 |  |  |
 | GET A NEW CAR NOW! |  |
|
| |
Frequently Asked QuestionsPCP is short for Personal Contract Purchase and is a finance method which allows you to place lower deposits and have lower monthly payments than you'd normally expect to pay with traditional HP loan methods.It achieves this by having what's known as a final Balloon payment option. This is a lump sum based on the expected value of the car at the time the deal ends. So, basically, instead of borrowing the whole amount of the purchase price you are instead borrowing enough to cover the depreciation of the car whilst you have it plus covering the finance company's costs and profit margin. Perhaps an easier way to explain it is to describe an example: The new car is on sale at £10000. If you went for a normal loan it might cost you something like £300 a month over 3 years with a £500 deposit. However, on a PCP deal the payments would only be around £200 monthly because there would also be a final balloon figure of around £4000 left outstanding at the end of the 3 year deal. Do I have to pay this final balloon figure? The great thing about PCP is that the final balloon figure is a guaranteed one. This simply means that the finance company have guaranteed that the car will be worth at least the balloon figure at the end of the deal (provided you have looked after it, had it serviced appropriately, had any damage repaired competently and not exceeded the agreed mileage limit). This guaranteed figure means that you have three options at the end of the deal - you can simply hand it back and walk away, you can pay off the balance to own it outright (which can be financed of course), or as most people do, you can trade it in against a new one. Hopefully the car will actually still be worth more than the amount left to pay which will then get you off to a good start on your next one! There is one other option worth a mention - you may also be able to sell it on to a third party trade buyer if the price is right and they will then settle the outstanding amount. Legally you are not entitled to sell it until the debt is cleared so can't sell it privately unless settling up with the finance company first. Points to note: You can usually get a settlement figure after about half way through the deal should you decide you want to change or end the deal. But it is usually financially best to complete the whole term. PCP apr rate is usually higher than traditional HP interest (because the finance company is laying out the same amount to start with but takes longer to get most of it back) and so the total overall cost is likely to be higher than traditional HP but it is a more flexible and therefore affordable way to stretch your budget. There are sometimes special low apr rate pcp deals available direct from the manufacturers themselves. |
 |
|  |
Cheap New Cars ~ Cheap New Vans ~ Citroen Deals ~ 0% Finance |
