Personal contract purchase (PCP)

daveg

There was a thread about this sometime ago but I damned if I can find it. I'm looking into the option as it looks a great finance deal. Has anyone any experiences of this finance option and more to the point is it the car dealer who has to give the finance or how does it work?

From the Sunday business post:

http://archives.tcm.ie/businesspost/1998/01/04/story290641.asp

PCP
The personal contract purchase is the best of both worlds, said Murphy. It is similar to a lease, because you get a new car every few years, but you have the opportunity to turn a profit at the end of the contract.

At the outset the dealer agrees to buy the vehicle back at a guaranteed price. But you have the option to take advantage of good market conditions, sell the vehicle for a higher price on your own, pay back the financier and pocket the profit.

" For example, you borrow £15,000 from a finance house to buy a car. The dealer underwrites £7,500, agreeing to buy the car back for this amount.

During a fixed period of three years you pay the bank £7,500 plus interest on £15,000. At the end, if you return the car to the dealer, they will repay the bank the other £7,500. But if you have someone who is willing to buy the car for £9,000, you pay the bank the £7,500 and pocket the profit £1,500. The dealers bear the risk because if market conditions are poor and the car will only fetch £6,000, you return it to them; they swallow the loss and your debt is still cleared"

_sheep

I was the guy that started the thread before about this, after looking into it, for me personally i decided to just buy a car using my own money, and keep it simple, didnt like the fact that i didnt own the car, was stuck in the contract and baloon payment at the end if you wanted to keep it.

I called to a few dealers about this, around various parts of Tipperary and Waterford city, only 3/4 out of about 15 or so that i visited knew/offered this plan, and even then when i asked him to get back to me with a normal price and a pcp repayment price he got back to me with a normal repayment price and didnt have any interest in the pcp. All of the guys that offered/knew about the plan did their absolute best to talk me out of it aswell, even when i said im only interested in buying using the pcp they said its not worth it....

Strange considering i read somewhere like cbg.ie that 70% of new cars in england were purchased this way, and like 90% in america....

Tommy Vercetti

the dealers probably don't make much commission from it