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Halloween horrors: sidestep these seven sinners to avoid car finance nightmares

  • Fail to do your homework and cars like these could bleed your wallet dry
  • Enormous APR charges and abysmal residual values could cost you dear
  • Don’t let wicked dealers trick you into long contracts or low mileage limits

PCP finance can be the smart way to get a monstrous machine on the drive for a saintly sum each month, but fail to do your homework and a bad ‘deal’ could pummel your pocket with almighty bills.

Rush into the showroom without shopping around and you risk being entangled in a crafty contract that could cost you much more than you expect.

To make sure the salesperson doesn’t get the better of you – and to help you dodge brutal bills or crippling end of contract costs – here are seven deadly sinners to avoid. We've also put together top tips to help you avoid dealers' sneaky finance sale tricks.

Meanwhile, below we’ve rounded up the best value offers – whatever your budget:

Repulsive residual values – Citroen C4

Citroen C4 PCP finance

The Citroen C4 has finally been killed off. And that’s no surprise when you consider how frighteningly expensive it was on PCP finance. That’s because it loses value so fast that it’s barely worth anything when you hand it back after three years – inflating your monthly payments dramatically.

This means that an £18,225 C4 could cost the same each month as a £30,460 Audi, even with identical contract terms and deposit, despite the car being worth far less. If you have any concern about value for money, you’ll want to run a mile from this sickly Citroen.

Abhorrent APR – Citroen C1

Citroen C1 PCP

The Citroen C1 city car may have low prices on paper, but don’t be tricked into financing the entry-level 1.0 72hp Touch model. Despite appearing as the cheapest model in the range, sneaky Citroen charges more than three times the APR – a rip-off 9.9% – for this version than C1s with a higher cash price.

That means that those choosing the C1 Touch expecting this to be the cheapest to finance, could find themselves paying more per month than for better equipped models courtesy of enormous interest charges.

We’d steer well clear, as this £9,450 Citroen could cost you the same per month as a larger, more powerful and much more grown up £14,845 Skoda Fabia.

Sorry savings – Toyota Land Cruiser

Toyota Land Cruiser PCP finance

A large proportion of PCP finance deals include deposit contribution discounts that massively cut your monthly payments. Choose a car without any form of saving, however, and the manufacturer could bleed your bank account dry to the tune of hundreds more every month than with a similarly priced rival.

Despite the Toyota Land Cruiser 2.8D Invincible costing £18,090 less than the BMW 730d M Sport, the Toyota would suck out £35 more from your wallet every month. That’s because the BMW comes with a whopping £17,580 deposit contribution, while Toyota gives you nothing.

It's the 7 Series, therefore, that offers much better value on finance, getting you a £72,130 BMW for less per month than the £54,040 Toyota, with like-for-like contracts.

Chilling contracts – Abarth 595

Abarth 595 PCP

No one wants to be tied into a contract for eternity, but some manufacturers hide high costs in extended contracts that make the monthly payments seem smaller than on shorter contracts.

Abarth advertises affordable-sounding monthly payments for its 595 range, but its standard finance deals last a lengthy four years, meaning you pay more overall than you might expect. Especially as the high interest rates add thousands to the total bill.

Yes, £199 per month for an Abarth 595 might sound affordable, but throw in a four-year contract and high 6.9% APR and it's much pricier than you might hope.

This is why it's so important to get like-for-like finance quotes when considering which car to go for; a car that costs £199 per month on a three-year contract is much better value than one that costs £199 per month on a four-year contract.

Devious deposits – Ford Ka+

Ford Ka+ PCP finance

Car manufacturers know that drivers typically focus on monthly payments when shopping for a new car, so they often shrink the instalments, while hiding costs in an enormous deposit, to make offers seem better value.

To work out whether a deal is really good value or not, though, you need to consider the deposit and monthly payments together.

Ford may be advertising the Ka+ city car at an affordable £99 per month currently, but the deposit is a gargantuan £3,343. That means that over the two-year contract you’d actually pay an average of £234 per month – more than a £198-per-month Skoda Citigo with a £1,000 deposit, which averages £231 per month overall.

Execrable excess mileage charges – Jaguar XE

Jaguar XE PCP finance

To shrink advertised finance prices, manufacturers’ example deals often only let you cover low distances. Whatever the mileage allowance, though, exceed this figure and you’ll face steep excess mileage charges if you hand the car back at the end of the contract.

Cover 40,000 miles on a 30,000-mile Jaguar XE contract and you’ll be stung with a mammoth £2,520 excess mileage bill. Do the same in a Skoda Octavia and it’ll cost you a mere £360, so you’ll want to check the excess mileage figure – and more importantly choose a realistic contracted mileage limit – before you sign on the dotted line.

Blood-curdling contract charges – McLaren 570S

McLaren 570S PCP finance

Manufacturers aren’t doing you a favour offering you finance – for most the motive is to lure you back at the end of the contract into a shiny new model – but that doesn’t stop some charging you more simply to set up the contract.

You wouldn’t expect supercar manufacturer McLaren to offer low prices to finance its 570S Coupe, but you’ll have to pay a hefty £295 ‘Documentation Fee’ to finance the car plus a £300 ‘Option to Purchase Fee’ should you make the optional final payment to buy it when the contract ends.

We think that’s pretty cheeky considering you’ll be paying high APR charges of 6.9% plus gigantic monthly payments.

Check out Parkers’ top tips for getting the best finance deal

Purchasing a car on PCP finance can be a minefield, with monthly payments, deposit, contract length, mileage allowance and a number of other factors to consider.

Make sure you get the best possible car for your budget by checking out our guide to how to get the best finance deal and prepare yourself for battle against the salesperson with our tips on how to dodge dealers’ sneaky tricks.

Finding finance a scary prospect? Find out everything you need to know with the articles below: