Carwow offer prices lower for PCP

Mercdriver

Remember also that the actual rate you will get will depend on your credit rating. Dr Eskimo, I hope you haven't been having credit checks done to get all these quotes, as you might struggle to get finance at all. A dealer might tell you that he can get you a deal at 3.9% (I got used at 0%) but when you come in and they do the credit check, you might not qualify for that rate.

People should definitely check what deals they might get, but I would advise against getting credit checks done until you have made a decision on the car that you want.

Yes, you can go armed with your 'clearscore' or Experian Credit Expert score, but these are representative of what a lender might see but not necessarily what they use to decide your credit worthiness.

DrEskimo

Very good point.

No I just ask what the best rate they can do, have never taken it further. Only finance I’ve taken out is one new car PCP. But it’s a great point that you might not get the rate they offer.

It’s been over a year since I sold my car that was on PCP, as I haven’t needed one since! I do miss owning one though, so sometimes enquire on certain cars and just see what they can do and what sort of prices are realistic.

Cornucopia

xzibit wrote: »

I see that you can get PCP deals on nearly new cars, so perhaps that's an option if the discount is still there. Then paying it off straight away.

PCPs on used cars are distinctly different to PCPs on new cars:

- No manufacturer incentives

- Finance rates often at 9.9% or higher, meaning that the key disadvantage of paying interest on the GFMV is made worse.

There are third party providers of PCPs, and if I were looking to buy a used car on PCP, I would definitely be getting a quote from them. (ISTR providers include Halifax and Admiral).

Cornucopia

DrEskimo wrote: »

Yes, but come the end of the deal when you decide to either pay the balloon on the PCP, or trade in the HP, the costs will be identical in term of depreciation, but different in terms of interest (with the HP saving you around £1,300).

We are simply saying the same thing in different ways. The rate of payment on the PCP will be slower than HP, so the interest will be higher. That's a basic fact. It's not a flaw in the PCP, as such.

What was the rate on the used PCP? Could this be negotiated (i've been able to get it down to around half the advertised rate on nearly all i've enquired).

Are you sure about this? I've been quoted as high as 29% APR in recent years, with no real scope for negotiation, other than taking finance elsewhere. I guess it depends on how many finance providers the Dealer has access to.

Was the 2016 reasonably priced or was it a dealer chancing his arm on a punter that didn't know you could discount a new one by X amount?

It is a typical vehicle from my local Renault Main Dealer. Therefore Main Dealer price, and possibly with some wriggle room built in for those customers who might require a discount. Maybe we could expect £500-750 off the windscreen price. However, between me looking a couple of weeks ago and yesterday, several of the prices have already been reduced by the Dealer, so maybe reducing the potential for additional discount?

The underlying thing, though, is that this is a fluid market. What a used car is worth is what people are prepared to pay for it. As such, and the price books notwithstanding, there will always be flexibility, especially if a transaction is in progress and just needs that little extra push.

What about private sale? On a car under warranty, what does the mark up from a dealer give you?

What about personal loan instead of PCP on both new and used?

What about straight cash on used?

All good questions.

- Personally, I would be very cautious about buying a c. £15000 car privately.

- In many cases, a personal loan will not attract the same manufacturer incentives on a new car. It's certainly worth comparing figures, and if I had one plea across all of this, it is for buyers to understand their figures and compare them between different buying options.

- The cash price of the used car in question is £14495. Borrowing £13000 over 48 months at 2.9% APR would cost £286pm.

Again it comes back to the main point I was trying to make. Focusing on monthlies just distracts from the actual value of the underlying asset. How much is the car, how much is it expected to depreciate and how much is the finance going to cost if needed. These are what I personally focus on, and look at new/nearly new/used, and PCP, HP, personal loan and cash.

Again, the nature of PCP and Lease is that the costs of ownership over the term are all wrapped up already. Deposit+Monthlies ARE the costs of buying. By all means try to get a more accurate view of what the car might be worth at the end of the term, but ultimately only the GMFV is underwritten. I have occasionally seen variations in GMFV on the same car, and it would be interesting to know why that happens.

I just aim to minimise these as much as possible, whilst balancing it against what I want, and what I want to spend. Not monthly spend, but total spend. Since depreciation is the biggest cost involved, new always loses out. Particularly as to me personally it adds absolutely no value whatsoever...

You have a particular view, which is fine. However, one of the things that we all have a tendency to do is to assume that everyone sees a situation in the same way we do, but that's rarely the case once you get into the issues.

For me, personally, Leasing a car for less than it would cost to finance a similar used car is a no-brainer. If I'm going to own/keep a depreciating asset, I'd ideally like a backstop on that depreciation, and I'd also like my entire period of ownership to be covered by Warranty.

But YMMV (your mileage may vary) - quite literally.

Penelopa.Pitstop

DrEskimo wrote: »

Let!!!8217;s be honest, when there is the prospect of a brand new car, you tend to exhibit every psychological bias going to convince yourself it!!!8217;s a good idea...

(...)
Fixation on monthly cost (sometimes even ignoring any upfront payments) takes away from the costs that matter; is the level of predicated depreciation acceptable, and is the cost of interest on the amount you are borrowing acceptable. On new cars, and on PCP, my answer to those is now generally !!!8216;no!!!8217;....

I don't consider used cars at all, so don't have to convince myself that new one is better.

It's best to look at total cost of ownership of the car over the years you plan to keep it. Looking at monthly cost only is always bad idea. That's why you have so many adverts with "from £299 a month" when in fact to get £299 a month, you have to pay quite a lot upfront. It's to temp people who can't calculate total costs.

The same goes for new vs nearly new on PCP. It could be cheaper to get new with discount and support from manufacturer than used one with high APR. Nearly new one could be an option if paying by cash and there's considerable discount.

motorguy

Penelopa.Pitstop wrote: »

The same goes for new vs nearly new on PCP. It could be cheaper to get new with discount and support from manufacturer than used one with high APR. Nearly new one could be an option if paying by cash and there's considerable discount.

+1

Agreed

DrEskimo

Cornucopia wrote: »

We are simply saying the same thing in different ways. The rate of payment on the PCP will be slower than HP, so the interest will be higher. That's a basic fact. It's not a flaw in the PCP, as such.

Yea I'm getting that impression about are entire discussion..!

You are right, I was perhaps suggesting it was a flaw, which I agree it isn't, but certainly something to be aware of. For example I have seen commentary from buyers that compare the APR of a HP with that of a PCP and say "PCP is lower APR than HP, so it must be cheaper", which is not true. The APR may be lower, but in terms of actual cost of interest charged, PCP may still be higher (obviously depending on the difference in rate). Again, it comes to the fact that I look at actual cost of each 'component' (interest, depreciation, fuel, servicing, etc.).

Cornucopia wrote: »

Are you sure about this? I've been quoted as high as 29% APR in recent years, with no real scope for negotiation, other than taking finance elsewhere. I guess it depends on how many finance providers the Dealer has access to.

Oh yea, when looking at used cars I very often got the APR halved from ~10% to ~5% by simple asking. Generally it was around the 7% mark, but obviously manufacturers will differ.

Cornucopia wrote: »

It is a typical vehicle from my local Renault Main Dealer. Therefore Main Dealer price, and possibly with some wriggle room built in for those customers who might require a discount. Maybe we could expect £500-750 off the windscreen price. However, between me looking a couple of weeks ago and yesterday, several of the prices have already been reduced by the Dealer, so maybe reducing the potential for additional discount?

Ah fair enough. I have seen very wide variation in pricing of similar models across dealerships. Most asking for very high prices relative to indie/private market.

Cornucopia wrote: »

The underlying thing, though, is that this is a fluid market. What a used car is worth is what people are prepared to pay for it. As such, and the price books notwithstanding, there will always be flexibility, especially if a transaction is in progress and just needs that little extra push.

Absolutely, very hard to gauge...!

Cornucopia wrote: »

You have a particular view, which is fine. However, one of the things that we all have a tendency to do is to assume that everyone sees a situation in the same way we do, but that's rarely the case once you get into the issues.

For me, personally, Leasing a car for less than it would cost to finance a similar used car is a no-brainer. If I'm going to own/keep a depreciating asset, I'd ideally like a backstop on that depreciation, and I'd also like my entire period of ownership to be covered by Warranty.

But YMMV (your mileage may vary) - quite literally.

Absolutely, I write all my statements based on my personal opinion. Everyone will have different wants/needs and expectations.

All I will say is, with respect, your comparisons with used cars to seem to be 'gamed' towards the most expensive way to purchase them, so it's unsurprising that you are concluding that new PCP/lease is similar in cost.

I would never look to buy a nearly new/used for a large cost, and will always make sure it accounts for the current new car discounts available + having one owner + having mileage. If this is not reflected in the price I wouldn't buy it. Much in the same way that some dealers won't always offer good discounts on new cars. Just because there are examples of nearly new cars being sold for high prices, doesn't mean that's reflective of the entire market.

Secondly I would never consider used PCP, for the reasons you have stipulated.

When you look at used cars for fair prices, with cheaper forms of finance, it will invariably be cheaper than new on PCP and indeed lease. In my experience by quite some margin...

Cornucopia

I agree with pretty much your whole post, except this:-

DrEskimo wrote: »

All I will say is, with respect, your comparisons with used cars to seem to be 'gamed' towards the most expensive way to purchase them, so it's unsurprising that you are concluding that new PCP/lease is similar in cost.

I'm not sure that "gamed" is right. What I am doing is recognising that (a) we are talking about a fair comparison, so like-for-like is important, and (b) not everyone will be able to access the cheapest possible finance in terms of interest rate, or want to. Other considerations like funding the car from income rather than savings come into play. Also, as we have already discussed the cheapest finance is not necessarily the one with the lowest interest rate - the repayment profile comes into question, too. The reason why a lot of people focus on the monthly payments is because they are an important indicator of affordability for them.

When you look at used cars for fair prices, with cheaper forms of finance, it will invariably be cheaper than new on PCP and indeed lease. In my experience by quite some margin...

It would be good to see some examples of what might be possible.

In the distant past, I certainly wandered around car lots and marvelled at the 2-year old Granadas for £4500 (25-35% of list), but I get the impression that those days are gone (even accounting for inflation).

DrEskimo

Cornucopia wrote: »

I agree with pretty much your whole post, except this:-


I'm not sure that "gamed" is right. What I am doing is recognising that (a) we are talking about a fair comparison, so like-for-like is important, and (b) not everyone will be able to access the cheapest possible finance in terms of interest rate, or want to. Other considerations like funding the car from income rather than savings come into play. Also, as we have already discussed the cheapest finance is not necessarily the one with the lowest interest rate - the repayment profile comes into question, too. The reason why a lot of people focus on the monthly payments is because they are an important indicator of affordability for them.


It would be good to see some examples of what might be possible.

In the distant past, I certainly wandered around car lots and marvelled at the 2-year old Granadas for £4500 (25-35% of list), but I get the impression that those days are gone (even accounting for inflation).

Ha...well we did pretty well in agreeing with most of what we said :P

Maybe this comes back to the affordability thing and how people define it. Personally I wouldn't pay over the odds on finance just to get the car. Whether the monthly cost is low or high is irrelevant to me as already stated. It's the actual cost. If I couldn't get the car for the monthly cost I have budgeted using finance, then my options are; 1) to borrow for longer, 2) find cheaper finance, or 3) borrow less. Invariably option three is what I go for because I'm able to get low rates, so cheaper finance is rarely an option, and I want to reduce interest, so I avoid borrowing for longer. Waiting and saving more to borrow less both saves me in interest, and reduces risk, so is always my preferred option.
But then that moves into a debate about the risks associated with loans and borrowing money from your future earnings (what all loans are...), which is one I don't fancy getting into :beer:

But I take your point about like for like comparisons.

Yea that's a very good point regarding examples, and I found using specific examples helps illustrate the actual difference much better than discussing hypotheticals and generalisations. As has been noted already, every model and manufacturer will be different, so always worth looking at all the options each time, and indeed everyone's situation is different, so that's probably the only real way to do this. A case by case basis!