Car finance - hire purchase or PCP?

danlovedough

Interesting discussion. I work with an ex-car salesman who has sold new German cars with PCP. His view is that PCP is the best way to pay for a new car. However from his experience he would never buy a new car.

Anyone I know who's sensible with money would buy a 2nd hand car outright. I'm coming round to the idea that monthly payments will be lowest if you save up the monthly payments rather than making them on a loan / PCH / PCP deal, - To buy the car outright and upgrade once you have saved up enough for a nicer car.

debtfreeme2015

Hi I wonder if any one can help? I am in the position that I did not have a car to part exchange when I took out my PCP and therefore pay quite a bit each month. When I got the car I was told I am able to make overpayments to lower the monthly repayments. I would like to do this but don't know if it is just to keep the money I would use for overpayments. Can anyone advise me please?

motorguy

danlovedough wrote: »

Anyone I know who's sensible with money would buy a 2nd hand car outright. I'm coming round to the idea that monthly payments will be lowest if you save up the monthly payments rather than making them on a loan / PCH / PCP deal, - To buy the car outright and upgrade once you have saved up enough for a nicer car.

Yes and no. My wifes current car would have cost around £33,000 after discount, yet her PCP deal means she drives it for £300 ish a month. I would doubt that many people 'save' their way into a £33,000 car.

The other side of that is that she doesnt *need* to be driving a £33,000 car. But she works hard, has a great paying job and is happy with the payments.

Me? well i bought my car for cash. Which isnt much of an acheivement as its a £500 Fiat Marea diesel....

motorguy

rs65 wrote: »

All I am saying is to go into a PCP with your eyes open. If a car has an OTR price of 30k and will be worth 14k at the end of three years, you will be paying 16k over three years. It doesn’t matter whether you pay a deposit or not, the end result is the same (plus/minus a bit of interest).

Well thats it really. With a PCP you're financing the depreciation. Shop around a bit and as you say theres probably not as much in it as people think.

I often cite the example of a guy on here who got really sniffy about how he ALWAYS bought for cash and where there was a shortfall he insured he bought a car with an interest free offer on.

He thought of himself as a canny buyer until it transpired he'd paid FULL LIST PRICE for his £25,000 Peugeot. :eek: He was too busy looking at the interest rate to realise he should have been aiming for a hefty discount.