Struggling over lease or PCP for new electric car - help would be great

jumeriah64

Grumpy_chap said:

jumeriah64 said:

•  We can buy, lease or PCP but after years of owning & maintaining, I think we will go for change every 3/4 years from now on so less likely buy.
•  Don't want to be wedded to one make of car we are choosing now. As I understand it, PCP is good if you are looking to replace with same? But the residual is only of benefit if you take another model in the same stable or sold by same organisation. I can't just take the money and go get another one elsewhere. Is that right?

It is incorrect that PCP ties you into the same make next time around.  PCP does not even tie you to changing the vehicle at the end of the agreed term.

Apart from lease, all the options you set out are means of financing the purchase:

• "BUY" - I assume you mean cash outright
• PCP - loan with lower monthly payments by deferring a chunk of the capital until the end of the agreed term
• Loan / HP - loan where the car is fully yours at the end of the agreed term

All things being equal, PCP would be the most expensive as it comes with the interest through the whole term on the balloon payment.  Various "incentives" can mean that all things are not equal.

With PCP, at the end of the term you can:

• hand the car back and walk away, then do whatever you wish
• pay the balloon and keep the car, after which the car is yours and you can do whatever you wish
• trade the car in, or sell, and settle the finance leaving you to do whatever you wish

Lease is different as you really are simply paying to use the car for a period of time and have not "right" to buy the car if you wish to keep it.  That does not mean that the lease company may not still agree to sell you the car, it's just they don't have to.

The best approach is to:

1. Choose the car you want
2. Negotiate the best price for purchase outright (use the online brokers to assist)
3. Get the finance that allows you to do the purchase at the lowest overall cost
4. Remember, if there are finance "incentives", you can still take the finance and then repay early if you would otherwise have paid cash.  This is the "best of both worlds" as it avoids the interest charges but gets the benefits of the incentives.

Good luck and hope you really enjoy the new car.
Out of interest, which EV are you going for?

That's very interesting and many thanks for explaining.

Car we are going with is the Audi E-tron GT. It's quite a leap from what we have been driving the last decade which has wind up windows, no PAS, no central locking ... in fact a base model of a very base car.

We have tested and there's no doubt it's good. But good as it is, I am sure in three years there will be significantly better options.

But the market likes larger performance Audi's I'm led to believe and if it captures the public enthusiasm, maybe there's milage in pay the balloon and sell it on. Who knows.

But interesting options you describe that I only partially understand. Thanks again ... is becoming clearer.

BOWFER

jumeriah64 said:

So if the car value was higher than expected, it 'could' be better pay the end payment (the balloon) and sell it on yourself?

You could do this at any time, not just at the end..
At any point during the deal, if you're offered more than they want for settling the account you're free to do so.

Petriix

PCP rarely works out cheapest over the term. Often taking out a PCP agreement can get you a discount off the total price, but then you can save a stack of interest by paying off the entire loan right away.

You really need to look at the total cost of ownership over the period. PCH (lease) very often works out cheapest as long as you don't actually want to keep the car after the 3-4 year term. Often batches of vehicles appear briefly for heavily discounted prices where a manufacturer decides to shift a load. This can be for a variety of reasons such a meeting emissions targets or clearing the unpopular trim levels etc. 

It's worth looking at where the deals are rather than being wedded to a particular make and model. There's a 'cheap deals' thread on the speakev forum and good looking deals are regularly posted on the various EV facebook groups. In my opinion the MG5 is the best value EV available right now, assuming you can negotiate the 'affinity' price.

Grumpy_chap

jumeriah64 said:

Car we are going with is the Audi E-tron GT. 

But interesting options you describe that I only partially understand. Thanks again ... is becoming clearer.

A fantastic choice of car!

Any remaining queries, I am sure this forum can help to clarify and explain.

jumeriah64

BOWFER said:

jumeriah64 said:

So if the car value was higher than expected, it 'could' be better pay the end payment (the balloon) and sell it on yourself?

You could do this at any time, not just at the end..
At any point during the deal, if you're offered more than they want for settling the account you're free to do so.

Now that is also interesting ... very much so. Why? While I am motivated by the Audi there's something else coming up 2023 that I really like the look of. So that would be a very cool facility to have in mind.

jumeriah64

Petriix said:

PCP rarely works out cheapest over the term. Often taking out a PCP agreement can get you a discount off the total price, but then you can save a stack of interest by paying off the entire loan right away.

You really need to look at the total cost of ownership over the period. PCH (lease) very often works out cheapest as long as you don't actually want to keep the car after the 3-4 year term. Often batches of vehicles appear briefly for heavily discounted prices where a manufacturer decides to shift a load. This can be for a variety of reasons such a meeting emissions targets or clearing the unpopular trim levels etc. 

It's worth looking at where the deals are rather than being wedded to a particular make and model. There's a 'cheap deals' thread on the speakev forum and good looking deals are regularly posted on the various EV facebook groups. In my opinion the MG5 is the best value EV available right now, assuming you can negotiate the 'affinity' price.

Thanks for the steer Petrix, is interesting but the focus is on that model and you are right, I will pay for that choice I think.

We have a contact that has access to cheap leases but his comment was similar .... because it's a little out of the main stream then the opportunity to negotiate is reduced.

jumeriah64

Grumpy_chap said:

jumeriah64 said:

Car we are going with is the Audi E-tron GT. 

But interesting options you describe that I only partially understand. Thanks again ... is becoming clearer.

A fantastic choice of car!

Any remaining queries, I am sure this forum can help to clarify and explain.

Yes it's the only one to motivate me in some years.

I was always fortunate enough to have significantly up scale company cars in the past but when finished work dropped many levels to the likes on base model 106 diesels and Micra's. 

It was actually rather refreshing to have that radical shift in a bizarre way. But equally pleasing to see something that makes me want to get up and do something at last.

Yes folks on MSE have been very helpful and forthcoming today on this subject. It's refreshing to see advice kindly offered without being made to feel like you sitting on the naughty step :-)

Sandtree

jumeriah64 said:
Many thanks Adrian, I think I'm getting that.

So PCP from a dealerships point of view is more interesting to them as it creates a replacement cycle that sounds beneficial to them .... you are more likely to stay with them for replacement?

If you can buy without debt then the majority of the time this will be the best option financially unless you've got your cash tied up in some high return investment.

Lease and PCP can workout better if the interest rate used (you don't get told the rate on a lease) is low and for some reason the value of your vehicle tanks. Rather than being stuck with a vehicle worth little you can walk away from it just give it back. Its hard to predict because if it was easy the lender would have set a lower final valuation in the first place. 

Obviously if you have to borrow in one way or another to buy then loan -v- pcp -v- pch -v- hp is a different set of comparisons

Keep_pedalling

Sandtree said:

jumeriah64 said:
Many thanks Adrian, I think I'm getting that.

So PCP from a dealerships point of view is more interesting to them as it creates a replacement cycle that sounds beneficial to them .... you are more likely to stay with them for replacement?

If you can buy without debt then the majority of the time this will be the best option financially unless you've got your cash tied up in some high return investment.

Lease and PCP can workout better if the interest rate used (you don't get told the rate on a lease) is low and for some reason the value of your vehicle tanks. Rather than being stuck with a vehicle worth little you can walk away from it just give it back. Its hard to predict because if it was easy the lender would have set a lower final valuation in the first place. 

Obviously if you have to borrow in one way or another to buy then loan -v- pcp -v- pch -v- hp is a different set of comparisons

That was the decision I came to on the ID 3 I ordered a couple of weeks ago. I will be use PCP to get the £1750 contribution, and pay it off within the first 14 days. 

jumeriah64

BOWFER said:

DrEskimo said:

The whole EV thing about it moving quick is a misnomer IMO. We know exactly what's on the horizon for the next 3-5yrs and older EVs still have maintained good values despite advances in the last 10.

They've held their value up to a point, because the tech didn't really advance much.
It was still pretty much the same cars for years on end.
I doubt a 24KW Leaf is holding its value as much now as it was 2-3 years ago, for example.

Yes and what I'm reading about solid state batteries becoming a practical reality in 3 years (I think it was) means the current Audi will be a V.2 model at that point.

If I understood correctly it is in fact VW who is developing commercially the solid state battery to come to the car market.