Car Buying help PCP or Lease

laticsforlife

Tarambor wrote: »

A bank loan for the whole amount is cheaper than taking out a PCP and paying the balloon payment.

Buying a 2 year old car is more sensible as it'll have had the largest amount of depreciation financed by someone else, will have manufacturers warranty and will be pretty much like new.

A bank loan is cheaper than PCP - that I doubt.

Bank loan means you have to fund the whole purchase (in this case around £29,000). even at 0% over 5 years that's £483pcm.

The whole point of PCP is the balloon, which you don't have to fund if you hand the car back (essentially you are paying the depreciation if you 'buy' the car at the end).

Agreed you need to factor in the deposit when working out the true costs, there are literally hundreds of adverts for cars at £199 a month over 3 years, read the small print and they want a £2,500 deposit, makes it £268 a month equivalent!

Here are the pros and cons of PCP vs Lease and vs a Loan;

PCP
Pro's
Available at most dealers (not all do personal leasing), so usually no admin fees
Cheaper than a bank loan
Can be VT'd (Voluntary Terminated) after paying half the value of the finance (useful if you've spotted a good deal near the end of your deal).
Nice new car under warranty

Con's
You'll need to find at least 3 months deposit (called a 3+35 deal)
You pay the road tax (£160 is it now, equates to over £10 a month - see leasing below)
You don't own the car unless you pay the balloon to own it at the end (when it's 3 years old and will then need MOT's and tyres, exhausts, repairs etc) - this is generally the current value of the car second hand unless you've exceeded the mileage in which case it will be more than it's current value, AND you'll have to pay excess mileage charges, on an A6 Avant I'd bet that's almost 10p a mile.

Leasing
Pro's
Likely cheaper than PCP (not by much)
Same new car element, warranty etc
No road tax to pay (most deals anyhow, saves £10 a month equiv.)
Warrantied, often includes breakdown cover too

Con's
You can't generally get out of it early.
You will never own it, and usually can't buy it (not always, manufacturer dependant)
Admin fees can be up to £360 in first month
Deposit can be misleading (always do the sums for a monthly equivalent)

Personally (and thinking about you being a 1st time toe-in-the-water type of customer), I'd not want to put a massive deposit down (you don't ever get this back), so limit your search to 3+35 or 6+35 deals.

The reason I say go for a 36 month deal is exactly for the reason of what will be needed after this point.

Up to 36m you will have a warranty and no MOT's (unless they change the rules like they keep saying). Also the deposit is being spread over a longer period, if that makes sense, so you're not having to find another deposit as soon as you would on a 2 year deal.

However depending on the miles you pick (and someone above said) most offers are quoted on either 8,000 or 10,000 miles, I've never seen a headline offer on 15,000 miles, that'll cost you more per month.

Also the more miles you do the more servicing you will have to do, and tyres come into play (e.g. on a 2-year 8,000 mile deal, assuming you stuck to that, you're not going to need to buy any tyres - well I'd hope not anyway).


In terms of damage, this always comes up in lease/PCP posts, and the basic premise is this;

The finance Company will employ a specialist firm to come and inspect the car, and they WILL do a thorough job. If you have any dents, scrapes or scuffed wheels, then you have 2 choices; either let them see them and charge accordingly for the reduction in the cars value (it's not how much it costs to repair, it's how much it devalues the car), so for example a scuffed alloy 'costs' around £50-£60, a small dent in a bumper 'cost' me £53.

Alternatively, near the end get these things fixed, always a better option IMO.

Hope all this helps - it's not a minefield, you just need to weigh up the pros and cons.

You said at the start of your post you wanted to have a new car, so I think you are right that either PCP or leasing is the way to go for you. It's not for everyone, and those saying to go buy a 2 year-old car as it'll be reliable aren't seeing the whole picture, with no warranty and guaranteed to need tyres, MOT's, repairs (do you really know how it was driven in the preceeding 2 years before you bought it?).

Why not go have a look for a decent 2 year old car, and see what they want, then see how much a loan would be to fund that purchase, if it's appreciably less than the A6 lease deal then consider it, if not, then go for the A6 (or even look for the A4, there are usually very good deals on this model more than any other Audi).

daveyjp

If you can afford £300 a month plus payments to replace your £2k to rent a car for three years, you can certainly afford a loan to buy a used car outright. £10-12k will get you in a very good car.

In three years it will only be 4-5 years old and have plenty of value to go towards your next 1-2 year old car.

laticsforlife

daveyjp wrote: »

If you can afford £300 a month plus payments to replace your £2k to rent a car for three years, you can certainly afford a loan to buy a used car outright. £10-12k will get you in a very good car.

In three years it will only be 4-5 years old and have plenty of value to go towards your next 1-2 year old car.

So OP puts the £2,000 as deposit and loans £10,000 getting a £12,000 car (e.g. car People - Audi A3 on a 64 plate with 43,000 miles or a quite new 66 plate Astra with only 10,000 miles on it, both £12,000).

36m @ 9.9% (MoneySupermarket) = £320.22 a month. (if you can get one at 3.9% that reduces by about £25 a month)

After the loan cost of £11,527 (or maybe £10,600) and the deposit of £2,000, less say £5,000 value of a 5 year-old Astra, plus road tax (£420), MOT (£135) and repairs (say he's lucky and that is only £300 in tyres) it therefore cost £9,382 over the period, or £260 a month (or £235 in the lower loan calc).


Parkers has several Audi A4 saloon, e.g. £1,961 deposit +£218 (x35mths) +£234 admin = £9,825 = £272 a month (15,000 miles).

if you can manage with 10,000 miles the cost comes down to £247 a month equivalent. (heck even adding 5,000 excess miles at 10ppm still only adds £14 a month to that deal, equiv of £260).

Or simply put £12-£25 extra a month for a £30k Audi as opposed to an £12k Astra.

That's how close it can be.

irc

Below is an offer I have been offered on A6 avent, new. (basic Model, no extras) should be with them around March. 36 months, Retail cash Price £29853.00 Optional final payable £13135.65, total amount of credit £21703.00 3.9 Apr. Monthly payment 301.45.

With that option you are paying £300 a month for 3 years then still owe £13000.

You want a reliable new family car. Look at prices for buying new on Drivethedeal. For example a Skoda Octavia 1.5Tsi estate. Fairly fast, loads of room. 3 yr warranty. £16'000 on Drivethedeal.

Use your £2000 along with a £14000 loan from Marks and Spencer at £308 per month for 4 years at which point the car is paid off.

jimjames

laticsforlife wrote: »

A bank loan is cheaper than PCP - that I doubt.

Bank loan means you have to fund the whole purchase (in this case around £29,000). even at 0% over 5 years that's £483pcm..

With PCP you pay the interest on the whole amount not just the amount you pay back over 3 years. Depends how you define cheaper but I'd expect the loan to cost less over that time and you have an asset at the end

Dil123

Hello all,
Sorry I have been away,
Wow... thank you all for the advice, so much to think about.
I am going to have to go through this information carefully.

System

laticsforlife wrote: »

A bank loan is cheaper than PCP - that I doubt.

I did the maths for someone else. The interest on their PCP deal was £3700 for the £16k worth that was going to be on PCP. A £20k bank loan which is what they'd need in addition to the money they had available had just over £1000 in interest. So £3700 interest on roughly 60% of the value of the car versus I think it was £1100 interest on 80% of the value of the car.

Quite clearly you've never done the maths or you're another of those people who seem to think that the true monthly cost is just the monthly payment, blissfully ignoring the £100+ a month you've pre-paid via the deposit.

System

laticsforlife wrote: »

Or simply put £12-£25 extra a month for a £30k Audi as opposed to an £12k Astra.

That's how close it can be.

Sorry but that is wrong. You're missing the elephant in the room that the deluded PCP lovers seem to always want to ignore.

It is £12-£25 extra a month for a £30k Audi A3 that they have to hand back at the end of 4 years opposed to a £12k Astra which they own outright.

The Audi deal leaves you with less money in the bank and no car at the end of 4 years.