Car finance types??

[nonamemummy]

I’m looking at getting a new car. The one I have is my first which I paid for outright. I’d need some sort of finance for a new one. I’d like to upgrade my car every couple of years so could anyone suggest what type of finance I should get?

Does anyone have PCP and get any money left over at the end for a deposit on another car?

I’ll admit it, I don’t really understand pcp. It seems you pay a deposit, don’t drive your car because it needs a low millage and no signs of use when you hand it back. Then you need another deposit? Or maybe you don’t?

I do to high a millage for PCP so I bank loan for a low interest rate and own the car. I don’t update my car unless I have to.
Why do you need to upgrade your car often?

Yeah I’ve just thought that a bank loan could be cheaper than pcp actually.

I just think newer car = less problems with the car. That’s why I’d like to upgrade every couple of years

Newer cars can mean fewer problems, but really with most modern cars it doesn't make enough difference to justify the cost. A new car will lose half its value in 3 years (probably more) and at 3 years old it will still be very reliable. Changing your car frequently mostly means you will be swapping a known reliable car for an unknown quantity.

If we assume that a car depreciates by 40% in the first 2 years then you will pay the full price of a new car, plus interest in 5 years. Alternatively, if you buy a 3 year old car at half the price of a new car and keep it 5 years, you will have spent half the money and the car will still retain some residual value.

I'm currently running an 8 year old car, bought at 3 1/2 years old and I have no reliability concerns. I am planning to keep it for another 5 years. If nothing happens to change those plans it will have cost me £1000 per year plus running costs. If I'd bought it new, on finance, I imagine the cost would have been more than £3000 per year, plus deposit, plus balloon payment. OK, I could afford that, but the money was much better spent on reducing my mortgage.

I do pcp and it has a minimum guaranteed value at the end to carry over. Did put old car in for a trade in the first place. Volkswagen is a good dealership. X

If you want to upgrade your car every couple years then PCP could work for you. You pay an initial deposit then x number of monthly payments at y amount and then there is a final payment at the end to own the car (the balloon payment). In theory at the end of the contract the car is worth at least the balloon payment and you can trade it in for a new one.

I've had 2 PCP cars and this is how mine worked out:

Car 1: 2012 fiat 500. Cost £13655. Initial deposit of £1500 then 36 monthly payments around £200 then final payment (can't remember exact amounts). Traded in after just over 2 years for car 2.

Car 2: 2014 Ford fiesta. Cost price less than the fiat maybe around £11000. They took the fiat in and used the value to pay off the balloon payment. I put down £500 and had 36 payments at around £180 with a final balloon payment due.

I then got fed up of never being able to afford the balloon payment of around £4000 each time and traded the fiesta for car 3:

Car 3. Citroen c1 on HP agreement. £700 deposit and 48 monthly payments of £182 but the difference is the car is mine at the end. I might trade it in or I might keep it. For now it's all good.

Also if you are not planning to return the car under the PCP agreement before the balloon payment and want to trade in before for another new car you don't need to worry so much about the mileage/condition although this obviously affects the trade in value. If the trade in value does not at least equal the balloon payment you will need to top it up as you can't finance finance.

I didn’t finance but I got a loan as it worked out cheaper, I also covered my car insurance outright in the loan as well which didn’t come with the finance.

I worked out my car finance options by using CarMoney's calculator and it did help me work out what I could afford on a monthly basis. DH got a bank loan for his car and he worked out he wasn't any better off than me. It's really down to how much you want to pay imo.

Whoops wrong link. You can find the Car Finance Calculator