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Buyacar advises motorists to steer clear of PCP-funded options

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Buyacar has advised car buyers to steer clear of costly options funded by a PCP finance plan – branding the resulting uplift in monthly payments a “rip-off”.

Analysts at the online motor retail specialist calculated that adding optional extra features to cars financed on PCP adds disproportionately to monthly payments.

While the findings were damning, however, it highlights an opportunity for car retailers to guide customers towards a higher-specification vehicle that includes their desired additions as-standard.

Austin Collins, the managing director of BuyaCar, said: “Although PCP finance has made new cars more affordable to ordinary people than ever before, there are still aspects of personal contract purchase which do not always represent the best value buyers could get for their money and option costs are one of them.

“Buyers can protect themselves though, by choosing a car with the desired equipment already installed rather than loading a basic model with expensive features."

The September 1, 2018, shift to the WLTP vehicle test standards has already caused many manufacturers to slim down the options lists as each added item is taken into account when calculating a vehicle's emissions and tax liability, with Seat and Mini among those leading the change.

Philip Nothard, Cox Automotive's customer insight and strategy director, told AM that the change in legisltaion had already sounded the "death knell" for costly optional extras.

Buyacar’s research revealed that while a £22,745 Volkswagen Golf – bought on a 48-month PCP contract with £1 deposit and a 10,000-mile-per-year allowance – could cost £327 per month, adding £14,190 worth of options almost doubled the monthly payment.

It said: “It costs £325 a month to finance just over £14,000 of equipment though just £2 more per month nets you almost £23,000 of car.”

Buyacar explained that the reason drivers are overcharged for optional extras is that while PCP monthly payments cover the difference between a car’s value new and at the end of the contract most new car finance schemes charge the full original cost of any options split into instalments.

It pointed out that the system “ignores the fact that a car with thousands of pounds’ worth of desirable options will typically be worth much more at the end of the contract – which should reduce how much those extras add to the monthly bill”.

BuyaCar.co.uk’s analysts calculated that for a typical PCP deal on a Ford Fiesta – in 1.0T 100 Titanium form – every £1 per month paid covers £72.94 of the car’s list price.

Meanwhile, the same £1 per month increment only gets drivers £46.91 worth of options (48 months, £0 deposit, 9,000-mile-per-year contract).

In another example it found that while a £41,530 Jaguar F-Pace 20d 180hp RWD R-Sport would cost £504.33 per month, adding £22,465 worth of options would cost motorists an additional £505.55 per month (48 months, £0 deposit, 10,000-mile-per-year contract).

Collins said that there was another sure-fire way of avoiding costly options on a PCP – buying a used car.

He said: “Used cars represent the very best value for money when it comes to getting a car with plenty of standard and optional kit fitted, because they have already lost the bulk of their original value and that is reflected in the purchase cost – and PCP finance monthly payments – for the car.”

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