- Suits those who want to drive a new car more regularly
- Some deals charge less per month than three-year plans
- Zero-percent two-year deals with deposit contributions available
Spreading car finance costs over a longer period is a sneaky way dealers can cut your monthly payments while potentially meaning you’ll have more to pay overall. This is because longer contracts may spread the cost across more months, but they also increase the amount of interest you’re charged (unless you're looking at a zero-percent APR offer).
Shop around for a low-interest, two-year deal, though, and you can get the best of both worlds with finance – a new car more often and low monthly costs. We’ve rounded up some of the best-value two-year PCP deals that offer minimal monthly payments while being strong value should you choose to buy the car outright at the end of the scheme.
Take a look at our car finance calculator to establish how much you can afford to borrow.
Audi A3 costs the same with two- or three-year PCP
Spread the cost of your car over a longer period and you’ll have less to pay each month, but opt for a shorter contract and you can expect bigger monthly bills. Take the £27,000 Kia Sportage 2.0 CRDi KX-3. This will set you back £364 per month on a three-year plan. Choose a two-year set-up, though, and you’ll need to find £445 per month.*
This isn’t always the case, however. Go for an Audi A3 1.0 TFSI SE 3dr and you’ll pay £176 per month whether you spread payments over two or three years. Even opting for a four-year deal will only save you £3 per month. As a result, if you fancy a new car more often, there’s no monthly premium to pay with this Audi scheme, making it great value.*
Keep an eye out for deals that only apply to two-year plans
Some brands offer zero-percent APR on two-year schemes, but not on three-year plans, meaning that the shorter-term option could actually be better value if you like the idea of swapping to a new vehicle every couple of years.
For instance, you can get the keys to a £22,895 Jeep Renegade on a two-year contract for the same monthly charge – £199 – as a £19,795 model over three years. This is because Jeep offers zero-percent finance and a £1,500 deposit contribution for the former and 4.9% APR and a smaller deposit contribution on the latter.*
More than this, the BMW i3 is actually cheaper per month on a two-year plan than a three-year set-up at £269 compared with £283. This is because a higher interest rate is charged on the longer-term option. Make the most of these options and you can have your cake and eat it with low monthly costs and a shorter contract.*
Beware of two-year deals' pitfalls
Not all 24-month finance offers are such good value, however, as the more often you swap your car, the more often you have to put down a deposit. Even if the deposit is the same on a two- or three-year plan, it inflates your average monthly cost more on a two-year plan than a three-year one.
While a £2,000 deposit would effectively add £56 to your average monthly cost over three years, place this down payment on a two-year plan and it contributes £83 to how much you pay per month of the contract overall. If interest rates and deposit contributions are the same you’ll pay more per month for the same car over 24 months than 36 months, too.
Similarly, a shorter contract gives you less time to save up for the optional final payment to take ownership of the car – or for a deposit on your next vehicle. On the flipside, choose to buy the car and it’s likely you’ll pay less overall with a two-year plan than a three-year one, as interest is applied over a shorter period.
Find a two-year deal with low interest charges and big deposit contributions, though, and it could be one of the best value ways to get behind the wheel of a new car every 24 months.
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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.