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What are the advantages and disadvantages of getting a new car on a PCP?
What are the advantages and disadvantages of getting a new car on a PCP? My present car has a guide value of £4620 but is eight years old although its mileage is only 38,000.
Asked on 1 November 2018 by David Slater
Answered by
Honest John
With a PCP you put down a deposit and a fixed 'guaranteed future value' is put on the car. You then make monthly payments which pay back the difference between the deposit and the future value, with APR interest on both the difference and the future value. When you get to the end of the contract, you can buy the car for the guaranteed future value, use any equity in it as deposit for another PCP, or walk away. Quite a lot of PCPs become 'toxic' because the guaranteed future value turns out to be far more than the true value.
Tags:
buying a new car
pcp
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