Car PCP

kirsteenkiki

Hello everyone, I am just looking for a bit of advice I am nearly at the end of my pcp car deal, is it worth while buying my car out right with a loan from the bank? My car will be 4 years old very low mileage I have kept it in immaculate condition! But I know with a new lease you get a 3 year warranty and service! I just feel the money is so much a month for nothing at the end of it and most repairs are never covered under your warranty anyway (which I have just found out) I love having a new car every 4 years but just feel the money every month £300+ there’s nothing to show for it! 

thank you  

[Deleted User]

You buy a low mileage 3 year old car and bung a good 3 year extended warranty on it £10k all in the car might still be worth £4K 3 years further down the line meaning the car has cost you £6k over 3 years which is around £170 a month. After 3 years keep the car or swap it in. 

Either way it’s still a heck o f a lot cheaper than leasing or pcp. 

AdrianC

When you say "very low mileage"... Pause and think about how much the depreciation and finance has cost you per mile driven...

motorguy

kirsteenkiki said:

Hello everyone, I am just looking for a bit of advice I am nearly at the end of my pcp car deal, is it worth while buying my car out right with a loan from the bank? My car will be 4 years old very low mileage I have kept it in immaculate condition! But I know with a new lease you get a 3 year warranty and service! I just feel the money is so much a month for nothing at the end of it and most repairs are never covered under your warranty anyway (which I have just found out) I love having a new car every 4 years but just feel the money every month £300+ there’s nothing to show for it! 

thank you  

If you're otherwise happy with the car then yes, get a cheap loan and buy it.  Unless its something likely to throw up big bills (high performance car for example), then i doubt it will need a warranty. 

Martin_the_Unjust

Take out a loan and buy the car, work out the difference between what you are paying for the loan and what you would be paying for a PCP deal and put that in a separate bank account each month.

Use that account to pay for repairs and servicing. The extra that accrues will go towards the next car you wish to buy in a few years time which will reduce the amount of loan you will need.

Repeat until in a few cars time you are paying cash for them

DrEskimo

Martin_the_Unjust said:

Take out a loan and buy the car, work out the difference between what you are paying for the loan and what you would be paying for a PCP deal and put that in a separate bank account each month.

Use that account to pay for repairs and servicing. The extra that accrues will go towards the next car you wish to buy in a few years time which will reduce the amount of loan you will need.

Repeat until in a few cars time you are paying cash for them

I love this idea, but the issue is that a personal loan to pay the balloon is sometimes a higher cost per month than a PCP. Its one of the reasons many convince themselves that another new car on PCP is 'cheaper'. 

The_Rainmaker

kirsteenkiki said:

 I love having a new car every 4 years but just feel the money every month £300+ there’s nothing to show for it! 

I think the OP has to get out of this mindset, which can be quite hard, we all love a brand new car.

OP start looking at car prices for cars like yours and cars you might be interested in and watch for a few weeks I suspect you might get a better deal in the market at the moment rather than paying your balloon.  So leave your decision until the last minute.

Edit:- They probably aren't collecting cars at the moment which might give you a bit more leeway.

KimJongUn88

AdrianC said:

When you say "very low mileage"... Pause and think about how much the depreciation and finance has cost you per mile driven...

Finance, yes. Depreciation is covered by the finance company not the OP.

The_Rainmaker

KimJongUn88 said:

AdrianC said:

When you say "very low mileage"... Pause and think about how much the depreciation and finance has cost you per mile driven...

Finance, yes. Depreciation is covered by the finance company not the OP.

Kim you need to rethink that post.  The OP is paying for depreciation via their monthly payments.  A car is not like a house it will in all but the rarest circumstances be a depreciating asset which someone is paying for and that is the OP.

neilmcl

The_Rainmaker said:

KimJongUn88 said:

AdrianC said:

When you say "very low mileage"... Pause and think about how much the depreciation and finance has cost you per mile driven...

Finance, yes. Depreciation is covered by the finance company not the OP.

Kim you need to rethink that post.  The OP is paying for depreciation via their monthly payments.  A car is not like a house it will in all but the rarest circumstances be a depreciating asset which someone is paying for and that is the OP.

Actually I think the point he was making is that the risk of depreciation is covered by the finance company. Yes, the customer pays a monthly amount to, what is considered to be the level of future depreciation, but the risk stays with the finance co. because the customer has the option to hand the car back should the level of depreciation be higher or pay the balloon and keep the car if it was not as high as expected.

MinuteNoodles

The_Rainmaker said:

KimJongUn88 said:

AdrianC said:

When you say "very low mileage"... Pause and think about how much the depreciation and finance has cost you per mile driven...

Finance, yes. Depreciation is covered by the finance company not the OP.

Kim you need to rethink that post.  The OP is paying for depreciation via their monthly payments.  A car is not like a house it will in all but the rarest circumstances be a depreciating asset which someone is paying for and that is the OP.

I think the point being made is when you do very low mileage if you break down the total cost of ownership of the car it might have been cheaper to take a taxi every time you would have used the car. 

If you're only doing 3000-4000 miles a year paying £300 a month for finance plus MOT, tax and servicing certainly in my town you'd have been better off just taking a taxi for that 3000 miles.