PCP car finance, is optional payment included in credit amount?

[malvolio]

you pay interest on the 15k. Obviously.

Yes you do, but not as part of the finance with the dealer...

[ASB]

Yes you do, but not as part of the finance with the dealer...

Not for the firsttime I am completely baffled.

it is very rare for dealers to finance anyway. They are simply introducers anyway.

whoever provides the finance pays the dealer. You pay them, you may or not make the final payment. The finance co ownsthe car until you pay it all (notwithstanding rules of 1/2 and 1/3). It is just like any other form of hp.

[fullyautomatix]

Is this another Suity or SAS sockie ?

[malvolio]

Not for the firsttime I am completely baffled.

it is very rare for dealers to finance anyway. They are simply introducers anyway.

whoever provides the finance pays the dealer. You pay them, you may or not make the final payment. The finance co ownsthe car until you pay it all (notwithstanding rules of 1/2 and 1/3). It is just like any other form of hp.

The way PCP works is that the dealer (or the finance company, to be precise) secure the final payment against the vehicle itself. The loan then covers the cost of the car less that final amount at commercial rates, apparently reducing the total loan amount and hence the interest paid against it. At the end of the deal they want their £!5k back, so they either keep the car, you pay it to them from your own pocket or you start again with a fresh deal and roll the balance of the final payment in to that one.

There is some interest due on the final payment money, of course, but only what it is costing the finance company to lose access to that sum for a few years as opposed to having t fund a three year loan deal from the bank for that amount, but they are making money from the deal itself which likely more than covers that fairly small amount.

But as has been said, buying the best car you can afford from your own pocket is the better idea.

[Scruff]

Use the built in formula in Excel and you can calculate and compare the balloon payment yourself?

[ASB]

Mal,

The balance you borrow is still the purchase prices less the deposit.

Interest is charged at the normal rates. Obviously a finance co could chose to apply different rates to different portions of the loan. Never seen it though.

[SpontaneousOrder]

So with insurance, tax and servicing on top it will cost you about £1.70 per mile and you won't even own it until you make a further payment of £15,000.

I have always paid cash for a car in the range I an afford.

Have you got a small willy?

Finance is cheaper than 25% on dividend payments.