- Be wary of high-interest off-roader PCP finance schemes
- Choose a hatchback or saloon to get a better finance deal
- Consider monthly costs and the overall amount payable
Off-roaders have rocketed in popularity in the last decade with drivers queuing up for keys to high-riding models over traditional bodystyles. This popularity, however, means that 4x4s can prove pricey on PCP car finance, with car manufacturers often bumping up interest charges and slashing discounts on them.
Consequently, if you’re willing to stick with a more conventional body type, you could get much more car for your money. We’ve compared the monthly payments – and overall costs – for several popular hatchbacks and saloons and compared them with their crossover counterparts to help you ensure you’re getting the best deal.
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Pay lower interest charges by opting for a hatchback or saloon
Audi isn’t a brand to promote zero-percent APR deals, but choose your model wisely and you can still benefit from substantial deposit contributions that mean buying a car at the end of a PCP deal can be cheaper overall than paying cash outright in some cases.
The A4 saloon and estate may be pretty new and the Q5 off-roader nearing the end of its life, but you’d never guess that from Audi’s finance deals. While APR weighs in at a moderate 3.9 percent on the A4, it’s a steep 6.7 percent on the Q5. The deposit contributions are greater on the A4 range, too, making it much better value to finance.*
Get a much bigger deposit contribution with a saloon or estate
Whether you go for an A3 hatchback or a Q3 crossover, Audi will chip in with a deposit contribution. However, the £1,000 available on the Q3 pales into significance compared with the £2,400 offered on the cheaper A3 three-door.*
Consequently, you’ll have to pay an extra £2,761 to finance a Q5 rather than paying cash compared with just £647 in interest and charges on the A3 three-door. It’s a similar story at BMW dealers with more than £3,000 available in deposit contribution on the 3 Series saloon and estate compared with nothing on the X3.*
Compare costs to buy the car or hand it back
One of the reasons PCP deals are so popular is that you get several years to decide whether to buy the car or hand it back. However, it pays to know which option you plan to go for before you sign on the dotted line. Cars that retain value well cost less each month but are more expensive overall if you buy them outright at the end of the contract.
Remember, some offers that might seem great value if you hand the car back could be much worse value if you choose to buy the car. The Fiat 500X 1.3 MultiJet 95hp Pop Star off-roader costs a mere £209 a month on a 36-month scheme compared with £259 for the 500L 1.3 MultiJet 95hp Pop Star people carrier (albeit with a much smaller deposit).*
This means that the off-roader costs just £14 more in deposit and monthly payments if you were to hand the keys back, despite having a £700 higher price tag. However, higher APR charges and a lower deposit contribution make the 500X much pricier if you were to buy the cars outright when the contract ends – to the tune of £3,681.
Fewer incentives on off-roaders mean higher monthly payments
While off-roaders typically carry a price premium over their manufacturer stablemates, even similarly priced crossovers can end up costing you more per month – due to the smaller deposit contributions and higher interest charges.
Opt for the £25,375 Volkswagen Golf 2.0 TDI 150 GT five-door on finance – with a £3,000 deposit and a £2,000 VW deposit contribution – and it’ll cost you £353 per month. A £25,560 Tiguan off-roader, however, would set you back £398.92 – inflated by the higher APR charged and the lack of deposit contribution.*
As a result, opting for the Tiguan crossover would set you back an additional £1,611 if you handed both back after three years – or a whopping £2,996 if you were to buy the car. All this despite a mere £185 difference in list price.
Some manufacturers buck the trend with great-value off-roader deals
As with all rules, there are exceptions – especially models which are about to be phased out, as these are often discounted heavily. Ford offers the same low 2.9 percent APR charges on the Mondeo saloon and Kuga off-roader. However, greater deposit contributions are available on the Kuga, which is just about to be revised.
While the off-roader costs £100 more – after £1,250 worth of discount – it is available with £600 more deposit contribution. Throw in stronger residual values and the Kuga costs just £308 per month – substantially less than the £360 needed to get the equivalent Mondeo. Buy the cars outright when the PCP plan ends and the crossover remains the cheaper model.*
To ensure you know just how much your next car is going to cost you – whether you hand it back or make the final payment to keep the keys – take a look at our guide to getting the sums right on a finance deal.
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*Deals are correct at time of publication. Everyone’s financial circumstances are different and credit is not always available – Parkers cannot recommend a deal for you specifically. These deals are indicative examples of some packages available this week.