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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Bank loan or PCP

30 replies

MoonShineReady · 21/06/2024 11:19

My very old car has broken down beyond repair and I need a new used car as soon as possible. I have some money saved up but would have to either borrow an additional 6K from the bank or do a PCP type of purchase.

The car will cost around 13-14K. What's best PCP or bank loan? I have no idea as my previous car, which was already quite old, was given to me by my parents as they didn't need a second car any longer.

OP posts:
MoonShineReady · 21/06/2024 11:20

Sorry didn't mean to enable voting. AIBU to consider a bank loan rather than PCP to pay for a car?

OP posts:
AllBlackEverything · 21/06/2024 11:23

I'd definitely choose a bank loan.

Arewealljustloosingtheplot · 21/06/2024 11:25

Honestly? I’d get the car on lease. Then when the lease is up just start again. I’m so over PCP and all the money you loose the moment you take it home.

Greenbike · 21/06/2024 11:27

Is there any possibility of getting a cheaper car for £7-8k and not needing a loan at all?

Giraffel · 21/06/2024 11:29

I'm with @Greenbike

MoonShineReady · 21/06/2024 11:35

@Greenbike definitely. I can't think straight as have to deal with this quickly. Any ideas what used smallish cars would be advisable? I'd need the car to last for at least 5-6 years ideally much longer.

I don't know how leasing would work.

OP posts:
MoonShineReady · 21/06/2024 11:37

Is eBay or autotrader ok? Or is used approved from a dealership better?

OP posts:
Badbadbunny · 21/06/2024 11:37

I always recommend a bank loan.

Seen too many horror stories with people trapped in PCP/leases after accidents, or illnesses meaning they had to give up driving, or just a car that's too expensive to repair, etc.

At least with a bank loan, there's no "link" between the car and the finance, so you're free to do whatever with the car and free to do whatever with the bank loan, i.e. pay off early, arrange longer repayment terms, or just carry on paying the monthly fee.

I.e. if it's financed, then if you want to sell the car, the finance has to be paid off, as it flags up on the credit database. If it's bank loan, there's no "marker" on any used car/credit databases, so you're free to do what you want, i.e. sell, give away, etc.

See a few sad cases on this and other online fora when someone, for whatever reason, has to give up a car (on finance), only to find their options are extremely limited as per the PCP/Lease/Credit agreement.

Toddlerteaplease · 21/06/2024 11:38

I had a bank loan for my first. For the second, the dealer was offering %0 finance, so I did that..

Toddlerteaplease · 21/06/2024 11:38

I'm on my second Hyundai i10. It's a brilliant car!

BrigadierEtienneGerard · 21/06/2024 11:39

Bank loan. Once it's paid off the car is yours with none of the issues with PCP.

Merryoldgoat · 21/06/2024 11:40

I’d go with @Greenbike suggestion.

Shallana · 21/06/2024 11:43

I would take a look on autotrader - you can filter by price, miles, age etc. I second looking for a cheaper car rather than taking on debt - there is absolutely no guarantee that a newer car would last you longer than an older one, or wouldn't cost you a fortune in repairs. I have a colleague who bought a £1000 car in an emergency during lockdown and it's still running no problem.

Defintely wouldn't go with PCP - the interest rates are absolutely extortionate. If you do decide to take out a loan, then I would recommend using a comparison site to find the cheapest deal rather than just asking your bank.

Also wouldn't recommend leasing - the monthly payments tend to be very high and restrict the number of miles you can drive. At the end of the term, you are left with nothing.

ALovelyCupOfNameChange · 21/06/2024 11:47

Are you affected by ulez? When you say small how small? Manual or auto?
the Hyundai i10 mentioned above is a great shout as is Kia picanto.
the Volkswagen up/skoda citigo/ seat mii are fantastic capable little cars. Pick the right one and it’s free or £20 a year tax, some come with heated seats, panoramic roofs. Can take mega miles as well.
if you need bigger the Skoda fabia represents fantastic value, again, pick the right one and it’s £20 a year tax. The auto box is brilliant.

AluckyEllie · 21/06/2024 11:47

@Toddlerteaplease I am also a Hyundai i10 owner and lover! It’s my first car (late learner) but glorious. Cheap to run and insure. We can get two seats in the back and a pushchair in the boot so it’s surprisingly roomy. Reliable. Apparently not too bad to repair and easy to get hold of parts. Buy one 😂

Badbadbunny · 21/06/2024 11:56

MoonShineReady · 21/06/2024 11:37

Is eBay or autotrader ok? Or is used approved from a dealership better?

Despite the negativity, there are lots of small/independent garages that aren't rip-off merchants and are actually genuine people. You certainly don't need to get one from a proper dealership, in fact, most dealerships don't sell older cars at lower prices - if they take an older car in part exchange, they pass it onto smaller/independent garages to sell.

You just need to know what you're looking for. I.e. a car with a full service history, check the online MOT history to see what it's failed on previously (if any) and for any "advisories", i.e. problems that aren't serious enough to fail an MOT, but are merely warnings about what may fail next time etc. You can also check mileage history from the online MOT record. Make sure the garage will provide some kind of warranty - at least six months preferably which should cover you for anything that crops up in the first few months you own it (most things do that you don't notice immediately, such as a faulty heater if you buy in Summer!). Some garages will offer a longer warranty, but not for the bargain basement type of car (i.e. under £5k). You can get cars checked over by firms like the RAC for a smallish charge, but most of what they do, you can do yourself, i.e. check MOT history and check for outstanding finance, but they sometimes include a physical check to check for undeclared accident damage or "cut and shut" etc.

You should be able to source a car that will last a few years for £5k-£7.5k range if it's got full service history and below average mileage.

You could also take a punt on a car under £5k but be prepared for it maybe not to last more than a couple of years, or be prepared to pay for repairs etc.

Today, the average car on the road is 13 years old. So that shows that you don't need a new or nearly new car. They last a lot longer than they used to, especially if driven carefully and below average mileage.

There is lots of research you can do about reliability of each type of car, what tends to go wrong and over what timescale etc.

The thing with buying older/cheaper is that you have to do more homework and take more responsibility as to what you're buying. Just educate yourself so that you don't unwittingly buy a dud.

Merryoldgoat · 21/06/2024 12:04

@Badbadbunny

I agree. We used an independent and our car has been perfect. Cost £6.5k and had it 3 years and it’s good as it was then. It’s 08 plate but low mileage and was excellent value. I’d be surprised if we had to replace it within 5 years.

We’re not ‘car people’ though.

CrotchetyQuaver · 21/06/2024 12:10

Bank loan every time over a PCP type thing.

MoonShineReady · 21/06/2024 12:12

Very helpful suggestions!

OP posts:
Juliet194 · 21/06/2024 12:21

I would personally go for a bank loan, I've looked into it myself recently and it seems to work out much cheaper over the long run.

But I'm very risk adverse (boring!) and don't care what type of car I drive. Some of my friends always buy their cars with PCP.

Fidgety31 · 21/06/2024 12:29

I would never get a pcp again . Had one once and had to pay £2k at the end to hand the car back as it was in negative equity - something they said would never happen !

ALovelyCupOfNameChange · 21/06/2024 12:30

with any kind of loan for a car unless it’s 0% interest your paying interest on a depreciating asset.
I do think if you do your homework to minimise risk your as can end up in the shit with a 15k car as a 6k. I’ve known people get into real bother with 4 year old cars needing new engines, new gearboxes and things.
you’ve a good healthy budget to get something reasonable, borrowing more won’t guarantee certainty

ALovelyCupOfNameChange · 21/06/2024 12:35

Other ones to avoid.
1.0 Ford eco boost engines. Terrible. Even after the modification, they’ve solved one problem but not another.
qashqai and jukes known gearbox and engine issues and Nissan just shrug.
honda in the 6k price bracket are probably slightly older so rust for fun. Reliable until they do that though

there’s an app called mot history where you can put reg numbers in and check the mot history on cars, that’s really useful to see advisories. Check things like matching make of tyres all round, it’s more likely to have been loved as well as service history.

ItsAlwaysSunnyInMyDreams · 21/06/2024 14:46

A third vote for a Hyundai i10, bought mine (13 plate) at the start of the pandemic and other than changing the tires and recently a suspension arm it's been running smoothly and without issues for the past 4 years I've had it and not anticipating changing it any time soon. Bought it for 3,5k back then, so definitely no where near your estimate of money needed!

Greenbike · 21/06/2024 15:25

MoonShineReady · 21/06/2024 11:37

Is eBay or autotrader ok? Or is used approved from a dealership better?

Both fine. I would probably go with something from a professional garage on Autotrader, then at least you know it’s been serviced. Modern cars are very reliable, in the main, and cheaper/smaller often more so than expensive ones because there’s literally fewer things to break. Any small Hyundai or Kia from the last ten years should be fine, ditto a Toyota or Honda. If you’re anxious you can pay the AA £200 or so to inspect it for you and give you a condition report.