My Rationale - PCP

omariqy

Hi all

Before I go into my question let me give some background. I purchased a BMW 320d M Sport back in 2014 for £11.5k using cash. It was a great drive but I had a fair few minor issues like needing new tyres often, suspension problems, brake pads, shock absorbers etc. It probably cost me about £500-600 a year on servicing and maintenance. I sold it recently for £6.7k after doing 30k miles in a little over 2 years. Now there were some extenuating circumstances why I did that many miles but still. All in all I reckon I have lost £6.5k on the car since I purchased it.

This time round I was determined to get a new car either through PCP, PCH or a bank loan. I ended up going down the PCP route because I really wanted the X1 which offered the drive and the practicality that we wanted. BMW recently were doing a 1.9% APR rate on PCP deals for the X1. Leasing was more expensive and I couldn't get near the APR with a bank for the amount in question.

The car is valued at £37k but I managed to get them down to £32k and I pay £310 per month with a £5k deposit on 10k miles per annum. They also threw in SupaGuard (I know!).

I am very conscious of negative equity and the PCP trap. However, I feel that I got a good deal on a low APR and that I plan to run it to near the end of the term and assess my options. If I have equity (not likely) then great otherwise I will look to go to other dealers and barter a deal to get into one of their cars on PCP or use it to get a better deal with my current dealer. Alternatively, I will give the car back and maybe think about leasing. I have been put off with a used car given the depreciation and the costs I have experienced. Although I am aware of the rate of depreciation on new cars.

My question is - have I been sensible in my decision making or have I missed a trick?

laidbackgjr

So you have gone from a BMW 320 that was costing just over £2,000 per year into an X1 that is costing £3,720 per year plus the £5k deposit spread over the number of years of the deal (you don't say how may years it's over).

Doesn't really matter how you dress it up (PCP, cash, loan or lease)- you've gone from a £11.5k car bought second hand to a £37k car brand new - no surprises that the £37k car is going to cost more.

omariqy

laidbackgjr wrote: »

So you have gone from a BMW 320 that was costing just over £2,000 per year into an X1 that is costing £3,720 per year plus the £5k deposit spread over the number of years of the deal (you don't say how may years it's over).

Doesn't really matter how you dress it up (PCP, cash, loan or lease)- you've gone from a £11.5k car bought second hand to a £37k car brand new - no surprises that the £37k car is going to cost more.

It cost me about £3,250 a year since I had it. I am happy to pay the £5k as a premium to have a new new car and not a 5/6 year old car with 60k on the clock.

IamNotAllowedToUseMyName

I think the trick you might be missing is excessive tyre wear suggests to be that you might have been enjoying that 3 series a bit too much and blaming high maintenance on it being an older car rather than spirited driving.

Go down the new car route and continue driving in the same way you are going to start falling out with your dealer because you'll find things like "needing new tyres often, suspension problems, brake pads, shock absorbers etc." all can apply to a new car and will not be warranted. Make sure you add on your £600/year maintenance back onto your deal because all though you may get a service plan included, service does not include fair wear and tear.

To be honest, your original costs don't sound too bad in the world of BMW. Look at your sums again, £5k depreciation - well that won't take long to realise on your new car and the £600/year may well still be required if you need to replace tyres and brakes and minor repairs that you don't want to claim on insurance (and are outside the reasonable wear and tear tests for PCP returns).

Lucky_Duck_2

I don't hang around but apart from having to change all four tires every three years or so I am still on the original suspension, brake pads, etc.

Nobbie1967

omariqy wrote: »

It cost me about £3,250 a year since I had it. I am happy to pay the £5k as a premium to have a new new car and not a 5/6 year old car with 60k on the clock.

If you've done the deal and are happy about it, not sure what the point of the question is? You seem to have looked at the alternatives of leasing and buying for cash and found this the best solution for your circumstances. Not sure what anyone can usefully add?

omariqy

IanMSpencer wrote: »

I think the trick you might be missing is excessive tyre wear suggests to be that you might have been enjoying that 3 series a bit too much and blaming high maintenance on it being an older car rather than spirited driving.

Go down the new car route and continue driving in the same way you are going to start falling out with your dealer because you'll find things like "needing new tyres often, suspension problems, brake pads, shock absorbers etc." all can apply to a new car and will not be warranted. Make sure you add on your £600/year maintenance back onto your deal because all though you may get a service plan included, service does not include fair wear and tear.

To be honest, your original costs don't sound too bad in the world of BMW. Look at your sums again, £5k depreciation - well that won't take long to realise on your new car and the £600/year may well still be required if you need to replace tyres and brakes and minor repairs that you don't want to claim on insurance (and are outside the reasonable wear and tear tests for PCP returns).

Thanks for the reply. To be honest I never do more than 80 (I mean 70) on the motorway. A few mechanics said to me that the e90 with its design at the back and the way the wheels sat meant that the tyres wore a lot quicker than they should have. That could've just been BS but 3 different tyre fitters said the same to me.

omariqy

Nobbie1967 wrote: »

If you've done the deal and are happy about it, not sure what the point of the question is? You seem to have looked at the alternatives of leasing and buying for cash and found this the best solution for your circumstances. Not sure what anyone can usefully add?

It certainly seems that way to me but you never know when you are missing something. This is my first time going down this route and I do research everything before I do it but you just never know when you haven't thought of something. If I have then I can use it as a lesson for next time.

Herzlos

Comparing a 5 year old 320 and a new X1 are a bit silly - X1 is always going to cost more. How does your PCP deal compare with a loan for the same car? Is that difference worth the lack of flexibility?

Most importantly, you can afford it so enjoy!

omariqy

Herzlos wrote: »

Comparing a 5 year old 320 and a new X1 are a bit silly - X1 is always going to cost more. How does your PCP deal compare with a loan for the same car? Is that difference worth the lack of flexibility?

Most importantly, you can afford it so enjoy!

Thanks. Oh I know it's going to be more but it was really the money I lost on that car compared to paying an average of about £100 more a month for a new car (over 48 months). Whilst also considering the other options of PCH and Loan. The best I could get was a 3.3% rate over 7 years which was about £368 per month. PCH was £400 per month with £3.6k down payment.

neilmcl

omariqy wrote: »

Thanks. Oh I know it's going to be more but it was really the money I lost on that car compared to paying an average of about £100 more a month for a new car (over 48 months). Whilst also considering the other options of PCH and Loan. The best I could get was a 3.3% rate over 7 years which was about £368 per month. PCH was £400 per month with £3.6k down payment.

You haven't "lost" money on your old car, it's called the cost of motoring.