PCP on a 3/4yr old car - is it worth it?

biged670

Hi,


I'm currnetly considering taking out a PCP on a car that is 3-4yrs old (still shopping around). Just wondering if anybody has done the same, what people's opinions were, good stories bad stories etc...


Cheers

Mercdriver

no. no and thrice no.

Standard HP or a personal loan.

foxy-stoat

Not worth it - personal loan all the way.

biged670

Cheers both - could you possibly add any context?


I know PCP is mainly used for brand new cars, but simply put, we cannot afford the payments for a brand new car. The payments for a PCP on a nearly new car are obviously considerably less.

The reason for me considering the PCP over the usual HP/ Personal loan are obviously the cheaper payments, but also at the end of the 3yr period we would probably be looking for a new car again anyway.

Mercdriver

The APR on used cars is generally terrible and you have to remember that you are paying interest on the whole of the balloon as well as what you repay. Not only that but as the car gets older it can get more unreliable, so you are throwing good money after bad.

A personal loan will depending on your credit history have a much lower APR and not be secured on the car.

You have to look beyond the 'low' monthly payments and remember that you don't own the car at the end of the term unless you pay the balloon.

foxy-stoat

PCP on a secondhand car is just letting you buy a car that you cannot afford and will cost you more in the long run.

Stick to what you can comfortably afford and save up for a few years for a dearer car.

biged670

Cheers for all the replies.

My thinking was that the repayments made, over a 36 month agreement for example, would more or less equate to the depreciation of the car's value, less interest.

My logic is that if I were to buy the car with a personal loan, and look to sell the car in 3yrs time, with the decrease in the car's value, I would have lost the money that I would make in repayments anyway? Not sure if I am being niave in my thinking thats why I've asked for opinions.

Exemplar

Unless it's a KIA with a remaining warranty then ney, ney and thrice ney.

Walk away unless the dealer is offering a full manufacturer warranty.

(We bought my FIL a 2012 3007 from a main dealer recently, they gave a Peugeot 1 year full warranty and we bought a Peugeot warranty for £350 for the second year).

foxy-stoat

biged670 wrote: »

Cheers for all the replies.

My thinking was that the repayments made, over a 36 month agreement for example, would more or less equate to the depreciation of the car's value, less interest.

My logic is that if I were to buy the car with a personal loan, and look to sell the car in 3yrs time, with the decrease in the car's value, I would have lost the money that I would make in repayments anyway? Not sure if I am being niave in my thinking thats why I've asked for opinions.

You need the full purchase price;
Deposit
36 monthly payments
Balloon payment

Against the loan repayments over similar time frame.

Are you forgetting about the balloon payment at the end of the 3 years, as the car wont be yours until you fully pay for it.

System

biged670 wrote: »

My logic is that if I were to buy the car with a personal loan, and look to sell the car in 3yrs time, with the decrease in the car's value, I would have lost the money that I would make in repayments anyway? Not sure if I am being niave in my thinking thats why I've asked for opinions.

Yeah but at the end of a 3 year loan you have a car you own outright so that if you find yourself with no job or circumstances change and money is really tight you still have a car to run around in, one which is only costing you maintenance and fuel to run, not maintenance, fuel and finance as well. If you get one on PCP and at the end of the 3 years find yourself in worse financial circumstances you have no car.

Mercdriver

Tarambor wrote: »

Yeah but at the end of a 3 year loan you have a car you own outright so that if you find yourself with no job or circumstances change and money is really tight you still have a car to run around in, one which is only costing you maintenance and fuel to run, not maintenance, fuel and finance as well. If you get one on PCP and at the end of the 3 years find yourself in worse financial circumstances you have no car.

We know you hate PCPs so your conclusion is very black and white. Have to correct you on the personal loan. On an unsecured personal loan the car is the OPs from the very beginning because the finance is unconnected to the car.

PCP can suit some people. Just not all. I do around 20k miles a year so it's not the best thing for me, and I wouldn't advise it on a used car at all. With brand new cars there be low APR deals and dealer or manufacturer contributions. Less common on used.