PCP Interest Rates

[bear1]

I've just sold my car through Motorway. Got a good price (over 10% more than dealers and we buy any car) and it was a very smooth process. I followed advice and ensured my photos were very accurate. Only problem: my dealer has failed to match his word and I haven't got the 4 yet. ?‍
Are you aware - I couldn't see it in other comments - that you can get PCP from other providers, not just MG? (I wasn't until recently).
We went for regular finance and I got the loan just as Truss was destroying the economy so got a decent rate.

 

[MrAshieB]

I've just sold my car through Motorway. Got a good price (over 10% more than dealers and we buy any car) and it was a very smooth process. I followed advice and ensured my photos were very accurate. Only problem: my dealer has failed to match his word and I haven't got the 4 yet. ?‍
Are you aware - I couldn't see it in other comments - that you can get PCP from other providers, not just MG? (I wasn't until recently).
We went for regular finance and I got the loan just as Truss was destroying the economy so got a decent rate.

Sounds good! Shame about the dealer though… that was my concern; selling our car and not having the MG4 here in time lol

I wasn’t aware, no. Where would you look for this? I assume if you take the PCP from other providers, the car is provided by whoever that company is, instead of an MG dealer, right?

Apologies if I sound very thick here… I am

Lucky you - I think I’m doomed to the Post-Truss rates now lol

 

[Deleted member 10041]

Sounds good! Shame about the dealer though… that was my concern; selling our car and not having the MG4 here in time lol

I wasn’t aware, no. Where would you look for this? I assume if you take the PCP from other providers, the car is provided by whoever that company is, instead of an MG dealer, right?

Apologies if I sound very thick here… I am

Lucky you - I think I’m doomed to the Post-Truss rates now lol

No it's just like getting a bank loan, the dealer you are using still provides the car. Loyds bank do PCP think it's rate is about 4.5% Halifax do it theirs is 4.9%

 

[Mr R]

No it's just like getting a bank loan, the dealer you are using still provides the car. Loyds bank do PCP think it's rate is about 4.5% Halifax do it theirs is 4.9%

… but what do Lloyds or Halifax state the final payment (guaranteed future value) is? If it’s lower than MG‘s figure then you’ll need to pay more during the term of the PCP…?

 

[Kamil]

Yes future value is lower so even know APR is lower then MG finance you actually pay more per month

 

[MrAshieB]

Ahh - didn’t realise the likes of Lloyds did it. Having said that, looking at their website it specifies you need to be a Lloyds current account banking customer for a minimum of 3 months.

As we’re with Starling Bank, I guess that’s out of the question this time around

 

[Sloucher]

Ahh - didn’t realise the likes of Lloyds did it. Having said that, looking at their website it specifies you need to be a Lloyds current account banking customer for a minimum of 3 months.

As we’re with Starling Bank, I guess that’s out of the question this time around

That's a pity . I am with Lloyds, and I have a PCP offer from them.
Unfortunately with what's been happening with the economy the last few weeks, the APR is now 5.8%. MG are quoting 7.9% though.

 

[NickHeynes]

Cash is king, unless the dealer is offering finance incentives.

No it isn't.
Manufacturers/Dealers/sales people want to find a way of tying you in
Don't forget that most people want to change their car every three or for years (you might not I'm just saying)
And unless you've got oodles of money you'll have to save up again over that period.In effect paying your self back what you've spent out .So you've "borrowed " from yourself.
So why not borrow from somewhere else?
Best thing is to leave your money invested and use someone else's (If you can afford to)
Oh and don't put a massive deposit down on a pcp .Yes there's examples of vehicles not depreciating in the traditional manner at the moment but that won't last .It can't.
So if you put a big deposit down to bring your payments down you'll have to put down even more next time. Ideally what you want (and what pcps were originally designed to do ) Is to have equity in the car at the end of the term using that equity to pay the deposit on a new car .
But cash is definitely not king .
Oh and don't forget the "total amount payable" includes the balloon or "guaranteed future value" as it used to be called .If you px the car you never pay the balloon .

 

[NickHeynes]

Be careful of deals with variable interest rates they're rare but they do exist .Manufacturers pcps are fixed for the term

 

[Sloucher]

Another variation between MG and someone like Lloyds Bank on PCP is the excess mileage charge - if you think its going to be an issue. Lloyds bank charge 9.6p/mile as opposed to MG's 14.9p/mile.

 

[bear1]

No it isn't.
Manufacturers/Dealers/sales people want to find a way of tying you in
Don't forget that most people want to change their car every three or for years (you might not I'm just saying)
And unless you've got oodles of money you'll have to save up again over that period.In effect paying your self back what you've spent out .So you've "borrowed " from yourself.
So why not borrow from somewhere else?
Best thing is to leave your money invested and use someone else's (If you can afford to)
Oh and don't put a massive deposit down on a pcp .Yes there's examples of vehicles not depreciating in the traditional manner at the moment but that won't last .It can't.
So if you put a big deposit down to bring your payments down you'll have to put down even more next time. Ideally what you want (and what pcps were originally designed to do ) Is to have equity in the car at the end of the term using that equity to pay the deposit on a new car .
But cash is definitely not king .
Oh and don't forget the "total amount payable" includes the balloon or "guaranteed future value" as it used to be called .If you px the car you never pay the balloon .

Plenty of good info.
The 4 is - IMHO - different to most cars in that dealers aren't offering any incentives. With previous purchases the dealers' finance was always good, this time I was better going elsewhere for a better APR. Because neither MG nor the dealer weren't contributing.

 

[NickHeynes]

Plenty of good info.
The 4 is - IMHO - different to most cars in that dealers aren't offering any incentives. With previous purchases the dealers' finance was always good, this time I was better going elsewhere for a better APR. Because neither MG nor the dealer weren't contributing.

I'd absolutely agree with you on this , although I did get a deal on colour (free dynamic red and Mats) But I'd also be careful of quoted rates as being "typical" because they can change and I'd also look at balloons as you can be so "rate aware" you may miss other aspects of the loan
Over mileage charges only exist if you allow the loan to run it's full term and pay the balloon. They'll have an impact on a px valuation but you won't actually "pay" them.

 

[siteguru]

Over mileage charges only exist if you allow the loan to run it's full term and pay the balloon. They'll have an impact on a px valuation but you won't actually "pay" them.

Or you don't pay the balloon and hand the car back - over-mileage charges apply then too, don't they?

 

[NickHeynes]

yup ! But in all my yrs of sales that never happened!

 

[Kithmo]

No it isn't.
Manufacturers/Dealers/sales people want to find a way of tying you in
Don't forget that most people want to change their car every three or for years (you might not I'm just saying)
And unless you've got oodles of money you'll have to save up again over that period.In effect paying your self back what you've spent out .So you've "borrowed " from yourself.
So why not borrow from somewhere else?
Best thing is to leave your money invested and use someone else's (If you can afford to)
Oh and don't put a massive deposit down on a pcp .Yes there's examples of vehicles not depreciating in the traditional manner at the moment but that won't last .It can't.
So if you put a big deposit down to bring your payments down you'll have to put down even more next time. Ideally what you want (and what pcps were originally designed to do ) Is to have equity in the car at the end of the term using that equity to pay the deposit on a new car .
But cash is definitely not king .
Oh and don't forget the "total amount payable" includes the balloon or "guaranteed future value" as it used to be called .If you px the car you never pay the balloon .

You find me an investment that pays the same interest as the PCPs and I'll agree, but the way inflation is at the moment, your money in the bank is depreciating in value faster than the interest rates, so if you have it, spend it.
Keeping savings that are depreciating plus paying interest on a loan doesn't make financial sense in today's climate.

 

[NickHeynes]

You're right as far as traditional savings are concerned which is why I was careful to use the word invest. Also don't forget invested money interest is compounded . So if you're being charged a flat rate of 5% and your invested money is earning 8% AER then you might be better off leaving your money where it is. And you wouldn't pay yourself back at 0% because of inflation . You'd have to pay yourself back at the rate vehicle prices are going up .
There are any number of reasons why a salesperson is "obsessed" with a customer taking finance. Manufacturer targets being one, finance commission being another although I believe that's pretty much bitten the dust nowadays.

 

[Kithmo]

You're right as far as traditional savings are concerned which is why I was careful to use the word invest. Also don't forget invested money interest is compounded . So if you're being charged a flat rate of 5% and your invested money is earning 8% AER then you might be better off leaving your money where it is. And you wouldn't pay yourself back at 0% because of inflation . You'd have to pay yourself back at the rate vehicle prices are going up .
There are any number of reasons why a salesperson is "obsessed" with a customer taking finance. Manufacturer targets being one, finance commission being another although I believe that's pretty much bitten the dust nowadays.

8% AER, where do I sign up ?
I suspect that is a very long term, no access, investment
Long term with no access is something I'm not into at my age, you never know what's round the corner health wise, I like to keep things simple.

 

[beefyj]

yup ! But in all my yrs of sales that never happened!

It happened a lot in 2017 when the inflated GFV and heavily discounted Leafs were handed back in. My 24 Tekna GFV was £2500 over market value at the time so just told RCI to collect it. Think it was late 2014 when they pushed a load of Leafs out on the same deal. Thank god for PCP then!

 

[NickHeynes]

It happened a lot in 2017 when the inflated GFV and heavily discounted Leafs were handed back in. My 24 Tekna GFV was £2500 over market value at the time so just told RCI to collect it. Think it was late 2014 when they pushed a load of Leafs out on the same deal. Thank god for PCP then!

Thank god I was out of the trade by then!!

 

[NickHeynes]

8% AER, where do I sign up ?
I suspect that is a very long term, no access, investment
Long term with no access is something I'm not into at my age, you never know what's round the corner health wise, I like to keep things simple.

Yes would be long term and as always it's horses for courses. I've bought out right , leased . Had PCP's HP'd . Only one thing for certain is I've been out of pocket to a greater of lesser extent which ever way I've chosen!