Getting into the PCP Game

motorguy

Grumpy_chap said:

motorguy said:

Most people use PCP as an extended rental.  They dont want to own the car long term, therefore are happy to pay a set amount.

The running of the car then becomes a service that they pay for monthly.

Most dont view it as "i wish i had £25,000 to buy a new car", they think "I have budgetted £200 a month to spend on a car, what can that get me?"

For that way of thinking, why do people PCP rather than lease?

I think that will come down the line.  Presently franchised dealers main funding instrument is PCP, but theres now more manufacturers offering pure lease deals. I think a lot of people still like the option of buying the car at the end of the term, even if very few actually avail of it.

Also, leasing works best if you just buy the standard car or buy whatever is on offer and sitting there right now.  It tends to get pricier when you want some options or a factory order car.

motorguy

Arklight said:

neilmcl said:

Arklight said:

BOWFER said:

Arklight said:

is designed to make people think they can afford more than they can. 

This phrase is really getting on my nerves now...
If people can afford the monthly payments, that's the end of it - the absolute end of it.
If that means they're driving a car they otherwise couldn't afford to buy outright, there is no relevance to that - none

FWIW I could afford to buy the cars we drive, quite easily.
I choose not to, I have no interest in that form of car ownership any more.

This is Moneysavingexpert, not Chuck_money_away_on_shiny_nonsense_bought_on_expensive_credit expert. If you could  afford to buy the cars you drive outright "quite easily", rather than renting them via restrictive lease agreements then why do you not do so?

The very fact that you are throwing money away on credit you don't think you need is proof that finance companies can spot a sucker every hour of the day.

There's a whole section of the forum dedicated to credit, finance instruments etc. Maybe you should inform those in charge that this is no longer required on these forums. Or, maybe you and your like minded posters should try and understand what the MSE forums are actually about and stop trolling.

PCP is a stupid debt treadmill that never leads to owning anything which is targeted at status-obsessed middle earners juggling credit cards. If you want to help buy a city banker another yacht, and pay for the kids' school fees of a motor executive somewhere then knock yourself out. 

If you want to hear that this is good financial sense fahgeddaboutit.

When i sold cars new back around 1988 / 89 we'd people who came in every three years and changed their car, maybe upping their monthly payment slightly.  Some bought new on HP, some bought used on HP.  I dont think anyone ever came in and bought a new or nearly new car with "cash" (though some organised their own bank loans).

Cars are expensive.  Unless you're happy to run something very old, theres going to be a monthly outlay for depreciation, maintenance, etc.  So its not a surprise that people do, and have done for many decades, used finance to roll that up in to a monthly payment.

motorguy

Arklight said:

born_again said:

When you really drum it down.
PCP is MSE.
You are getting a new car for a lot less than someone you buys it out right. (that is in the terms of your outright bank balance has more money in, than the person buying the car)
OK at the end of the term, one still has the car & the other does not (unless they pay to buy it)

If you run the numbers for the average life (14 years) of a car. PCP might come out cheaper if your car requires money spending on it to keep it going...
So £250 a month would be £42K. Could you buy & fully service a car for 14 years on that amount?
eg Kia niro £234 a month.
£26K new that leaves £1150 a year to play with over the 14 years...

Either way who cares. Each to their own.

This from someone who is not PCP lover....

This doesn't relate to any PCP arrangement I have ever heard of. PCP agreements are usually for 3 or 4 years at most, at which point you have a balloon payment you have to fund yourself based on a price that was estimated years ago, which is essentially you buying a 3 year old car. Or you go back on the treadmill of debt with a new vehicle.

You dont have to go back on the "treadmill of debt".  Do what you like at the end of term - buy it outright, fund the residual with a cheap loan, hand it back, sell the car for profit.  The world is your lobster.   If you dont want that particular car, go do what you like next time - buy a car for cash, loan, HP, PCH, lease, whatever.

dipsomaniac

BOWFER said:

Honestly, drives me mad this.
In a site that's full of people asking what they should do with tens of thousands of pounds they have lying around to invest, people are whinging that PCP "isn't MSE"
Dear oh dear.

Bowfer compared talking about investments to PCP

motorguy

Arklight said:

You pay off the estimated monthly depreciation of the vehicle plus the finance costs and interest, plus restoring any damage before you return it, plus any mileage penalties. The car is then returned to the manufacturer and sold off for more than the marginal cost that that it cost them to produce in the first place.

Very few cars are ever returned to the finance company.  The vast majority are traded in, bought outright, sold on, etc.

Interest charges on a new car PCP are usually very low or nil if done correctly with the right deal in mind.  

No need to "restore" the car unless you're handing it back and even then there are specific guidelines that the finance companies must adhere to RE: fair wear and tear.

No mileage penalties either unless you're handing the car back AND you've done more miles than you agreed to.

motorguy

Arklight said:

PCP is an amazing deal, for the motor industry.

PCP finance puts new cars on the road in a palatable way for consumers.

That leads to a large amount of used cars on the market, which keeps used prices relatively low.  Thats a win / win all round, surely?

motorguy

dipsomaniac said:

BOWFER said:

Honestly, drives me mad this.
In a site that's full of people asking what they should do with tens of thousands of pounds they have lying around to invest, people are whinging that PCP "isn't MSE"
Dear oh dear.

Bowfer compared talking about investments to PCP

No, he didnt.

He said on this site people were as free to talk about making large investments as they were to talk about PCPing new cars - and the site offers guidance for those both.

Neither fits your narrative of MSE being about making do and eking out a living.

He didnt say Investing = PCP.

dipsomaniac

I have got no problem with people having cars on monthly payment plans.  It keeps people in work.  Just don't tell me you are saving money or have had a great deal

motorguy

dipsomaniac said:

I have got no problem with people having cars on monthly payment plans.  It keeps people in work.  Just don't tell me you are saving money or have had a great deal

I dont think anyone has told you they are saving money by doing so?

And they could well have had a great deal.  How do you know they didnt?

BOWFER

Grumpy_chap said:

For that way of thinking, why do people PCP rather than lease?

I've done both and currently have one car on lease and two on PCP.
There are advantages/disadvantages to either.
PCP gives you the V5, so that's an advantage if you intend to use a private plate - you can do all the paperwork yourself.
Disadvantage is you're responsible for roadtax.
Lease, they pay the roadtax.
They're much of a muchness really though.