PCP on a new car

thehorse

hello all,

I’m looking to buy a new car and I’ve looked at a Ford Kuga. The dealer has told me that when the 3 years are up, the mileage won’t be considered even though the yearly limitation is 20k. I’ll be most likely at 30k. He is telling me that I won’t get penalised and that my GMFV will cover the balance on the car. My real concern is the penalty that I might have to pay if I’m over the limitation but he’s telling me there will be NO penalties to pay even if I’m 10k over each year so rather then bring the car back with 60k on it after 3 years , there would be most likely 90k on it.

let me know your thoughts as I don’t feel I’m being told the truth.

thanks

Allinall

Ask the dealer for the contract you will be signing, and confirm for yourself what applies regarding the mileage.

Don't take their word for it.

mickdw

You need to understand the process.

Option 1, you buy out the car at end of three years. You pay the outstanding balance. It wouldn't matter what condition the car is in in this scenario.

Option 2, you trade in the car. In this case, you are free to travel the entire country to dealers of all brands to get the best price offer for the car on a trade in. Mileage will affect trade in price but the car will be worth significantly more than the outstanding balance.

Option 3, you hand the car back. In this case you are literally throwing money into the fire as the car is worth more than you owe. They also then have the option to charge the penalty for excess mileage in the case of handing it back so you would be robbing yourself on the double.

In short, the excess mileage won't have an effect any more than it usually would when trading in high v low mile car unless you going the hand back route. If You think you may end up handing it back and walking away, don't buy it at all as it's financial madness.

PCP in itself with a low interest rate is a good way to buy as long as you can genuinely afford it.

Too many people get sucked Into a dearer car than they can afford by having a valuable trade in and then going PCP resulting in very low payments or even cash back from dealer. In 3 years, the next car will be more expensive though.

thehorse

I know all about the options at the end. My query specifically relates to whether I will get penalised if I am over the allowed mileage or not

mickdw

Only in the hand back situation as explained above.

On trade in,mileage will effect it's value in normal way only. If the original supplying dealer tried to charge you a mileage penalty on trading in, you just go down the road and get best price where ever you can get it.

bazz26

They would only invoke an excessive mileage penalty if the used car market were to tank in 3 years time where you want to hand back the car and walk away with nothing.

If you trade the car in for another new car in 3 years time then they just adjust it's trade-in taking the mileage into account. The only time you would be penalised there is if the trade-in value would be less than the balloon payment in which case it would be better to just hand it back. However if current used car prices remain high then that won't happen.

If you decide to keep the car after the 3 years then it doesn't matter what mileage is on it as you just pay the outstanding balloon payment.

brokenbad

Think carefully about PCP and the constraints around same particularly with mileage restrictions and tied into a servicing contact with the main dealer.

Once you enter into a PCP arrangement, its difficult to break the cycle unless you decide to take a hit and walk away.

A credit union loan would be a more favourable option - if available.

thehorse

Thanks very much everyone for the advice