PCP isn't MSE

fred246

If you start a new job you have very few rights. If you lose the job you have to carry on paying. People get themselves into all sorts of problems with PCPs. I would rather lend my kids a few thousand for a second hand car than to have to bail them out of a PCP.

Grumpy_chap

motorguy said:

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.

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?

That article linked is providing information, not endorsing (or otherwise) PCP.  There are similar articles on the MSE site about all sorts of finance products but none are endorsements - all try to give explainers in simple terms.

I have not said that PCP is never a valid option.  I have accepted that PCP can work for some.  You should take on board my comments in their entirety, at least within this thread:

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.

In fact, you even agreed with me:

motorguy said:

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.

I do think, though, that the way PCP works, and certainly how the motor industry wants it to work, is that people renew from one PCP to the next.  That results in the individual carrying a large debt for ever and, if explained like that, it is difficult to justify:
Just looking at the Ford Focus, the default PCP on the website is:

• £5.7k deposit
• £250/month for 36 months
• £9.5k balloon

The equivalent monthly including the deposit spread across the term is £408.  Very different to the headline figure.
Ford would work hard at the end of the scheme to sign the customer to a new PCP, so the £9.5k balloon payment is carried as a debt for ever.
I don't think PCP would be as popular if explained like that.

I have never said that PCP never suits for anyone.  I just don't think that number is as high as the take-up suggests.  It is the power of marketing over good sense.

Biggus_Dickus

Grumpy_chap said:

motorguy said:

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.

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?

That article linked is providing information, not endorsing (or otherwise) PCP.  There are similar articles on the MSE site about all sorts of finance products but none are endorsements - all try to give explainers in simple terms.

I have not said that PCP is never a valid option.  I have accepted that PCP can work for some.  You should take on board my comments in their entirety, at least within this thread:

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.

In fact, you even agreed with me:

motorguy said:

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.

I do think, though, that the way PCP works, and certainly how the motor industry wants it to work, is that people renew from one PCP to the next.  That results in the individual carrying a large debt for ever and, if explained like that, it is difficult to justify:
Just looking at the Ford Focus, the default PCP on the website is:

• £5.7k deposit
• £250/month for 36 months
• £9.5k balloon

The equivalent monthly including the deposit spread across the term is £408.  Very different to the headline figure.
Ford would work hard at the end of the scheme to sign the customer to a new PCP, so the £9.5k balloon payment is carried as a debt for ever.
I don't think PCP would be as popular if explained like that.

I have never said that PCP never suits for anyone.  I just don't think that number is as high as the take-up suggests.  It is the power of marketing over good sense.

...indeed;...these days the marketing gurus can drill into our psyche like never before. 🤔

 

 

 

 

motorguy

Grumpy_chap said:

motorguy said:

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.

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?

That article linked is providing information, not endorsing (or otherwise) PCP.  There are similar articles on the MSE site about all sorts of finance products but none are endorsements - all try to give explainers in simple terms.

I have not said that PCP is never a valid option.  I have accepted that PCP can work for some.  You should take on board my comments in their entirety, at least within this thread:

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.

In fact, you even agreed with me:

motorguy said:

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.

I do think, though, that the way PCP works, and certainly how the motor industry wants it to work, is that people renew from one PCP to the next.  That results in the individual carrying a large debt for ever and, if explained like that, it is difficult to justify:
Just looking at the Ford Focus, the default PCP on the website is:

• £5.7k deposit
• £250/month for 36 months
• £9.5k balloon

The equivalent monthly including the deposit spread across the term is £408.  Very different to the headline figure.
Ford would work hard at the end of the scheme to sign the customer to a new PCP, so the £9.5k balloon payment is carried as a debt for ever.
I don't think PCP would be as popular if explained like that.

I have never said that PCP never suits for anyone.  I just don't think that number is as high as the take-up suggests.  It is the power of marketing over good sense.

Absolutely - they do provide objective information on all payment methods for a car, new or otherwise.  My point being at no point do they say PCP is "not very MSE" or say it is a bad idea.

RE: the Ford example, the end of the day real world example will never look like that as their website never includes discount.  Theres an easy £5K off pretty much every model.

https://broadspeed.com/new_cars/Ford/Focus/Choose_Number_Of_Doors/Choose_Bodystyle/Choose_Fuel_Type/Choose_Engine_Size/Choose_Transmission

Factor that in and you're back to a few hundred deposit (if any), £250 a month, hand the car back.  That will hold a lot of appeal for people who just want a monthly payment which will cover warranty, depreciation and protect them from large ad hoc bills.

neilmcl

You can easily argue that buying a new car, full stop, isn't money saving. PCP is just another method of achieving this and with various discounts and manufacturer contributions applied can sometimes work out the same, if not cheaper, than buying by cash but comes the advantage of having a fixed, stable repayment system and an option to walk away at the end. We don't argue that new car purchases should be outlawed from this forum for not being MSE, so I don't see the argument why PCP is any different in that respect.

I'll give you one example where PCP fits the MSE ethos. Every now and then a thread will come up where someone is wanting to buy a nearly new or pre-reg car but then are pleasantly surprised when it's pointed out that they could probably get a better deal by buying the car new with dealer contributions and a much lower interest rate. Yes we could've told them to go away and and just buy a £2K banger, and I'm sure some of the contributors here do just that, but that doesn't mean the advice given to buy the new car isn't MSE, far from it.

Grumpy_chap

No-one is saying that PCP should be outlawed.

neilmcl said:

I'll give you one example where PCP fits the MSE ethos. Every now and then a thread will come up where someone is wanting to buy a nearly new or pre-reg car but then are pleasantly surprised when it's pointed out that they could probably get a better deal by buying the car new with dealer contributions and a much lower interest rate. 

In those cases, the suggestion is usually to take the PCP, grab the incentives, then pay off so avoiding finance interest costs.

The idea of PCP, as the motor industry wants it to work, so that the consumer carries a substantial debt and the interest for ever is nonsense.  There is nowhere else that people would write that having a large debt that can never be cleared is a good idea.

ontheroad1970

dipsomaniac said:

Firstly. I am guessing there is not a lot of multi millionaires on this site looking to save money

Secondly, I don't see my £200 focus as a 'banger'

I am just saying PCP is not money saving imho

Don't understand your last paragraph. Hope you are not saying I should leave this forum??  I am offering my opinion, nothing more.

Are you trying to hit a post target, or just trying to be difficult?  For you it might not be cost saving, but a 0% deal over 3 years can be a cost saving to some.  Unless you propose to take over the site from the owners, I don't think it's up to you to decide its remit

motorguy

Grumpy_chap said:

No-one is saying that PCP should be outlawed.

neilmcl said:

I'll give you one example where PCP fits the MSE ethos. Every now and then a thread will come up where someone is wanting to buy a nearly new or pre-reg car but then are pleasantly surprised when it's pointed out that they could probably get a better deal by buying the car new with dealer contributions and a much lower interest rate. 

In those cases, the suggestion is usually to take the PCP, grab the incentives, then pay off so avoiding finance interest costs.

The idea of PCP, as the motor industry wants it to work, so that the consumer carries a substantial debt and the interest for ever is nonsense.  There is nowhere else that people would write that having a large debt that can never be cleared is a good idea.

But it can be cleared, if the customer decides to.  If they dont they can hand it back or trade it in.

Effectively most PCPs are treated as leases, with people getting to the end of term then making a decision on what they want to do next, moreoften opting to dispose of the car and moving on.

Interest rates on new car PCPs tends to be quite minimal.  Yes, if someone wanted to avail of all the offers and then clear the finance (as i have done in the past on occasions), then great, however most are happy to run with a fixed monthly payment.  If i was running with a PCP on a new car i'd be looking to pay 2.9% APR max, though less than that and 0% are available depending on the car.  

Herzlos

All PCPs are is a loan where you only pay a percentage of the balance over the term in order to keep the payments down, kind of link an interest free mortgage. A 3 year PCP is conceptually not that different from a 6 year HP in that you've got a lowish payment and at the 3 year mark there's still a chunk of car to pay off. Except that for the PCP you then get to decide if you want to keep the car and deal with the outstanding balance or change it for something else using the equity. If you want to change cars regularly then it's a pretty fair deal.

All of the pitfalls with a PCP are exactly the same as buying a new car in cash - that circumstances change and you're in a financial hole trying to get rid of the car.

Grumpy_chap

motorguy said:

Interest rates on new car PCPs tends to be quite minimal.  If i was running with a PCP on a new car i'd be looking to pay 2.9% APR max, though less than that and 0% are available depending on the car.  

This, itself, is a big distortion of the market.  The lower-than-market interest can only be offered because the cost is incorporated into the price.  It requires that everyone pays for the interest whether they need it or not.  It would be far more money saving overall if the car was £1k cheaper and then those that need finance take that on the best available rate on the lower balance.