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Ok, so you have a PCP and have paid a deposit and taken delivery of your car. The monthly payments have started and you are 3 months into ownership. Then you have a windfall and want to add to your deposit and reduce your monthly instalments. This can halve them in some cases. Nothing else fundamentally changes - mileage allowance, balloon payment at the end etc - just the monthly payment. JLR Finance say there are NO penalties for doing this in terms of the APR, the amount you will pay in total, the balloon etc. You just save paying interest on the interest you have paid off with the extra deposit.

What are your thoughts?
 

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Given there's no other changes to balloon payment etc, assuming you can get a return that is higher than your APR by investing the new windfall, then don't pay down the principal. I.e. if you assume a modest avg 7% return on investment via stock market and your APR is ~4%, then it's better to invest and reap that 3% difference while continuing to pay that low interest loan down. The opposite is true if you had an interest rate higher than your anticipated return by investing.

I will add a disclaimer that each person's situation is unique, and I'm not a certified financial planner, so take it with a grain of salt :) stock market can always crash.
 
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