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PCP change in circumstances
Comments
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cjmillsnun wrote: »You don't own the car until you make the balloon payment at the end.
You don't technically own the car with a standard HP deal either until you pay the fee at the end of term. But as the accountants put it; 'substance over form' - it's your bl00dy car.:)0 -
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No, you do own the car. PCP stands for Personal Contract Purchase. The clue is in the name.
Of course, PCP deals are structured so that most people choose to stop owning the car at the end of term, and start owning another one. But that's something else all together.
No you don't own the car, the finance company does until the very last payment is made and the big bill at the end to own the car outright is made.
If you own a car you are free to do with it what you wish including selling it or taking it to the crusher and turning it into a cube. Neither are options on a PCP deal without the lenders consent. If you have to get permission from someone else to do something with an article you have then you don't own it.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
Horses for courses. I'm on my 4th PCP car, it suits me fine. Low monthly costs, minimal maintenance costs and a new car every 3 years.
You do know you're paying the largest bulk of the depreciation every 3 years? Someone can buy that car at 3 years old for 1/3 of what you paid for it and have a very good car for the next 3 years and save a fortune. And given that they could be a cash buyer then they're not going to be like many posters on this board and royally shafted if their circumstances change.
Yes you MAY save in maintenance costs but then again you might not but the few hundred quid you save are dwarfed by the several grand you've set fire to in depreciation.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
No you don't own the car, the finance company does until the very last payment is made and the big bill at the end to own the car outright is made. ...
I'm aware of the legal formalities that lenders impose to ensure their security. It doesn't change the fact that it would be your car, and all the economic benefits and costs of ownership are yours.
Which is why, if you are a business and buy a car on HP or BCP, HMRC dictates that you claim capital allowances on the asset you have acquired. And why accountants insist that you stick it on your balance sheet as an asset.
Substance over form, remember.:)..If you own a car you are free to do with it what you wish including selling it or taking it to the crusher and turning it into a cube. Neither are options on a PCP deal without the lenders consent. If you have to get permission from someone else to do something with an article you have then you don't own it.
The exact same things could be said of a mortgage.
What I would say is that prattling on about 'never owning a car' that is on PCP is neither helpful or meaningful to anyone. What is both helpful and meaningful is to understand that it is a way of buying a car on finance with a balloon payment at the end that matches the guaranteed trade in value offered by the manufacturer.0 -
You do know you're paying the largest bulk of the depreciation every 3 years? Someone can buy that car at 3 years old for 1/3 of what you paid for it and have a very good car for the next 3 years and save a fortune. And given that they could be a cash buyer then they're not going to be like many posters on this board and royally shafted if their circumstances change.
Yes you MAY save in maintenance costs but then again you might not but the few hundred quid you save are dwarfed by the several grand you've set fire to in depreciation.
I never pay the balloon payment at the end, i just swap it for another car. The last 2 i've swapped after 2 and a half years. It suits me to pay between £120 and £150 per month for my car and not have to worry about depreciation or maintenance costs. It might not suit everyone but it's fine for me.0 -
No, you do own the car. PCP stands for Personal Contract Purchase. The clue is in the name.
Of course, PCP deals are structured so that most people choose to stop owning the car at the end of term, and start owning another one. But that's something else all together.
It doesn't matter what the arrangement is called, effectively it is a lease as most people use it. Yes, you can purchase the car if you can come up with the baloon payment at the end but most people do not. You hand the car back to the dealer having paid for all the early depreciation. The deal is rolled over onto another car and the whole process starts again.
There are those that can make this work for them but for the majority of people I do not believe that it is the best way to finance a car purchase.0 -
If you plan on getting a new PCP then the dealer should happily accept any over mileage/negative equity.
Instigating a new PCP before the end of the current one can often keep people happy.
My scenario is similar to your.
I am 6000 miles pa for 4 year deal.
I do circa 8000 pa
I do a new deal at year 3 which keeps me under 24000 total miles (That's the actual deal).
Also then avoid MOTs and servicing that hits in year 3 (I get 2 years servicing up front in the deal).0 -
I am about to buy a new car and I was going to pay cash, but the PCP deal offered is so good that I am going to take it, along with the hefty dealer contribution not available to a cash purchaser. When the balloon payment comes up in three years time I will probably pay it and keep the car.
I know that buying new cars is not moneysaving, but I love owning a car from brand new, and you're a long time dead.I used to think that good grammar is important, but now I know that good wine is importanter.0 -
I know that buying new cars is not moneysaving, but I love owning a car from brand new, and you're a long time dead.
If you enjoy and can afford a new car then why not - as they say there are no pockets in shrouds.0
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