PCP balloon payment - refinance or bank loan?

[Daniel Royle]

Hi all,

New to the forum, and not great with car knowledge so looking for your expertise.

We're coming to the end of our PCP deal on our Audi Q2 (bought at 6 months old, now 4.5 years old).

We want to keep the car, and have a final PCP balloon payment to pay of £10K. Rough estimate of car's value is about £15K.

Can anyone help advise on the best course of action, which tends to be the best approach:
- refinance the car to another PCP deal with the car company (keep same car) (around 10% interest rate)
- or take out a £10K bank loan to cover the balloon (look likely to get 7% interest rate)

Does it come down to whether we prioritise a lower monthly payment versus paying back less overall? We'd like to meet somewhere in the middle of those. Or are there any other pros/cons to either that I'm not considering.

Any advice is appreciated.
Thanks,
Dan

[Earthdweller]

Without knowing your circs imo you’d be mad to enter into another PCP on a car you’ve already pcp’d

You have a 4.5 year old car you owe loads of money on and you think doing it again and ending up with an 8.5 year old car you owe loads of money on is a good idea, you’re paying interest again on money you’re not paying the capital down on, which you’ve already done once!

Get a bank loan, pay it off entirely and at the end you’ll own it having paid both the interest and capital off

You’ll have more equity in it throughout should you wish to change it early in any case

Edited by Earthdweller on Wednesday 11th October 12:05

[ChrisH72]

I’ve never used PCP but believe the idea is to use the equity in the car as a deposit against a new one. So you take out a PCP on another new car and stay on that pattern, hopefully negotiating a deal where your monthly payments don’t need to change all that much.

If you’re keeping the car then it really has to be a bank loan and pay it off over your preferred term.

[_Darren_]

I posted this in another thread but my credit untion ( ScotWest ) have a car loan APR of 3.9%, which is the lowest i've seen, might be worth checking your local credit unions for a better rate than a bank loan.

[Jazoli]

You'd be mad to PCP it again, bank loan or even a 0% credit card to finance it depending how long the 0% is for then move onto another 0% card until its paid off.

[Summit_Detailing]

As above, crazy to go down the PCP in this scenario.

Personal loan to cover the balloon...tailor the term to best meet your needs.

Happy motoring.

Cheers,

Chris

[Daniel Royle]

Thanks all for the replies. I was hoping they would be as emphatic as they have been