18 Year Old PCP

FlameCloud

You seem to start each post agreeing it!!!8217;s his fault and then ending it implying the salesman is at fault for selling him the car.

Is it a case that the car payments are affordable but the running costs are not?

Mike967angus

To be honest it's no.longer about this case as we will.sort it.
I wondered if there was any mileage in contacting finance company and the general opinion is just take the medicine and move on.
On more general terms when you take a loan or mortgage affordability plays a big part. They need to.know not just your wages but outgoings etc. Cars cost money to run and maintain so just because the payments are affordable doesn't mean you can afford the car. By only borrowing half the amount as on a pcp they are finding buyers who couldn't afford normal finance...There's a reason for that and it's when everything else is taken into account they can't afford the car.
It's just my opinion that credit is too easily available and only plays a part in affordability.

neilmcl

Mike967angus wrote: »

To be honest it's no.longer about this case as we will.sort it.
I wondered if there was any mileage in contacting finance company and the general opinion is just take the medicine and move on.
On more general terms when you take a loan or mortgage affordability plays a big part. They need to.know not just your wages but outgoings etc. Cars cost money to run and maintain so just because the payments are affordable doesn't mean you can afford the car. By only borrowing half the amount as on a pcp they are finding buyers who couldn't afford normal finance...There's a reason for that and it's when everything else is taken into account they can't afford the car.
It's just my opinion that credit is too easily available and only plays a part in affordability.

Just because you're not required to pay off the full amount during the term does not meant you're borrowing "half the amount". The total amount of credit includes the balloon payment at the end and the amount of interest paid takes that into account. The only difference between a PCP and a traditional HP agreement (a PCP is also a form of HP btw) is that the this final payment is deferred to the end and is optional.

Mike967angus

I know that and you know that but then we view this forum and have a fair idea how these things work.
My point is PCPs make the payments affordable. That doesn't mean you can afford the car when insurance maintenance etc etc come into play.
Regular finance would put people off as they couldn't afford the repayments.
This means they really couldn't afford the car in the first place so it's way of self regulation.
Just my opinion and don't think all PCPs are bad but they need to be right for the person and their circumstances NOT just a means to get into a car they can't really afford.

Herzlos

Mike967angus wrote: »

My point is PCPs make the payments affordable. That doesn't mean you can afford the car when insurance maintenance etc etc come into play.

No car finance or loans factor in things like insurance or maintenance - there's no way they can cover it.

All PCP does is reduce the balance payments to about half, thus bringing the affordability down. It does have the effect of making more expensive vehicles more affordable, which has the side effect of pushing up the running costs, but it's still very much on the buyer to determine they can afford it.

In any case, your son *could* afford the insurance for year 1, so would assume he'd have passed the affordability checks anyway.

motorguy

Mike967angus wrote: »

I know that and you know that but then we view this forum and have a fair idea how these things work.
My point is PCPs make the payments affordable. That doesn't mean you can afford the car when insurance maintenance etc etc come into play.
Regular finance would put people off as they couldn't afford the repayments.
This means they really couldn't afford the car in the first place so it's way of self regulation.
Just my opinion and don't think all PCPs are bad but they need to be right for the person and their circumstances NOT just a means to get into a car they can't really afford.

I dont get the logic. For talks sake, lets say the Polo GTI was £20K and the payments £300 with a £10K balloon payment.

Had PCP not been available your son would most likely have taken out a £10K HP agreement at £300 a month for a used GTI instead.

There is no "affordability" difference. Its still £300 a month plus running costs - in fact technically its more affordable as you've a warranty, less wear and tear issues, less ad hoc repairs and no MOT to worry about.

motorguy

Herzlos wrote: »

It does have the effect of making more expensive vehicles more affordable, which has the side effect of pushing up the running costs, but it's still very much on the buyer to determine they can afford it.

I would suggest running costs are actually down by buying a new not, say a 4 year old one, as you've a manufacturers warranty to cover ad hoc faults that you;d have to sort yourself on a used car, no MOTs to worry about and little need for replacing stuff like discs, pads, exhausts etc.

I'd be surprised if a new Polo GTIs running costs for three years amounted to more than a couple of services and maybe tyres

Mike967angus

They do PCPs on used cars as well so there is that to consider also.
New cars shouldn't need much and most have a 3 yr warranty (Although 3rd year is via dealer not manufacturer)
I'm always amazed how many people think tyres brakes and clutches are covered by warranties and all they have to do is put in fuel and insure it.
On new cars I've been impressed with the servicing packages which do seem reasonable bearing in mind a service can easily be upwards of £200 before the addition of tyres which a powerful front drive car can easily go through in a year or so with pads not too far behind.
Cars are expensive and which ever way you slice the pie it's still the same.size pie:)

motorguy

Mike967angus wrote: »

Cars are expensive and which ever way you slice the pie it's still the same.size pie:)

Indeed. Which is why i'm not sure why you seem to be blaming PCP for your sons predicament, when he'd have HP'd a car instead.

And likewise you havent really said why the dealer has "lost a customer"?

Herzlos

motorguy wrote: »

I would suggest running costs are actually down by buying a new not, say a 4 year old one, as you've a manufacturers warranty to cover ad hoc faults that you;d have to sort yourself on a used car, no MOTs to worry about and little need for replacing stuff like discs, pads, exhausts etc.

I'd be surprised if a new Polo GTIs running costs for three years amounted to more than a couple of services and maybe tyres

Sure, but I meant in general a more expensive new car will cost more to maintain than a cheaper new car.

Whether that's using PCP to afford a Polo GTI when you would otherwise only be able to finance a base model.
Or using PCP to afford a BMW 1 series when you'd otherwise only be able to afford a Ford Focus.

Warranty will cover most of it, but you're looking at higher insurance (generally), higher consumables costs and so on.

Polo GTI presumably uses a lot more fuel than the base version.