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New car on finance - thoughts..

  • 07-08-2018 1:53pm
    #1
    miss.lost
    Registered Users Posts: 135 ✭✭


    Hi,

    What do people think of buying a new car on finance, whether it be PCP or hire purchase? Obviously I have read the official t&cs etc of it but wondering if anyone has had any personal experience of it, pros+cons or any issues you may have run into. Any problems with insurance for example? First time prospective new car buyer...
    Have spoken to a couple of people who think its 100% the best way to buy a car and others who wouldn’t go near it. Looking at a small car, would be trading my own as a deposit.

    Thanks! 🙂

    L


Comments

  • #2
    Lantus
    Registered Users, Registered Users 2 Posts: 3,027 ✭✭✭Lantus


    Hp is a big loan for the entire period. You own the car at the end of 3,4,5 years.

    PCP is similar but with more options. You pay off more than half over 3 years with an option to buy or hand back or trade in after those 3 years.

    Sometimes a zero pcp deal can be better than Hp so compare carefully. You can save the difference with the lower monthly payments of pcp and pay off a chunk of the gmfv to limit further interest on that portion of the loan.


  • #3
    bazz26
    Registered Users, Registered Users 2 Posts: 51,338 ✭✭✭✭bazz26


    OP, how long do you plan to keep the car?

    HP is basically borrowing the money up front and the car is yours when the final payment is paid including interest incurred at the end of the term. Upside is there is no outstanding money owed at the end of the term. Downside is that HP interest rates tend to be higher than PCP interest rates.

    PCP allows you to pay for the car over 3 years in monthly installments with a lump sum owing at the end of the 3rd year, with the options to hand the car back and walk away, pay the lump sum off or go PCP again by trading in the car against another new one. Upside is that PCP interest rates can be very cheap, generally cheaper than normal loan rates. Downside is that many people only look at the monthly repayments, they don't plan for having to pay the lump sum at the end of the 3rd year unless you hand the car back and walk away with nothing. If they decide to go PCP again but initially put a high deposit into the first PCP deal then they need to come up with another high deposit to keep similar monthly payments on a new car again.


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