taxi driver car purchase pcp

85jaimsay

Hi everyone,

First time poster, sorry in advance if it's been covered already in other sections and is a bit of a long winded headache.

Basically I'm a self employed private hire driver looking to get a new vehicle. I own my current car and was initially looking to go into contract hire for my next one to save any costly problems and gain on the tax expense benefits rather than the capital allowance pool @18% per year etc.

It turns out that I would have difficulty getting insurance and a plate for the car as I do not own the vehicle therefore I have been considering the option of a PCP. I have read various articles and forums and have gained a good insight into how the system works (thanks everyone) however I am not 100% on the best route for someone such as myself.

Currently looking at an approved used vehicle for sale at around £15k mark based on a pcp over 48 months more than likely looking to trade the car in for another one around year 3 or whenever someone on here with experience may recommend. I have read about people voluntary terminating the car after 50% paid with excess mileage etc, trading the car in with equity and using that as a deposit etc but to be honest I still haven't figured out the best path to take

I have done a couple of calculations on the dealers site based on the same car doing either 25k or 30k per year and come up with some different options. Whether they are the actual figures or they may change upon circumstances I do not yet know.

But to give you guys an idea to work off iv crunched a few numbers below. Same car same term just different mileage.

Car value £14990
Term 48 months
Deposit £0
Apr 6.9%
Excess mileage 6p per mile

Annual mileage 25k (100k term total)
47 monthly payments @£283.48 =£13323.56
Optional final payment £4286.59
Option to purchase fee £10
Total amount payable £17620.15
Passed 50% paid @month 32 (£9071.36)

Annual mileage 30k (120k term total)
47 monthly payments @£292.47 =£13746.09
Optional final payment £3802.98
Option to purchase fee £10
Total amount payable £17559.06
Passed 50% paid @ month 31 (£9066.57)

As you can see above the payment plan has me paying an extra £422.53 total over the 4 years if I was to go for 30k per year and valuing the car £483.61 less than the 25k per year even though the overall amount payable is £61.09 less on the higher mileage.

However, should I opt for the lesser annual mileage and actually do 30k per year which is generally what I do at the minute then the excess mileage of 20k x 6p would be £1200 that is without vat which I assume they probably add to it.

It may sound like a no brainer as if I'm going to archive 30k per year then why not do that right. Well after reading everyone's posts about VT and trading in early I find myself saying is it better to take less miles with lower payments and trade early before the mileage cap of 100k is hit or do they actually base it on annual figures? As if I took a 25k path and decided to trade at month 32 then theoretically on a 30k annual at month 32 I would only be at 80k which is under the 100k total.

My questions are:-

1- can someone in my position get a pcp deal?

2-is there a mileage cap or is the sky the limit upon sign up and the more you say the more you pay?

3-based on the scenarios about what do people think seems the most sensible and cost effective route?

4-in terms of cutting the term short is it better to trade or voluntary terminate

5- if the car is worth more than anticipated is there any trade in benefits rather than buying it for the final payment and selling private?


Apologies once again if it's been covered already but I have hunted high and low for info on various sites.

Any information would be greatly appreciated

Thanks

motorguy

With a PCP deal you wont own the car until the final payment (residual value) is paid. You may wish to clarify this with your licence providers and insurance company - you wont own the car.

Are the finance company happy for you to buy a car on a personal PCP and use it for business / taxiing purposes. Some may have issues with that. Dont assume that what the car salesman tells you is FACT. They are lying weasels.

A taxi will incur an awful lot more use / abuse than a regular car and you could invoke hefty charges if you try to hand it back.

Why tie yourself in to a PCP at all? You could get a loan over 5 years at a lower APR and then review after 3 years what the car is actually worth, relative to what you owe at that point.

Is it really necessary to spend £15,000? Thats got to be buying you a year old Passat or Skoda or whatever but is that really necessary? You will seriously roger the value of the car by putting big taxi miles on it.

You could buy one at 3 years old for an awful lot less. If you bought a car at £9,000 and took out a personal loan for it, payments would be around £300 a month and after three years you'd be in pocket as you'd have the loan paid and whatever the car was worth it would be yours. You might also find you are happy to drive on at the car for several years after that, payment free.

I personally think PCP on a used car, to be used as a Taxi is a particularly bad idea.

motorguy

Heres the cars I'd be looking at. Three years old, sensible miles and a good price octavia

http://www.autotrader.co.uk/classified/advert/201706286863434?maximum-mileage=40000&make=SKODA&onesearchad=Used&onesearchad=Nearly%20New&onesearchad=New&year-from=2014&body-type=Hatchback&model=OCTAVIA&sort=price-asc&advertising-location=at_cars&postcode=bt622hb&fuel-type=Diesel&radius=1500&price-to=9500&page=1

You could have that for around £260 a month and own it after three years.

Heres a Superb for only a little more

http://www.autotrader.co.uk/classified/advert/201708118236351?onesearchad=Used&onesearchad=Nearly%20New&onesearchad=New&make=SKODA&sort=price-asc&advertising-location=at_cars&fuel-type=Diesel&radius=1500&body-type=Hatchback&price-to=9500&maximum-mileage=40000&model=SUPERB&postcode=bt622hb&year-from=2014&page=1

Or a Passat for the price of the Octavia

http://www.autotrader.co.uk/classified/advert/201707117270965?body-type=Saloon&price-to=9500&year-from=2014&onesearchad=Used&onesearchad=Nearly%20New&onesearchad=New&radius=1500&make=VOLKSWAGEN&fuel-type=Diesel&model=PASSAT&sort=price-asc&postcode=bt622hb&maximum-mileage=40000&advertising-location=at_cars&page=1

85jaimsay

Hi motorguy

Thanks for taking the time to reply and give some recommendations.

Your right in saying that an older car would do the job. I could drive around in a road worthy 15 year old car if I wanted to but how often would it be back and forth to the garage needing work done leaving me off the road not earning money.

My current car is on a 62 plate with 140k on clock. Purchased at 1 year old for £11k. Serviced 4 times a year and very well looked after. Servicing after 100k has become more expensive. I'd be lucky to get £3k for it now. So it's depreciated £8k in 3.5 year. Had I took a loan out over 3 year at 9.9%apr I'd be paying £350 a month and over £12500 total putting the depreciation at £9.5k which is not far off what it costs on a pcp in 3 year. Had the loan been over 5 year the car would be in negative equity.

Reliability, comfort and efficiency are important to me and the added benefit of warranty to a younger car. There are a number of drivers nowadays driving executive cars such as new Mercedes and bmw’s however unless the executive work is there to cover the cost I see no reason to tie into such an expensive car. I don't think £15k is that expensive in contrast to this.

I appreciate your input on age, models and prices. There is the alternative of hiring the car from the private hire company without the worry of maintenance however at £120 a week (£520 a month) plus being tied into their more expensive fleet insurance at additional cost is a big chunk out of your weeks wage. In essence my idea of the pcp is a form of hire that costs me a lot less and I change cars every few year and should my circumstances change after 50% paid I could voluntarily terminate the deal like a lot of people seem to be doing. My post is really just to find out what people are doing with these pcp deals and how they are working out for them.

Regards

motorguy

85jaimsay wrote: »

My post is really just to find out what people are doing with these pcp deals and how they are working out for them.

Regards

No probs RE: the rest of the stuff.

RE: this - as per my post i'd still check as to whether the licencing office are happy that that is "owning" the vehicle, and also that the finance company are happy for you to use their car as a taxi.

If you hand the car back either at the end of term or via a VT it will be subject to rather stringent checks which it is highly likely (unless you maintain your car to an exceptionally high standard) it is likely to fall short of given the miles you will be doing.

Granted, you have a "fixed cost" every month but personally i'd always be looking at the miles and worrying about going over, or be concerned about every mark / scratch / chip on the bodywork or wheels, knowing they will be billing you.

Entirely up to you, but i personally dont think PCP is the right finance mechanism - to me it creates more problems than it solves.

Even if you were to buy a £15K car on a 5 year loan you'd roughly replicate the PCP payments but have choices at the end of year 3 to either drive on or replace it.