PCP or 0% finance

Ultrasonic

harrpau7 wrote: »

As well as the monthly payments on the loan I could also get about an extra £200 odd a month at least by cutting back on monthly spends and the odd bit of overtime

If you really are trying to save money then I urge you to seriously think about reconsidering buying a brand new car. You don't need a brand new car, they are very much a luxury in my eyes. Scrimping on monthly spending to try to make back the huge depreciation loss of buying a new car makes no financial sense.

harrpau7

Ultrasonic wrote: »

I'd personally be prioritising buying a house sooner over buying a brand new car.

Assuming you are dead set on it though, how likely do you think it is you'd want to buy the car after 3 years if you went down the PCP route? If you think it's likely then the 0% option is clearly better (via PCP then paying the GMFV the total cost of the car is £14,200 vs £12k via the 0% finance route). Another downside of the PCP option is that it will have annual mileage restrictions.

The other way of looking at it is the following, IF the GFMV is an accurate estimate of the value of the car after 3 years:

PCP: pay a total of £8700 over three years and then hand the car back.

0%: pay a total of £12k over three years but have a car worth £5500 at the end; net cost £6500 for three years (£2200 less than the PCP option).

For the PCP deal to work out cheaper, the car would have to be worth less than £3300 after three years.

If I go the PCP route, I definitely wouldn't buy at the end of the 3 years, would likely lather, rinse and repeat.

The 0% finance route would be on a cheaper car, the Fiesta Studio is £9,995, the Fiesta Zetec on the PCP is about £12,000 if memory serves. THE GMFV on PCP is £5,550 after 3 years, 12,000 miles per year.

The PCP seems good but I can't shake the fact that I am only renting the car, it's never mine. That's why the 0% finance if I could get it for the cheaper Fiesta Studio seemed so good.

I have until Friday to decide for definite, it's either go PCP on 12K car, 0% finance if possible on 10K car or stick with current car and hope nowt else goes wrong with it.

WWJD??

harrpau7

Ultrasonic wrote: »

If you really are trying to save money then I urge you to seriously think about reconsidering buying a brand new car. You don't need a brand new car, they are very much a luxury in my eyes. Scrimping on monthly spending to try to make back the huge depreciation loss of buying a new car makes no financial sense.

The main attraction from a new car was the 3 years warranty, no MOT for 3 years, free servicing and breakdown cover, plus you would hope a brand new car is reliable. I dont want to get into a situation with my current car that things start going wrong with it and it cost me chunks of money to fix as it has no warranty on it.

Ultrasonic

Well in that case the MSE thing to do is clearly to buy the cheaper car on 0% finance. But presumably you're attracted to the PCP option as you fancy the more expensive car?

Ultrasonic

harrpau7 wrote: »

The main attraction from a new car was the 3 years warranty, no MOT for 3 years, free servicing and breakdown cover, plus you would hope a brand new car is reliable. I dont want to get into a situation with my current car that things start going wrong with it and it cost me chunks of money to fix as it has no warranty on it.

Trying to convince yourself that these factors make buying a new car a money saving strategy is deluding yourself I'm afraid. Try doing some sums comparing estimated running costs of a second hand car vs the new ones you are looking at.

harrpau7

Ultrasonic wrote: »

Well in that case the MSE thing to do is clearly to buy the cheaper car on 0% finance. But presumably you're attracted to the PCP option as you fancy the more expensive car?

The more expensive car doesn't bother me at all.

Ultrasonic wrote: »

Trying to convince yourself that these factors make buying a new car a money saving strategy is deluding yourself I'm afraid. Try doing some sums comparing estimated running costs of a second hand car vs the new ones you are looking at.

Will do, may actually just not bother at all and stay as I am for now.

Ultrasonic

I was assuming that keeping using your current car wasn't realistic since you said it needs a new engine?

harrpau7

Ultrasonic wrote: »

I was assuming that keeping using your current car wasn't realistic since you said it needs a new engine?

Sorry, meant battery, not engine, stupid of me that was!

New battery's aren't too expensive anyway I don't think.

Ultrasonic

LOL! Minor difference

In that case keeping your current car is almost certainly the cheapest option. Compare your current running costs plus estimated depreciation with the new car options...

harrpau7

Ultrasonic wrote: »

LOL! Minor difference

In that case keeping your current car is almost certainly the cheapest option. Compare your current running costs plus estimated depreciation with the new car options...

Yup - have discussed with the girlfriend and we are going to start looking for mortgages instead.

Just hope cancelling the PCP contract won't affect my credit rating.