Nowadays many car users are financing their cars through Personal Contract Purchases (PCP). But if you are not carefully choosing the right option while making the PCP deal, it may create problems. You may experience a very different car-buying landscape when they are coming to the end of their contracts and looking for their next new car. So, it is very important to know the right option that you require at the end of a PCP car finance deal. There are different options for the PCP deal. Each has pros and cons. Let’s check out all of those.
Returning the car and walking away
You don’t have to make further payments with this option. Because you have no more payments to make. But you will lose the value of the car which can be equal to an outstanding finance balance. Sometimes it could be a handsome amount like several thousand pounds. You also have to pay damage charges and finally end up with no car.
Making the final payment
When you make the optional final payment, you will own the car. You can either keep it or may like to trade it or sell it. It is quite profitable. Because the used car values are growing higher over the last two years. So, this option will help you to be financially better off. However, it is expensive and many car buyers don’t have ready funds to make the final payment.
Trade-in through using equity
This option allows you to make special ‘short-term’ PCP deals. If you have the financial capability to purchase a new car a few months later and badly need a can right now, this option of a PCP deal will help you to bridge the gap. This option allows you to take advantage of the unexpectedly high current value of your car. By putting any equity towards the deposit on your next car, you can reduce the monthly payment cost. But you may face difficulties while sourcing a new car. As a result, you have to stick with your old car for longer.