I'm trying to figure out the best way to pay for a car we're about to purchase. I had a figure in mind of between £6-7k when looking at cars, so I also knew I wanted to pay around £200-£240 per month over 3 years.

We've found the car we want and need to raise £6640 to pay the balance. The garage has quoted us a PCP deal as follows:

£136.56 for 35 months with a balloon amount left of £2,970.
=£7,749.60

However using the loan calculator at tescobank.com:

£208.07 over 3 years
=£7,491

Tesco do say that the APR (8.3%) might change once I actually apply depending upon my circumstances, but on the face of it it seems like the loan will cost about £260 less than the PCP.

If I went for the PCP deal, I would put the monthly difference into an ISA, so I would at least be close to the balloon when the 3 years were up.

Is it as simple as it seems? The only benefit I can see from the PCP deal under my circumstances, is that we can hand the car back after 3 years if it's depreciated significantly and have a guaranteed figure in our ISA. Is this worth the £260 figure in your opinion?

I'd just like to hear some opinions really and find out if I've missed anything or if there's anything else I should take into consideration.

Thanks,
Anthony