You know the old saying; If it looks too good to be true…
Not so long ago, buying a car was easy. You chose a car, found out the cost of buying it, the trade in value for your own car and then worked out if or how much you need to borrow to pay for it. Simple!
For anyone who has tried to finance a car purchase in recent times, the process can now be a lot more complicated. One emerging trend in car finance is the introduction of Personal Contract Plans (PCPs). Essentially a PCP is a lease scheme which makes financing a new car seem affordable for lots of us with low monthly repayments. But all is not what it seems!
COMPARE PCP WITH A CAR LOAN FROM US
|
Our Car Loan |
PCP Car Loan |
|
| Do I own the car from the outset? | Yes | No, the garage own the car until the final payment is made |
| Do I have to pay an initial deposit? | No | Yes, typically a deposit of 10-30% is required |
| Can I sell the car at any time? | Yes, it is 100% yours | No, you do not own the car until the final payment |
| Are there any extra fees? | No | Yes, there are often documentation, administration and completion fees |
| Can I pay off my loan early, make additional payments or increase my monthly payments? | Yes | PCPs are often the least felxible for of finance, and payments cannot ususally be changed |
| Is my loan insured? | Yes, subject to terms & conditions your loan is insured in the event of your death at no extra charge | No, this is not standard with PCP’s and if available will incurr an extra charge |
| Is there a cap on my annual mileage? | No, the car is 100% yours with no restrictions | Yes, there is often a cap on the annual milegae that you are allowed to clock up over the period of the agreement |
| Do I own the car at the end of the agreement? | Yes, you actually own the car when you buy it | No, you only own the car once you have made the final balloon payment at the end of the PCP agreement |
| Does my interest reduce with my reducing balance? | Yes, repayments are calculated on your reducing balance, so you pay less interest with each payment | No |
So, as you can see, it’s not always as good as it first looks. Choosing us for your car loan is the smart thing to do, and means that you own your car from day one. Come in a talk to us today and we’ll help get you on the road!
