Car Finance Deals

Honest John Back Room » Motoring discussion
View Threaded
Tue 19 Jun 2007 20:47
Car Finance Deals - Armitage Shanks {p}
Just idly looking at a purchase plan for a Renault in today's DT. It looks like HP. Basically one puts down zero deposit, a first payment including some fees, 35 monthly payments and a final payment at the end of which you own the car, I suppose. Now, there is a penalty of 6p/mile for every mile over 10K a year. If you are going to own the car at the end of the 3 years and have done 50K in it why should that bother the seller and why should it cost one money? I guess the answer is blindingly obvious but I can't see it from here! Something to do with value if they have to repossess it perhaps?
Reply | Report as offensive | Link
Tue 19 Jun 2007 21:06
Car Finance Deals - BobbyG
AS, its a PCP.

The final value that you need to pay is based on the value of the car at that time based on the mileage agreed.

If you are planning on keeping the car, then the mileage should not be an issue. However if you are planning on handing the car back after the three years and it has done more mileage, you will incur a charge for this extra mileage to make up for the lesser residual value of the car.
Reply | Report as offensive | Link
Tue 19 Jun 2007 21:06
Car Finance Deals - Ruperts Trooper
I think these plans are aimed at those that simply want to walk away at the end of three years. I do agree, though, that excess mileage penalties should reduce the residual value payment.
Reply | Report as offensive | Link
Tue 19 Jun 2007 21:24
Car Finance Deals - bristolmotorspeedway {P}
Yep, my Avensis is on a 20k miles per annum PCP. At the end of 3 yrs I can pay the final payment (MGFV) and keep the car, trade in for another or hand the car in and walk away owing nothing. If I did 60k a year then handed the car back with 180k on the clock it would be worth considerably less than the MGFV, hence the requirement for a mileage payment to keep the buyer to the originally agreed mileage.

Assuming the same deposit, low miles per annum means lower monthly payments and a higher final payment; high miles per annum equals higher monthly payments but a lower final payment.
Reply | Report as offensive | Link
Tue 19 Jun 2007 21:29
Car Finance Deals - bristolmotorspeedway {P}
I think these plans are aimed at those that simply want to walk away at
the end of three years.

Personally not the reason I did it. It means I don't have to buy the 'last third' of my car - after 3 years I will either move on to another PCP, or will pay the final payment, run the car for x further months and then trade it in. When compared with 'traditional' HP the monthly payments are lower.

NB To walk away at the end of the deal is usually the most unwise move financially as the final payment is set to be lower than the actual value of the car.
Reply | Report as offensive | Link

If you cover no more than 100 miles per day and have easy access to a charging point at home or work, then an EV is ideal for you.

Is an electric car right for me?