Paying off PCP or keeping the vehicle

chanz4

its going to be the next missold I think, its not explained well at all

pmartin86

MataNui wrote: »

That would be a bit frustrating. Your right about PCP too. Its rarely the most suitable finance option yet its becoming the most common by a long way. Looking around on autotrader and the number of traders who are only offering PCP type finance is unbelievable. It really seems like financial suicide, particularly on used cars.[/]

I dont want to argue unneccassarily, and you entitled to your opinion, but that sweeping statment, is in my opinion, !!!!!!!!.

I personaly would say that for a large proprtion of people, PCP is an entire suitable option if all the pros and cons are considered, as opposed to the "Ohh shiny car, i want!" Attitude. I personaly beleive the main issue with PCP is the fact its heavily incetived for the salesmen and heavily weighed to be "one low payment" for people who can't see the big picture.

I use myself as an example, I have a reasonable disposable income a month, I drive aproxx 40,000 miles a year (work and business) yes I have got a deal thats costs me less than £200 a month plus a one off "£350 for 3 years service" fee. I know that having a relible car Ive got a guranteed handin price for in 3 years which will effectivly be a deposit on the next car is great.

While I understand that my situation is unique, im sure there are several examples of where PCP is mutualy beneficial.

phillw

MataNui wrote: »

Your right about PCP too. Its rarely the most suitable finance option yet its becoming the most common by a long way.

PCP itself isn't a problem. Most of the time they are 0%, so your payment is just the depreciation of the car. If anything the problem is that they have made buying new cars too affordable, like interest only mortgages.

Most new car owners don't need a new car, they just want it.

The_Real_Cheddar_Bob

pmartin86 wrote: »

MataNui wrote: »

That would be a bit frustrating. Your right about PCP too. Its rarely the most suitable finance option yet its becoming the most common by a long way. Looking around on autotrader and the number of traders who are only offering PCP type finance is unbelievable. It really seems like financial suicide, particularly on used cars.[/]

I dont want to argue unneccassarily, and you entitled to your opinion, but that sweeping statment, is in my opinion, !!!!!!!!.

I personaly would say that for a large proprtion of people, PCP is an entire suitable option if all the pros and cons are considered, as opposed to the "Ohh shiny car, i want!" Attitude. I personaly beleive the main issue with PCP is the fact its heavily incetived for the salesmen and heavily weighed to be "one low payment" for people who can't see the big picture.

I use myself as an example, I have a reasonable disposable income a month, I drive aproxx 40,000 miles a year (work and business) yes I have got a deal thats costs me less than £200 a month plus a one off "£350 for 3 years service" fee. I know that having a relible car Ive got a guranteed handin price for in 3 years which will effectivly be a deposit on the next car is great.

While I understand that my situation is unique, im sure there are several examples of where PCP is mutualy beneficial.

I wouldn't hold out for any equity left in the car you have. I wouldn't be surprised between now and then if it wipes it out completely. Look at the bank of England and their comments regarding pcp.

MataNui

We need to make a distinction here. There is PCP commonly offered on new cars which is nothing new. Then there is PCP being offered as a means to purchase used cars which is a rapidly growing trend. PCP rates on new cars can indeed by 0% (if you are lucky and i wouldnt suggest anyone turns down 0%). PCP deals on used cars though (even from franchised dealers) are typically around the 9-10.5% mark and i saw one this weekend at 24%. This seems nuts to me.

Also have a look at how these things are marketed. Look around autotrader and you wonder what some of these places are actually selling. The photos (meant to be of the car) are every other image being an advert 'Low rate finance', 'Guaranteed finance' etc.

spikyone

rjwr wrote: »

I wouldn't hold out for any equity left in the car you have. I wouldn't be surprised between now and then if it wipes it out completely. Look at the bank of England and their comments regarding pcp.

Not necessarily, it all depends on the car. Whilst some manufacturers (VW, BMW) use cheap monthlies to hook the unwary, leaving them with a balloon payment worth more than the car and perpetuating the PCP trap, I will have about £3-£4k of equity at the end of my PCP. Although if you look on Pistonheads you'll find plenty of whining that my car is "too expensive" because the monthlies on a Golf R are less, even though the VW is far more expensive overall. Which sort of proves that people really don't understand car financing because those people will have a balloon payment costing more than the car is worth when their PCP ends.
Of course, in my case, it's bad for the dealer because I'll be paying off the balloon before deciding whether to keep my car or trade it for an interesting used car that looks like it's finished depreciating.

As to your earlier comment, I rather take issue with this:

rjwr wrote: »

ok, so car went today. Thats £9000 weve spent in two years with insurance and tax and nothing to show for for it!!

"Nothing to show for it" is rather disingenuous. Your £9000 has paid for you/OH to have exclusive use of a brand new car for two years, plus the tax and insurance which would've likely cost even more had the car been older - not to mention the amount that you would've been spending on repairs, MOTs, and consumables. In two years you didn't need to replace tyres or brakes and it probably needed minimal maintenance. So you had plenty to show for it - it just wasn't what you wanted. Nowt wrong with that, but it doesn't make buying & owning a car some kind of a scam.

jimbo747

PCPs are great imo. Take out for 3 years, and then VT in last few months as the payments will be greater than depreciation by that point.

Saying that, I'll be leasing next time come December, some cracking deals around.

I'm not ashamed to admit I like new shiny things, and then get rid when it starts going wrong. If you can comfortably afford it, why not. Some people spend £50 a month just on a phone, or blow £100 on a night out each week. That £450 a month can buy and run a pretty decent car.

The_Real_Cheddar_Bob

spikyone wrote: »

Not necessarily, it all depends on the car. Whilst some manufacturers (VW, BMW) use cheap monthlies to hook the unwary, leaving them with a balloon payment worth more than the car and perpetuating the PCP trap, I will have about £3-£4k of equity at the end of my PCP. Although if you look on Pistonheads you'll find plenty of whining that my car is "too expensive" because the monthlies on a Golf R are less, even though the VW is far more expensive overall. Which sort of proves that people really don't understand car financing because those people will have a balloon payment costing more than the car is worth when their PCP ends.
Of course, in my case, it's bad for the dealer because I'll be paying off the balloon before deciding whether to keep my car or trade it for an interesting used car that looks like it's finished depreciating.

As to your earlier comment, I rather take issue with this:



"Nothing to show for it" is rather disingenuous. Your £9000 has paid for you/OH to have exclusive use of a brand new car for two years, plus the tax and insurance which would've likely cost even more had the car been older - not to mention the amount that you would've been spending on repairs, MOTs, and consumables. In two years you didn't need to replace tyres or brakes and it probably needed minimal maintenance. So you had plenty to show for it - it just wasn't what you wanted. Nowt wrong with that, but it doesn't make buying & owning a car some kind of a scam.

it wasn't new. I disagree, but you seem like the sort of person I could spend the next five weeks arguing with so ill take your comments and leave it there.

:T