Working PCP

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There are 3 ways to not lose money on PCP.


1) get a car on a high % PCP with a large manufacturer's "contribution" then immediately pay off the finance and therefore get the car cheaper than you could have bought it any other way.


2) get a car on zero % PCP, take out gap insurance, pay off the finance just before the gap insurance runs out, and then unfortunately write off the car, refunding the purchase price, so you have it for the best part of 3 years for nothing.


3) Get 0% PCP on a car that suddenly becomes massively desirable (e.g. Ford Mustang when they first came out), and in short supply, so you can sell the car for more than the invoice price, pay off the finance and keep the surplus.



Otherwise you are giving money to a finance company to keep them in profit.


Fine if you want that, but never believe a salesman who tells you you will "make money" on a PCP.

loskie

PCP on a used car is a very bad idea. OP if you genuinely think that you can make money or break even as you say you can then I think that you are in cloud cuckoo land.

Mercdriver

At 8.7% APR you stand no chance of getting anywhere near break even, let alone make money.

Ectophile

The finance quote should tell you the total amount repayable over the three years. Look carefully through it.


Here's a bit of scary maths for you. The expected second-hand value of the car at the end of the finance deal is usually about the same as the final payment. That way the finance company doesn't lose out of you hand it back instead of making the payment. If WaywardDriver's figures are about right, then the total payable would be around £49000.


So you do 5000 miles/year - that's 15000 over 3 years.


(49000 - 22000) / 15000 = 1.8. That means that you'll be paying £1.80 per mile in depreciation alone.

Frozen_up_north

Beware of depreciation figures, the often quoted figures are based on the new price at a main dealers showroom to their second user sale price... Not the price you are likely to obtain as a trade-in.


Most cars (ie not the classic ones) depreciate significantly, putting a large deposit on a PCP deal doesn't alter that.

JP1978

If you put that 18k in as a deposit, if you let the car go after the term, that 18k is gone and you have nothing to show for it. That car has then cost you 18k + the Monthly payments. If you plan on keeping the car after the term, you would need to find the baloon payment, so either another loan to cover, or you need to save for that as well as paying the monthlies.

If you have no desire to own the car, a lease maybe a better option. New car, small deposit and for a £50k car, probably £3-350 a month payment, possibly less if there is dealer support.

I am leasing a 40k car now for £400/month now but that is on 25,000 a year miles. 5k would have been about the £275/£300 month mark.