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

AdrianC

jumeriah64 said:

AdrianC said:

jumeriah64 said:

•  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?

No.

Once you reach the end of your term, you have two options with a PCP.
Pay the balloon to buy the car, or hand it back and walk away.
If the value is higher than the balloon, the first is a no-brainer. Whether you pay it, or whether a dealer pays it to buy the car in as a PX...

If you want to change before the end of the term, there will be a settlement value from the financier. That will almost certainly be higher than the value of the car - and any dealer for any brand will gladly hide that in a new deal for you...

The one thing to remember is that with both lease and PCP, you're effectively paying the depreciation over the term plus interest on the remainder. Whether you're doing so explicitly in a PCP, or hidden in a lease, that's what you're paying for...

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?

The opposite, if anything.

PCP sees you more likely to buy the car out of the finance and keep it at the end.

Both have a fixed end date to the finance, and neither tie you to the same brand or dealer for any future cars.

If you want to get out before the end, both have settlement routes, and staying with the same financier might make that easier/cheaper.

AdrianC

jumeriah64 said:

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

One thing you can guarantee is that it won't be car makers who come up with any significant battery advances - it'll be the battery makers or academics. They might or might not have deals with car makers, but anything really significant has FAR wider applications than just cars.

All VW are doing is larding a shedload of cash into a US R&D company, Quantumscape, which they've been doing since 2018.
More recently, Quantumscape have received a shedload of money from venture capitalists and the Qatari sovereign wealth fund.

BOWFER

AdrianC said:

jumeriah64 said:

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

One thing you can guarantee is that it won't be car makers who come up with any significant battery advances - it'll be the battery makers or academics. They might or might not have deals with car makers, but anything really significant has FAR wider applications than just cars.

All VW are doing is larding a shedload of cash into a US R&D company, Quantumscape, which they've been doing since 2018.
More recently, Quantumscape have received a shedload of money from venture capitalists and the Qatari sovereign wealth fund.

Don't know about that, Tesla seem to be leading the way.
Of course there are many who say Tesla are really a battery company who happen to make cars, but there you go.

Mobeer

AdrianC said:

jumeriah64 said:

AdrianC said:

jumeriah64 said:

•  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?

No.

Once you reach the end of your term, you have two options with a PCP.
Pay the balloon to buy the car, or hand it back and walk away.
If the value is higher than the balloon, the first is a no-brainer. Whether you pay it, or whether a dealer pays it to buy the car in as a PX...

If you want to change before the end of the term, there will be a settlement value from the financier. That will almost certainly be higher than the value of the car - and any dealer for any brand will gladly hide that in a new deal for you...

The one thing to remember is that with both lease and PCP, you're effectively paying the depreciation over the term plus interest on the remainder. Whether you're doing so explicitly in a PCP, or hidden in a lease, that's what you're paying for...

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?

The opposite, if anything.

PCP sees you more likely to buy the car out of the finance and keep it at the end.

Both have a fixed end date to the finance, and neither tie you to the same brand or dealer for any future cars.

If you want to get out before the end, both have settlement routes, and staying with the same financier might make that easier/cheaper.

Two things going on:

1) Dealers (and industry in general) want a dependable income stream rather than one-off lumps of cash that may or may not come. PCH and PCP help deliver this.

2) Buyers seem more willing to pay small amounts often rather than large amounts infrequently. "Unwilling to spend £1000 on a new TV? Then just pay £1 per day. For 5 years."


Smart buyers compare and contrast all the finance options and pick the one that works best for their circumstances. Plenty of other buyers do what the salesman tells them to do.

BOWFER

Mobeer said:

AdrianC said:

jumeriah64 said:

AdrianC said:

jumeriah64 said:

•  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?

No.

Once you reach the end of your term, you have two options with a PCP.
Pay the balloon to buy the car, or hand it back and walk away.
If the value is higher than the balloon, the first is a no-brainer. Whether you pay it, or whether a dealer pays it to buy the car in as a PX...

If you want to change before the end of the term, there will be a settlement value from the financier. That will almost certainly be higher than the value of the car - and any dealer for any brand will gladly hide that in a new deal for you...

The one thing to remember is that with both lease and PCP, you're effectively paying the depreciation over the term plus interest on the remainder. Whether you're doing so explicitly in a PCP, or hidden in a lease, that's what you're paying for...

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?

The opposite, if anything.

PCP sees you more likely to buy the car out of the finance and keep it at the end.

Both have a fixed end date to the finance, and neither tie you to the same brand or dealer for any future cars.

If you want to get out before the end, both have settlement routes, and staying with the same financier might make that easier/cheaper.

Two things going on:

1) Dealers (and industry in general) want a dependable income stream rather than one-off lumps of cash that may or may not come. PCH and PCP help deliver this.

2) Buyers seem more willing to pay small amounts often rather than large amounts infrequently. "Unwilling to spend £1000 on a new TV? Then just pay £1 per day. For 5 years."


Smart buyers compare and contrast all the finance options and pick the one that works best for their circumstances. Plenty of other buyers do what the salesman tells them to do.

3) Buyers have a budget they're willing to spend on a car every month (say £300) and want the relatively fixed cost of a new car under warranty, rather than the uncertainty of a used one.

jumeriah64

Is an interesting new world this 'not actually owning' a car world.

Which is doubly weird when most of my life I had company cars until the tax regs became way less attractive early 2000's ... it didn't really matter then.

But thanks to all for helping explain this new world. I have now gone with the GT for the next three years. 

Now to find out all about chargers! :-)