Thoughts on PCP

Mrjuls33

Just wondering what everyones thoughts are on PCP car finace as seems so popular lately is it worth doing or should it be avoided at all costs?:money:

poppy10_2

You might get a better response on the Loans board

PCP deals are not a good idea for a Debt-free wannabe. Low monthly costs but the interest racks up over the 3-5 year term, and at the end there are often prohibitive charges for any mileage overruns or damage to the car.
I used PCP but only because it got me a discount from the car salesman, and I was able to pay off the PCP loan in full immediately.

Mobeer

Lots of discussion on both the Loans and Motoring boards.

- Some people use them to their advantage (me included)
- Others don't see the appeal and don't use them
- A small minority sign up to them with seemingly no clue what they are

Being in either of the first two groups is fine, but if you don't understand a contract then don't sign up to it.

System

PCP Advantages


- New car more often
- Because it's a new car, you don't need to MOT

- Usually includes the TAX
- Under warranty so you literally don't owe a penny if it goes wrong


Disadvantages


- You are effectively renting so you get nothing for your investment
- Have to watch mileage and be wary of damage


If you are looking for the best deals with a small deposit, you could do much worse than visit here: http://www.lingscars.com

Niv

andydownes123 wrote: »

PCP Advantages


- New car more often
- Because it's a new car, you don't need to MOT

- Usually includes the TAX
- Under warranty so you literally don't owe a penny if it goes wrong


Disadvantages


- You are effectively renting so you get nothing for your investment
- Have to watch mileage and be wary of damage


If you are looking for the best deals with a small deposit, you could do much worse than visit here: http://www.lingscars.com

But some of those are only advantages / disadvantages if you do not intend to buy the car at the end of the deal. So it also depends what your intention is at the end.

System

Niv wrote: »

But some of those are only advantages / disadvantages if you do not intend to buy the car at the end of the deal. So it also depends what your intention is at the end.

True. Never take on a PCP deal if you intend to keep the car and pay the balloon payment. The interest is sky-high. They are great if you want a new car at a low monthly cost with trouble-free motoring.


If you intend to keep the car, finance yourself using one of the banks on here.

Niv

andydownes123 wrote: »

True. Never take on a PCP deal if you intend to keep the car and pay the balloon payment. The interest is sky-high. They are great if you want a new car at a low monthly cost with trouble-free motoring.


If you intend to keep the car, finance yourself using one of the banks on here.

my pcp APR is 0%

System

Niv wrote: »

my pcp APR is 0%

Lucky you lol

Niv

andydownes123 wrote: »

Lucky you lol

Thats what I thought when it was offered!

Indout96

We have 1 car on PCH - same as PCP but no option to buy at the end. Payments are lower than PCP and my wife gets a new car to drive round in.
Benefit is fixed cost - new car to her exact specification.
Bad points - Dealer serving costs - any damage needs fixing before return.


I have my car (second hand) on PCP (@ 1.5%) and put away the money each month for the final payment. This was cheaper than a bank loan (I was offered 2.7% from bank) so cheaper overall.
I expect several calls from the main dealer I bought it from close to the final payments trying to "upgrade" me to a newer car for the same cost but they can whistle.


The cars are our only debt.

System

Mrjuls33 wrote: »

Just wondering what everyones thoughts are on PCP car finace as seems so popular lately is it worth doing or should it be avoided at all costs?:money:

You get to finance a brand new car and therefore finance the largest chunk of depreciation on it and not only that, because very few people actually buy the car at the end of the PCP deal and just get another they do that in perpetuity. A new car can depreciate by over 50% of its new value in the first 2 years. From a money saving point of view you are better buying a car that is 2-3 years old where some other mug has paid the largest lump of depreciation.

I find this Youtube video quite apt. It is American but the message in it is bang on.

https://www.youtube.com/watch?v=8tk1BycWC9I