Likelihood of being accepted for PCP after mortgage completion

Yorkshire_Dave

So I’m just looking ahead to the future at the moment. My partner and I are currently living together at my house (mortgaged by me) but are looking at moving somewhere else together at the end of this year. We’re just at the stage of working out what we can afford (already have a house at a new build in mind) and I’m looking at getting rid of my car.

We have two cars, hers is a fiesta only a few months old and mine is a 6 year old Volvo I’ve had from new and I’m currently paying £267 a month on a loan I had to buy it off the finance company. We discussed getting rid of it recently as it doesn’t get used much (we work less than half a mile away) and it’s potentially costing over £300 a month to run. So what we’re thinking is this is extra money that could be saved (potentially £350 together when we share the cost of running her car). Also it’s one less debt against my name. I came round to the idea of selling but then started worrying that once we got a house I’d struggle to get a car almost straight away for two reasons. One I might not have a big enough deposit for PCP and two I didn’t know what the chances of being accepted for PCP would be.

The issue we would have is where we’re looking at moving to would require a 20 minute commute and whilst we both work at the same place on the same days we do shifts and these don’t always fully line up so really we’d need two cars.

Basically what is the likelihood of being accepted on PCP in a very short (I’m talking a week or so) timescale after completion on a house? I’m aware that getting an agreement prior to completion isn’t wise due to the risk of another search being performed prior to completion so want to avoid this. If I’m better off keeping this car for now then that’s what I’ll do as we can still save but it just might be tight with fees and deposit (especially since we’ll probably have to pay stamp duty).

Apologies for the rather long post!

Thanks
Dave

iainscomputer

Cars that are sold on PCP are generally new & therefore expensive. As a couple you don’t need a 2nd car as you work near to home.
Just walk to work or cycle & save your money. The country is full of people in lots of debt buying expensive new things that they do not need.
Save your money & overpay on your new mortgage.
We also have 2 cars that are not used that much as I cycle to work & my wife works at home. The difference is our cars are paid off & one car is 16 years old & worth under £1k. 

Taking on a large debt in your circumstances is madness,

DrEskimo

How is swapping a £267 loan repayment on your Volvo for a £350 PCP payment going to improve your financial situation?

I take it the Volvo is just a personal loan too? If so, the £267/month isn't all going towards depreciation/interest. A substantial amount would be going towards owning the car which will be recouped when you do decide to sell. A PCP is the opposite. All of the payment would go towards deprecation and interest. Then there will be servicing and running costs on top.

Just focus on paying down the loan on the Volvo as fast as you can.

Yorkshire_Dave

I think I’ve been as clear as mud!

My current payment is £267. Then with tax, insurance and money set aside for servicing/repairs/MOT it’s £350. If we went down to one car (which she is currently paying for) I’d pay half the running costs which would cost me £150 and her £150. As a result we could collectively save £350 a month (myself £200 and her £250). 

A new car on PCP that I’ve been looking at would be £210pm and with insurance and a servicing pack £242pm. 

We don’t need two cars at present but from the moment we moved we would as we work 12 hour days/nights and are often late finishing so if we car shared we’d have to wait until we both finished more often than not.

So if I sold my car now I’d have to buy one almost immediately when we moved but likely won’t have much spare money to pay a deposit. If I keep it then that’s less to save. But if I got a new car I could save a little but undoubtedly have a bigger debt.

Do lenders look more at the monthly repayment or the overall debt?

I think I’m just a bit rubbish in getting things across!

DrEskimo

What is the finance on the Volvo? 

Yorkshire_Dave

DrEskimo said:

What is the finance on the Volvo? 

Apologies, you did ask! It is a loan not PCP and is £267 a month with just under 2 years remaining.

DrEskimo

Yorkshire_Dave said:

DrEskimo said:

What is the finance on the Volvo? 

Apologies, you did ask! It is a loan not PCP and is £267 a month with just under 2 years remaining.

The Volvo is therefore not costing you £350/month. As said, the majority of the loan payment is going towards owning the car. Monthly depreciation would be minimal and very little would be interest at this point.

A PCP on a new car however would be all towards depreciation of a new car and interest.

It would be far far far cheaper to simply keep the Volvo. By the time you move you will be close to finishing the loan and will have a paid for Volvo with no car payments at all.

homersimpson246

Don't buy a car on PCP if you only do a small amount of miles, you can get a very nice small car for less than 2K which will do you just fine and put some of the money you would have spent on the PCP aside each month for minor repairs and MOT.

Buy something simple so there is less to go wrong (small petrol engine non turbo), I have a 2007 1.4 Fiesta and its perfect as a cheap car, when something does go wrong with it (last time it was a fox running out of a hedge into it an damaging the radiator) it cost me less than £40 to fix myself and even at a garage would have cost very little.  Other than that in the 10 years we have owned it it has tyres, a brake pipe, cam belt replacement, front discs and pads and general servicing. 

I'm afraid a lot of people are scared of cars and think they will cost a fortune to fix so go down the PCP route for new/nearly new.  If you do a lot of miles then there might be an argument for that but if its short journeys then something older (but simple) is much more economically sensible, the problem is that people look at complicated older cars (Jags, Mercs, BMW's etc.) and when they go wrong they go wrong big time.

Something like this might be worth considering (I have one of these so im a bit biased) https://www.ebay.co.uk/itm/Ford-Fiesta-2006-Manual1-4-Petrol/274728192349?hash=item3ff713895d:g:BeMAAOSwSgVgVyk9&LH_BIN=1 At £900 if it lasts for 3-4 months you will have bought the whole car for the cost of a car on PCP and anything more than that you are saving money.  If it blows up after a month just sell it for spares or repair and someone will take it wall for a few hundred pounds so its not a big risk.

I see so many people renting cars on PCP and I just despair, a friend of mine bought a car on PCP to commute to the train station (around 5 miles each day), they paid over 30K for it and 5 years later is is worth around 13K, its very nice and low mileage but it has cost them 17K to do around the same in mileage.  My Fiesta on the other hand has probably lost less than £1000 in value and even if I was paying for repairs cost less than £1000 in the same period, just find a good reputable mechanical (not a Kwik-Fit type outfit) and you will be laughing all the way to the bank.