Maths check on car finance

Begazzz

Hi. First post after lurking for years so hi all.

I’m just going through the maths of my pcp deal now that the polish has worn off after 2 yrs and having a sanity check.

My Mercedes on pcp costs £6199 p/a which includes servicing road licence and fuel. At the end of the “deal” I’m sure I’ll be left with equity of naff all or the equity will be hidden into a fake discount on a new car or some other trick.

I’ve done another calculation on a used Mitsubishi Delica import which is worse on fuel/tax but just an example for fun as the principle is key. ( bear with me )

Loan of £12k over 4 yrs fuel/tax etc come to £5214 p/a. so assuming it’s not a bag of spanner’s I’m better off by £985 per year.

Now my thinking is assuming the car is worth £4K at the end of my loan on the 4th year which I think is pessimistic. I am essentially gaining equity in that asset at the rate of £1000 p/a which in real terms means I take £1000 p/a off the cost of the car meaning the real cost is £4214 which is a saving of nearly £2k per year and £8k over 4 years. That’s a lot of money!!!

This is obviously dependent on Mercedes not giving me any real equity (likely as all dealers are sharks) and the old car only being worth 4K.

Can anyone sanity check this logic. My brain hurts.

Many thanks Dom.

Mr.Generous

Sounds right to me, £2k pa extra would get you some very memorable holidays. As I get older I can tell you I don't look back on the nice cars as much as the fantastic experiences, and family holidays are right up there.

AdrianC

I'm not sure the only options on the table are a new financed Merc or a (long in the tooth?) import (4x4 camper?) van...

Decide first on which of those very different vehicles you want to be driving, because your motoring life will be VERY different with them.

Once you've decided what you want, then decide the best way to finance it. For the Mitsu, that's unlikely to be anything other than cash, maybe with a loan - your biggest expense will be maintenance. For the Merc, there's a wide range of options - but however it's wrapped up, your biggest expenses will be interest and depreciation.

BTW - PCP including FUEL? Are you sure about that? However that's wrapped, it's unlikely to be a good deal for you...

LandyAndy

Begazzz wrote: »

My Mercedes on pcp costs £6199 p/a which includes servicing road licence and fuel. .

AdrianC wrote: »

BTW - PCP including FUEL? Are you sure about that? However that's wrapped, it's unlikely to be a good deal for you...

I assumed the OP had wrapped up their repayments / servicing / VED and fuel into a single figure (although it is rather precise to be an estimate).

On the other hand no mention of insurance?

Do PCPs normally come with Servicing and VED as well?

forgotmyname

What happens when the old vehicle needs a top end rebuild your savings ends up as a loss.

Not as B&W as you may think. Delica imports can be good BUT lots of troublesome vehicles out there. Mileages will be suspect.

fred246

By far the best thing to do is to buy a car capable of towing and then buy a caravan. You will then have a nice car for day to day use. When you want a holiday just pop the caravan on the back. At your destination just take it off and you have your nice car for exploration. Old caravans don't have the complicated mechanicals of an old motorhome. Much cheaper in the long term. I remember looking at old motorhomes with my father in law. Would you buy a 16 year old car? No Then why are looking to buy a 16 year old motorhome? We bought our caravan for £5700 in 2006. Worth about £2500 now. Spent about £400 maintaining it. No MOT, emissions tax, insurance. This is assuming you want the Delica as a camper. Not sure OP mentions that.

Begazzz

Hi,

Thanks for the replies.

Mr Generous I think your statement would be very hard to argue with and is certainly a major driver in my financial rationalisation.

For information my PCP deal only includes servicing and gap insurance but i have calculated and added on the fuel costs based on my milage and average consumption along with the cost of tax as i still call it. insurance is no different on an old car so not a cost that needs comparing.

The type of vehicle is not really the question but i appreciate everyones comments. I live in Braunton north devon, surf ,camp, 2 dogs, 2 kids so when we go away we don't travel light so even with my e class estate with roof box its a push and I'm certainly not paying crazy merc money for a tow bar. Ive had vans all my life (5 vw t5's 2 vito's and a couple of imports) but you don't get any toys for the money. VW t5 is £30k and is still basic and I've been spoilt in the merc. basically I'm looking at Jap as for 9-12K i can get a fully loaded 8 seater (not camper) with 30k on the clock and comparative vehicles will be 15k+ and still likely to be lacking in many extras.

Whatever the vehicle it will be used so i'll take the risks like i have my whole life with used cars before the merc. however if I'm saving £2K PA thats a shed load of bad luck if i have to spend it on the car. I could go crazy and make overpayments on the mortgage with it. however ill probably get the house sorted and as suggested above, make more memories for my family and I.

in summary a new car is a waste of money as you are gaining nothing other than imaginary Kudos and unlikely breakdowns. (unless its french!) and now I've got it out of my system i won't be going back. the imaginary kudos, power, luxury. I won't miss the car park fear, payments and the kids and dogs doing their dam best to destroy it

AdrianC

Please don't get hung up on mileage. It's utterly irrelevant.

Begazzz

I’m not but it’s a good indication of use. Like I said this is mainly about the pros and cons of new or used and the calculation of true costs of convenience. I’ve taken a few vehicles to 250k only minor issues in the past so I’m not shy