CHOOSE THE RIGHT FINANCE PACKAGE
For many private buyers financing their next car can be confusing.
With many different ways to fund a vehicle many struggle to understand their best option. Cash? PCP? Hire purchase? Which is best for you?
We spoke with Sean Dunne, Financial Controller of Subaru NI for expert advice.
“For private buyers, cash is simplest,” said Dunne.
“You get ownership from the outset and in the old days the folding stuff always got a sharp deal.
“Times have changed though, liquidity is tight and few want to disrupt their long term savings and investments to buy a new car.
“Private buyers have two main alternatives — Hire Purchase or Personal Contract Purchase (PCP).
“Hire Purchase is well understood, you pay a deposit, then repay the full balance (capital and interest) over typically 48 to 60 months.
“At the end the car is yours, albeit monthly repayments can be substantial as car values rise, that’s where PCP comes in.
“You make the same deposit, but there is a lump sum set aside to the end of the agreement that you never have to repay, called the minimum guaranteed future value (MGFV).
“You pay interest only on the MGFV, so monthly repayments are much lower than HP on the identical car and often the term is shorter so you can renew your car sooner.
“At the end of a PCP agreement you can choose to make the final payment (pay the MGFV), part-exchange for a new vehicle, or simply walk away.
“You only own the vehicle if you make the final repayment. Most PCP customers simply part-exchange for another new car, enjoying low monthly repayments on a vehicle that’s normally covered by the manufacturer’s guarantee for the full agreement term.
“If owning your vehicle is important to you then don’t choose PCP; HP will attract less interest repayments if you repay the entire value.
“Of course most owners never actually own their car on HP — partway through a finance agreement many will request an early settlement and part-exchange for new.
“That’s essentially why PCP has become so popular — you’re really only paying for the period you use the car, not funding the car’s full value to resell the unused lifespan back to your dealer in a few years’ time.
“PCP is a bit like holidays, you don’t buy a hotel, then sell it back after your vacation, you just pay for the period you’re going to stay.
“PCP delivers what most customers’ want: a better car, changed quicker, at the lowest possible monthly repayment.
“Talk to your NI Subaru dealers for expert funding advice tailored to your personal circumstances, they’ll ensure you fully under- stand your finance options and which may best suit your circumstances.
“Be sure to check out our current ex-demo offers – our AWD fleet gets renewed in January so there are some great deals all with the balance of the Subaru warranty at your local dealer right now. See more at www.subaru-ni.com and enjoy your new car.”
There are a number of finance options open to anyone who wants to buy a Subaru XV Crossover through Subaru NI’S Financial Controller Sean Dunne (right)