Cash vs PCP and if PCP what’s the optimal deposit

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    • #131436 Reply
      AvatarMichael W

      I’ve just bought a factory ordered Audi A3 on PCP. Should I settle it early i.e. pay it off within the 14 days or let the PCP run its course? If the latter what is the optimal deposit to put down. I have the cash £20k to buy the car outright if required. What are the factors and is their calculation that I can use which is better?

    • #131518 Reply
      Stuart MassonStuart Masson

      Hi Michael. We can’t advise what’s best for you – you’d need to speak to a financial advisor.

      All we can do is explain how products like a PCP work, so you can use that information to make your own judgment on what’s best for you.

      In terms of deposit for a PCP, there will be a maximum amount – usually about 20-30% of the price. Ultimately the more you put down up-front, the less you have to pay each month. Up to you to judge what works best for you.

      The dealer will almost always tell you to put in less deposit in and take higher monthly payments. That’s certainly what’s best for them, as they get paid commission on every pound you borrow, so take their “advice” with a large pinch of salt. You also pay interest on every pound you borrow, so the total amount payable will be higher with less deposit.

      If you cancel with 14 days, you will be charged interest on however long you borrowed the money but you won’t be charged any fees, so it will only be a few pounds.

      Have a look through the various advice articles in our car finance section, as there’s loads of great information on different aspects of financing a car that will help you.

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