Discussion
I usually buy my cars from a main dealer using main dealer’s PCP, however since the FSA have got involved and you can no longer barter on the APR rates the prices have become crazy (e.g. 13.9% at BMW) and I’m not willing to pay those prices.
I’ve therefore been looking at independent/3rd party PCP finance, are there any negatives or issues using independent companies over main dealers for PCP?
I’ve therefore been looking at independent/3rd party PCP finance, are there any negatives or issues using independent companies over main dealers for PCP?
snerkler said:
I usually buy my cars from a main dealer using main dealer’s PCP, however since the FSA have got involved and you can no longer barter on the APR rates the prices have become crazy (e.g. 13.9% at BMW) and I’m not willing to pay those prices.
I’ve therefore been looking at independent/3rd party PCP finance, are there any negatives or issues using independent companies over main dealers for PCP?
As I understand it, you can haggle on used car APR charges, though new car rates are usually fixed.I’ve therefore been looking at independent/3rd party PCP finance, are there any negatives or issues using independent companies over main dealers for PCP?
APR figures aren’t the be all and end all with PCP, though. Where deposit contribution discounts are available, the APR quoted is inaccurate, as it doesn’t take into account the dep. con. saving.
Furthermore, with PCP, your monthly payments and the exact amount of interest you pay is also affected by the optional final payment - what the car is predicted to be worth at the end of the contract.
Do you have a budget in mind - specific deposit and monthly payments - as getting like-for-like quotes is the best way to compare PCP quotes - regardless of what the quoted APR is? One PCP option might have a higher APR but a higher optional final payment, too, and both affect the monthly payments and the overall amount of interest you pay.
You may already know this and have other reasons for choosing PCP, but another way to cut the amount of interest you pay is to go for Hire Purchase, as this involves paying off the finance balance faster than with PCP, so less interest accrues for a set deposit and contract length.
RoVoFob said:
As I understand it, you can haggle on used car APR charges, though new car rates are usually fixed.
APR figures aren’t the be all and end all with PCP, though. Where deposit contribution discounts are available, the APR quoted is inaccurate, as it doesn’t take into account the dep. con. saving.
Furthermore, with PCP, your monthly payments and the exact amount of interest you pay is also affected by the optional final payment - what the car is predicted to be worth at the end of the contract.
Do you have a budget in mind - specific deposit and monthly payments - as getting like-for-like quotes is the best way to compare PCP quotes - regardless of what the quoted APR is? One PCP option might have a higher APR but a higher optional final payment, too, and both affect the monthly payments and the overall amount of interest you pay.
You may already know this and have other reasons for choosing PCP, but another way to cut the amount of interest you pay is to go for Hire Purchase, as this involves paying off the finance balance faster than with PCP, so less interest accrues for a set deposit and contract length.
Thanks for the reply. I’m actually au fait with how PCP’s work and what can affect monthly prices. In the past I’ve always haggled APR’s down, however it is my understanding that it all changed in Jan 2021 and APRs are now set. This is enforced by the FSA in an attempt to make it fair so that one customer doesn’t get 4% whilst another gets 13.9%. I personally don’t think it’s now fair for those that are prepared to haggle but that’s the way it is. APR figures aren’t the be all and end all with PCP, though. Where deposit contribution discounts are available, the APR quoted is inaccurate, as it doesn’t take into account the dep. con. saving.
Furthermore, with PCP, your monthly payments and the exact amount of interest you pay is also affected by the optional final payment - what the car is predicted to be worth at the end of the contract.
Do you have a budget in mind - specific deposit and monthly payments - as getting like-for-like quotes is the best way to compare PCP quotes - regardless of what the quoted APR is? One PCP option might have a higher APR but a higher optional final payment, too, and both affect the monthly payments and the overall amount of interest you pay.
You may already know this and have other reasons for choosing PCP, but another way to cut the amount of interest you pay is to go for Hire Purchase, as this involves paying off the finance balance faster than with PCP, so less interest accrues for a set deposit and contract length.
Dealerships/manufacturers can set their APR, and in fact there are sometimes deals on new, but used APR’s are high and have gradually climbed since Jan 2021. From memory BMW, Audi, Land Rover were around 7.9-8.9% last year and are now 11.9-13.9%. If the market doesn’t change it means I can no longer afford the same level of cars that I’ve had for the past 20 years, hence looking at independents that may offer a much more palatable 5.9-6.9%
snerkler said:
Thanks for the reply. I’m actually au fait with how PCP’s work and what can affect monthly prices. In the past I’ve always haggled APR’s down, however it is my understanding that it all changed in Jan 2021 and APRs are now set. This is enforced by the FSA in an attempt to make it fair so that one customer doesn’t get 4% whilst another gets 13.9%. I personally don’t think it’s now fair for those that are prepared to haggle but that’s the way it is.
It does seem counter-intuitive that the FSA's solution to one person being ripped off was to ensure that everybody got ripped off instead
Dimebars said:
It does seem counter-intuitive that the FSA's solution to one person being ripped off was to ensure that everybody got ripped off instead
I have to assume that the intention was that everyone would get the 'middle ground'. Instead, the current rates are just comical for anyone not desperately in need of finance and terrifying for anyone who is. I'm having some work done in February and wanted to keep cash reserves but was worried about loan prices rising, I got lucky and took a £25k loan in June at 2.9% over 5 years. Arguably that could've been for a car instead of house work and it's over 10% better than what a lot of the manufacturer's are now offering (Seeing 12.9-14.9% APR on a lot).Gassing Station | Car Buying | Top of Page | What's New | My Stuff