Mercedes PCP

racing_blue

XeonSX wrote: »

I see way too many replies here advising me not to buy a factory car. I am perfectly aware of the total cost of car + cost of this deal and choose to spend the money this way, that's not what this post is about.
I just wanted to understand the criteria for successful PCP application as to avoid worsening my credit history.

Sorry if any offence caused - not intended.

It's just you posted about buying a £45k car when you have £10k, and that makes all sorts of red flags and alarm bells go off in my head. We're all wired differently I guess.

I have no problem with the idea of spending £45K on a car. In fact, my last car cost over £30K. At least, that's what it cost the original owner. They ran it in for me and kindly allowed me to have it 3 years later for £14K, cash on the barrel. It's a fine set of wheels, although not a Merc.

I'd reframe it that renting this £45K car is like allowing Mercedes to securitize a slice of your income for the next 3 years. You'll be working for Mercedes...

One of the great things about credit scores, if you buy stuff this way, is that they really stop mattering.

saverbuyer

XeonSX wrote: »

Right, so this option is to save on £2770 interest that I'll have to pay over 3 years. I will indeed be cheaper to go from 6.4% Mercedes APR to 3.4% you suggest. That is very low, I wasn't aware this low was available. With mortgage I'm at higher lending risk so don't think I'll qualify. I also thought Mercedes won't allow me to end the deal this early especially after £7000 discount only because I went for their finance deal and even if they do they must have some penalties for early repayment.

But, you've done it so I guess it's possible. Let me look at their small print... thanks for the tip.

No penalty. You cancel the agreement within the 14 day cooling off period and retain the discount. I've done the same with Audi also.


This was through MB finance. It seems common enough.


http://www.mbclub.co.uk/forums/insurance-finance/188948-pcp-can-you-beat-system-3.html

XeonSX

racing_blue wrote: »

Sorry if any offence caused - not intended.

It's just you posted about buying a £45k car when you have £10k, and that makes all sorts of red flags and alarm bells go off in my head. We're all wired differently I guess.

I have no problem with the idea of spending £45K on a car. In fact, my last car cost over £30K. At least, that's what it cost the original owner. They ran it in for me and kindly allowed me to have it 3 years later for £14K, cash on the barrel. It's a fine set of wheels, although not a Merc.

I'd reframe it that renting this £45K car is like allowing Mercedes to securitize a slice of your income for the next 3 years. You'll be working for Mercedes...

One of the great things about credit scores, if you buy stuff this way, is that they really stop mattering.

I don't think looking at it as '' buying 45k car with 10k" is right. Firstly, there is 7k discount, that automatically makes it "buying 38k car with 10k". Then there is no commitment to actually buying a car after 3 years. And you've done this, buy after 3 years, so I guess you don't object to that. What you seem to find strange is people who spend a lot of money for first 3 years of owning a new car.

It might seem a little crazy to spend 20k to rent a car for 3 years but the prices are what they are because people can afford it. Surely you can appreciate the option of choosing how you car looks, what extras it has, the fact that it's new and covered by warranty and most importantly it's the latest.
I want 350e ( to be released in the summer). It's no secret that latest things cost the most but there is value in that, that I find worth it.

saverbuyer

XeonSX wrote: »

I don't think looking at it as '' buying 45k car with 10k" is right. Firstly, there is 7k discount, that automatically makes it "buying 38k car with 10k". Then there is no commitment to actually buying a car after 3 years. And you've done this, buy after 3 years, so I guess you don't object to that. What you seem to find strange is people who spend a lot of money for first 3 years of owning a new car.

It might seem a little crazy to spend 20k to rent a car for 3 years but the prices are what they are because people can afford it. Surely you can appreciate the option of choosing how you car looks, what extras it has, the fact that it's new and covered by warranty and most importantly it's the latest.
I want 350e ( to be released in the summer). It's no secret that latest things cost the most but there is value in that, that I find worth it.

Don't get fixated on the "discount". It's available if you pay cash. Essentially you're paying 20k to rent a 38k car for 3 years.

andyfromotley

XeonSX wrote: »

I'm not sure if I don't understand something or you're wrong but let me do the maths and you tell me if I am.

45k car over 3 years.

PCP - 10k Deposit, 7k Retailer deposit, 10k loan, 18k Final Payment (I intent to keep the car)
I repay 10k across 3 years @ £278 /month repayment + 28k across 3 years @ £77 / month interest (6.4% APR with Mercedes) = £355
£355 * 36 = £12780
Now totals: £12780 + £10000 + £18000 = £40780

Car loan - 35k across 3 years @5% (generous but anyway, it only makes your case stronger)
This comes to £37700 (£1047 / month) + £10000 = £47700

Your option is 7k more expensive. Now lets talk about pros and cons of each:
I own the car either way after paying off loan or PCP with final payment
True, that's where car loan is better I guess
If I intent to own it at the end, and I do then it doesn't matter what mileage I do.
Instead you'll have 'help I'm stuck with this 1k a month car loan'.
It's a lot easier to pay £355 per month than a £1050 you suggest I go for. The risks with PCP are less because you can give the car back after 3 years in addition to each month only costing £355.
The option you suggested, selling the car. Let me see if that's even useful.
Say you hit a problem 1 year into your loan. By that time you'd have spent 10k deposit + repayed 11k of your loan + spent £1500 in interest. Total spent £22.5k. Car probably depreciated by 33% so worth 30k. You sell and pay the loan back £30k - £24k = £6k - is what you have left so that 1 year costed you £16.5k

With PCP after 1 year. You can't back out since you can't sell the car so have to finish 3 year finance PCP deal. However since you only spend £355 a month you save £1050 - £355 = £695. After a year you saved up 695*12 = £8340. For next 2 years, to finish PCP, you need £355 * 24 = £8520.
This means you'd have almost saved up enough money to finish your PCP deal.
and if we calculate cost of ownership for those 3 years; guaranteed car value is 18k, I don't buy it though since I'm broke in this scenario. 10k + £355*36 = £22780

In conclusion it costed £6280 more to own the car for 3 years on PCP than 1 year on personal loan. Risks are the same.
Now this worries me, you have 1730 posts and been a member for over a year. Why are you suggesting such poor finance advice. I hope it's just your or my mistake and not some ulterior motive.

So you actually think that the 7K discount is only available to people buying on pcp?? Its not, trust me.

So assuming you can get £7k discount (at least) the costs are the same, my way still has the benefits that I listed. It does have a higher monthly payment, but you will pay less interest, however if you cant afford the personal loan repayments then you wont be able to use this option. As for handing back after 3 years, your dealer will be delighted if you do as the GTFV is always less than the value of the vehicle so you will lose again. I'll say it again PCP's are imo awful products bad for the borrower and beloved by dealers.

All that is by the by though, i was chipping in my opinion you can take it or leave it thats ok. However you then go on to question my motivation for giving such 'terrible' advice. Well I spend a lot of time on these forums gaining advice and giving where appropriate, i have only one aim, to become debt free and help others do the same, tbh i think your comments are out of order. But i'll live.

musafir05

The deal is beyond madness. Instead of a PCP try to obtain the car on PCH using gatewy2lease, selectedcontracts or lingcars.

XeonSX

saverbuyer wrote: »

Don't get fixated on the "discount". It's available if you pay cash. Essentially you're paying 20k to rent a 38k car for 3 years.

Is it? I've not heard / read anybody getting that. Please point me to where I can read about it.
Also show me a cheaper way of owning this factory car.

XeonSX

musafir05 wrote: »

The deal is beyond madness. Instead of a PCP try to obtain the car on PCH using gatewy2lease, selectedcontracts or lingcars.

gatewy2lease don't have e-class saloons. selected contracts do and their 45k model is £486 / month + £4374 initial payment. After 3 years I've spent £21870 and no way to actually buy a car for 18k anymore like I can with PCP. Please show me a deal that's better than what I explained rather than just saying its madness.

Double_V

I paid £800 deposit on my first car.

musafir05

XeonSX wrote: »

gatewy2lease don't have e-class saloons. selected contracts do and their 45k model is £486 / month + £4374 initial payment. After 3 years I've spent £21870 and no way to actually buy a car for 18k anymore like I can with PCP. Please show me a deal that's better than what I explained rather than just saying its madness.

A 3 year PCH is not the way to go because before returning you must complete MOT plus conduct repair if required. I suggest stick with a 2 year contract and rotate. I haven't done much search, however found a good deal on gbvehiclecontracts. If you are looking for specific E Class model then it will be difficult to obtain at a decent price.

If you are open to other manufactures then selectcarleasing has a good Audi A6 deal.