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    • MarianneP
    • By MarianneP 30th Nov 17, 6:08 PM
    • 2Posts
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    MarianneP
    PCP, PCH or loan?
    • #1
    • 30th Nov 17, 6:08 PM
    PCP, PCH or loan? 30th Nov 17 at 6:08 PM
    Hi folks,
    We really need a new(er) car but don't have the cash available to buy something newer outright. I've had a bit of a look in to buying with PCP or leasing with PCH but it's very confusing and I'm struggling to work out what are the best value for money options. I'd be happy to look at something second hand up to about 3 years old - can I get a second hand car with PCP/PCH or are they always new? Would I be better to get an old fashioned loan?

    All help and your experience with any of those options (or others!) would be very welcome.

    Thanks

    (P.S. This is my first post on the MSE forum )
Page 1
    • Mercdriver
    • By Mercdriver 30th Nov 17, 7:01 PM
    • 1,459 Posts
    • 997 Thanks
    Mercdriver
    • #2
    • 30th Nov 17, 7:01 PM
    • #2
    • 30th Nov 17, 7:01 PM
    Hi folks,
    We really need a new(er) car but don't have the cash available to buy something newer outright. I've had a bit of a look in to buying with PCP or leasing with PCH but it's very confusing and I'm struggling to work out what are the best value for money options. I'd be happy to look at something second hand up to about 3 years old - can I get a second hand car with PCP/PCH or are they always new? Would I be better to get an old fashioned loan?

    All help and your experience with any of those options (or others!) would be very welcome.

    Thanks

    (P.S. This is my first post on the MSE forum )
    Originally posted by MarianneP
    Welcome.

    Personally I wouldn't do a PCP on a used car. The benefit is mainly on new. Check your budget for a low APR loan for a 3 year old car, or follow the banger route advocated by many on here.
    • Ebe Scrooge
    • By Ebe Scrooge 30th Nov 17, 7:04 PM
    • 4,011 Posts
    • 3,432 Thanks
    Ebe Scrooge
    • #3
    • 30th Nov 17, 7:04 PM
    • #3
    • 30th Nov 17, 7:04 PM
    OK, this is always a bit of a minefield. For what it's worth, I'll give you my thoughts.

    It depends an awful lot on what sort of mileage you're doing. If you do higher than average, then the typical PCP plans can start to work out expensive.

    My personal view, as someone who does a lot of miles and is not a car snob ( i.e. it's a tool to get me from A to B and back again ), is that I'd go for the personal loan route. You buy a reasonable second-hand car, pay off the loan over 3 years, you then own the car. You're not too worried about keeping it in pristine condition, for fear of paying expensive costs when you return it. You own the car after 3 ( or whatever ) years, can then either keep or sell it as you choose. And if you're sensible about servicing and looking after it, there's no reason it shouldn't last for many more years after that, giving a much lower overall cost of "motoring-per-year", as it were.

    PCP plans do have advantages - commonly servicing etc. is included, so it makes it easy to budget. But to my mind, why pay all that money for something you'll never own ? I guess it's akin to the option of buying or renting a house. Buy a house, you end up with something of value, but you're lumbered with repair costs. Renting is a simpler option, but you don't end up owning anything. OK, a house will generally appreciate in value whilst a car will depreciate ... but you get my drift.

    I guess a big factor is how long you expect to keep a car. If you want a shiny new car every 3 years, then PCP can be a good option. If you prefer to buy a decent 3-year-old car and run it for as long as possible, then a loan ( or savings !! ) is the more sensible route. I always tend to do this - my current car was bought at 4 years old, is now 12 years old, and touch wood is still going strong. I've had no nasty surprises, just routine servicing ( which I do myself ) and "expected" wear-and-tear items. If it dies tomorrow it owes me nothing - though I hope it goes on for many more years yet !
    Last edited by Ebe Scrooge; 30-11-2017 at 7:09 PM.
    I may not know much about art, but I know what I like.
    • Ectophile
    • By Ectophile 30th Nov 17, 10:04 PM
    • 2,822 Posts
    • 1,738 Thanks
    Ectophile
    • #4
    • 30th Nov 17, 10:04 PM
    • #4
    • 30th Nov 17, 10:04 PM
    With PCH, you're not buying a car, you're renting it. At the end of the period, you have to hand it back.

    With PCP, you're still renting it. However, you have the option of buying it at an agreed second-hand price at the end of the deal.

    If you actually want to own the car, you need to take out a traditional loan. Either a finance deal from the dealer, or get a bank loan and use this to buy the car. Buying on a loan will work out more expensive per month (which is why PCP deals are so popular). But at the end, you get to keep the car.
    If it sticks, force it.
    If it breaks, well it wasn't working right anyway.
    • trailingspouse
    • By trailingspouse 30th Nov 17, 10:27 PM
    • 2,447 Posts
    • 3,507 Thanks
    trailingspouse
    • #5
    • 30th Nov 17, 10:27 PM
    • #5
    • 30th Nov 17, 10:27 PM
    If you can get a personal loan (rather than car finance) then, for me, that is absolutely the way forward.
    • sheslookinhot
    • By sheslookinhot 30th Nov 17, 10:31 PM
    • 1,094 Posts
    • 729 Thanks
    sheslookinhot
    • #6
    • 30th Nov 17, 10:31 PM
    • #6
    • 30th Nov 17, 10:31 PM
    There is no right answer. PCH can be a very good way and cost effective way of "hiring"a new car for 2-4 years. Nationwide Vehcle Leasing do great "hot offers". As an example, my wife got an Infiniti Q30 from them much cheaper than anything the dealer could match.
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    • Robby1988
    • By Robby1988 30th Nov 17, 11:19 PM
    • 20 Posts
    • 5 Thanks
    Robby1988
    • #7
    • 30th Nov 17, 11:19 PM
    • #7
    • 30th Nov 17, 11:19 PM
    The question is whether you have any interest in owning the car?

    If you have a few hundred quid a month to spare & just want a new car to drive around for a few years & then change, then i'd recommend leasing personally as it's usually cheaper, it's straightforward and you can get some great deals. Check out the WhatCar leasing website to search offers. Print out any quotes you have for leases though & take them into a dealership to challenge them to better it.

    If you think you might want to own one day, i'd personally get a personal loan out on a used car thats a few years old as you will get a lot more car for your money & you'll own the car outright from day 1.
    • Robby1988
    • By Robby1988 30th Nov 17, 11:29 PM
    • 20 Posts
    • 5 Thanks
    Robby1988
    • #8
    • 30th Nov 17, 11:29 PM
    • #8
    • 30th Nov 17, 11:29 PM
    Just to add, from my own past experience... Leasing/getting PCP's on new cars you can't afford can be a trap.

    In 2/3/4 years time when you come to the end of your payments, unless you had a PCP and can afford the big final balloon payment you are essentially left with nothing. If you still need a car, your forced into yet more years of monthly payments to finance/lease a new one or finance the balloon payment.

    Who is to say in a few years time you will still want/afford to be paying out loads of money every month on a car?

    I would personally aim for eventual ownership.
    • MarianneP
    • By MarianneP 5th Dec 17, 10:29 PM
    • 2 Posts
    • 0 Thanks
    MarianneP
    • #9
    • 5th Dec 17, 10:29 PM
    • #9
    • 5th Dec 17, 10:29 PM
    Thanks everyone, that's really helpful!

    We're a bit wary of getting a slightly older second hand car - we did that a couple of years ago and the car has been nothing but trouble and cost us a fortune in niggly little faults, so as much as anything we're quite keen to minimise the risk of that.

    Right now I'm thinking maybe we do PCH for now, making sure we save the extra which we would have spent if it was PCP and then use that for the next car in a few years time.

    I'll let you know what we go for in the end, but I suspect it won't be PCP!
    • knightstyle
    • By knightstyle 6th Dec 17, 8:46 AM
    • 4,485 Posts
    • 1,650 Thanks
    knightstyle
    For me a personal loan or 0% credit card is best and buy from a dealer who will give a decent manufacturers guarantee.
    • satchef1
    • By satchef1 6th Dec 17, 11:36 AM
    • 96 Posts
    • 51 Thanks
    satchef1
    Which is better is incredibly situational. You have to run. The numbers yourself and decide.

    For me, there was no upside in getting a normal loan. A saving of ~£5 per month on the repayments, if I could keep all of the sweeteners I got for buying on PCP. But after three years, I'd owe £180 more than the PCP's GMFV. So I'd break even. At three years, I'd have an equal amount of equity in the car, whether I purchased on PCP or with a loan. But the PCP gives me a hassle-free exit option; I can simply hand the car back after three years if it's worth less than the GMFV. With a loan, I'd be in negative equity.
    • Tarambor
    • By Tarambor 6th Dec 17, 2:08 PM
    • 1,746 Posts
    • 1,197 Thanks
    Tarambor
    But the PCP gives me a hassle-free exit option; I can simply hand the car back after three years if it's worth less than the GMFV.
    Originally posted by satchef1
    And then what? You've got no car so then what are you going to do? And even if its worth more than the GMFV you've got no money to pay the £1000s the balloon payment will be so what are you going to do then?

    With a loan, I'd be in negative equity.
    You MIGHT be in negative equity but at least you'd have something to show for all that money you've been paying and you would no longer need to pay out.

    In the first two cases you pay a ton of money out and at the end have no car. In the last case you pay a ton of money out but at the end you have a car.

    In the first two cases because you'll have no car and you'll have no money because you've been paying the finance you'll be left with the only option available, start another PCH/PCP deal so once again you can spend way more money than you have to be left with nothing at the end of it.
    • worried jim
    • By worried jim 6th Dec 17, 2:26 PM
    • 8,765 Posts
    • 13,375 Thanks
    worried jim
    Thanks everyone, that's really helpful!

    We're a bit wary of getting a slightly older second hand car - we did that a couple of years ago and the car has been nothing but trouble and cost us a fortune in niggly little faults, so as much as anything we're quite keen to minimise the risk of that. )
    Originally posted by MarianneP
    Toyota or Honda then. Buy outright used and you should be okay for some great value for money motoring.
    "Only two things are infinite-the universe and human stupidity, and I'm not so sure about the universe"
    Albert Einstein
    • Mercdriver
    • By Mercdriver 6th Dec 17, 4:01 PM
    • 1,459 Posts
    • 997 Thanks
    Mercdriver
    Which is better is incredibly situational. You have to run. The numbers yourself and decide.

    For me, there was no upside in getting a normal loan. A saving of ~£5 per month on the repayments, if I could keep all of the sweeteners I got for buying on PCP. But after three years, I'd owe £180 more than the PCP's GMFV. So I'd break even. At three years, I'd have an equal amount of equity in the car, whether I purchased on PCP or with a loan. But the PCP gives me a hassle-free exit option; I can simply hand the car back after three years if it's worth less than the GMFV. With a loan, I'd be in negative equity.
    Originally posted by satchef1
    Keep taking the tablets!

    You will have been paying for 3 years and have nothing to show for it if you turn the car in. The salesman may try and tell you that you will have sufficient equity at the end of the term to put the car in and go for a new one with no further payment, but that is dodgy to say the least.

    Negative equity (in all senses, both cars and houses) is only meaningful in the event that you are forced to sell. It's a theoretical loss until you are in this position.

    I used a dealers 0% offer on a used vehicle. Compared the price for the same car and trim in all dealers and my price was comparable. I expect to keep the car for far longer than the 3 years the finance is over.
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