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Reducing Interest paid on a PCP

Home Forums Car finance Reducing Interest paid on a PCP

This topic contains 2 replies, has 2 voices, and was last updated by Avatar James 1 month ago.

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  • #81571 Reply
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    Adrian Waring

    Hi, What is the best way to reduce the amount of interest to pay on a PCP and If I pay an overpayment would my remaining payments start to reduce my balloon?

  • #81911 Reply
    Stuart Masson
    Stuart Masson
    Keymaster

    Hi Adrian. Most car finance companies will allow you to make overpayments on your PCP. It won’t reduce the balloon at the end of the term, but it will reduce your subsequent payments and will mean that you are paying less interest in total.

  • #167826 Reply
    Avatar
    James

    Hi, I am looking at a PCP over 2-4 years for 13k price.
    I am wondering how to reduce interest, as its 4% fixed rate and 8% APR => this is high I Know :(

    I have £3K to put as a deposit, and I can pay off in 24 or 36 months with higher monthly payments. But doing the math and seeing the numbers the dealer is showing me is not helpful; mostly, what I need to know is:

    1. Will my £3k deposit and paying off in 2-3 years VS 4-5 years actually reduce my interest owed?

    2. Can I pay off early and still save more interest? or does a PCP act like a mortgage = interest is added at the front end of the term, so even if I make overpayments on on the PCP paid and pay off the vehicle in 2 years, on a 4 year PCP term, will the interest have already been mostly charged in the first 2 years, or am I actually saving 2 years of interest by paying off the 4 year term in 2 years?

    I want to use PCP because I get a 2 free years of added dealer warrantee, and less interest rate.

    Should I consider HP?

    Thanks!

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