PCP & Whatever, Any Good?

anotheruser

I know it's very different for each contract but trying to decide without being sold, whether a PCP (or whatever it's called) is good value for my circumstances.

How much do you pay? 
For what car?
Do you have to pay road tax?
What about MOTs and such?

I know for new cars, they're MOT exempt for a few years.

Thanks

Grumpy_chap

It is very difficult for anyone to comment on whether a PCP is good value for your circumstances as you have said nothing about what your circumstances are.

Here are some general considerations:

• Do you need a car, or want a car?
• The first thing is to decide on the type of car required.  Number seats, body style, fuel type, your mileage.
• What are your long term plans for the car?  Keep until it breaks, new car every 3 years, something in-between?
• What is your life stage?  How well off are you?  What other demands on your finances do you anticipate in the next few years?
• How secure is your income?
• Then try to narrow down to a choice of makes and models.
• Do you need new or used?  (With the complication that incentives can sometimes make new more cost-effective than nearly new.)
• What is the best price you can negotiate to buy the correct car for cash?
• Can you buy the car for cash if you wish?
• Now, what is the lowest cost way to finance that car at the best negotiated price?

anotheruser

The problem is, people are scared to say what they have in case someone else suggests it's too much.

If 20 people say they pay £200 a month for a 1 year old car that's all in, then I'd be better informed of what to expect.
If those 20 people say they may £400 a month, that's quite a bit of difference.
Yes, I appreciate different cars have different values but that's why I asked what car they have.

It means I can decide if it's worth looking into or just carry on buying a car.

DrEskimo

It's just a loan to buy a car. Once you frame it that way, you realise all it will do is increase costs by adding on interest, just as buying a TV using credit would, or car insurance.

Equally, as with any finance agreement, the monthly cost is entirely adjustable and completely personal. The cars value (and predicted future value by the finance company), APR and term will obviously play a large role, but it's also possible that someone will pay a very large amount of the cost upfront and therefore less per month. Comparing monthly costs makes little sense. It's like asking someone what their mortgage payment is to gauge the house price.

Look at the costs of the car separately.

• Calculate the depreciation by looking at purchase and anticipating future value when you think you will sell/trade.
• Calculate the interest cost if finance is used (PCP or other).
• Calculate servicing costs.

How you chose to finance these, and how that finance is arranged is up to you.

Personally, I minimise depreciation by buying used, but also researching and trying to buy a used car at the lower end of the curve (not all identical used cars will be priced the same...). Sometimes I use finance to get additional discounts, but settle that finance straight away, as I also avoid finance to avoid additional interest charges. This can add thousands. I then decided to buy EV to reduce servicing and fuel costs.

HTH

frost500

"PCP & Whatever, Any Good?" Depends. If you are happy dealing with what I used to call "spivs". If you are happy with giving up a few hundred pounds every month. If you are happy with paying a couple of grand (maybe) at the end of the contract. If you are happy with having the mindset that the vehicle is not yours. Then yes go for it. But remember the new car feeling will quickly evaporate.

(BTW Yes I am a cynical old b**tard)

CoastingHatbox

As a general rule, I've always done bangernomics. Buy the best car I can for under £1,000 and run it for as long as possible. Which worked out rather well, but I know just enough about cars to avoid buying a lemon most of the time. If you are patient and careful, you can pick up some nice 15 year old motors with few owners and full history.

Thus I wouldn't recommend car finance unless unless you have a fair chunk of disposable income, enough  to save up and avoid financing future vehicles.

We bought a new car on a PCP deal and a van with a loan, both in 2019.

Both suited our circumstances at the time, and didn't break our cardinal rule of being able to survive on just one of our incomes.

The car came along after our old one suffered a series engine related problems leaving us with a repair bill of between £2 and £4k depending on whether I repaired it or whether let a garage do it. The new one, on a PCP at 80% of the OTR RRP with a competitive interest rate proved too tempting.

But in 18 months of ownership, it has covered < 3,000 miles (largely thanks to the pandemic), possibly making it our worst financial decision ever.

I have enough liquidity to pay off the finance on the van and really probably should do, but in the current circumstances I am going to leave it a while yet.