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    • Mrs Mac 1
    • By Mrs Mac 1 14th Mar 17, 2:28 PM
    • 47Posts
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    Mrs Mac 1
    buying a car - HP vs PCP
    • #1
    • 14th Mar 17, 2:28 PM
    buying a car - HP vs PCP 14th Mar 17 at 2:28 PM
    Hello

    Has anyone on here any views on hire purchase vs personal contract purchase for buying either a new or used car?

    John Mulholland Motors are advertising great offers at the moment for new Hyundai or Skoda cars, something along the lines of up to £2000 dealer contribution towards your new car and then min of £99 per month payment.

    Have any of you used pcp to purchase a car? I have used hp in the past and I understand how it works. I assume with the pcp that i would never outright own the car as most people would opt for a new car by the time 3-4 years are up?

    Which make of car would retain its value better by the time 4 years are up?

    In the case of John Mulholland offers, which would be the better make, Hyundai or Skoda?

    Motorguy Paul, have you any opinions?


    Thanking all in advance.
    Mrs Mac
Page 1
    • MataNui
    • By MataNui 14th Mar 17, 3:21 PM
    • 775 Posts
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    MataNui
    • #2
    • 14th Mar 17, 3:21 PM
    • #2
    • 14th Mar 17, 3:21 PM
    Traditional HP means you finance the total value of the car over a period (say 3 years). You pay a deposit then fixed monthly payments. At the end of 3 years the car is yours. You have an asset you can either just keep driving or PX against the deposit on a new car.

    PCP means you finance the depreciation on the car (NOT the car itself) ##EDIT## Simplistic but demonstrates the difference. You pay a deposit then fixed monthly payments then an optional balloon payment. At the end of the 3 years you own nothing. You have no asset to PX. If you want to keep the car you need to find the money for the balloon payment. If you cant or dont want to you are left with no car and no money for a deposit on a new car.

    PCP payments are a lot less because you are only paying for the depreciation. The big chunk of the value is at the end. Personally i dont like PCP. I think its going to be the next PPI scandal. It gets people into cars they really cant afford to be in.

    In terms of the actual depreciation thats going to depend on model and trim as well as the make. Some options can keep almost 100% of their value which really raises the overall residual value of the car after 4 years.
    • qwert yuiop
    • By qwert yuiop 14th Mar 17, 3:37 PM
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    qwert yuiop
    • #3
    • 14th Mar 17, 3:37 PM
    • #3
    • 14th Mar 17, 3:37 PM

    PCP payments are a lot less because you are only paying for the depreciation. The big chunk of the value is at the end. Personally i dont like PCP. I think its going to be the next PPI scandal. It gets people into cars they really cant afford to be in.
    .
    Originally posted by MataNui
    Paul, surely you're paying for the depreciation on an hp plan as well, and unless they're seriously overcharging on the pcp it ought to be no worse? (Maybe they are) The only advantage I could see with hp otherwise is if you intend to keep the car several more years, in which case you should probably pbuy a 3 year old to begin with and really save some money.
    • Zola.
    • By Zola. 14th Mar 17, 4:08 PM
    • 977 Posts
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    Zola.
    • #4
    • 14th Mar 17, 4:08 PM
    • #4
    • 14th Mar 17, 4:08 PM
    SERE have 5 years 0% deals on at the mo. Cracking offer if you can find a car you like
    • ballyblack
    • By ballyblack 14th Mar 17, 5:16 PM
    • 3,265 Posts
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    ballyblack
    • #5
    • 14th Mar 17, 5:16 PM
    • #5
    • 14th Mar 17, 5:16 PM
    In the case of John Mulholland offers, which would be the better make, Hyundai or Skoda?
    Matter of choice but maybe for reselling an 'ongoing manufacturers warranty' would be a consideration after 4 years ownership on HP?

    Hyundai 5yrs v Skoda 3 years
    Last edited by ballyblack; 14-03-2017 at 9:14 PM.
    • ballyblack
    • By ballyblack 14th Mar 17, 5:42 PM
    • 3,265 Posts
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    ballyblack
    • #6
    • 14th Mar 17, 5:42 PM
    • #6
    • 14th Mar 17, 5:42 PM
    SERE have 5 years 0% deals on at the mo. Cracking offer if you can find a car you like


    Not much use if you are paying a higher price .....for the car than the competition


    .
    Last edited by ballyblack; 14-03-2017 at 9:15 PM.
    • motorguy
    • By motorguy 14th Mar 17, 7:58 PM
    • 15,110 Posts
    • 8,539 Thanks
    motorguy
    • #7
    • 14th Mar 17, 7:58 PM
    • #7
    • 14th Mar 17, 7:58 PM
    Hello

    Has anyone on here any views on hire purchase vs personal contract purchase for buying either a new or used car?

    John Mulholland Motors are advertising great offers at the moment for new Hyundai or Skoda cars, something along the lines of up to £2000 dealer contribution towards your new car and then min of £99 per month payment.

    Have any of you used pcp to purchase a car? I have used hp in the past and I understand how it works. I assume with the pcp that i would never outright own the car as most people would opt for a new car by the time 3-4 years are up?

    Which make of car would retain its value better by the time 4 years are up?

    In the case of John Mulholland offers, which would be the better make, Hyundai or Skoda?

    Motorguy Paul, have you any opinions?


    Thanking all in advance.
    Mrs Mac
    Originally posted by Mrs Mac 1
    Sorry for the late response.

    As has been said already, the merits of a PCP deal are that monthly payments are kept low and it keeps the payments for a new car reasonable.

    The downside is, you're effectively signing up to keep the car for a set period of time, then either trading in, selling it, or handing it back. If you intend to keep it indefinitely, it would be better to look for a car and either pay it off via a conventional loan, HP or 0% finance.

    As has been alluded to, 0% finance has to be paid for by somebody, so if someone is offering it, check you're not paying for it by paying a higher price for the car in the first place.

    Its also worth factoring in with a PCP deal that it may be "only £££ per month", but often there is a significant deposit so you need to factor that in when looking at the TOTAL cost over the period or apportion it across your monthly payments for a real monthly payment figure.

    Be careful of what Mulholland is doing - the £2000 "dealer contribution" is most likely just discount you'd otherwise get off the car, so again, make sure you're not paying more to get this £2,000 contribution "free".

    Also, watch the mileage allowance - i've had a look at the Fabia deal he's doing with £2000 contribution from them and £99 a month and its just 5,000 miles a year. Thats restrictively low....
    Last edited by motorguy; 14-03-2017 at 8:03 PM.
    You are not special. You are not a beautiful and unique snowflake.
    • boliston
    • By boliston 14th Mar 17, 10:17 PM
    • 2,277 Posts
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    boliston
    • #8
    • 14th Mar 17, 10:17 PM
    • #8
    • 14th Mar 17, 10:17 PM
    ....

    Also, watch the mileage allowance - i've had a look at the Fabia deal he's doing with £2000 contribution from them and £99 a month and its just 5,000 miles a year. Thats restrictively low....
    Originally posted by motorguy
    Can they still charge a mileage penalty if you have paid off 50% of the finance and the car is still in good condition?

    Surely as long as those 2 criteria are met they are obliged to terminate the agreement with nothing further to pay?
    • daveyjp
    • By daveyjp 15th Mar 17, 7:13 AM
    • 6,934 Posts
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    daveyjp
    • #9
    • 15th Mar 17, 7:13 AM
    • #9
    • 15th Mar 17, 7:13 AM
    50% of the finance repayment on a 3 year PCP is around the full term of the agreement anyway.

    So on 5,000 a year after 3 years you need to do less than 15,000 or expect a charge.
    • boliston
    • By boliston 15th Mar 17, 7:30 AM
    • 2,277 Posts
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    boliston
    50% of the finance repayment on a 3 year PCP is around the full term of the agreement anyway.

    So on 5,000 a year after 3 years you need to do less than 15,000 or expect a charge.
    Originally posted by daveyjp
    I'm sure the final balloon is not as much as 50% of the finance - more like 30%
    • MataNui
    • By MataNui 15th Mar 17, 8:21 AM
    • 775 Posts
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    MataNui
    I'm sure the final balloon is not as much as 50% of the finance - more like 30%
    Originally posted by boliston
    Lets split hairs and say about 40%. Only saying that because there are a few posts on here about VT on PCP and people are only meeting the 50% in month 30ish (or later) of a 36 month contract. Also these deals are financed so the eventual balloon payment closely matches the residual value of the car. On average this would be around 40% after 3 years. Note liberal use of words like 'average', 'ish' and 'about'.
    • motorguy
    • By motorguy 15th Mar 17, 11:43 AM
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    motorguy
    Can they still charge a mileage penalty if you have paid off 50% of the finance and the car is still in good condition?

    Surely as long as those 2 criteria are met they are obliged to terminate the agreement with nothing further to pay?
    Originally posted by boliston
    a VT is forcing the contract termination under your rights in the Consumer Credit Act. Its to protect people who can no longer afford to pay due to a dramatic change in circumstance against being pursued for a disproportionate amount by the finance company.

    It is NOT designed as a handy get out of jail free card and as such i wouldnt recommend abusing that right just to save a few £.

    BUT, you are correct, if you did do a VT and had already paid 50% of the total contract cost but did say 8,000 miles instead of 5,000 miles a year then they cant particularly object - UNLESS you sign a "waiver" as part of a VT pack that they might kindly send you when you try to VT. They tend not to take that lying down any more so i personally wouldnt go in to a PCP agreement, relying on a VT as my exit strategy.
    You are not special. You are not a beautiful and unique snowflake.
    • motorguy
    • By motorguy 15th Mar 17, 11:44 AM
    • 15,110 Posts
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    motorguy
    50% of the finance repayment on a 3 year PCP is around the full term of the agreement anyway.

    So on 5,000 a year after 3 years you need to do less than 15,000 or expect a charge.
    Originally posted by daveyjp
    It tends to be around months 30-33 of a 36 month agreement, thus you usually have a window in advance of the contract end date in which you could VT with nothing further to pay.
    You are not special. You are not a beautiful and unique snowflake.
    • motorguy
    • By motorguy 15th Mar 17, 11:45 AM
    • 15,110 Posts
    • 8,539 Thanks
    motorguy
    Lets split hairs and say about 40%. Only saying that because there are a few posts on here about VT on PCP and people are only meeting the 50% in month 30ish (or later) of a 36 month contract. Also these deals are financed so the eventual balloon payment closely matches the residual value of the car. On average this would be around 40% after 3 years. Note liberal use of words like 'average', 'ish' and 'about'.
    Originally posted by MataNui
    Once you factor in interest charges, admin charges etc, its usual for it to be around months 30-33.

    It would be wrong to say it doesnt happen until month 36 of a 36 month agreement, because its very very unlikely.
    You are not special. You are not a beautiful and unique snowflake.
    • bertiewhite
    • By bertiewhite 15th Mar 17, 12:14 PM
    • 421 Posts
    • 400 Thanks
    bertiewhite
    Based on a friend's experience - a PCP car needs to be in pristine condition when it's returned as well.
    • qwert yuiop
    • By qwert yuiop 15th Mar 17, 12:39 PM
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    qwert yuiop
    Of topic I know but i have a 2002 Peugeot 106 for sale , One lady owner and 51,000 miles, get in touch if interested £475 .
    Originally posted by Coolhandluke
    That's more like it. Loans to buy a car? Using money I've paid tax on to pay interest on a depreciating asset? Not going to happen in this house.

    Does anyone remember a magazine years ago titled "jalopy, incorporating slow car"? Entertaining tips for budget motoring. At the time, I had an elderly Saab with no first gear, which eventually lost reverse as well. We went to Dublin one Saturday, and parked it illegally. When we came back it was clamped. I took out the tax disc and went home in the train. Hard core cheap motoring.
    • motorguy
    • By motorguy 15th Mar 17, 1:05 PM
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    motorguy
    Based on a friend's experience - a PCP car needs to be in pristine condition when it's returned as well.
    Originally posted by bertiewhite
    No. It doesnt.

    It can have wear and tear in line with industry guidelines.

    http://www.bvrla.co.uk/service/fair-wear-and-tear-guides
    You are not special. You are not a beautiful and unique snowflake.
    • qwert yuiop
    • By qwert yuiop 15th Mar 17, 1:24 PM
    • 1,861 Posts
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    qwert yuiop
    No. It doesnt.

    It can have wear and tear in line with industry guidelines.

    http://www.bvrla.co.uk/service/fair-wear-and-tear-guides
    Originally posted by motorguy
    Do they not penalise extreme mileage in some way? Speaking as someone who's driven 150,000 miles in the last five years (but isn't in the market for pcp).
    • motorguy
    • By motorguy 15th Mar 17, 2:02 PM
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    motorguy
    Do they not penalise extreme mileage in some way? Speaking as someone who's driven 150,000 miles in the last five years (but isn't in the market for pcp).
    Originally posted by qwert yuiop
    If the PCP agreement was for say, 90000 over 3 years then fair wear and tear still applies.

    High mileage PCP deals rarely stack up as viable though.
    You are not special. You are not a beautiful and unique snowflake.
    • bertiewhite
    • By bertiewhite 15th Mar 17, 3:17 PM
    • 421 Posts
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    bertiewhite
    The company his Audi was leased through had a weird concept of wear & tear then.
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