Getting into the PCP Game

motorguy

AdrianC said:

fred990 said:

Family of four I know are all on the pcp hamster wheel and have been for some years now. All complain they never have any money left for savings to buy their own car!

Mmm. It has long struck me that the PCP hamsterwheel is a lot easier to get on than to get off.

Whys it hard to get off?  

At the end of the term you've a myriad of options to chose from.

motorguy

fred990 said:

Family of four I know are all on the pcp hamster wheel and have been for some years now. All complain they never have any money left for savings to buy their own car! There's been an impressive fleet outside over the years. 
They've got the patter of a salesman, I guess they've heard it a few times now. 
I'm told we've been lucky with our two VW's (19 & 23 yrs old) that have never failed to start nor ever broken down.....owned from about two years old. 

Wow.  You happen to have an example to back up your narrative.  Who'd have thought?

A family i know spend their time judging others and concerning themselves far too much with how other people have what they have, instead of enjoying life.  

AdrianC

motorguy said:

AdrianC said:

fred990 said:

Family of four I know are all on the pcp hamster wheel and have been for some years now. All complain they never have any money left for savings to buy their own car!

Mmm. It has long struck me that the PCP hamsterwheel is a lot easier to get on than to get off.

Whys it hard to get off?  

At the end of the term you've a myriad of options to chose from.

All of which involve outlay to still be driving a week later.

The least outlay is to get back on the wheel.

If you've spent three years in a shiny new car for minimal-but-regular drip-feed outlay, then bangernomics is unlikely to be acceptable.

fred990

AdrianC said:

fred990 said:

Family of four I know are all on the pcp hamster wheel and have been for some years now. All complain they never have any money left for savings to buy their own car!

Mmm. It has long struck me that the PCP hamsterwheel is a lot easier to get on than to get off.

Totally agree.....that's why it works so well for the industry and their massively overinflated starting prices that they then helpfully 'discount' with their 'dealer contributions'....lol. Even more funny is they then have a finance 'product' to help you into a car you probably can't really afford. 
There's no such thing as a free lunch. 

NBLondon

So much has already been said....

To me - the basic principle has to be:  If you can afford the payments (and are reasonably confident you will continue to be able to) and you want/need a newish car then it works.  It may not be the absolute cheapest option but if you are prepared to pay for the convenience or intangible benefits then why not?  Most of us do that with other things in life.

I suspect the idea of PCP pushing people into cars they can't afford is those buyers who don't plan for three years ahead so at the end of the plan, they see getting back on the wheel as the only option; because they simply have no plan for paying the balloon to keep the car.   Yes - you could get a loan, sell the car and possibly take the profit.  Or you could find someone to buy it and settle the finance in one go.  But if you then still need/want a car....

If you can afford £300; maybe look for a deal at £250 and then have a buffer of 36 x £50 = £1800 at change time?  That would be my approach.

Grumpy_chap

motorguy said:

AdrianC said:

fred990 said:

Family of four I know are all on the pcp hamster wheel and have been for some years now. All complain they never have any money left for savings to buy their own car!

Mmm. It has long struck me that the PCP hamsterwheel is a lot easier to get on than to get off.

Whys it hard to get off?  

At the end of the term you've a myriad of options to chose from.

There are many options, I agree.

For most people with a PCP, do nothing is not an option as that leaves the individual car-less.

So, to guide you through the remaining options is the helpful hand of the car sales representative who has a vested interest in the individual taking the option that keeps them on the hamster wheel.

motorguy

AdrianC said:

motorguy said:

AdrianC said:

fred990 said:

Family of four I know are all on the pcp hamster wheel and have been for some years now. All complain they never have any money left for savings to buy their own car!

Mmm. It has long struck me that the PCP hamsterwheel is a lot easier to get on than to get off.

Whys it hard to get off?  

At the end of the term you've a myriad of options to chose from.

All of which involve outlay to still be driving a week later.

The least outlay is to get back on the wheel.

If you've spent three years in a shiny new car for minimal-but-regular drip-feed outlay, then bangernomics is unlikely to be acceptable.

Doesnt have to be bangernomics does it?  It could be a cheap bank loan, cash savings, combination of both.  

Of course, that assumes you do realise that people can have a car on PCP AND have savings?  It would be terribly narrow minded to assume that cant possibly be the case wouldnt it?

The vast bulk of people PCP because it provides a service for a given timeframe.  They dip in to the many different options as and when suits them. 

I've done it myself - had a car on PCP, dont currently, might have again, dont know.  I've found the move back out of PCP easy and perfectly acceptable, because its a tool.

Its not a binary black or white has to be a new car or has to be bangernomics - there are many shades of grey in between.  Dont you agree?

motorguy

Grumpy_chap said:

motorguy said:

AdrianC said:

fred990 said:

Family of four I know are all on the pcp hamster wheel and have been for some years now. All complain they never have any money left for savings to buy their own car!

Mmm. It has long struck me that the PCP hamsterwheel is a lot easier to get on than to get off.

Whys it hard to get off?  

At the end of the term you've a myriad of options to chose from.

There are many options, I agree.

For most people with a PCP, do nothing is not an option as that leaves the individual car-less.

So, to guide you through the remaining options is the helpful hand of the car sales representative who has a vested interest in the individual taking the option that keeps them on the hamster wheel.

"remaining options"?

None of them have to involve going anywhere near a car sales representative.

Hand the car back
Sell it on if theres equity and keep the equity
Make the final payment and keep it, using either cash, a cheap loan or a combination of both.

Go do whatever you want after that - buy privately, buy with cash, buy with a cheap loan, buy with HP, suit yourself.  Live happily ever after.

Jeez.  I didnt think this needed explaining....

Grumpy_chap

motorguy said:

"remaining options"?

None of them have to involve going anywhere near a car sales representative.

Hand the car back
Sell it on if theres equity and keep the equity
Make the final payment and keep it, using either cash, a cheap loan or a combination of both.

Go do whatever you want after that - buy privately, buy with cash, buy with a cheap loan, buy with HP, suit yourself.  Live happily ever after.

Jeez.  I didnt think this needed explaining....

None of this needs explaining to me, but the reality is that a lot of consumers simply don't have the full awareness that these other options are available. 

I suspect there are a high number of people who, as the end of the arrangement approaches, make the first call to the original supplying dealer to ask about "what happens next?"  That dealer is clearly going to offer the next PCP as the favoured proposal.

I would also expect that any sales representative worth their salt would be making contact with customers who have a PCP nearing the end of term to remind the customer about the end of the term and to offer their help with sourcing a new car on another PCP.  Possibly with a bit of fear thrown in for good measure "if you sign with me, I can ensure the new car takes over straight away from the end date on your current term - that might not be guaranteed everywhere and you may have a gap with no car..."

Much simpler to just stay on the hamster wheel than actually think about the other options (which the dealer has not promoted).

That is, essentially, what my SiL had, even though she was on 50-50 plan not PCP.


Irrespective of the options at the end of PCP, I think there is good acceptance that PCP is simply a form of finance.  I'll ignore comparison with "cash" purchase as most people taking and keeping PCP full term probably don't have the cash available.  However, comparison with other forms of credit finance are valid.  The way I see it with PCP:

• Get sold a new car, say £24k typical family hatchback
• Discount 10% )or incentives or whatever they are presented as) and PCP with zero percent finance.
• Old car is the deposit, say £3.6k
• Pay £250 per month for 36 months = £9k
• End of three years, give the car back or still owe £9k to buy that car (or go elsewhere and buy something else)
• IF you want to keep the car, then there is another three years of paying £250 per month (or higher as the finance very unlikely to be available at zero percent)

So, PCP is simply a 6-year finance plan to buy a car with a built-in structured break clause at 3 years.

Generally, if anyone asked for advice about buying a car and needing a 6-year finance plan, the response would be that this is a too expensive car and buy something cheaper.

The 3-year structured break of a PCP is really just the triumph of marketing as any car on finance can be sold, swapped for new, or whatever and the finance paid down at any time in the finance period.

Again, generally, if someone came on asking for advice saying they are half way through a car payment plan and would like to swap up to a new car, just because, then the response would typically be that is not the most financially astute thing to do.

There are many people that are unduly persuaded by the clever marketing of PCP and seem to think it is something other than a "too long" finance plan to purchase a car.

motorguy

Grumpy_chap said:

motorguy said:

"remaining options"?

None of them have to involve going anywhere near a car sales representative.

Hand the car back
Sell it on if theres equity and keep the equity
Make the final payment and keep it, using either cash, a cheap loan or a combination of both.

Go do whatever you want after that - buy privately, buy with cash, buy with a cheap loan, buy with HP, suit yourself.  Live happily ever after.

Jeez.  I didnt think this needed explaining....

None of this needs explaining to me, but the reality is that a lot of consumers simply don't have the full awareness that these other options are available. 

I suspect there are a high number of people who, as the end of the arrangement approaches, make the first call to the original supplying dealer to ask about "what happens next?"  That dealer is clearly going to offer the next PCP as the favoured proposal.

I would also expect that any sales representative worth their salt would be making contact with customers who have a PCP nearing the end of term to remind the customer about the end of the term and to offer their help with sourcing a new car on another PCP.  Possibly with a bit of fear thrown in for good measure "if you sign with me, I can ensure the new car takes over straight away from the end date on your current term - that might not be guaranteed everywhere and you may have a gap with no car..."

Much simpler to just stay on the hamster wheel than actually think about the other options (which the dealer has not promoted).

That is, essentially, what my SiL had, even though she was on 50-50 plan not PCP.


Irrespective of the options at the end of PCP, I think there is good acceptance that PCP is simply a form of finance.  I'll ignore comparison with "cash" purchase as most people taking and keeping PCP full term probably don't have the cash available.  However, comparison with other forms of credit finance are valid.  The way I see it with PCP:

• Get sold a new car, say £24k typical family hatchback
• Discount 10% )or incentives or whatever they are presented as) and PCP with zero percent finance.
• Old car is the deposit, say £3.6k
• Pay £250 per month for 36 months = £9k
• End of three years, give the car back or still owe £9k to buy that car (or go elsewhere and buy something else)
• IF you want to keep the car, then there is another three years of paying £250 per month (or higher as the finance very unlikely to be available at zero percent)

So, PCP is simply a 6-year finance plan to buy a car with a built-in structured break clause at 3 years.

Generally, if anyone asked for advice about buying a car and needing a 6-year finance plan, the response would be that this is a too expensive car and buy something cheaper.

The 3-year structured break of a PCP is really just the triumph of marketing as any car on finance can be sold, swapped for new, or whatever and the finance paid down at any time in the finance period.

Again, generally, if someone came on asking for advice saying they are half way through a car payment plan and would like to swap up to a new car, just because, then the response would typically be that is not the most financially astute thing to do.

There are many people that are unduly persuaded by the clever marketing of PCP and seem to think it is something other than a "too long" finance plan to purchase a car.

The point being there is a general intimation that people who use PCP finance on a new car are "schmos" on a "hamster wheel" who simply dont know any better, bless their little cotton socks, and they are doing it because they cant actually afford a car at all, and will have to get back on the hamster wheel at the end of the term, because its either that or bangernomics and they wont be able to impress the neighbours unless they get another new car at the door.

THATs the opinion of a small minority on here, when the actual reality is, rolling up depreciation, warranty, the assurance of no adhoc big bills and sometimes servicing in to one monthly payment can be quite compelling to a lot of people.

Is it the absolute cheapest way of meeting their ongoing needs to get from a to b and back again?  No.  Should that matter to people on here?  No.  Can these people afford it?  The vast majority of them, yes.  

PCP for most people is not a finance plan to purchase a car.  Its a rental plan.  They make the payments for three years then hand the car back or trade it in.  They have no desire to "own" the car from cradle to grave, or for any timeframe.  

I think PCP and PCH are products that allow the manufacturers to supply new cars at a palatable monthly payment and i think that suits a big sector of the market who view transport as a service, not as an asset they want to own outright.