PCP Pros and Cons
Interest rates can be a big factor in the cost of PCP deals. As an example, see a quote below for a Peugeot 2006 Allure (generated 4Apr20), the interest rate of 5% APR results in £2,974 interest being paid through the monthly payments=> 18% of the cost of owning the car! Borrowing the money by other means is sometimes a big cost saving opportunity!
Lowering interest charges
- Option 1: Take a personal loan and go to the dealer as a cash buyer and save on interest; see quote from Sainsburys (2.9% APR) below, the savings on interest buying the above Peugeot in this way would be over £1600!(£1339.76 vs £2,974.72 above) Click here to access the sainsburys loan calculator. Note: monthly payments are higher but you own the car at the end.
- Option 2: Take minimum term PCP to receive any incentives and then pay for the car at the end of the term using a personal loan again saving on interest.