Beware the Credit Crash!

michaels

wotsthat wrote: »

If PCP was being used after careful assessment that it was a cheaper way to own a new car compared to using abundant cash savings then that would be very MSE.

In the real world people use PCP because they have no savings and don't calculate the cost so it appears to offer a wondrous way to drive around in a set of wheels they could never otherwise afford.

PCP increases the cost of motoring because without it the average punter would be driving around in a perfectly serviceable £5k used car at a much lower cost per mile.

I used to drive 'pre-depriciated' cars until my most recent 5k purchase needed 2 clutches, a dpf, a turbo and an egr within 2 years - add in the depreciation and tax and it was massively more expensive than the brand new car I replaced it with on pcp which cost a total of 3.3k over 2 years.

I am now extending the credit to buy the car after 2 years as they have knocked 3.5k of the 'GFV' and are offereing me 0% over 3 years so total purchase price of a 'list price' 27k car will be 12.3k paid over 6 years.

And I think this is the real 'con' of PCP, it allows manufacturers to artificially inflate the list price of cars to then offer 'unbelievable' discounts which has become pervasive in retailling in the UK - Tube of Pringles? That will be £2.49 RRP and either 50% off special offer or buy one get one free.

kabayiri

michaels wrote: »

...
And I think this is the real 'con' of PCP, it allows manufacturers to artificially inflate the list price of cars to then offer 'unbelievable' discounts which has become pervasive in retailling in the UK - Tube of Pringles? That will be £2.49 RRP and either 50% off special offer or buy one get one free.

List price of privately purchased vehicles is often high because of the high percentage of sales going to Fleet customers.

I've sat in on the sales chat between the dealers and the purchasers in the Fleet provider offices.

The conversation used to start with "let's take 20% discount off List as a given. NOW tell me how much you will reduce the price further".

Private buyer subsidises the fleet buyer.

Conrad

These things are not black n white.


I've always owned outright or with a very cheap HSBC personal loan, but have spent the last few months considering PCP, and I'm pretty tempted for all sorts of reasons.


I'm not one for flash cars but I'm getting older and do fancy having a bit of splash out.


Some 'tight' folk I know love to remind you of their £3k car bargain but overlook the fact they keep expensive pedigree dogs.

Thrugelmir

Carl31 wrote: »

PCP makes sense, thats probably more likely why its increased, people realise its the more sensible option, theres no value in owning cars

Depends on ones circumstances. Bought my last car 8 years ago when it was already 4 years old. Still only done 52,000 miles. The car cost me £3.5k for cash. How much would I have spent leasing?

wotsthat

michaels wrote: »

I used to drive 'pre-depriciated' cars until my most recent 5k purchase needed 2 clutches, a dpf, a turbo and an egr within 2 years - add in the depreciation and tax and it was massively more expensive than the brand new car I replaced it with on pcp which cost a total of 3.3k over 2 years.

I am now extending the credit to buy the car after 2 years as they have knocked 3.5k of the 'GFV' and are offereing me 0% over 3 years so total purchase price of a 'list price' 27k car will be 12.3k paid over 6 years.

And I think this is the real 'con' of PCP, it allows manufacturers to artificially inflate the list price of cars to then offer 'unbelievable' discounts which has become pervasive in retailling in the UK - Tube of Pringles? That will be £2.49 RRP and either 50% off special offer or buy one get one free.

You can win with PCP and I'd fully expect that you wouldn't have entered into the deal without a great deal of spreadsheet work.

However, I think it's fair to say that the bulk of PCP 'buyers' are people who, without it, would never be able to own a new car in a month of Sundays and I'd bet they'd struggle to raise £5k from savings to buy a decent used car.

PCP occupies the same space as Wonga IMO.

I might be biased because the only people I know using it have been young people amazed they can get some cool wheels for a 'low' monthly payment. Never has that monthly payment been multiplied out to provide a comparative cost of motoring.

wotsthat

kabayiri wrote: »

List price of privately purchased vehicles is often high because of the high percentage of sales going to Fleet customers.

I've sat in on the sales chat between the dealers and the purchasers in the Fleet provider offices.

The conversation used to start with "let's take 20% discount off List as a given. NOW tell me how much you will reduce the price further".

Private buyer subsidises the fleet buyer.

But nobody pays list price for a new car?

I find it annoying as a company car driver. Nobody, nowhere pays list price for a new car yet HMRC consider the benefit of my car to be based on the list price rather than what I could've paid as a private punter.

grawiz

If you can hold on until Brexit actually starts, there should be some amazing deals available as the economy plummets.

antrobus

grawiz wrote: »

If you can hold on until Brexit actually starts, there should be some amazing deals available as the economy plummets.

If the "economy plummets" then so will the pound. Making all those BMWs etc and so forth more expensive.

antrobus

WengerIn wrote: »

I do wonder about self driving cars.

Firstly there's the problem about how we get there. I'm not sure I want a road full of AVs and people trying to game claims against their insurance. Secondly I'm not sure I want to sit in an AV that is going to return control to me when disaster strikes. Thirdly I don't want to be doing 80 mph and get a phone call asking me to pay £20k to return braking control to me.

I love the idea, I think most people do. The reality might be a harder sell.

Plus vehicle number savings might be lower than you think. You claim 2/3rds. Well I don't know about you but my kids have to be at school at 9am and I need to be in at 8.30am as does my wife at a different place of work. If my kids are going to be taken to school by an AV then I need more cars not fewer!

With AVs the problem remains that most people work something approximating 9-5, that's why we have a rush hour. Like with power stations we need enough capacity for peak hours not average consumption.

I believe that the GreatApe is somewhat over-enthusiastic over the impact of self-drive cars.

As you have noted, there is the issue of peak demand. But more importantly, as you have again noted, there is the open quesion of whether people want the darn things. We already have taxis, people can already decide to ditch the car on their driveway and rely on taxis, but they choose not to do so.

So it's not a question of arithmetic, as in x number of self-drive taxis can replace y number of owned cars, it's a question of economics, as in dispensing with the need for a human taxi driver will make taxis so much cheaper that people will make a different choice.

kabayiri

wotsthat wrote: »

But nobody pays list price for a new car?

I find it annoying as a company car driver. Nobody, nowhere pays list price for a new car yet HMRC consider the benefit of my car to be based on the list price rather than what I could've paid as a private punter.

You'd be surprised how many don't haggle.

You're likely to be paying list if you enter into a PCP deal, because the real cost of the car is shrouded in the overall contract.

People don't care though. They just look at the cost per week.