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Offline M25  
#1 Posted : Thursday, June 05, 2014 2:59:31 PM(UTC)

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Joined: 6/5/2014(UTC)
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I purchased a new car last year with a PCP finance arrangement whereas previously I have always purchased a cars on either HP or a personal loan arrangement.

Can someone (if it is so possible!) set out briefly a summary of the pros and cons that perhaps knows more about the difference than I do.

I realise that PCP usually means a balloon payment at the end if you want to keep the car by ballon is quite low at around £2500 to keep the car after fours years if I want to do that.

But I guess the advantage seems to be a lower monthly payment against the car.

One disadvantage I think with PCP vs HP or a personal loan is that with PCP you are tied in for an initial period I think my period is 18 months or two years from memory so if you got ill and could not afford to keep up the car payments you could get stung? I did ask about this at purchase buy the dealer said (if you can believe car dealers even at large established franchises that is!) if it was due to illness they would be "gentle with me" and simply take the car back with no further payments (umm not sure I believe him though).

Whereas with a personal loan to buy the car I guess you could just sell the car and pay of the personal loan early to avoid a problem if you could not drive for any reason (illness or whatever). This would only cover it if there was sufficient equity in the car (i.e. it was worth more than the outstanding loan balance). This is more likely if a reasonable size cash deposit was paid out the outset I think.

Anyone help with this conundrum of HP vs PCP?
Offline Sally  
#2 Posted : Wednesday, October 08, 2014 1:07:44 PM(UTC)

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Joined: 10/8/2014(UTC)
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I prefer HP for the following reasons:

If you have a good credit rating you can often get a better rate of interest on the financing

You own the car with HP whereas with PCP although the car is registered in your name you are tied to the PCP finance company or garage?

Just don't feel comfortable with PCP.

I have friends that lease their car. Never done that personally, doubt I ever will as that seems the worst of all worlds?

In my experience you can get a better deal buying cash (with a personal self arranged loan).

Check around the internet for the best loan interest rates.

In the past I have used Sainsburys Bank for personal car loans and had very competitive interest rates from them (will depend on your credit rating though).


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