End of PCP - what next??

sjjones83

I’m just after a few opinions.

My PCP comes to an end in July and I’m just wondering what to do. I like the car and it suits my needs perfectly. I’m tempted to buy it outright (I have the cash available) but is buying a depreciating asset, that will no doubt need work doing in due course, foolish. Investing the cash might be more financially sound?

Other options would include getting a new car via PCP or leasing. There is likely to be a small amount of equity in the car given the final PCP value and current resale values.

Any thoughts?

AdrianC

Sure, you can invest the cash. But you're then borrowing the same - and a lot more - to get a new one. Remember, what you've paid in the PCP so far is not just all the depreciation, plus interest on that, but interest on the balloon.

So whatever interest rate you're paying on the PCP, are you getting that much return - after tax - on the investment?

mgfvvc

sjjones83 wrote: »

I’m just after a few opinions.

My PCP comes to an end in July and I’m just wondering what to do. I like the car and it suits my needs perfectly. I’m tempted to buy it outright (I have the cash available) but is buying a depreciating asset, that will no doubt need work doing in due course, foolish. Investing the cash might be more financially sound?

Other options would include getting a new car via PCP or leasing. There is likely to be a small amount of equity in the car given the final PCP value and current resale values.

Any thoughts?

I assume the car is about 3 years old and has depreciated by at least 50%. If you buy it outright and keep it, it will potentially have another 10-15 years in it, although you probably won't keep it that long.

You say it will no doubt need work doing in due course, but a 3 year old car shouldn't need a great deal of work for many years. A modern car won't normally need major work before it's 10 years old, if it is looked after properly.

Ask yourself what benefit another new car will bring for the cost?

If it suits your needs then buying it outright with a view to keeping it another 5 years seems like a good choice to me.

k6chris

sjjones83 wrote: »

is buying a depreciating asset, that will no doubt need work doing in due course, foolish.

That old chestnut, I bet the car dealer told you this 'fact'. When you take out a PCP you are paying for the depreciation. Sure you are not buying the car but you are paying a price both to use the car and cover that cost. Add up what you paid, the initial depost and the monthly repayments. Now look at the cost of keeping the car which you both like and know the history of. The car dealer wants you to stay on PCP because they can get a nice stream of revenue from you, where if you buy the asset, the can't. Yes your bought car will go down in value, but you are getting productive use out of. Rant over!

Ectophile

If you just take out another PCP or lease, then you are constantly paying out for a car that is never yours.


Buy the car outright, and you will face some maintenance bills. But there's no longer the monthly payment.


And owning the car outright is flexible. If your needs change, you can sell it and buy something else at any time with no penalty charges. Try doing that with a PCP or lease.

Robby1988

If you take out another 3 year PCP at say £250pm, that is £9,000 you are going to be forking out not including any deposit you have to pay.

The calculation to do is....

Overall cost of a new PCP/lease
-
The cost of buying your current car.

Take a look at the figure you get & ask yourself whether you think the cost of upkeep on your current car going forward is likely to come anywhere near. Also don't forget that if you buy your current car it will be an asset that will always be of some value.

System

sjjones83 wrote: »

but is buying a depreciating asset, that will no doubt need work doing in due course, foolish.

Far less foolish than getting another new one on PCP and once again paying for the years of its highest annual depreciation. The amount of money you'll save will more than cover any repairs you're likely to have for the next half decade.

gzoom

sjjones83 wrote: »

but is buying a depreciating asset, that will no doubt need work doing in due course, foolish. Investing the cash might be more financially sound?

Swapping to a new car doesn't get you out of paying for depreciation, infact all you do with PCP/lease is pay additional interest on top of depreciation!!

Also what 'investing' are you going to do with the cash instead?

The most foolish thing to do with your money is commit to a brand new car when your existing one suits you fine.