PCP is a product designed specifically for the private individual where all the protections afforded by the Consumer Credit Act 1974 and the Financial Services (Distance Marketing) Regulations 2004 are available to the consumer.
Firstly, how is the monthly PCP quote price achieved?
The following points are all taken into consideration by the provider in order to work out the monthly Personal Contract Purchase payments:
- 1) Cost of the Vehicle
- 2) Deposit
- 3) Length of contract
- 4) Miles Per annum
- 5) Residual Value
- 6) Finance Rate
- 7) Maintainance Requirement
Is the Monthly amount payable on the Personal Contract Purchase Quote, the key decider on whether it is the most competitive deal for a new car?
The answer to this normally taken for granted question is, not necessarily! To explain this you have to understand that there are many factors to take into consideration when working out who is providing the best deal, and the mistake is not to look solely at the monthly Personal Contract Purchase price quoted, but all the costs involved. This would include all the acceptance fees applicable, along with the optional final payment, for some companies will value the vehicle at a higher rate than others at the end of the contract.
Is the APR rate associated with the PCP quote a good indicator for how good the quote is?
It depends on the amount on which the rate is going to apply. If the provider has negotiated good vehicle prices and residual prices, the amount on which the competative rate will apply will mean that you are getting a good all round deal. Although if the vehicle price is high and the residual is low a good APR would not mean that the deal is competitive, for the amount on which the rate would apply would be considerable.
It is obviously one of the key factors to achieving a competitive PCP price by getting a good APR rate. Although make sure you see it as one of a combination of factors that need to be competitive and not the ultimate.
How important is the amount for the final payment when selecting a PCP deal?
... to be written ...
Do additional options added to the vehicle get taken into consideration in the residual value of the vehicle?
... to be written ...
Does the cash price of the vehicle indicate how good the PCP quote is?
An Example of two Personal Contract Purchase Quotes can be seen below:
|
Key Factors |
PCP Quote A |
PCP Quote B |
|
Vehicle list price |
13,991.00 |
13,991.00 |
|
Providers discount price |
13,745.00 |
13,357.00 |
|
Deposit |
1,000.00 |
1,000.00 |
|
Finance amount |
13,745.00 |
12,357.00 |
|
Finance term |
36 months |
36 months |
|
Monthly amount |
379.01 |
250.26 |
|
APR |
10.4% |
7.2% |
|
Maintenance |
0 |
0 |
|
Optional final payment |
5,700.50 |
5,274.00 |
|
Initial acceptance fee |
135.00 |
0 |
|
Final payment fee |
0 |
0 |
|
Total amount payable |
£16,600.85 |
£15,283.36 |