Opinions on forking out on a PCP deal?

oscart1111

Hi all,

Just some context here, I am 23 years old and I earn £32,000 per year. I want to finance a car for £190.00 on a 36 month deal and I am putting down a £4k deposit to reduce monthly payments. Is this more sensible or should I reduce the deposit?

Car is 220i BMW M Sport Coupe 15 plate so it is not a brand new car. Car insurance is just shy of 1.1K as it is a 2.0L petrol.

Seems like a silly question but is there anything else I realistically need to consider with such finance deals? as in the past I have just purchased the car outright. As I am fairly young I have located a PCP deal for 5% APR at £190 a month.
I pay rent of £70 (all inclusive), relative discount, so not much of my income goes towards rental costs. On paper it seems affordable, but a part of me feels it isn't (PCP) and a part of me thinks I am being far too frugal with my finances.
From your perspective how would you view this situation?

Lastly, what are you experiences with PCP? and what advice would you give to a first time PCP buyer?

Thank you

System

> I want to finance a car for £190.00 on a 36 month deal and I am putting down a £4k deposit to reduce monthly payments. Is this more sensible or should I reduce the deposit?

Makes no odds, you pay the same its just that the larger deposit allows mugs to think the monthly payments are reasonable and they're not paying through the nose.

Also one thing you need to consider, especially if you enjoy driving, are the pitiful annual mileage allowances which can be as low as 6000 miles a year, less than 120 miles per week average.

Personally I would never buy a car on finance, especially PCP. This board, the loans board and the debt free wannabe boards are littered with people who got cars on PCP/HP, found their circumstances changed and are shafted with the monthly payments trying to find a way out.

oscart1111

Thanks for your honest response! Mileage is set at 12k a year, I appreciate there are many that finance cars that are totally out of their means and that PCP can be a dangerous trap in that respect.

motorguy

oscart1111 wrote: »

Hi all,

Just some context here, I am 23 years old and I earn £32,000 per year. I want to finance a car for £190.00 on a 36 month deal and I am putting down a £4k deposit to reduce monthly payments. Is this more sensible or should I reduce the deposit?

Car is 220i BMW M Sport Coupe 15 plate so it is not a brand new car. Car insurance is just shy of 1.1K as it is a 2.0L petrol.

Seems like a silly question but is there anything else I realistically need to consider with such finance deals? as in the past I have just purchased the car outright. As I am fairly young I have located a PCP deal for 5% APR at £190 a month.
I pay rent of £70 (all inclusive), relative discount, so not much of my income goes towards rental costs. On paper it seems affordable, but a part of me feels it isn't (PCP) and a part of me thinks I am being far too frugal with my finances.
From your perspective how would you view this situation?

Lastly, what are you experiences with PCP? and what advice would you give to a first time PCP buyer?

Thank you

My advice is to run with the minimum deposit on a PCP as otherwise you get a false positive about affordability.

The actual price per month of that car is £300 a month ammortised, if you spread the deposit over the 36 months. By that time the car will be nigh on 7 years old and you'll be wanting to change it.

You've done well to get 5% on a used car PCP. Whos doing that?

motorguy

Tarambor wrote: »

Personally I would never buy a car on finance, especially PCP. This board, the loans board and the debt free wannabe boards are littered with people who got cars on PCP/HP, found their circumstances changed and are shafted with the monthly payments trying to find a way out.

Frankly - you're full of !!!! on that. Theres 3.7 million new cars sold a year, most on PCP. A very tiny amount of people have issues with PCP deals and if they do its generally because they went in !!! first and are looking to bail early. And no the debt free wannabe boards arent "littered" with people who have done that.

If someone has concerns about the longevity of their job role, then either take on no finance ever, ensure you've adequate savings to cover a time out of work or take out redundancy insurance.

motorguy

oscart1111 wrote: »

Thanks for your honest response! Mileage is set at 12k a year, I appreciate there are many that finance cars that are totally out of their means and that PCP can be a dangerous trap in that respect.

Yes, and there are doom and gloom merchants who make vast assumptions and sweeping generalisations to justify their own skewed view on things.

PCP is a financial commitment. Be very sure of your finances, be very sure you know what you're signing up to and be very sure you can deal with a significant change in circumstance if you have to.

99% of people have no issues with them.

oscart1111

Thank you for your response! As I would expect to get 6k for my car now. I thought I would stick down 4k deposit down. I understand technically it is the same overall repayment cost, but I prefer lower repayments if I put down a larger deposit if I have it (so I don't get tempted to spend it) aha.

Unless that is really advised against. I have heard people say its best to put down a lower deposit on new car PCP deals, but I am a newbie to the PCP scene.

I got the 5% rate with Admiral through the phone and my car insurance is with them, not sure if that swayed anything!

DrEskimo

Whats the price of the car, and what is the PCP suggesting the trade in value will be at the end of the term?

oscart1111

I found a cheaper model now for £14,920 with £4k deposit and 36 x monthly repayments of 117.91£. I am not too well versed with the jargon! and not completely sure how I would find out the trade in value.
Optional final payment at £7,753.00.

Apologies, like I said I am new to PCP and am looking to find out a lot more about it before I actually go ahead (if i do)!

motorguy

oscart1111 wrote: »

Thank you for your response! As I would expect to get 6k for my car now. I thought I would stick down 4k deposit down. I understand technically it is the same overall repayment cost, but I prefer lower repayments if I put down a larger deposit if I have it (so I don't get tempted to spend it) aha.

Unless that is really advised against. I have heard people say its best to put down a lower deposit on new car PCP deals, but I am a newbie to the PCP scene.

I got the 5% rate with Admiral through the phone and my car insurance is with them, not sure if that swayed anything!

I'm going to assume the car in question is around £15K. Put down your £4K deposit and take out a 5 year personal loan @ 2.8% APR for the £11K.

https://www.money.co.uk/loans/unsecured-loans.htm

You'll pay back £196 a month, only accrue £800 in interest charges over the term and you'll be moving towards owning the car instead of effectively renting it. There will be no hard stop after 3 years, you can continue paying it off.

Oh, in case i forget, dont do long life services on the car - do them every 8-9K miles to preserve the engine / timing chain. Also check the car bi monthly for oil level too.

Oh, and when your insurance settles, those engines remap to an easy 250BHP on a stage 1 tune or around 290BHP on a stage 2.

I have that engine in my Cooper S and modded to 250BHP ish.

oscart1111

motorguy wrote: »

I'm going to assume the car in question is around £15K. Put down your £4K deposit and take out a 5 year personal loan @ 2.8% APR for the £11K.

https://www.money.co.uk/loans/unsecured-loans.htm

You'll pay back £196 a month, only accrue £800 in interest charges over the term and you'll be moving towards owning the car instead of effectively renting it. There will be no hard stop after 3 years, you can continue paying it off.

Oh, in case i forget, dont do long life services on the car - do them every 8-9K miles to preserve the engine / timing chain. Also check the car bi monthly for oil level too.

Oh, and when your insurance settles, those engines remap to an easy 250BHP on a stage 1 tune or around 290BHP on a stage 2.

I have that engine in my Cooper S and modded to 250BHP ish.

Thanks a lot :beer: because I like to change my car quite often so I thought PCP would be useful in that respect. With a personal loan at least that car will effectively be owned by me and I am free to sell it after 3 years? as opposed to a PCP whereby I will have to settle any outstanding finances beforehand?