Cash for car or pcp?

ontheroad1970

Cisco001 said:

How about getting a 0% interest purchase credit card?
I think they usually doing 20 months?
When I bought my car couple years ago, I part pay with cash and part paid with credit card.

Not many will allow you to pay very much via credit card.  Why?  Because  the charges are high and they are no longer allowed to charge a surcharge on personal credit cards.

MrsStepford

If you buy a  new car, you then lose money as soon as you drive it off the forecourt. You will also lose money annually in depreciation and will have to pay the entire cost for insurance, tyres and servicing. If buying on HP it may take years to pay off the car and you will also pay interest.

If you lease a car you pay a deposit. That gets rolled over if you lease again or you get it back, You can have a package whereby the only thing you pay for, is the insurance. Depreciation isn't your problem. If you lease through the manufacturer, you may get a special edition with extras eg leather seats, tinted windows, heated seats and steering wheel. You pay every month for 4 years for using a new car.and depending on car/deal it can be cheaper than HP. 

If you need a car for work and get a car allowance and business mileage, it can be possible to make the lease car cost neutral,  whereas if you own a car, the extra miles and wear and tear affect the value of your car. 

motorguy

MrsStepford said:

If you buy a  new car, you then lose money as soon as you drive it off the forecourt. (1) You will also lose money annually in depreciation and will have to pay the entire cost for insurance, tyres and servicing. If buying on HP it may take years to pay off the car and you will also pay interest.

(2) If you lease a car you pay a deposit. That gets rolled over if you lease again or you get it back, You can have a package whereby the only thing you pay for, is the insurance. (3) Depreciation isn't your problem. (4) If you lease through the manufacturer, you may get a special edition with extras eg leather seats, tinted windows, heated seats and steering wheel. You pay every month for 4 years for using a new car.and depending on car/deal it can be cheaper than HP. 

(5) If you need a car for work and get a car allowance and business mileage, it can be possible to make the lease car cost neutral,  whereas if you own a car, the extra miles and wear and tear affect the value of your car. 

I've picked my top 5.

(1) With leasing you replace that with a monthly payment. 

(2) It doesnt get rolled over and you dont get it back.

(3) You do however pay a monthly payment which is going to be broadly equivalent to the depreciation

(4) No. There is no lease only special editions.

(5) Its hardly cost neutral if you're burning up all that car allowance and mileage allowance money potentially unnecessarily when part of it could go into your pocket instead.

Grumpy_chap

MrsStepford said:

If you buy a  new car, you then lose money as soon as you drive it off the forecourt. You will also lose money annually in depreciation and will have to pay the entire cost for insurance, tyres and servicing. If buying on HP it may take years to pay off the car and you will also pay interest.

If you lease a car you pay a deposit. That gets rolled over if you lease again or you get it back, You can have a package whereby the only thing you pay for, is the insurance. Depreciation isn't your problem. If you lease through the manufacturer, you may get a special edition with extras eg leather seats, tinted windows, heated seats and steering wheel. You pay every month for 4 years for using a new car.and depending on car/deal it can be cheaper than HP. 

If you need a car for work and get a car allowance and business mileage, it can be possible to make the lease car cost neutral,  whereas if you own a car, the extra miles and wear and tear affect the value of your car. 

Some of these points seem incorrect.

Particularly the references to having a lease car and paying a deposit that you can get back.
A typical lease is 3 (or 6 or 9) months paid upfront as initial rental
Then the number of months of the rental minus one at the monthly rate
Sometimes an "admin fee" as well.
So a "3 + 35" lease is one payment of 3 months' value plus 35 payments, thus covering the 36-month term
The initial payment is not "rolled over" if you lease again, nor do you get it back.

Referencing a lease to HP is not necessarily appropriate.  With a lease, the monthly payment is likely less than HP, but the two finance models are entirely different in their intent.  With HP, the intent is to own the car outright.  With lease, the intent is to use the car and hand it back.

lordmountararat

In 2017 I saved just short of £2K by buying on PCP and then paying it off a couple of months later. This was due to a combination of dealer and manufacturer incentives, but it is a funny old world when cash no longer gets you the best deal.

DrEskimo

lordmountararat said:

In 2017 I saved just short of £2K by buying on PCP and then paying it off a couple of months later. This was due to a combination of dealer and manufacturer incentives, but it is a funny old world when cash no longer gets you the best deal.

To an extent...

Without cash you wouldn't have been able to settle, so would have eroded some of those savings through interest paid. I would argue that you are still a 'cash buyer'.

I did the same, but would be odd if I told anyone I bought my car on finance and then they asked me 'how much is it per month' for me to reply....I don't have any finance on it...!

gzoom

freddiecider said:

BOWFER said:

Aaaargh, the old chestnut of "my PCP payments have gone for nothing"
No they haven't, they've gone towards you driving a new car for 4 years!

Yes completely get that ……I’m just trying to get my head around whether I should buy it outright or go with the PCP to do it. 

Do what lots of people have already suggested.

'Buy' the car on PCP to get dealer incentives, and than phone up the finance company to settle/clear the finance with cash.

It took me 10 minutes on the phone to settle the PCP finance on the last new car we bought. 'Saved' about £2.5k in discounts the dealer would only give if we 'bought' it on PCP. 

Car dealers always wants you to take finance as they get a kick back from finance companies. So play their game, but use consumer law that says everyone has a right to pay off finance early to get the best deal for you. 

gzoom

motorguy said:

MrsStepford said:

If you buy a  new car, you then lose money as soon as you drive it off the forecourt. (1) You will also lose money annually in depreciation  

I've picked my top 5.

(1) With leasing you replace that with a monthly payment. 

Its amazing people are conned into thinking lease deals some how avoid depreciation!!

A lease deal is essential an interest only mortgage. 

There is a time and place for interest only mortgages, but I suspect most people don't see their cars in the same role as investigation properties.