Do you want to get a new car and are using PCP finance as a means of doing so. These tips will help you get a better deal.
PCP car finance allows you to choose if you want to buy a car outright or give it back with nothing else to incur at the end of the specified finance term. Generally speaking, at the outset, PCPs outline an optional final payment that allows you to take ownership of the car. It also gives you time to decide if to save up some additional cash to keep the keys or hand it back to the dealer.
With PCP payments determined from the difference in value between the vehicle when new and at the contract’s end, you will pay more each month for a vehicle that depreciates quickly. But, if you plan to purchase the vehicle at the end of the contract, you will have to find a more substantial amount to pay off a particular model that maintains its value well.
For this reason, PCP deals could prove the right value if you return a posh vehicle at the end of the term – since it’s still worth a significant amount. Perhaps you can incur the lower final payment to get ownership of a vehicle that loses value faster, since you’ll have paid off much of the depreciation, with little remaining to pay to own the car.
Since PCP spreads the cost of a vehicle over a couple of years, you don’t own unless you’ve paid off the optional final payment and all the monthly payments. If you choose not to incur this last charge, the vehicle will still belong to the finance company.
Determining the right value deal for you can be daunting with certain manufacturers throwing in free fuel, varying APR, and dealer contributions, among other benefits. A good figure to look out for is the actual “total amount payable” sum, which must be published alongside that offer.
It shows how much interest is included in the price, and any charges such as “option to purchase” and “finance facility” fees. If you want to establish how much you require to pay overall, deduct any dealer contributions and other savings from the overall amount payable.
In case you don’t intend to buy the vehicle, deducting the optional last payment from this final figure should indicate exactly how much you require to incur to drive the vehicle for the finance period.
Look for offers that include road tax, insurance, and servicing. If you’d prefer lumping all your motoring costs into one, certain companies provide “packaged” deals that comprise everything from servicing to insurance, roadside assistance and road tax – with just fuel left to pay for.
For instance, Peugeot comprises a simple bundled scheme known as Just Add Fuel. Although this works in a similar way to typical PCP schemes, it includes a monthly payment to cover road assistance and servicing costs with a separate monthly insurance charge.
Since most drivers are opting to upgrade to a new model at their PCP scheme’s end, the condition of the vehicle being handed back is crucial. So, if the vehicle is covered in dents and has never been serviced, there’s a good chance to incur substantial charges. But manufacturers should accept cars handed back with considerable wear and tear for their particular age.
In case the vehicle isn’t up to scratch and you’re ready to keep it, you might be better off paying final payment to purchase it, since this way you won’t be stung with extra fees. Alternatively, it might be wise to get quotes to resolve any damage so that you can establish if you will put the damage right or pay repair fees to the manufacturer.