- 4 January 2019 at 1:04 pm #149659
I am wondering, is the industry is (knowingly) incorrectly presenting PCP deals.
Following a visit to my local dealer, PCP was, once again, explained as “only financing the difference between the price and the GFV”.
The moneysavingexpert website also explains it similarly (link:https://www.moneysavingexpert.com/car-finance/personal-contract-purchase/)
It is explained by both above as:
Car price = X
GVT = Y
Amount to be finance: X – Y = Z
However, it appears on closer inspection that the interest rate is calculated over the entire outstanding car value. Which actually means that the quoted GVT is more like a settlement amount at the quoted point in time.
Perhaps I am too obtuse to understand, but if I am financing Z then I should only pay interest on Z, as the dealer retains car ownership until I settle, if I decide so.
By paying interest on the entire cars value (minus any deposit) it seems like what I am actually doing is financing the whole car with an agreed payment plan based on the quoted amount of payments followed by a single settlement payment, which, is optional.
Of course, I am slow-witted, so I am happy to be corrected.
- 13 January 2019 at 3:58 pm #150368