PCP, PCH or loan?

System

satchef1 wrote: »

But the PCP gives me a hassle-free exit option; I can simply hand the car back after three years if it's worth less than the GMFV.

And then what? You've got no car so then what are you going to do? And even if its worth more than the GMFV you've got no money to pay the £1000s the balloon payment will be so what are you going to do then?

With a loan, I'd be in negative equity.

You MIGHT be in negative equity but at least you'd have something to show for all that money you've been paying and you would no longer need to pay out.

In the first two cases you pay a ton of money out and at the end have no car. In the last case you pay a ton of money out but at the end you have a car.

In the first two cases because you'll have no car and you'll have no money because you've been paying the finance you'll be left with the only option available, start another PCH/PCP deal so once again you can spend way more money than you have to be left with nothing at the end of it.

worried_jim

MarianneP wrote: »

Thanks everyone, that's really helpful!

We're a bit wary of getting a slightly older second hand car - we did that a couple of years ago and the car has been nothing but trouble and cost us a fortune in niggly little faults, so as much as anything we're quite keen to minimise the risk of that. )

Toyota or Honda then. Buy outright used and you should be okay for some great value for money motoring.

Mercdriver

satchef1 wrote: »

Which is better is incredibly situational. You have to run. The numbers yourself and decide.

For me, there was no upside in getting a normal loan. A saving of ~£5 per month on the repayments, if I could keep all of the sweeteners I got for buying on PCP. But after three years, I'd owe £180 more than the PCP's GMFV. So I'd break even. At three years, I'd have an equal amount of equity in the car, whether I purchased on PCP or with a loan. But the PCP gives me a hassle-free exit option; I can simply hand the car back after three years if it's worth less than the GMFV. With a loan, I'd be in negative equity.

Keep taking the tablets!

You will have been paying for 3 years and have nothing to show for it if you turn the car in. The salesman may try and tell you that you will have sufficient equity at the end of the term to put the car in and go for a new one with no further payment, but that is dodgy to say the least.

Negative equity (in all senses, both cars and houses) is only meaningful in the event that you are forced to sell. It's a theoretical loss until you are in this position.

I used a dealers 0% offer on a used vehicle. Compared the price for the same car and trim in all dealers and my price was comparable. I expect to keep the car for far longer than the 3 years the finance is over.