PCP isn't MSE

dipsomaniac

motorguy said:

thegentleway said:

I think it’s safe to say MSE means different things to different people.

"Money Saving" means different things to different people, however MSE has a very specific ethos - which is to help you get what you want at the best price.  You only have to look at their tagline - "The average person in the UK can give themselves the equivalent of a 25% pay rise by being an active, savvy consumer and shifting to the very best deals. "

https://www.moneysavingexpert.com/site/about-the-site/#:~:text=The site's dedicated to cutting,and campaigning for financial justice.

It doesnt say "The average person in the UK must buy the cheapest viable option possible at every opportunity", nor does it say "The average person in the UK should deprive themselves of the things they want and only get what they need".

You're misrepresenting what I am saying and you know you are. I am not saying you have to take the cheapest viable option. I am saying that PCP or buying a new car and keeping it for 3 years, rinsing and repeating is not MSE

Cornucopia

Cars are a tricky purchase from an MSE POV - there are no really good options to own and operate a depreciating asset that requires expensive insurance and the possibility of other unpredictable running costs.   

OTOH, I have a new-ish car that would have cost over £20K when it was new and I pay £183pm on a PCH Lease (similar to a PCP) including maintenance and I have no liability for any fluctuations in its residual value.    I simply don't want to take on a significant capital cost nor the responsibility for disposal losses.  

The other thing about it is that with a reasonable monthly income, these payments simply become living costs rather than interfering with capital, investments, etc.

Grumpy_chap

dipsomaniac said:

I have never taken out a PCP but isn't it about paying for a new car, keeping it for 3 years, then rinsing and repeating? If so, how am I moving the goal posts?

OK, so you describe in high-level terms how a PCP works.
BUT, you are conflating two different products:

1. PCP is simply a finance product, with a structure to reduce monthly payments by a generally large(ish) deposit and a large balloon payment which bears interest for the whole term of the product life. 
2. Having a new car every few years is, for those that can afford it, a choice of how they choose to spend their money and meet their desires and needs.

With regards to (1) the PCP finance product, I agree this is not MSE because of the interest costs applied and carried full-term for the balloon payment.  Manufacturer incentives and zero percent interest offers do distort that.  Keen sales-persons do also, in some cases, over-emphasise the low monthly payments to "push" a sale to individuals that cannot really afford it.  That is not good, but it is the sales-persons' job to get the sale.

Because of (1), some people do end up with (2) when they cannot really afford it - this is not recommended.  Alternatives can be just as effective and avoid the risk of financial strife.

Totally separate from the finance product (1) is the choice to have a new car every few years (product 2).  If an individual can afford this choice and wants or needs the new car every few years, then the MSE-approach is to meet that outcome in the most cost-effective manner.  

Life is not just about achieving the same end (a means of transport) at the lowest possible cost.  Similarly, the world does not work with the same type of approach for any other product.  If it did, there would be little point in maintaining an aspirational societal structure where you can train, work hard to get a better job and income as the increased income would yield no benefit other than a figure on a balance sheet.

• Why buy a premium £1k mobile, when a £150 product is more MSE?
• Why buy a Panasonic or Sony TV when a Technilks from Tesco will show the same picture?
• Why buy a Bentley when it is no faster in a traffic jam than a Mondeo?
• Why buy a brand new car when a clapped out banger will do the job?

The answer to all of the above is choice and, if the choice is affordable, it is not for others to say that the choice is incorrect.  Interestingly, each of the questions can be asked as the inverse and the answer is pretty much the same, except you could re-phase the "buy" with "make do".

motorguy

68ComebackSpecial said:

dipsomaniac said:

Sorry if I have done you a disservice grumpy_chap I might have been mistaken lumping you with motorguy and bowfer.  Still trying to get someone to explain how buying a new car, keeping it for 3 years and then rinsing and repeating is MSe

Because some people want to own a new/ sub 3 year old "prestige" vehicle and can't afford to buy them through any other means. It might not be what you, I and countless other members aspire to but for some people their preferred lifestyle is all about looking "successful" to their friends/ family/ neighbours and this means having a new car, wearing labelled clothing etc. MSE can help them to achieve the best PCP deal to buy the car they want and maybe, if they hang around long enough, they might change their mindset and realise that there are other, less financially wasteful, ways of living a good life.

Why does PCP have to be about getting a "prestige" car?  The most successful PCP deals tend to be around Clios, Fiestas, Meganes and small to medium soft roader type Nissans etc.  Pretty much all Renaults, Fords, Vauxhalls, Nissans are sold new on PCP or lease deals.

And - contrary to the view of a small but noisy minority - people dont PCP a car to impress others, they do so primarily because it gets them what they want for a payment they can afford and are happy with.

RE: the second bit in bold, PCP puts them in to a new or nearly new variant of the car they could otherwise buy on an HP finance / personal loan deal.

A friend of mine, 25 years ago was buying up 4-6 year old BMWs, Mercs and Audi trade ins from the local franchised dealers, sticking a set of new replica alloys on them and selling them like hot cakes.  Genuinely he had rows of them and they sold hand over fist.  But the market moved on when the "prestige" manufacturers started selling the new / nearly new cars on PCP deals with similar payments to the older cars on finance. 

Grumpy_chap

motorguy said:

And - contrary to the view of a small but noisy minority - people dont PCP a car to impress others, they do so primarily because it gets them what they want for a payment they can afford and are happy with.

PCP is a finance product, but do people buy brand new cars to impress others?
If the registration plate did not include the year-identifier, but a purely random combination of letters and numbers instead, would the sales of brand new cars fall?

Sea_Shell

motorguy said:

68ComebackSpecial said:

dipsomaniac said:

Sorry if I have done you a disservice grumpy_chap I might have been mistaken lumping you with motorguy and bowfer.  Still trying to get someone to explain how buying a new car, keeping it for 3 years and then rinsing and repeating is MSe

Because some people want to own a new/ sub 3 year old "prestige" vehicle and can't afford to buy them through any other means. It might not be what you, I and countless other members aspire to but for some people their preferred lifestyle is all about looking "successful" to their friends/ family/ neighbours and this means having a new car, wearing labelled clothing etc. MSE can help them to achieve the best PCP deal to buy the car they want and maybe, if they hang around long enough, they might change their mindset and realise that there are other, less financially wasteful, ways of living a good life.

Why does PCP have to be about getting a "prestige" car?  The most successful PCP deals tend to be around Clios, Fiestas, Meganes and small to medium soft roader type Nissans etc.  Pretty much all Renaults, Fords, Vauxhalls, Nissans are sold new on PCP or lease deals.

I've not studied the numbers, but I'd always thought that PCP on "average" cars (Ford, Vauxhall) was an even worse deal, due to the faster depreciation that they suffer over the more "prestigious" brands?

In other words their residuals are through the floor.

When you say "most successful", what do you mean?

Most popular?
Best for the dealer?
Best for the finance company?
Or best for the customer?

motorguy

dipsomaniac said:

Herzlos said:

dipsomaniac said:

buying a new car every 3 years from new is what this thread is all about and is NOT MSE.  motorguy, bowfer, grumpy_chap why are you trying to muddy the waters?

The thread is literally titled "PCP isn't MSE", stop moving the goal posts.

I certainly don't agree that a new car every 3 years is a cost effective way to run a car, given they you're always taking the worst of the depreciation curve. It is, however, a pretty low risk approach because the car is always in warranty and probably not doing enough miles for things to wear out. Couple that with a fixed monthly payment and it's actually a fairly attractive package for those who care nothing for cars but want something consistent and low hassle. In the 3 years of ownership it'll probably just need 3 services and wiper fluid.

I have never taken out a PCP but isn't it about paying for a new car, keeping it for 3 years, then rinsing and repeating? If so, how am I moving the goal posts?

You're viewing it as a purchase and its not.

Its a rental for a fixed period of time.  People pay a palatable amount for what they see as what they require for that timeframe.

The price of the car itself does not matter.

motorguy

Grumpy_chap said:

motorguy said:

And - contrary to the view of a small but noisy minority - people dont PCP a car to impress others, they do so primarily because it gets them what they want for a payment they can afford and are happy with.

PCP is a finance product, but do people buy brand new cars to impress others?
If the registration plate did not include the year-identifier, but a purely random combination of letters and numbers instead, would the sales of brand new cars fall?

There will always be a minority of people who want the "newest" thing and will happily pay a premium for that.

BUT it would be wrong to broad brush all PCPers with that.  Its a fixed term and the driver (ha!) for change will be the end of the term, NOT the latest plate coming out.

My neice and her husband run one of those Captur things on a PCP.  She had a Clio last time and now they've a couple of kids a Captur works better for them.  They'll change it when the timeframe is up on it - which will coincide with the end of the warranty, the end of the servicing pack, and the start of having to do MOTs etc, so if they get another palatable, affordable to them deal they will likely do the same again.  If not they'll likely buy something used and cheaper.

Herzlos

dipsomaniac said:

Herzlos said:

dipsomaniac said:

buying a new car every 3 years from new is what this thread is all about and is NOT MSE.  motorguy, bowfer, grumpy_chap why are you trying to muddy the waters?

The thread is literally titled "PCP isn't MSE", stop moving the goal posts.

I certainly don't agree that a new car every 3 years is a cost effective way to run a car, given they you're always taking the worst of the depreciation curve. It is, however, a pretty low risk approach because the car is always in warranty and probably not doing enough miles for things to wear out. Couple that with a fixed monthly payment and it's actually a fairly attractive package for those who care nothing for cars but want something consistent and low hassle. In the 3 years of ownership it'll probably just need 3 services and wiper fluid.

I have never taken out a PCP but isn't it about paying for a new car, keeping it for 3 years, then rinsing and repeating? If so, how am I moving the goal posts?

It's been explained a few times but I'll give it another go.
PCP is a finance product, that whilst often applied to new cars doesn't necessarily mean so.
It allows you to essentially only pay part of the capital off over the term, with a balloon payment at the end, in order to bring down the monthly costs (kind of like an interest only mortgage). After the term expires the customer can either pay the balloon and keep the car, or hand the car back. Generally poor planning leads to the buyers not having a contingency in place and are faced with handing the car back and being carless so often roll the contract over into a new deal (taking any positive balance into account).
More organised buyers will either pay the balloon and keep the car, or get something more suitable.

There are often incentives on PCP's such as dealer contributions (discounts) which, combined with brokers can mean that a new car is actually cheaper to buy than a nearly new one.

The 3-year new car cycle may be made easier by PCP's but it's very much a buying problem and not a selling problem, in exactly the same way that interest only mortgages really hurt the people who had no plans in place to clear the capital.

It's also not a prestige thing; you can get a PCP on any new car, though the ones with the lowest depreciation will be the cheaper over the term, just like paying cash.

You're moving the goalposts because you started complaining about PCPs and are now complaining about new cars which is apparently what you've been upset about the whole time.

Grumpy_chap

motorguy said:

You're viewing it as a purchase and its not.

Its a rental for a fixed period of time.  People pay a palatable amount for what they see as what they require for that timeframe.

The price of the car itself does not matter.

Unfortunately, too many people don't realise this.  They are not helped by marketing phrases such as "the affordable way to buy / own your new car" when, as you say, you don't buy / own the car.
It sounds as though your niece is one of those that does understand that PCP is not ownership.