New Car

jack_tyler

Hi, I am thinking about buying a new car, but I am unsure as to what would be the best way, financially, for me to buy it...whether its P.C.P, H.P or buying the car outright.

In the past myself and my late husband, have always bought cars via Hire Purchase, as my husband always said this was the best way....but after talking with friends I am now not so sure. A lot of my friends have their cars via P.C.P, they say that this is most definitely the best way, as every 3yrs (or so) you can have a brand new car, the payments are relatively low, you don't take the hit as regards depreciation value and you will always be in positive equity so after doing this for a few years, eventually you will have a brand new car, paying next to nothing for it.....however some other people have said that this is not the best way, as you will never own the car outright, you are continuously paying for a car and the depreciation value is terrible...and then other people have said that if you can you are better to pay for a car outright.......please please can somebody tell me what its the best way to buy a car, confused doesn't cover how I feel right now :wall:

marlot

You always end up paying the depreciation!

How long do you normally keep your cars for? Unless you change your car every three years or so it normally makes most sense to pay outright (assuming you have the money).

foxy-stoat

The people who use PCP say its the best thing for them.
The people who use HP say its the best thing for them.
The people who take out a loan for £5000, £10,000, £20,000 and buy the car say its the best thing for them.
The people who save £2000 (thats me) and buy a cheapy say its the best thing for them.....

See where I am going.

Whats the best thing for you and whats the most important aspects for you about car ownership, or non-ownership?

Too many factors to give an easy or correct answer.

forgotmyname

foxy-stoat wrote: »

The people who use PCP say its the best thing for them.
The people who use HP say its the best thing for them.
The people who take out a loan for £5000, £10,000, £20,000 and buy the car say its the best thing for them.
The people who save £2000 (thats me) and buy a cheapy say its the best thing for them.....

See where I am going.

Whats the best thing for you and whats the most important aspects for you about car ownership, or non-ownership?

Too many factors to give an easy or correct answer.

Me too, We must be doing it right

£2000 (ish) and 5 years cheap motoring, Bought new once and wont make that mistake again.

All too often its because the tax is cheap... what about the £2000 - £3000 its depreciating each year? Does the cheap tax saving balance out the £2k+ depreciation each year?

neilmcl

jack_tyler wrote: »

Hi, I am thinking about buying a new car, but I am unsure as to what would be the best way, financially, for me to buy it...whether its P.C.P, H.P or buying the car outright.

In the past myself and my late husband, have always bought cars via Hire Purchase, as my husband always said this was the best way....but after talking with friends I am now not so sure. A lot of my friends have their cars via P.C.P, they say that this is most definitely the best way, as every 3yrs (or so) you can have a brand new car, the payments are relatively low, you don't take the hit as regards depreciation value and you will always be in positive equity so after doing this for a few years, eventually you will have a brand new car, paying next to nothing for it.....however some other people have said that this is not the best way, as you will never own the car outright, you are continuously paying for a car and the depreciation value is terrible...and then other people have said that if you can you are better to pay for a car outright.......please please can somebody tell me what its the best way to buy a car, confused doesn't cover how I feel right now :wall:

Please read - http://www.thecarexpert.co.uk/car-finance-pcp-explained/

loskie

op your idea of pcp is completely misguided. By changing the car at the end of each 3yr or whatever term you are basically renting, You own nothing, there is no equity IT IS AN EXPENSIVE ASSET THAT DEPRECIATES RAPIDLY

AdrianC

Cash - you pay all the money initially. You own the car.
HP - you borrow money, you repay all that money over a period. At the end of that period, you own the car.
PCP - you borrow money, you repay some of that money over a period. At the end of that period, you can choose to repay the rest of the money and own the car.

Remember, you are borrowing that "balloon" money for the entire period of the PCP.

forgotmyname

I wish someone had told me that borrowing for a car is a poor choice.

Your asset depreciates and the interest accumulates. Where were you MSE??

NBLondon

This is in no way an expert opinion but.... It seems that PCP works for some people who never intend to own the car - they do intend to change every 2/3 years because that's important to them and their logic is mostly focused on the amount going out every month. Particularly if they are getting a car allowance from work which will cover most or all of it. So they don't care about the balloon payment as they never expect to pay it. It's the same logic as a mobile phone contract. It's a system that works if you expect your income to be stable or increasing and want/need the convenience right now. You may pay more for that convenience and take the risk that if your income unexpectedly drops/stops you may be in negative equity or carless. It's attractive at first because the payments per month are lower than HP.


Personally, I'd not take that risk - because I've been made redundant more than once and had periods of contract working with irregular income. I personally wouldn't take the HP route - because I don't need/want a brand-new car that much. So I save the cash ready for when I might need to change and haggle a deal if I can. Best case is having the cash; finding a 0% finance deal and keeping the cash in an interest generating place until the point it is needed to pay off that deal early.

andrewf75

as others have said it depends whether you want to own a car the cheapest way or whether you want a new car every few years.
Personally as a committed money saver, I would never buy a *new* car outright or by any other method. The first few years are when it depreciates most so I think you get the best value buying a second hand car. With the ease of lease schemes these days I'm convinced second hand cars are better value than ever.

ratrace

I have just been comparing two cars that someone I know has bought on pcp

New skoda rapid 1.4 tsi dsg, the deal is (£203.22 x 47 = £9551.34) + the baloon of £*** (not sure what the baloon at the end is)

Compared to a used

(used) 2013 skoda rapid 1.4 tsi dsg 16,000 miles on the clock cost to buy from the trader £7,499 ono

so as you can see from the above example the overall savings are huge as the above poster mentioned, not very mse