PCP the new PPI Scandal?

motorguy

Cornucopia wrote: »

That's not true at all. I've been there - had the worst depreciation on any of the cars I've owned on a nearly new Ford, which was a forced sale because it wouldn't fit in the garage of the house I'd just moved to (and the area precluded keeping it outside).

As such, I value the protection against depreciation offered by PCPs and Leases.


Yes, that's intrinsically what they are. I think PCPs would be better termed Personal Leases or something similar that emphasised the sort of product that they are.


I cannot see how you can buy a £20,000 car for £200 per month.

As an example, a Skoda Octavia 2.0 CRDi SE Business is available on a 3+35 Lease for £202.80pm. This equates to a total cost of £7706 including £606 down.

The list price is £20,535. Assume a decent discount of £3000, and the repayments on a 36 month loan would be of the order of £500 per month with a £600 deposit. Even extending to 60 months only sees it reduce to £319.

The total cost after 3 years would be £18,600. Therefore if the vehicle was worth more than £10894, then the purchase route would be better value for money, but I'm not sure I'd take that bet.

TBH i'd a response typed up for this, but realistically we could debate all day on the advantages / disadvantages of PCP / leasing. Actually i could debate all day on the advantages of it - i'm not against it.

However, there are a lot of people out there who are now defaulting to the PCP route without considering all their options. Thats really all i would say - look at all options and dont just "assume" that any particular one is going to be best for every given circumstance.

Cornucopia

I suppose what I'm against is the opposite to that - people who presume that PCPs/Leases are always bad, without considering the true position.

I appreciate that the true position isn't always as clear as it could be, and I also appreciate that PCPs should not be described as an approach to buying a car, but are more akin to renting one.

For me, it's about 3 things:-

- The TCO for the vehicle over the period I wish to own it for.

- The built-in accounting for depreciation and protection against excess depreciation.

- And to a lesser extent the VFM represented by the monthly costs versus the vehicle.


You are right, of course, about the very best leasing deals (and it's also true in a slightly different way of manufacturers' PCP deals) - the best prices are on specific cars at the time.

Personally, I take the view that most mainstream cars these days are not bad cars, and if I was in the market for a petrol hatchback, I'd probably be happy with a Seat Ibiza (£100pm if I leased this month), a Skoda Fabia (if I leased next month) or a Kia Ceed (if I leased the month after). I'm happy for others to take a more personalised or brand-oriented view and pay additional costs accordingly.

I'm also happy to weigh up the cost/benefit difference between say, a VW Golf (c. £200pm) vs. a Seat Ibiza (c. £100pm). For me, the leasing price makes it clearer exactly what costs are involved.

takman

Cornucopia wrote: »

I suppose what I'm against is the opposite to that - people who presume that PCPs/Leases are always bad, without considering the true position.

I appreciate that the true position isn't always as clear as it could be, and I also appreciate that PCPs should not be described as an approach to buying a car, but are more akin to renting one.

For me, it's about 3 things:-

- The TCO for the vehicle over the period I wish to own it for.

- The built-in accounting for depreciation and protection against excess depreciation.

- And to a lesser extent the VFM represented by the monthly costs versus the vehicle.


You are right, of course, about the very best leasing deals (and it's also true in a slightly different way of manufacturers' PCP deals) - the best prices are on specific cars at the time.

Personally, I take the view that most mainstream cars these days are not bad cars, and if I was in the market for a petrol hatchback, I'd probably be happy with a Seat Ibiza (£100pm if I leased this month), a Skoda Fabia (if I leased next month) or a Kia Ceed (if I leased the month after). I'm happy for others to take a more personalised or brand-oriented view and pay additional costs accordingly.

I'm also happy to weigh up the cost/benefit difference between say, a VW Golf (c. £200pm) vs. a Seat Ibiza (c. £100pm). For me, the leasing price makes it clearer exactly what costs are involved.

So what your saying is to get a good deal on a lease car you have to not care what make or model you want and not care what options the car has. If you have this attitude then I can't see the benefit of buying a new car?.

If your not fussed about any of that you can get a good second hand car which will work out a lot cheaper than paying the depreciation on a new car.

Why would you want a brand new car if you don't want any of the new features that they offer.

AdrianC

takman wrote: »

So what your saying is to get a good deal on a lease car you have to not care what make or model you want and not care what options the car has. If you have this attitude then I can't see the benefit of buying a new car?

No, he's saying that the headline lease deals are often very specific, and that you may have to choose between the headline deal and the specification.

Cornucopia

takman wrote: »

So what your saying is to get a good deal on a lease car you have to not care what make or model you want and not care what options the car has. If you have this attitude then I can't see the benefit of buying a new car?.

No?

The key selling point of a new car is that it's new. Ideally, it's also been chosen by you to broadly meet your needs.

Top spec Chevrolet Spark or barely-spec'd Dodge Viper? Hmmm. Tricky decision.

If your not fussed about any of that you can get a good second hand car which will work out a lot cheaper than paying the depreciation on a new car.

Yes, that's a given, but is not what this thread is about. However, I did say a few posts back that my worst depreciating car (by far) was not new. If I had been told (by way of the MGFV or a high lease price) that that car would depreciate as quickly as it did, I would not have bought it, and any protection against depreciation would have been ideal.

Why would you want a brand new car if you don't want any of the new features that they offer.

As I've said several times now, not everyone is buying a new car to get new features. And probably for most drivers, getting the most "toys" is not their primary concern.

To clarify for you, what I am saying is this:-

- Lease prices provide a level of transparency such that you can choose spec vs. price, if you wish. Or you can search for a specific model and choose a deal that way.

- Lease prices are such that IF you aren't that concerned about a specific model or specification, you can sometimes grab a relative bargain - just as you can with a cash purchase or a second-hand car.

- Leases and PCPs provide proper accounting for the major cost of new car purchases, and a level of protection against excess depreciation, too.

motorguy

Cornucopia wrote: »

I suppose what I'm against is the opposite to that - people who presume that PCPs/Leases are always bad, without considering the true position.

I appreciate that the true position isn't always as clear as it could be, and I also appreciate that PCPs should not be described as an approach to buying a car, but are more akin to renting one.

For me, it's about 3 things:-

- The TCO for the vehicle over the period I wish to own it for.

- The built-in accounting for depreciation and protection against excess depreciation.

- And to a lesser extent the VFM represented by the monthly costs versus the vehicle.


You are right, of course, about the very best leasing deals (and it's also true in a slightly different way of manufacturers' PCP deals) - the best prices are on specific cars at the time.

Personally, I take the view that most mainstream cars these days are not bad cars, and if I was in the market for a petrol hatchback, I'd probably be happy with a Seat Ibiza (£100pm if I leased this month), a Skoda Fabia (if I leased next month) or a Kia Ceed (if I leased the month after). I'm happy for others to take a more personalised or brand-oriented view and pay additional costs accordingly.

I'm also happy to weigh up the cost/benefit difference between say, a VW Golf (c. £200pm) vs. a Seat Ibiza (c. £100pm). For me, the leasing price makes it clearer exactly what costs are involved.

Yes, i totally agree with this. However in the context of this thread i would say almost without doubt the O/Ps son could have had a good used car and something to sell at the end of it than committing to a brand new car now.

PCP / lease deals are probably the most cost effective ways of driving a new car (with some caveats) however how many of us really need to drive a new car?

Its great to be evangelising about say, a new Focus for £2K down and £200 a month, but what about a 3 year old from a Ford main dealer for the same £2K down and £200 a month?

http://www4.autotrader.co.uk/classified/advert/201604293459356?price-to=8500&radius=1500&searchcontext=default&page=5&search-target=usedcars&make=ford&keywords=zetec&year-from=2013&postcode=bt622hb&sort=default&onesearchad=new%2Cnearlynew%2Cused&fuel-type=diesel&model=focus&maximum-mileage=up_to_35000_miles&logcode=p

You'd get years driving out of it and even if you did change after 3 years, you'd probably get a return of £4000.

Whilst PCP / leasing is a very useful product, we need to be careful that the right people are using it for the right reasons

motorguy

Cornucopia wrote: »

To clarify for you, what I am saying is this:-

- Lease prices provide a level of transparency such that you can choose spec vs. price, if you wish. Or you can search for a specific model and choose a deal that way.

- Lease prices are such that IF you aren't that concerned about a specific model or specification, you can sometimes grab a relative bargain - just as you can with a cash purchase or a second-hand car.

- Leases and PCPs provide proper accounting for the major cost of new car purchases, and a level of protection against excess depreciation, too.

True, however whilst people can see the "raw" depreciation costs, it does hide the fact that if they were to buy a 3 year old example of finance they would at the end of it an asset with a significant value rather than walking away with just the memory of having had a nice shiney new car at the door.

motorguy

Cornucopia wrote: »

- Leases and PCPs provide proper accounting for the major cost of new car purchases, and a level of protection against excess depreciation, too.

How many people "need" a new car though?

jimjames

Stacy_B wrote: »

It's a pity Some people on here werent about when PPI was as such an expert would have prevented it from happening to "millions" of people of all ages including parents that should know better! Even the financial "experts" couldn't see it, prevent or stop it, hindsight is great with these anonymous experts.

Although many PPI claims were genuine I'd suggest that most of the ones now are probably not. Some people were probably mis-sold, others more likely to be mis-bought. As with all things including PCP, you should be aware of what you are signing up to before you put your signature to it.

Stacy_B wrote: »

Please read the post carefully in the future and don't jump to conclusions - the PCP bubble has to burst in the future.

PCP has been around over 20 years. Just because some people want a shiny new car every few years doesn't mean there is a problem with the system - maybe a problem with the people who sign up without thinking about consequences though.

jimjames

securityguy wrote: »

The generation with children now in their early 20s are the generation that bought, or should that be "bought", houses on endowment mortgages, swapped employer pensions into private pensions and had PPI on their loans, so those parents' advice is, in general, not great.

I'd say the opposite. If you've experienced all those things and had fingers burnt then surely you'd be able to give good advice to kids not to do it!
I'm of that generation, I refused PPI because I could see it was a pointless ripoff, I refused endowments despite being told I was crazy by the salesman. I looked at private pension and, shock horror, took advice from my dad not to do I!