Should I accept these PCP terms or apply for bank loan

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This topic contains 6 replies, has 2 voices, and was last updated by Stuart Masson Stuart Masson 1 year, 8 months ago.

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  • #88605 Reply

    John Craig

    We are purchasing a 1 year old Car on PCP and have been given the figures of:
    Total car cost: £19995
    Cash deposit: £2500
    Trade-in: £3500
    Financed amount: £13995
    Optional final payment (GFV): £10824
    36 monthly payments of: £180.23

    This is from a Nissan main dealer financed with what I can make out from the printout they gave me.
    However, when I asked the sales guy how much interest I would be paying he worked out nearly £3000 over 3 years. If we do go down the PCP route we get the 2 free services & 2 year warranty etc. But if we start the PCP rolling could we then pay it off with a bank loan; surely we can still have the free services & warranty? Also, when I asked them about any info on terms & conditions of the PCP they said “they don’t give us any of that”. What should I expect to recieve before signing on the dotted line? Like a mortgage I thought we would have a “Key facts illustration” or equivelant. Or is this not the case with car finance.
    Many thanks for any thoughts/advice.

  • #88608 Reply

    John Craig

    Hi again,

    Further to my above question, if I paid off the PCP soon after initiating it (as is my plan), would I have to pay any depreciation say, a week after starting the ball rolling?
    Thank you in advance.

    • #88612 Reply
      Stuart Masson
      Stuart Masson

      Hi John. Based on the numbers you have provided, the salesman appears to be correct that the interest is over £3,000.

      A quote from the finance company should always show the Total Amount Payable, which includes all interest and fees. Subtract the cost of the car from that number and you will know what the cost of borrowing will be.

      Terms and conditions should be provided with any finance agreement. They don’t have to give them to you with a quote, but when you receive a contract to sign, you should also get the Key Facts statement and a pre-contract information document which covers the key points of the contract. If you are not being provided with these then something is very wrong.

      Have a read of our article about deposit contributions, as it explains the issues about cancelling a PCP just after you start it (within the 14-day finance cooling-off period).

  • #88649 Reply


    I have owned two cars on a hired purchase option, and in would say this. It’s the worst deal ever, and i would never do it again. I now go by the saying, ‘If i can’t afford to buy it in cash, i don’t buy it at all.’

    If you have to borrow i would suggest a bank loan. When you HP you have the deposit, monthly payments, and final (balloon) payment to keep the car, on top of up-keep bills etc etc. Now, of course it will be the same with a bank loan as you still have to keep up the repayments, but there is no initial deposit, and no final payment. If you plan to give the car back at the end of the agreement go for HP. If you wish to keep it i would say don’t go for HP. Many may disagree with me, but from my experience i would never do it again. First car was brilliant and never gave problems. Paid off the final payment, sold the car and made a profit to use towards my next car. Second car near the final payment the convertible roof jammed, mot and insurance was due all at the same time. I paid off £7,000 and it was the worst decision ever as to get the car back on the road after repairs and insurance was going to cost me around £2,100. The car was only 4 years old! I ended up selling the car for around £4,300. Worst investment ever!

    • #88653 Reply
      Stuart Masson
      Stuart Masson

      Hi Justin. Firstly, I think you are confusing an HP with a PCP (although, to be fair, a PCP is a variation of an HP). Usually an HP agreement will not have a balloon payment at the end, and you don’t have the opportunity to give the car back at the end. These are features of a PCP.

      As for your own personal experience, the problems you had with your car were unrelated to the finance agreement, so you would have been liable for those expenses anyway.

      There is nothing wrong with financing a car, as long as you are comfortable with the interest and fees you are paying over the term of the agreement, and you can comfortably afford the repayments.

  • #88668 Reply

    John Craig

    Hi Stuart,
    Just an update, just come back from dealer. Basically, he wanted me to sign on one of those electronic pad things (without seeing any figures or t&c’s!, only figures he printed out last week for me). I asked him if we could see the ‘figures’, so he turns the computer monitor around for me to view on screen (they did seem to match to be fair ). I then had to ask him for a copy of the t&c’s to take away for a short while to look over. So it was only at this point that I got my SECCI! Went away and read it over, notably the ‘right of withdrawal’ which says about the 14 day cooling off period. So I went back and signed and I pick the car up on Wednesday where I should have the servicing, roadside assistance agreements. There is nothing in the finance contract which says servicing or roadside assistance agreement is dependent on maintaining the finance agreement for a minimum period of time. However, the servicing agreement may say different (hope not!). I have a bank loan in place at 3.46% so am covered just in case I get lumbered with an car with the finance company chasing me for payment. I know this is a bit of a risky way to do this but with the bank loan in place I feel a bit more confident.

    Hi Stuart,

    So, picked up my car early today. Had all the free servicing agreement and a free years Nissan roadside assistance in writing. There’s nothing in these documents that stipulate maintaining the PCP contract for a minimum period. So now to pick my moment and cancel PCP and pay it off with my loan (I feel a bit guilty TBH as they were very helpful and friendly). I have just overpaid on my credit card to pay off the PCP (for extra protection) but I now realise they charge a 3% credit card, so have to transfer that back to current account. Does anyone think any of the freebies will be cancelled? Also, did you know that under the SECCI agreement, if you ask, the finance person is obliged to disclose how much commission he/she is earning from the sale, or at the very least, inform you how their commission is calculated?

    Thanks for your advice,
    Kind Regards.

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