The Student Room Group

People’s experiences of getting PCP car finance

Hi, just wondering how easy people found it getting accepted for PCP finance. I understand you are more likely to be accepted for this sort of finance, as they can just repossess the car back. I try to keep my credit report in good health. Currently have a combined credit limit on my credit cards of £3,000. So I must be doing something right. Currently paying £200 a month now on a £8,000 loan I got off my grandad for my current car. Plus I drive 20,000 miles a year, so I think PCP finance would be better for me personally, as I can just switch the car every 3 years. Thanks :smile:
Reply 1
Original post by Joshkav
Hi, just wondering how easy people found it getting accepted for PCP finance. I understand you are more likely to be accepted for this sort of finance, as they can just repossess the car back. I try to keep my credit report in good health. Currently have a combined credit limit on my credit cards of £3,000. So I must be doing something right. Currently paying £200 a month now on a £8,000 loan I got off my grandad for my current car. Plus I drive 20,000 miles a year, so I think PCP finance would be better for me personally, as I can just switch the car every 3 years. Thanks :smile:


You'll find that PCP is a very expensive way to get a car if your mileage is 20,000 per year.
Reply 2
Original post by IWMTom
You'll find that PCP is a very expensive way to get a car if your mileage is 20,000 per year.



Wouldn’t it be better than getting a loan for that amount, considering the amount I would pay for the loan repayments, it would become more than the car would be worth in 4 years time. But if I took out PCP, I would end up up paying out less overall. Plus, I’ve been told I can part exchange my current car as a deposit, which works out at £6,000 currently.
(edited 5 years ago)
Reply 3
Original post by Joshkav
Wouldn’t it be better than getting a loan for that amount, considering the amount I would pay for the loan repayments, it would become more than the car would be worth in 4 years time. But if I took out PCP, I would end up up paying out less overall. Plus, I’ve been told I can part exchange my current car as a deposit, which works out at £6,000 currently.


You can always part exchange your car regardless of whether you pay cash or take out a PCP "deal".

Do your calculations to compare the PCP deal you are being offered over a bank loan as it's not a one size fits all approach.
Reply 4
Original post by IWMTom
You can always part exchange your car regardless of whether you pay cash or take out a PCP "deal".

Do your calculations to compare the PCP deal you are being offered over a bank loan as it's not a one size fits all approach.



Will do, thanks for your input. Just in my head, it worked out better for me, in my current lifestyle. If I got a loan of £25,000 for example and repayed over 3 years. The amount I would of paid all together, wouldn’t reflect the then current value of the car, as I would of driven 80,000 miles over that time. But if I got PCP, the payments I’ve seen on a £25,000 car I’ve seen would be £320 a month, which would equal just over £11,500 after 3 years. So obviously the amount I’ve paid vs the value of the car is of a smaller difference than a loan. Plus I can swap it for a new one again at the end of the term. I think if I wasn’t driving so much per year, a loan would be better, but my mileage is greatly depreciating the value of any car I have :smile:
(edited 5 years ago)
Reply 5
Original post by Joshkav
Will do, thanks for your input. Just in my head, it worked out better for me, in my current lifestyle. If I got a loan of £25,000 for example and repayed over 3 years. The amount I would of paid all together, wouldn’t reflect the then current value of the car, as I would of driven 80,000 miles over that time. But if I got PCP, the payments I’ve seen on a £25,000 car I’ve seen would be £320 a month, which would equal just over £11,500 after 3 years. So obviously the amount I’ve paid vs the value of the car is of a smaller difference than a loan. Plus I can swap it for a new one again at the end of the term. I think if I wasn’t driving so much per year, a loan would be better, but my mileage is greatly depreciating the value of any car I have :smile:


Don't forget, though, that with a bank loan you have a realisable asset at the end - with PCP, you've got nothing.

What is the residual value after 3 years and 80k miles?
The value would be basically nothing due to his mileage, which is his point. I think after hearing his case, that a PCP deal would be most fitting.
Reply 7
Just put in the car reg that I’ve been using as an example, if it was to be part exchanged now with 80k on the clock, the value would be £16,072. So about a £5k difference between what I would pay and what it would be worth.
Reply 8
Original post by Lemon Haze
The value would be basically nothing due to his mileage, which is his point.


Nonsense. It entirely depends on which car we're talking about as to how hard the depreciation will hit due to mileage - a German car will depreciate a hell of a lot less than a French car.
Reply 9
Original post by Joshkav
Just put in the car reg that I’ve been using as an example, if it was to be part exchanged now with 80k on the clock, the value would be £16,072. So about a £5k difference between what I would pay and what it would be worth.


Is that taking into account age too?
Reply 10
Original post by IWMTom
Is that taking into account age too?


No sadly, couldn't find any way of calculating the age deprivation. the car is already 2 years old though, the one I'm comparing, with only 1,000 miles on the clock.
(edited 5 years ago)
Reply 11
Original post by Joshkav
No sadly, couldn't find any way of calculating the age deprivation. the car is already 2 years old though, the one I'm comparing, with only 1,000 miles on the clock.


Which car is this? It's quite simple - just find a car that's 5 years old to use for your checks!
Reply 12
Just looked up one that is 5 years old, but with a slightly lower spec, since the current spec didn't exist then. Its valuing around £13,000 :smile:

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