PCP type packages

whereschris

Hi,

My car is nearly four years old with fairly high mileage and I have been thinking of changing it before the value really goes from it. My initial thoughts were to buy nearly new but several dealers have been pushing their PCP style packages such as Citroen's Elect 3 package. What are anyones thought on these schemes. The rate on the Citroen is 4.9 APR. They are also offering 0% on some models so is that not better? The dealer thinks not but then I'm not so sure...

Any thoughts would be much appreciated.

motorguy

If your car is high miles, then does this mean you do big miles?

The headline figures for these PCP deals tend to be based on low miles and they work out less effective when you do bigger miles (as that impacts the residual value greatly)

I would have thought your car should still have a considerable monetary value if its only four years old. I would use it as a deposit on a new (if you must) or nearly new car (better value) and use straight finance whereby you own it at the end of the term.

Bear in mind with 0% deals "somebody" is paying the interest - usually the customer in lieu of discount they would otherwise get.

uknick

My experience is that ALL finance deals from dealers cost you more in the long run, unless it is zero rate finance. A nearly new car will always be cheaper overall.

We just bought a pre-registered BMW with 50 miles on the clock and got a 20% discount. No PCP finance deal will even come close to that.

motorguy

uknick wrote: »

My experience is that ALL finance deals from dealers cost you more in the long run, unless it is zero rate finance. A nearly new car will always be cheaper overall.

We just bought a pre-registered BMW with 50 miles on the clock and got a 20% discount. No PCP finance deal will even come close to that.

Hmm. Whilst i agree with you in principle, having just got a 9 month old golf for £12,400 from a main VW dealer, when list price on a new one was £20,000, i dont necessarily agree when it comes to BMW or Merc.

• You can usually get an easy 10% off new BMWs anyway without a whole pile of hassle, and a broker will get you more - broadspeed for example are doing 12.5% off a 3 series for example.
  
• Often you can get "preferential" finance deals on new BMWs, for example "manufacturer contributions" of £1000 or more that you cant otherwise get as discount.
  
• Sometimes they also do complimentary specification upgrades - for example free business NAV or free upgrade from an SE to an M Sport
  
• Also, the finance rate will generally be better on a new one, for example the APR deal currently is 3.9%.
  
• Also the pre reg cars tend to be on the last of the previous plate, which will impact values come resale time.

I would say that if you factored all that in, then you'd be close to, or greater than 20% off.

I'll give you a practical example of that in action - my wife went to buy a z4 last year. They tried to sell her an ex demo car with a "saving" of £6000 over list price. Also, the engine was the older less efficient one that had just been replaced. Worked out at something like £329 on a PCP deal.

We looked instead at a new car. She got £3000 off through discount, a "complimentary upgrade" from SE to M Sport (worth £2,000) and a "manufacturer contribution of £1500 if she used the finance available. This was with the exact spec and colour combo she wanted, not the spec the demo car had been in. The icing on the cake was the 19 inch alloys which were a £500 extra - once she added those to the spec it added ZERO, yes ZERO to the monthly payments as it upped the residual price.

The list price of the car she bought was £36,000, yet after discounts, complimentary upgrades and finance contributions it brought the price back to £29,500.

She ended up paying £309 a month with the same deposit.

I am sure you checked all the above points in detail before you bought, but it is worth flagging it as some people can "assume" that an ex demo automatically means ££££'s of a saving.

neilmcl

motorguy wrote: »

Hmm. Whilst i agree with you in principle, having just got a 9 month old golf for £12,400 from a main VW dealer, when list price on a new one was £20,000, i dont necessarily agree when it comes to BMW or Merc.

• You can usually get an easy 10% off new BMWs anyway without a whole pile of hassle, and a broker will get you more - broadspeed for example are doing 12.5% off a 3 series for example.
  
• Often you can get "preferential" finance deals on new BMWs, for example "manufacturer contributions" of £1000 or more that you cant otherwise get as discount.
  
• Sometimes they also do complimentary specification upgrades - for example free business NAV or free upgrade from an SE to an M Sport
  
• Also, the finance rate will generally be better on a new one, for example the APR deal currently is 3.9%.
  
• Also the pre reg cars tend to be on the last of the previous plate, which will impact values come resale time.

I would say that if you factored all that in, then you'd be close to, or greater than 20% off.

I'll give you a practical example of that in action - my wife went to buy a z4 last year. They tried to sell her an ex demo car with a "saving" of £6000 over list price. Also, the engine was the older less efficient one that had just been replaced. Worked out at something like £329 on a PCP deal.

We looked instead at a new car. She got £3000 off through discount, a "complimentary upgrade" from SE to M Sport (worth £2,000) and a "manufacturer contribution of £1500 if she used the finance available. This was with the exact spec and colour combo she wanted, not the spec the demo car had been in. The icing on the cake was the 19 inch alloys which were a £500 extra - once she added those to the spec it added ZERO, yes ZERO to the monthly payments as it upped the residual price.

The list price of the car she bought was £36,000, yet after discounts, complimentary upgrades and finance contributions it brought the price back to £29,500.

She ended up paying £309 a month with the same deposit.

I am sure you checked all the above points in detail before you bought, but it is worth flagging it as some people can "assume" that an ex demo automatically means ££££'s of a saving.

Pretty much a similar story when I purchased a new 1 series M Sport a couple of months back on a finance deal. The dealer contribution and discount easily surpassed the amount of discount I was offered on a "nearly new" model from the group stock.

uknick

I paid cash for the car and the model has been on the market for less than a year.

So yes, I did do my homework. Only downside was I had to have black, I'd have preferred dark blue.

My point was finance deals through dealers nearly always, if not always, cost more. Especially PCP deals.

Why else would they push them so hard?

1jim

They often push pcp deals as it encourages you to look at a new car in 3 years, it also helps them control the second hand market in their cars so helps keep prices higher than they may otherwise be

Buy a car in pcp, chances are your back in 3 years to same dealer (or at least same manufacturer), part ex the car to a new one, they can then decide what to out your old car back on their used forecourt for.

whereschris

Hi

Thanks for all of your replies. It is really confusing but I can't get away from the notion that if I can either get 0% or borrow the money from my parents it would ultimately be cheaper.

motorguy

uknick wrote: »

I paid cash for the car and the model has been on the market for less than a year.

So yes, I did do my homework. Only downside was I had to have black, I'd have preferred dark blue.

My point was finance deals through dealers nearly always, if not always, cost more. Especially PCP deals.

Why else would they push them so hard?

You're not comparing like with like then.

You're comparing dealer finance with a cash sale.

All BMWs can be got with an easy 12% off if you look hard enough and pretty much all have other incentives attached to them if you take out BMW finance. There are demonstrable examples where using a PCP deal works out cheaper than buying with cash and driving the car three years then selling it.

Comparing apples with apples, a PCP deal on a new BMW is likely to end up costing similar if not less than a PCP deal on a nearly new one.

As has already been said, PCP deals are BMW's mechanism for selling the volume of cars they do. You are very much in the minority if you walked in with cash to buy your car. In fact there are very valid arguments that buying with cash isnt necessarily the smartest or cheapest thing to do.

Ultimately because of the residual values of BMWs they can offer VERY competitive deals without having to discount their cars heavily AND they effectively control the resale market too.

To put it in perspective, my wife has a £36K list BMW z4 with all the toys for slightly over £300 a month - a new Golf 1.6 TDI S diesel with metallic paint was working out at £270 a month for me.

She'll drive it for the term and either trade it in and use the equity towards whatever next tickles her fancy OR hand it back and negotiate on a new car from there.

motorguy

whereschris wrote: »

Hi

Thanks for all of your replies. It is really confusing but I can't get away from the notion that if I can either get 0% or borrow the money from my parents it would ultimately be cheaper.

It really depends on the car. 0% finance has to be paid for by somebody and its usually in lieu of discount. For example, there was a guy on here some time ago got all sniffy about how he only ever used 0% finance but it turns out he paid the full £25,000 list price on his 308 diesel convertible! :eek:

I would in your case as i said originally use the value of your own car as a deposit and take out a straight finance deal for the balance. It may well work out cheaper to buy a nearly new than new, but you need to be aware of ALL the options to get the best deal.

If you let us know specifically what car(s) you're looking at we can perhaps advise / point you to the best deals.

whereschris

Hi

I'm not sure what car which possibly not helpful!

I do know this -

I do about 14,000 miles per year. I have always thought that diesel is my best option...

I really like the Peugeot/Citroen diesel engines as they've always been really economic but I think that things have moved on a fair bit now.
I would ideally like something that has a combined cycle of 70 mpg or more.
I also like things like bluetooth phone and usb capability, a/c etc...

I like a medium family car.

My budget is about £12,000.

Any tips or suggestions would be very welcome!