Petrol vs Diesel dilemma - GTI or GTD in 2017?

[gtiaps]

Don't shop with your dealer for finance on a used car. You will get much much better deals from other banks and finance houses.

Fully agree with you here banks are way better than dealers when I was looking my own bank was 5.6% and tesco was the best at 4.9% dealers were around 9.9% approx 

[seonhughes]

Don't shop with your dealer for finance on a used car. You will get much much better deals from other banks and finance houses.

Don't shop with your dealer for finance on a used car. You will get much much better deals from other banks and finance houses.

Fully agree with you here banks are way better than dealers when I was looking my own bank was 5.6% and tesco was the best at 4.9% dealers were around 9.9% approx 

My local dealer does 6.9% APR which isn't far off those rates you've quoted from the bank, although most around here vary from 10-13% so places a bit of a limit on cars to choose from if i can only go to that dealer. Only problem with the bank loan is that even though the APR is lower the monthly payment is higher than with a PCP because the repayments to the bank would be for the whole loan amount over the loan term whereas with PCP the repayments are limited to the difference in the cost of the car + any interest charges and fees minus the GFV of the car.

[monkeyhanger]

Don't shop with your dealer for finance on a used car. You will get much much better deals from other banks and finance houses.

Don't shop with your dealer for finance on a used car. You will get much much better deals from other banks and finance houses.

Fully agree with you here banks are way better than dealers when I was looking my own bank was 5.6% and tesco was the best at 4.9% dealers were around 9.9% approx 

Only problem with the bank loan is that even though the APR is lower the monthly payment is higher than with a PCP because the repayments to the bank would be for the whole loan amount over the loan term whereas with PCP the repayments are limited to the difference in the cost of the car + any interest charges and fees minus the GFV of the car.

There is an easy way around the above - You don't look to pay off a £25k car with a 3 year loan unless you really want to. To get PCP equivalent payments at bankloan APR%, take out that £25k over 5 years and what is left to pay after 36 months is basically your GFV. Either keep the loan going or trade in and ask for cashback on your trade-in to clear the loan.

[Ivor Mk4 Turbo]

The sensible and older me says get a mk5 or 6 gti and save some cash. Enjoy living life with the minimum fixed out goings as you can.

What he just said. Plenty of time for new cars.

At 20, I would get some ins. quotes for the mk6 vs mk7, as I'm sure the 7 works out a lot cheaper thanks to the driver aids etc.

[fredgroves]

There is an easy way around the above - You don't look to pay off a £25k car with a 3 year loan unless you really want to. To get PCP equivalent payments at bankloan APR%, take out that £25k over 5 years and what is left to pay after 36 months is basically your GFV. Either keep the loan going or trade in and ask for cashback on your trade-in to clear the loan.

Tesco are offering 3.4%  (good rate btw!) on a 5 year 25k loan... £453 pounds a month.

Whilst what you are correct in what you say, the monthlies are always going to be higher than PCP, even over 5 years, because you are repaying 100% of the full purchase price of the car.

[seonhughes]

The sensible and older me says get a mk5 or 6 gti and save some cash. Enjoy living life with the minimum fixed out goings as you can.

What he just said. Plenty of time for new cars.

At 20, I would get some ins. quotes for the mk6 vs mk7, as I'm sure the 7 works out a lot cheaper thanks to the driver aids etc.

The 7 is working out a good bit cheaper thanks to the lower insurance groups - come the time to change I'll be 21 with 2 years NCB so I've altered my quote details to reflect this and compared to other people my age who are just passing their test now paying £800 to insure a 220hp car is a steal

[seonhughes]

There is an easy way around the above - You don't look to pay off a £25k car with a 3 year loan unless you really want to. To get PCP equivalent payments at bankloan APR%, take out that £25k over 5 years and what is left to pay after 36 months is basically your GFV. Either keep the loan going or trade in and ask for cashback on your trade-in to clear the loan.

Tesco are offering 3.4%  (good rate btw!) on a 5 year 25k loan... £453 pounds a month.

Whilst what you are correct in what you say, the monthlies are always going to be higher than PCP, even over 5 years, because you are repaying 100% of the full purchase price of the car.

The differences in the monthly payments between the two are massive which is my main concern. Although the charge for credit on the PCP would be around double that of the bank loan, the lower monthly payments still make more sense. Plus going through the dealer makes the process a bit easier for me.

[p3asa]

Tesco are offering 3.4%  (good rate btw!) on a 5 year 25k loan... £453 pounds a month.

I'll raise you  Clydesdale are doing 3% Or if you have a nectar card, Sainsbury's bank are 2.9%

[monkeyhanger]

There is an easy way around the above - You don't look to pay off a £25k car with a 3 year loan unless you really want to. To get PCP equivalent payments at bankloan APR%, take out that £25k over 5 years and what is left to pay after 36 months is basically your GFV. Either keep the loan going or trade in and ask for cashback on your trade-in to clear the loan.

Tesco are offering 3.4%  (good rate btw!) on a 5 year 25k loan... £453 pounds a month.

Whilst what you are correct in what you say, the monthlies are always going to be higher than PCP, even over 5 years, because you are repaying 100% of the full purchase price of the car.

Only if you want to. If you stop the loan short at 3 yeara, you'll still owe about 45% of what you borrowed, pretty close to GFV. - you'd be in slight positive equity at 3 years vs PCP for the extra you have paid in your example. You can of course tweak the repayment period to 63/66 months to get you owing half of the capital borrowed at 36 months. This is exactly like PCP. To get to the point of coving the depreciation capital plus interest of what you have borrowed, a PCP is very similar to taking out a 5 year loan and stopping it after 3 years, except you don't have to pay back what you still owe, you hand the car back instead.

If you take out a loan which is less than the APR of PCP finance and pick a term thereby after 3 years you have covered the depreciation, it will be cheaper than PCP.

[fredgroves]

I still couldn't get this straight in my head, so I worked some basic numbers:

IGNORING INTEREST (because the difference is not much really):

PCP:

£21000   cost
£5000   gfv
£16000   loan
36 month   term
£444.44   monthly

Loan from the bank:

£21000   loan
48 month   term
£437.5   monthly

If you stop at 36 months into the 48 month term, you still owe the bank £5244.... which is roughly your GFV.

So you only have the advantages of interest rates to gain really.

BUT one more thing I will say... a PCP credit agreement is easier to get because you do not own the car. Its a secured loan.

A loan from a bank is just a cash loan, they probably will ask for detailed income statements etc etc and may not lend money to a student, unless your parents guarantee it...