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Thanks for that. Re. Leaving the agreement when the value is less than expected, someone mentioned that this may result on a black mark against you when a credit check is done. Not sure if this is accurate info.
TGR-
I don't have personal experience but I can't imagine that being true because the minute you drive a car off the forecourt, it's lost value, so you're in negative equity from day 1. I think the GFV doesn't count until the end of the contract period so ending the agreement early is costly.
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I originally bought my Fabia on PCP when i got my first "real" job out of university and needed a car having not owned a daily driver for years. PCP worked out great because the initial deposit was low (1%), the repayments were affordable, interest rate was reasonable (3.6% iirc) and it came with 3 years free servicing included.
At the end of the term i had positive equity over market value, decided to just pay the final value of the car outright and keep it. That was 2 years ago, it's just about at break even point now as far as i can tell, but i'll probably run it until something catastrophic breaks
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Sorry for the delayed reply but...
No, handing it back at the end of the agreement won't affect your credit rating - the whole idea is that this is an option when you start the finance agreement. You'll very rarely get positive equity at the end of a PCP these days as the "bubble has burst" somewhat
Some companies view it dimly if you utilise the option of what's known as "halves and thirds" whereby you can voluntarily terminate or VT you agreement once you've paid back over half of the total amount borrowed - it's a clause in the T&C's not many people know about but it's a potential get out early thing.
New is often as cheap as 3-5 years old with PCP as there are manufacturer supported deals to be had - most manufacturers have deposit contributions on certain models and the total margin they could potentially use to do a deal is around 15% - some models even more than that. Go to a dealer at the end of the month / quarter and know what you want to acheive. Don't use the "well you tell me your best price" and keeping your cards close to your chest thing just makes the whole process more laborious - make a salesman's job easy by telling him where you need to be for a deal and they'll do their best to get it for you. A card ready to place a deposit gets things done!
...the voice of 10+ years experience in the trade
@golgol PCH is a bit of a tricky one, if you know you'll 100% want the same car for the full term then they can be a good option but if you needed to change the car for whatever reason you'd be liable for 50% of the remaining rentals - plus companies can be super strict on any damage at the hand back stage
NurseHolliday
mcmyk
hudsoncjnr
Definitely wouldn't recommend overpaying to "build equity" - put it in your savings instead.
My wife has a Mini Cooper Clubman which is currently £5,000 in negative equity a year before the contract ends - I'm not bothered, we'll hand it back and walk away.
PCP is great because the risk is on the finance company rather than you - even if the car is worth less than the GMFV (balloon / guaranteed minimum future value) at the end, as long as the vehicle is in a condition commensurate with the age and mileage it's not your problem
...this is also the reason why there are some used car bargains out there for a "cash buyer" as the manufacturers are propping up the new car market.
@TGR companies will do up to 30k a year, just pick what will suit you as best you can, but don't stress too much - the penalty for going over is usually about 7p a mile so even if you went 10k over on mileage you're only looking at a penalty of £700