How To Get A Good PCP Deal

With a record amount of cars being sold using the finance plan PCP, there has been a lot of scrutiny regarding its use. PCP plans are used to purchase new vehicles, the Bank of England and the press have been looking into the industry closely. From our experience we have the best tips on how to get a good PCP deal.

But is PCP that bad? Well, figures showing it is the most popular way to buy a vehicle. PCP’s are a good way to purchase a vehicle but it’s important that the deal suits your needs. 

What Is PCP?

PCP stands for Personal Contact Purchase, it is a finance based on a partial amount of the car. Usually it is the price of the car, minus the deposit and Guaranteed Minimum Future Value (GMFV) or Balloon. This way of financing a car brings your loan payments down compared to traditional finance agreements. PCP gives you the benefits of both leasing and HP in one finance package.

Who Owns The Car?

This is one of the most common questions asked about PCP. The reality is that the vehicle is owned by the finance company. They own the vehicle until if and when the finance on the car is paid off. The registered keeper can be the person who took out the deal but these are two different entries.

Interest

The cost of borrowing on a PCP is set up so you pay the interest on the FULL AMOUNT of the car. This is very important to understand when looking at the total cost of the deal. 

Benefits of PCP

  • Lower monthly payments compared to HP, you are only borrowing a partial amount of the value of the car.
  • You have the option to buy the car at the end.
  • Most PCP deals give you a better car for your money. Payments are more affordable and you can get a better spec or model.
  • You get to change your vehicle more often which gives you the ability to own the most technologically advanced and economical vehicles on the market.
  • Fewer maintenance worries if your PCP term is based around the warranty period of the car. You will always have a car under the manufacturer’s warranty.
  • Lower deposits in most cases, the is dependent on your credit. You can put a lower deposit than traditional finance options, leaving you with more capital do do smarter things.

So How Do You Get The Best Deal On PCP?

There are a number of methods dealers use to get you into a PCP deal. Some will be beneficial and some are used to make things look more attractive than they actually are.

Beware Of The "Grab Your Attention" Deal!

You will see some great deals advertised with “from £99” but make sure the car is the one you want. Some of these deals are based on low spec cars with unrealistic Guaranteed Minimum Future Values (GMFV). It is more likely that by the time you get the car with the right specifications and the mileage you need the price will rise considerably.

Ask For More

Most dealers have incentives to get you into a deal. Car manufacturers will support a deal with extras such as free insurance, free equipment options, discounted or free servicing, or free finance. See what extra you can get from a deal. 

Cost Up The Full Deal

When looking at the PCP, the actual price you are paying could be lost in the deposit and monthly payments. You need to see exactly what you are paying for the new car, especially if you decide to keep it. Check its price is in line with the value of the car if you were doing a straight cash deal. Also, check how much the finance on the car is actually costing you. Car Buying Guru is happy to help to ensure you are getting the right price on any deal with any dealer. You can contact us here.

Know Your Mileage and Wear and Tear Pattern

An important aspect of PCP is to keep within your mileage, you can be penalised heavily for going over your mileage which can make the deal become less of a bargain. Similarly keeping the car in good condition is vital to ensure you achieve above your GFV.

Be Cautious Of High Guaranteed Future Values

A high GFV set by a manufacturer will have two effects, it will bring your payments down. However, if this GFV is more than what a dealer would pay for it, it will leave you with little or no equity and in some cases negative equity. This is a common trap by dealers to get you into a car for now not caring about what happens in the future. 

Protect Your Equity

Being able to have equity in your old car to put towards the deposit in a new car is what you ideally want from a PCP deal. It is very beneficial to look at how much more your car can be worth that its GFV. This is a hard task and depends on many factors. An expert such as our staff at Car Buying Guru can help you get a deal that protects your GFV. Contact us now for more information.

Keep Deals Separate

Dealers have a habit of tying in part exchanges or old PCP deals with a deal for a new car to make things look more attractive when in fact it could be disguising an overall poor deal. Always negotiate the deal to dispose of your old car first, making sure you are happy with the figures before negotiating your replacement. Car Buying Guru can assist in selling your car. We work with industry partners to get the best quote for you. You can begin this process simply by clicking here.

Getting the right deal does require knowing what you are doing and can be sometimes best left to an expert. For advice and information and great PCP deals contact Car Buying Guru today. 

Supplying the Power

There are more than 42,000 charging points across the UK. Free charging points can often be found at supermarkets, shopping centres, public car parks, hotels and sometimes service stations.

How long does it take to charge an electric car?

Like a mobile phone, charging an electric car will most likely be done when the vehicle is not in use either overnight at home, or during the day while working (depending on your job). For those who drive combustion cars, you’ll most likely drive the car until the fuel gauge is low before having to drive to the petrol station to fully re-fuel your car. With an electric car you have the convenience of charging at home where you will most likely only need to “top-up” the battery overnight instead of letting it run empty. The time it takes to charge your car will also depend on temperature. For example lithium-ion batteries perform better in warm weather meaning the range of the vehicle may ever so slightly decrease in the colder seasons.

AC vs. DC

Each charger type has an associated set of connectors which are designed for low or high power use, and for either AC or DC charging. With EVs the converter is built inside the car but is labelled as the “onboard charger”. It converts power from AC to DC and then feeds it into the car’s battery. Power from the grid is always AC. The difference between AC and DC charging is the location where the AC power gets converted; inside or outside the car. A DC charger has the converter inside the charger itself meaning it can feed power directly to the car’s battery and doesn’t need the “onboard charger” to convert it. DC chargers are bigger and faster.

Most charging stations are AC charging. DC charging stations are more common near motorways or public charging stations where you may not have much time to recharge.

Connect & Charge

AC Connectors

  • UK 3-pin (BS 1363)

  • Industrial Commando i.e. 16 amp (IEC 60309)

  • Type 1 (SAE J1772)

  • Type 2 (Mennekes, IEC 62196)

 

DC Connectors

  • CHAdeMO (Japanese JEVS)

  • CCS (Combined Charging System or ‘Combo’)

  • Tesla’s proprietary supercharger connectors

 

Slow Chargers: have a maximum of 3.6 kW available and typically take between 6-12 hours to recharge a full electric car. Ideal for overnight charging. 

  • 3 kW – 6kW slow charging on one of four connector types

  • Charging units are either untethered or have tethered cables

  • Includes mains charging and from specialist chargers

  • Often covers home charging

 
  1. 3-Pin: 3 kW AC

  2. Type 1: 3-6 kW AC

  3. Type 2: 3-6 kW AC

  4. Commando: 3-6 kW AC

 

Fast Chargers: are rated at 7-22 kW and usually take between 3-7 hours to recharge depending on the size of the battery.

  • 7 kW fast charging point one of three connector types

  • 22 kW fast charging on one of three connector types

  • 11 kW fast charging on Tesla Destination network

  • Units are either untethered or have tethered cables 

 
  1. Type 2: 7-22 kW AC

  2. Type 1: 7 kW AC

  3. Commando: 7-22 kW AC

 

Rapid chargers: are the quickest (43 kW+), generally capable of charging cars to 80% in 20 – 40 minutes, again depending on how big the battery is and how much charge it had to begin with.

  • 50 kW DC charging on one of two connector types

  • 43 kW AC charging on one connector type

  • 100+ kW  DC ultra-rapid charging on one of two connector types

  • All rapid units have tethered cables

 
  1. CHAdeMO: 50 kW DC

  2. CCS: 50-350 kW DC

  3. Type 2: 43 kW AC

  4. Tesla Type 2: 150 kW DC

Charging at Home

There are around 40 manufacturers that will provide your home with charging units. For home charging these units will most likely be Type 1 or Type 2 and are usually wall mounted.  These chargers are the most popular and are widely recommended for the UK market. Always check with the installers that your fuse board has enough spare capacity to support the additional load of a home charging station, otherwise you may have to upgrade your distribution board.

But how much do these charging units cost? Well, the government-funded Electric Vehicle Homecharge Scheme (EVHS) provides grants for home charging points. These grants will not cover anything over 75% of the cost for the charging unit itself and its installation. Also, these grants are only available to anyone who has their unit installed by an OLEV-accredited installer. The price of a unit will depend on which manufacturer you choose to buy from and how fast you want your unit to charge your vehicle. Overall you’re going to be looking to spend anywhere between £250 to £800. You can view the grant schemes for electric vehicles here.

How To Get Out Of Your PCP Early

So you have a car on PCP, but you don’t actually want the car anymore. What can you do? This is one of the most popular questions we get asked at Car Buying Guru. In simple terms, yes you can terminate a PCP early meaning you just hand the car back and walk away from the deal. This is actually your legal right. However, there are a few things you need to be aware of. 

Firstly, you must have paid at least 50% of the total amount you owe, this includes any interest and fees. The vehicle must be kept in good condition. If you have not taken care of the goods, you will not be able to return the car. If these conditions are met, you can sign the car back over to the dealer through a voluntary termination clause. With this option no more payments are required to be made. 

How do you know how much you need to pay? All agreements should show you the total amount payable and the termination figure. If you haven’t reach the figure you need to terminate, you will need to pay the finance company the difference. For example, the total amount payable is £20k and you’ve only pay £7k, you will need to pay the difference. The £3k remaining will need to be paid to voluntarily terminate. For those legal eagles out there you can check the activities that this covered here.

There are also other points to consider that are not within the law but help when going through with a voluntary termination. It is important to ensure you have kept repayments up until that point. The voluntary termination cancels the agreement and still protects your credit history. So it is important not to give any reason for a negative mark.

It is a good idea to be in a position of strength when dealing with the finance company initiating a Voluntary Termination. This law is to protect you in case of a charged lifestyle such as loss in a job, or new car requirement for family or health reasons. This should be your last resort because settling finance and keeping the car to sell can sometimes work out better. 

So What Do I Do To Terminate My PCP

Bear in mind the finance company isn’t going to be overjoyed at the fact that you want to return the car. They will now receive no more payments so they may not be enthusiastic about helping you. When you contact the finance company you should be clear on your position and ensure you have met the above criteria. You can then set a deadline with the finance company to return the car. They will try and drag it on as you will be paying for the car until its return. 

Send a Letter or Email

Send an email or a signed letter with your plan clearly stating that you are exercising you right to terminate. You will be terminating your car finance agreement as set out in your contract and the Consumer Credit Act 1974. Do not fill out any forms from the finance company as you don’t need to. Finance companies could be adding new clauses and could be removing some of your rights. Do no get confused with Voluntary Surrender which is different from Voluntary Termination. The main difference is that the finance company can still charge you after you hand back the car. 

Keep Your Vehicle in Good Condition

It is so important that the car is returned in good condition. Remember the finance company is likely to be losing money so will be trying to claw it back somehow. The easiest way is to overcharge you for a scratch or a scuffed wheel. It is also a good idea to take a picture of the car so you have evidence of its condition. Just in case you get an unexpected charge.

Once you have handed back the car, you will not be required to pay any future payments. If you do get any further chargers that seem unfair then, it is within your right to fight those. Some finance companies will try it. 

Excess Mileage

One of the ways finance companies try and recuperate their money is through excess mileage charges. But you DO NOT have to pay! There is no legal provision for excess mileage charges. However, the value of the car is linked to mileage, the finance company will try their best to intimidate you. This is especially true if at return your pro-rated mileage is higher than it should be. As part of a voluntary termination, you do not have to pay any more charge if: you have satisfied over 50% of your agreement and the car is in good condition.

Credit Record

A common misconception is that finance companies tell you that a Voluntary Termination will adversely affect your credit rating. This is not the case, a Voluntary Termination is your legal right. Despite it being noted on your credit file, it is seen as common because there are many causes for Voluntary Termination.

Voluntary terminations are recorded when a car has been rejected for being faulty or the dealer cancels because of an accommodation deal. There are many other reasons, it is not always the customer handing the car back. The reason for Voluntary Termination is no recorded. The finance company you have returned the car to may not look at you again but that is something to consider at the time. You should not be affected when going for any other financial product such as a mortgage or loan. Learn more about the affects here.

Wrapping Things Up

So, that’s a quick guide to voluntarily terminating a PCP, this is also the same for a HP agreement. These rules do not apply for a leased vehicle which is a different type of agreement. If you are thinking about Voluntary Termination make sure you assess your situation thoroughly. Sometimes, if the car has equity in it, settling the finance and selling the car would be a better option. If in any doubt about the legalities of your contract please seek professional advice from a solicitor.

Please do not hesitate to contact Car Buying Guru if you need any assistance!

Owning An Electric Fleet Can Benefit Your Business

Running Costs

Becoming an owner of an EV or Hybrid has a high price tag. There’s the purchase of the vehicle and paying for the installation of the charging unit. However, owning Electric or Hybrid vehicles could be a business investment that will save you a lot of money long term.

Every Penny Counts

To give you an idea on savings, a Volkswagen e-Golf covering around 8,000 miles a year will add around £300 a year to an electricity bill. A petrol or diesel Golf covering the same mileage, would probably cost £1,000 or more in fuel.

 

For those of you based in London, all EVs (currently defined as vehicles that emit up to 75 g/km CO2, have a minimum electric range of 20 miles, and meet at least Euro 6 emissions standards) are eligible for the Cleaner Vehicle Discount. This is a replacement for the Ultra-Low Emission Discount (ULED) and will require you to pay a £10 fee annually to register. If you drive in London everyday, you will be saving over £10,000 because of the 100% discount. You would be saving yourself £27.50 a day (excluding the 25th December). 


From Monday 25th October 2021, the cleaner vehicle discount will change so that only battery electric or hydrogen fuel cell vehicles are eligible. Then from the 25th December 2025, the cleaner vehicle discount will be discontinued. You can pay the charge here.

Maintenance

Pure-EVs have fewer components. They require less maintenance making servicing or any repairs cheaper to that of a petrol or diesel car. Tyres and brake pads have been said to last longer due to the regenerative braking. This is especially ideal if you own a company and choose to run a fleet of EVs. With that said, there are grants for businesses that you can apply for if you are eligible. You can view all the low-emission vehicles eligible for a grant here.

 

The battery’s lifespan is something that a lot of new buyer’s question. Think about your phone for example, when you buy a new phone, you can charge it quickly and the battery will last all day. But over time that battery doesn’t last as long as it used to and takes longer to charge. This is not the case with the batteries used in EVs. The batteries use a different technology with a unique management system that helps to protect the battery’s life span. Most manufacturers will provide a guarantee of 100,000 miles: for the average driver, that’s roughly 12 years.

Insurance

Insurance for EVs and Hybrids is similar to vehicles with a combustion engine. Despite EVs being placed in a higher insurance category, the drivers themselves are considered lower risk.

 

At this current stage we are seeing more and more EVs and hybrids on the road. As a result of this some insurance companies are now providing insurance for EVs and have integrated EVs into their online quotation systems. Prior to this owners would have to go through specialist insurance companies. Some manufacturers even provide insurance packages as an option to customers.

 

There are some differences that come with EV insurance. When charging your vehicle, it is your responsibility to care for the safety of any member of the public that could trip on a cable or injure themselves. Make sure you have adequate liability insurance cover included in your electric car insurance policy in case anything like this happens. Some manufacturers also include the use of petrol or diesel cars for a set number of days in the year, so be sure to check the policy includes sufficient cover for the short-term load of the car along with your EV. Lastly if you lease your battery on a contract separate from owning the vehicle, it is important to make your insurance company aware of this to prevent problems should a claim be necessary. You can get a quote for insurance on an EV here.

Tax

Pure-EVs are zero-rated for Vehicle Excise Duty (VED), removing a three-figure sum from annual car running costs. While PHEVs must pay the same Standard Rate as petrol or diesel drivers, they are eligible for a £10 annual Alternative Fuel Discount.

 

There was a zero tax on Benefit in Kind (BIK) during 2020. These zero rates also apply to hybrid vehicles with emissions from 1 – 50g/km and a pure electric range of over 130 miles. The government has also announced the tax rate for the next three years, helping businesses to plan ahead. The electric car tax on benefit in kind rate has increased to 1% in 2021/ 2022 and will increase again to 2% in 2022/ 2023.

Businesses operating EVs can also receive a tax break through the system of enhanced capital allowances (ECAs). From April 2021, the 100% Write Down Allowance (WDA) will extend to first year allowances to pure-electric models only. 

 

For example, owning a Peugeot e-208 could save you £490 in VED Road Tax over three years when compared to a petrol Peugeot 208. This is the same case if we compare a Porsche Taycan to a petrol Ford Fiesta, you’re still saving £490 over three years.

Ultra-low emissions

Despite EVs having zero-emissions, emissions are still produced during the generation of electricity; the amount generated will depend on the method. For climate change gases (such as CO2), EVs charged using average UK electricity show a significant reduction in emissions. Larger carbon reductions are likely in the future as the UK grid continues to ‘decarbonise’. If renewable or ‘green tariff’ electricity is used, then life cycle greenhouse gas emissions are effectively zero.

 

For local air pollutants, including nitrogen oxides (NOx) and particulates (PMs), EVs using average electricity are increased. However, as these are emitted from power-stations which are well away from urban areas, their overall impact tends to be much less than when emitted from the exhausts of petrol and diesel cars.

 

While the evidence is that EVs provide significant climate change benefits and reduce noise pollution, they may increase the potential impact on human health in areas where resources (such as lithium) are extracted for battery production. Indeed, the sourcing of lithium remains contentious relating to the level of reserves and the local impacts on human health where lithium ore is mined.

Workplace Charging Scheme (WCS)

Like the home charger grant, this scheme can cover up to 75% of the cost of buying and installing electric car chargers, up to a maximum of £350 for each socket. This grant is available for up to a maximum of 40 sockets. 

Any business, charity or public sector organisation with a Companies House Reference Number can apply for funding for up to 40 chargers if they can declare the need for charging equipment and or intend to encourage EV use amongst their staff or fleet. You must be the owner of the property where the units will be installed or have the landlord’s permission to do so. 

Once you’ve applied for your grant online, a voucher will be generated which is valid for four months. Your approved installer will then complete the work on your unit and submit a claim on the WCS portal.

How can we help?

Here at Car Buying Guru we have been promoting the use of Hybrid and Electric Vehicles for some time now. If you’d like to book a free consultation with us to enquire about purchasing your new Hybrid or EV, then click here. We’ve provided some examples of some popular models for you. Get in touch today!

Electric Vehicles Explained

electric vehicles

Electric vehicles are still a relatively new concept to many people. Despite having been on the roads for some time now; some are more obvious than others, like a Tesla. Some you may not have even realised were electric because they are electric versions of popular models we’ve seen or driven on the roads for years, like a Mini or Peugeot; a hatchback or SUV. Either way there are still many questions regarding electric and hybrid cars.

Electric Mini Cooper

There are two main types of Electric Vehicles (EVs):

  1. Battery (BEV)
  2. Plug-in hybrids (PHEV).

Electric Vehicles (EVs)

BEVs, or just EVs, have an on-board battery which powers an electric motor. Therefore there is no combustion engine, so they need to be charged from an external power supply. The distance an EV will travel all depends on the vehicle’s weight, battery size, how you drive it, speed and even weather conditions. Probably worth noting that the colder seasons will affect your EV’s range.

Hybrids (PHEVs)

Plug-in hybrids have an electric motor alongside a combustion engine which can either work together or separately in full electric mode; or using conventional fuel. Because of this the combustion engine is able to run at a higher efficiency level with assistance from the battery. On the other hand there are Mild Hybrids which are cheaper, but unlike a full hybrid its power sources can’t be used independently. A hybrid is best running in electric-only mode for slow city driving, keeping in mind that the maximum distance it can travel in this mode will depend on the size of the battery. The batteries tend to be small but because of this it means they can be charged to full capacity relatively quickly. If you run the batteries completely flat the vehicle should face no issues, just simply run off the combustion engine.

There is however a variation that sits between EVs and PHEVs: the Range-Extended EV (REX). REX’s are configured so that the electric motors power the drivetrain with a small internal combustion engine that is used to recharge the battery if necessary. This combustion engine does not drive the wheels.

So do i Need AAA Batteries or something Bigger?

The most common types of rechargeable batteries currently being used are Lithium-ion (Li-Ion) and Lithium-polymer (Li-Poly). These batteries work with a belt alternator system (BAS) to use regenerative braking which stores the built-up kinetic energy that would otherwise be lost, and uses it instead to charge the batteries. This helps to reduce the overall energy use by roughly 20%.



ev battery capacity

So what are the benefits?

There are a number of benefits when it comes to owning a hybrid or electric vehicle. Some are more obvious than others, like fuel costs or lowered to zero tax, along with the positive green image for the environment of course. But what are they like to drive? Well most drivers should be able to get behind the wheel of a Hybrid or EV and instantly feel a difference in the way they drive. Because of the electric motors they are able to deliver instant torque meaning even the most standard electric, or hybrid models, will more than likely beat that expensive sports car off the line.

The video below really shows the power behind an EV on an extreme level!

EVs offer their drivers a “low stress journey”. The batteries are usually hidden down in the car’s chassis, lowering its centre of gravity to improve handling. Acoustic insulation is fitted throughout the cars to help mask the sound of the electric motors, fans, vibrations, delivering the quietest of journey’s… unless you have your music turned all the way up!

Hybrids have their benefits too! Conventional fuel that would otherwise be used on small trips here and there can now be saved for those longer journeys. Whether you’re just popping to the shops, picking the kids up from school, seeing friends or family, or your journey to work is less than 30 miles. You could complete all these journey’s running in all-electric mode and save your fuel.

electric vehicles - power

EVs and PHEV’s also offer a great convenience in terms of recharging. As mentioned before, simply breaking helps to recharge your batteries. Now you can recharge your car overnight just like you would your phone or any other electrical devices. We’ll dive deeper into charging points and the types of connectors in the next blog.

So what now?

Despite the big push to get more EVs and Hybrids on the road, petrol and diesel vehicles still dominate the market. They’re still cheaper to buy, especially if they’re used since they depreciate quickly; but the price of fuel continues to rise. Will the government really ban new petrol and diesel cars by 2040? Or will they be forced to go back on their idea when that year comes and EVs are still expensive and the majority of the UK population still own cars with combustion engines.