Opinions on forking out on a PCP deal?

TheMoonandBack

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

Oscart1111

Don’t do it ! Take it from someone who has been there - it was the start of financial problems and massive debt.
I know thousands of people buy cars on pcp, but as you are 23 my advice is don’t do it. If you’ve got £4K, buy a car for that.

oscart1111

TheMoonandBack wrote: »

Oscart1111

Don’t do it ! Take it from someone who has been there - it was the start of financial problems and massive debt.
I know thousands of people buy cars on pcp, but as you are 23 my advice is don’t do it. If you’ve got £4K, buy a car for that.

Thanks a lot. After a long and hard think, I don't think taking out a loan for a depreciating asset should be at the time of my priorities at this moment in time.
I already own an Audi, the world of PCP and the possibility of a (slightly) nicer and faster car strongly got to me for a moment.

Sorry if this seems personal but how caused everything to spiral? and may I ask if the car you financed and an expensive one?

:beer:

TheMoonandBack

I’m genuinely glad you made the choice not to pcp. I bought a normal car, nothing fancy.
When I took out that pcp, there was no problem I was earning a good wage. It was a nice car but once the novelty wears off it’s just a big pile of 10 pound notes fluttering away in the wind...
Within a year my partner was pregnant (not planned !) and our household income dropped. I then spent the next several years juggling loans, credit cards, trading the car for a cheaper one, selling that and generally making a mess of my finances (£40+k of card and loan debt) until I’d had enough and had a LBM.
Car sold, belts tightened, debt attacked until eventually I sorted it out.

I’m not anti-debt but I’m very wary of it now. Who knows what life will be like in a year or two? Debt of any kind is dangerous and pcp cars are a big debt, as you rightly say it’s a depreciating asset. It eats such a big percentage of your income.
Keep the Audi, save whatever you would have paid on a pcp and then buy a better car for cash in a couple of years time. You will enjoy it more knowing it’s yours - bought and paid for:)