PCP isn't MSE

Grumpy_chap

dipsomaniac said:

 I just don't think PCP is MSE. 

Nor do I.
BUT I do agree with the posters that say that the forum is not about "never spending money" but is about achieving what you want in a financially astute manner.
In that regard, there are some who could argue that PCP is very MSE as it allows you to get the use of, say, an A4 for the monthly payment as traditional finance for, say, a Focus.  I don't agree that this is a good argument, but it works if monthlies is the primary consideration.  Whether monthlies should be the primary consideration is another matter entirely.

motorguy

dipsomaniac said:

Just for the record I am not outraged (your words) or expect talk of PCP to be stopped (your words again). I just don't think PCP is MSE. There are plenty of motoring forums where you can discuss PCP, Lambos, Tesla's & maseratis until your heart's content. I just thought this was a money saving expert forum to discuss cheap motoring

And yet you keep bringing it up repeatedly?  You get the same answers too.

You keep being told what MSE is about but refuse to accept that.

What outcome do you expect?  Everyone to accept your view and stop posting on such subjects?

Herzlos

dipsomaniac said:

Just for the record I am not outraged (your words) or expect talk of PCP to be stopped (your words again). I just don't think PCP is MSE. There are plenty of motoring forums where you can discuss PCP, Lambos, Tesla's & maseratis until your heart's content. I just thought this was a money saving expert forum to discuss cheap motoring

You can buy an expensive car and still want to save money. What's your cut off point where a car is no longer MSE?

motorguy

Grumpy_chap said:

dipsomaniac said:

 I just don't think PCP is MSE. 

Nor do I.
BUT I do agree with the posters that say that the forum is not about "never spending money" but is about achieving what you want in a financially astute manner.
In that regard, there are some who could argue that PCP is very MSE as it allows you to get the use of, say, an A4 for the monthly payment as traditional finance for, say, a Focus.  I don't agree that this is a good argument, but it works if monthlies is the primary consideration.  Whether monthlies should be the primary consideration is another matter entirely.

Absolutely. 

Not up to any of us to judge what other people should be doing with their money.  Hence we just assist others where we can with what they wish to buy.

If the O/P wishes to drive a £200 car, thats fine by me.  I dont see why that has to be the solution for everyone?  Other people have different wants and needs.

Grumpy_chap

Herzlos said:

dipsomaniac said:

Just for the record I am not outraged (your words) or expect talk of PCP to be stopped (your words again). I just don't think PCP is MSE. There are plenty of motoring forums where you can discuss PCP, Lambos, Tesla's & maseratis until your heart's content. I just thought this was a money saving expert forum to discuss cheap motoring

You can buy an expensive car and still want to save money. What's your cut off point where a car is no longer MSE?

There is none at the top end - I can want a Ferrari and still want competitive insurance.

The real point at which a car fails to be MSE is at the other end.  Because of lockdown, I have only done a few hundred miles this year - MSE would have been rid of the car and Uber or Avis.

motorguy

I could understand the O/Ps concern if threads about new or fancy cars precluded anyone from asking about running a cheap car but it doesnt.

Loads of threads covering the full spectrum of motoring.

fred246

It's certainly not money saving especially if people keep renewing them. It seems to be based on a number of misconceptions. The first is that cars have to be less than 3 years old to be reliable. Brand new cars can have problems like the snagging list of a new house. Components often fail early. In my experience cars between 3 years and 12 years are just as reliable if not more reliable than a brand new car. Cars do need MOTs, tyres, batteries, brake linings, wipers. These are needed more on the 3-12 year old car but it would be daft to pay for a PCP to avoid these which are cheap. The other question is a warranty. As with most warranties it's far cheaper to just pay for your own repairs as they are needed. You just need to have the discipline to keep some savings for those eventualities.

Grumpy_chap

I agree with Fred on this one.

The real problem with PCP is that it is marketed and people enter the agreements focusing solely on the monthly payments.
The balloon payment is often glossed-over, in part because the concept is marketed that the balloon payment is never paid.  That does mean that the consumer is carrying, and incurring interest on, a large debt in perpetuity.  That definitely is not MSE.
The other part of PCP that gets overlooked is the deposit.  To overlook that is even more strange as it is actually paid and can be a large amount - sometimes even as much as another whole year's worth of monthly payments.  Maybe individuals are persuaded to pretend that is not "real money" because the deposit is met from the trade in on the old car before taking out the first PCP.  As money does not leave the bank, it is easy to pretend it is free.  The upshot is, though, paying in total 4 years' monthly for three years use of the car.

Maybe, if it was only PCP that was structured like this, things would not be so bad.  Unfortunately, I suspect that many of the people opting for PCP by only looking at the monthly payments have the same mind-set for everything else so mobile phone, car insurance, TV package, computer software, etc., etc. are all just "monthly payments".  The result is a finely balanced system whereby every pound of salary is accounted for on payday and there is nothing left for any savings or unforeseen events.  Unless the individual starts from the point of having a substantial emergency reserve fund, which I doubt many do, any event or change to the equation creates havoc.

motorguy

Grumpy_chap said:

I agree with Fred on this one.

The real problem with PCP is that it is marketed and people enter the agreements focusing solely on the monthly payments.
The balloon payment is often glossed-over, in part because the concept is marketed that the balloon payment is never paid.  That does mean that the consumer is carrying, and incurring interest on, a large debt in perpetuity.  That definitely is not MSE.
The other part of PCP that gets overlooked is the deposit.  To overlook that is even more strange as it is actually paid and can be a large amount - sometimes even as much as another whole year's worth of monthly payments.  Maybe individuals are persuaded to pretend that is not "real money" because the deposit is met from the trade in on the old car before taking out the first PCP.  As money does not leave the bank, it is easy to pretend it is free.  The upshot is, though, paying in total 4 years' monthly for three years use of the car.

Maybe, if it was only PCP that was structured like this, things would not be so bad.  Unfortunately, I suspect that many of the people opting for PCP by only looking at the monthly payments have the same mind-set for everything else so mobile phone, car insurance, TV package, computer software, etc., etc. are all just "monthly payments".  The result is a finely balanced system whereby every pound of salary is accounted for on payday and there is nothing left for any savings or unforeseen events.  Unless the individual starts from the point of having a substantial emergency reserve fund, which I doubt many do, any event or change to the equation creates havoc.

You are using the phrase "not very MSE", ergo, "not very Money Saving Expert".

That is not the MSE / Money Saving Expert view on this.

https://www.moneysavingexpert.com/car-finance/personal-contract-purchase/

If you want to say "that is not very money saving" then fine, but you cant declare "that is not very MSE" as you cant speak for the site, nor is it their view, nor is aligned to the ethos of the site.

Also, it may be perfectly valid for someone to avail of a new car PCP deal as an enabler for them.  Paying a couple of hundred a month for reliable, warranted transport could enable them to take on a new job with new opportunities.  Who are we to apply a broad sweep judgement on whats right for anyone?

motorguy

Grumpy_chap said:

Maybe, if it was only PCP that was structured like this, things would not be so bad.  Unfortunately, I suspect that many of the people opting for PCP by only looking at the monthly payments have the same mind-set for everything else so mobile phone, car insurance, TV package, computer software, etc., etc. are all just "monthly payments".  The result is a finely balanced system whereby every pound of salary is accounted for on payday and there is nothing left for any savings or unforeseen events.  Unless the individual starts from the point of having a substantial emergency reserve fund, which I doubt many do, any event or change to the equation creates havoc.

And wheres your evidence of this?  You cant simply apply a broad brush that people who PCP new cars are in a situation where every pound of their salary is accounted for on payday.

Granted, there may be some people who over stretch themselves, but then that becomes about people misusing the capability to get something - people could misuse credit cards, personal loans, overdrafts, store cards, mobile phone contracts, etc and get themselves in to excessive debt, BUT the vast majority of people dont.


Debt is not necessarily a bad thing, inappropriate use of debt is the problem.