PCP

duesouthtwin2

Need advice about leasing a car on PCP in the UK. 

Currently have a 2015 plate Ka with about 47k on the clock. It cost me £4000 three years ago. It’s just passed it’s MOT/service but passing comment from
the mechanic was not to take it in long journeys now. It is starting to rattle now and not start occasionally. 

Looking into options for a newer car. Been offered PCP car lease-2020 Vauxhall Corsa or a Peugeot 208 - both for about £200 per month. Capped mileage at 15k a year but I definitely do less than that. If I trade in my Ka and pay £1k deposit the monthly fee comes down -£140 Ish. Can trade it in every 3 years for another newer car. I don’t want to own them so no balloon payment. I don’t have the money to shell out thousands for an asset that will depreciate and age then have to sell on. PCP will let me drive a newer car at a fixed lower monthly price with options to trade up every 3 years.  My sister keeps saying that I won’t own the car -but when I finish work at 2am in the rain and can get home safely I don’t care who owns it?! So what do you think? PCP any good? Any advice? Anyone do this? 

AdrianC

A car of any age - let alone just 6yo - that can't be taken on long journeys is broken. Perhaps you could consider simply asking your mechanic to mend it? That would be a far more money-saving thing to do... It would certainly be cheaper to do that than to spend £1,700/year avoiding proper maintenance.

Bear in mind the average age of a car in the UK is 8yo, and the average age at scrapping is 14yo.

Our youngest car is 16yo. I'd jump in it tomorrow to go from Land's End to John o'Groats.
We drove a 40yo car to the Balkans and back just before lockdown with no specific prep.

Grumpy_chap

duesouthtwin2 said:

Need advice about leasing a car on PCP in the UK. 

Currently have a 2015 plate Ka with about 47k on the clock. It cost me £4000 three years ago. It’s just passed it’s MOT/service but passing comment from
the mechanic was not to take it in long journeys now. It is starting to rattle now and not start occasionally. 

Looking into options for a newer car. Been offered PCP car lease-2020 Vauxhall Corsa or a Peugeot 208 - both for about £200 per month. Capped mileage at 15k a year but I definitely do less than that. If I trade in my Ka and pay £1k deposit the monthly fee comes down -£140 Ish. Can trade it in every 3 years for another newer car. I don’t want to own them so no balloon payment. I don’t have the money to shell out thousands for an asset that will depreciate and age then have to sell on. PCP will let me drive a newer car at a fixed lower monthly price with options to trade up every 3 years.  My sister keeps saying that I won’t own the car -but when I finish work at 2am in the rain and can get home safely I don’t care who owns it?! So what do you think? PCP any good? Any advice? Anyone do this? 

I don't think you have given enough information for anyone to comment on the PCP deals you have seen as to whether they are good deals or not.  There are people that think PCP is the best thing since sliced bread and people that think PCP is the work of the devil.  For most people, PCP can be an appropriate solution in some circumstances.  The only thing that can really be said in this case is that, if the OP intends to change cars every three years for another new car, then the monthly payment of £140 (or £200 or whatever) is likely to become a payment for life almost irrespective of the finance choice.

The comment about not shelling out money to own an asset that will depreciate versus paying for ever-recycling PCP is not acknowledging the fact that everything paid on a PCP is the cost of depreciation plus the finance for that depreciation.

Is the drive for a new car here that the OP simply wants a new car and is building a case that the new car is a rational choice?  Nothing inherently wrong with simply wanting a new car. 

However, if the change is prompted by what seems to be a throwaway comment from the mechanic about long journeys, that is possibly a mis-understanding.  What exactly did the mechanic say?  Big difference between "you don't do many long journeys" (likely self evident for 8k miles/ /year) and "you shouldn't do many long journeys".  There is no reason why a 6 yo 50k Ka (8k miles/year) should not be as capable of long journeys today as it ever has been.  As for the rattles, even a new car will soon begin to rattle, and why did the mechanic say the car occasionally fails to start first time?  That is likely an easy and cheap fix.

Finally, the OP has seen some offers on used cars with a mileage at double what the OP does.  PCP on used cars tends not to be particulalry attractive.  The OP may find just as good a deal, or even better, on brand new car with PCP if PCP is the route the OP decides to go down.

{EDIT - Just looked on the Vauxhall website and brand new Corsa SE 15k miles / year 4 year PCP £2.5k deposit is £207 per month.}

Flight3287462

Why are you only looking at PCP.  Contract Hire ie lease is probably more suitable.

DrEskimo

duesouthtwin2 said:

Need advice about leasing a car on PCP in the UK. 

Currently have a 2015 plate Ka with about 47k on the clock. It cost me £4000 three years ago. It’s just passed it’s MOT/service but passing comment from
the mechanic was not to take it in long journeys now. It is starting to rattle now and not start occasionally. 

Looking into options for a newer car. Been offered PCP car lease-2020 Vauxhall Corsa or a Peugeot 208 - both for about £200 per month. Capped mileage at 15k a year but I definitely do less than that. If I trade in my Ka and pay £1k deposit the monthly fee comes down -£140 Ish. Can trade it in every 3 years for another newer car. I don’t want to own them so no balloon payment. I don’t have the money to shell out thousands for an asset that will depreciate and age then have to sell on. PCP will let me drive a newer car at a fixed lower monthly price with options to trade up every 3 years.  My sister keeps saying that I won’t own the car -but when I finish work at 2am in the rain and can get home safely I don’t care who owns it?! So what do you think? PCP any good? Any advice? Anyone do this? 

There is nothing special about PCP in that you somehow 'not owning it' means you get a better and more advantageous experience compared to someone who does own it.

A PCP is just a loan. Therefore if it has interest costs with it (i.e. not 0%), it will cost you more money than had you bought the car outright. The fact you can trade it in every 3 years is something you can do with any car of any age, whenever you like. You don't have to sell it privately. You can take your car to any garage/dealer and trade it to them, just as you are likely to do at the end of the PCP.

The only advantage you get is when the car's value is much less than the final payment predicted by the finance company (balloon). But you need to consider that these final payments are typically lower than market value, and you also need to factor in the cost of interest. Simply compare the cost of the PCP (add up deposit + monthlies) and then compare that to the predicted depreciation cost if you were to buy outright (discounted price - expected trade in at 3-years).

Of course it can be a more affordable way to run a newer car when you don't have the savings or can't pay the monthly payment on a personal loan for the entire amount, but then it begs the question whether you are in a position financially to be buying a selling brand new cars every few years....it certainly does not make it cheaper. On the contrary, it adds thousands in additional costs in the form of interest. Not to mention main dealer servicing and maybe higher insurance premiums.

It's a more convenient way to run a car, but certainly not cost effective. 

Herzlos

A 6 year old car should be reliable; I'd look into getting that fixed first.

However, if your only aim is to have something newer and more reliable, then you can lease something like a Pugeot 107 for about £100/month.

motorguy

PCP deals on used cars are rarely good VFM.  Look at the interest rate as they often quite high.

With a new car you usually get manufacturer incentives so you could likely get a brand new car for the same price (and thus be under warranty / not require MOT for the duration).

If you're looking at a year old car, i'd look at getting a cheap loan for over maybe 5 years as the payments would likely work out less due to much lower interest rates.  I'd also think about keeping the car for longer than three years.  There should be no need to worry about big maintenance bills on a 3-6 year old car.

Also watch for the deposit amount as it can give you a false positive as to the monthly cost.  A £3,500 deposit and "only £150 a month" really works out at closer to £250 a month once you factor in the deposit and spread it over the term.

BOWFER

I like PCP and lease, PCP is more flexible if you get fed up of the car during the term though.
Example, I was able to easily get a settlement figure for my Polo GTi, even though i was only 9 months into a 4 year PCP.
I then sold it back to the dealer for a small profit.
Doing the same 9 months into a four year lease would have been far more problematic.

BOWFER

motorguy said:

PCP deals on used cars are rarely good VFM.  Look at the interest rate as they often quite high.

I second this, I've taken on 2 x PCP cars in the past week and new ones were actually cheaper than slightly used due to the far lower APR of the new ones.
The new ones also came with 2 years free servicing.

jimjames

Herzlos said:

A 6 year old car should be reliable; I'd look into getting that fixed first.

Absolutely. My 12 year and 20 year old cars are routinely used for long journeys with no issues at all. However they are both properly maintained as well as preventative maintenance done to help reduce the risk of breakdowns.

If the comment from the mechanic is the only reason for looking to change cars then ask what needs to be done to fix it. It does seem a bit odd that a mechanic would say that without quoting how to resolve it.