Getting into the PCP Game

BOWFER

DrEskimo said:

This makes no sense.

With the car you just traded in after 9months, you would have been able to trade it in to the exact same dealer for the exact same price had you bought it (or for argument sake, got it on PCP to get the best possible deal and then settled the PCP the next day).

The only difference between the two is you had to pay interest for those 9months on top of the depreciation, whereas had you settled the PCP you would have just paid the depreciation.

Your ability to trade a car in to a dealer is not just reserved for people with cars on PCP. You don't have to sell it privately, it's just an option.

So buying the car in your cases would have been cheaper.

I don't care about any of the above, I was just demonstrating how you can get out of PCP early.

born_again

BOWFER said:

I don't care about any of the above, I was just demonstrating how you can get out of PCP early.

Yes you can.
But at the moment with 2nd hand prices through the roof it's a lot easier to do it and turn a profit.
You only have to go back to last year and all the posts about can't afford the PCP on the car, and due to it's value I'm going to end up in debt after selling it.
So no car & still a debt.

So it is not all profit & roses. Many last year faced the reality that they had a car they could not afford. But in many cases it was probably due to pushing the limits of their affordability.

In the end you pays your many and makes your choice.

DrEskimo

For me it's simple. I just ask if I am in a financial position to sink substantial sums of money into something I know will only be worth around half its' value in just a few years. If the thought of putting £30k into something and knowing it will only be worth £15k in 3yrs makes me nervous, I know I am not in the financial position to be buying it.

The idea that somehow the situation is any different by borrowing the money and paying thousands in interest on top of that loss in depreciation is lost on me...it simply increases the costs.

Besides, you can save substantial amounts of money by simply buying the exact same car used after a few years, and just swap that out every 2/3yrs. 99% of the same experience and typically half the cost of doing it with brand new cars. 

Ibrahim5

I am not sure how PCP can ever be discussed on a money saving forum. Doesn't make any sense.

ontheroad1970

BOWFER said:

jimjames said:

anotheruser said:

Anyone made this switch and have any advice? 

If you PCP then you don't own the car and are committed to paying those monthly payments for the duration of your agreement or until the point where you can cancel which is quite late on in the agreement normally.

With PCP you're free to sell the car at any point, as long as you settle the finance.
I did it myself only last week.
The PCP settlement figure from VWFS was £19800, the garage offered me £20300.
The garage settled VWFS and paid me the balance.
Hey presto, I'm out of a 4 year PCP deal after only 9 months and free to start again.

Bear in mind, Sarge, that these aren't normal times.  Two years time someone taking your advice may rue it.

neilmcl

Ibrahim5 said:

I am not sure how PCP can ever be discussed on a money saving forum. Doesn't make any sense.

Feel free not to join in with discussion then.

BOWFER

born_again said:

BOWFER said:

I don't care about any of the above, I was just demonstrating how you can get out of PCP early.

Yes you can.
But at the moment with 2nd hand prices through the roof it's a lot easier to do it and turn a profit.
You only have to go back to last year and all the posts about can't afford the PCP on the car, and due to it's value I'm going to end up in debt after selling it.
So no car & still a debt.

So it is not all profit & roses. Many last year faced the reality that they had a car they could not afford. But in many cases it was probably due to pushing the limits of their affordability.

In the end you pays your many and makes your choice.

I didn't say it was all profit and roses.
But, if you're in financial trouble, surely getting rid of the car and being left with nothing or a smaller debt is preferable to having to keep finding the payments for XX months.
Unless the car is a proper munter, the settlement figure on the PCP shouldn't be far away from what you'd get selling it.
I haven't only just started getting rid of PCP cars in the current climate, i've done it in 'normal times' too.

Freecall

BOWFER said:

Explain the difference between hiring a villa you couldn't afford to buy and hiring a car you can't afford to buy.
Apart from the time span.

This is getting a bit silly now.  The value of the asset has no relevance, it's the commitment imposed by the debt that can cause problems.  In the villa example there was never any intention to buy it let alone take on debt to do so.  Whether I can afford to buy the villa is irrelevant.

In the past, for a few hours, I have hired seats on £250 million Boeing 747, something I certainly could't have afforded to buy.

The point is that my commitment was limited to my ticket price.

Herzlos

BOWFER said:

I don't care about any of the above, I was just demonstrating how you can get out of PCP early.

But you must be able to acknowledge that it's unlikely.

You can get out of a PCP any time if either:

1. You can either reach the VT point, which normally means paying a large chunk of cash in unless you're almost at the end of the contract.

or

2. You can get someone to buy the car from you for the settlement fee. In normal times, that usually means paying a shortfall, but it is remotely possible that the car will be worth more in which case you get some cash back (minus the deposit).

It's all still debt, you're just shifting it around a bit and if you can't afford to do the HP you probably can't afford to break out of the PCP early.

BOWFER said:

Unless the car is a proper munter, the settlement figure on the PCP shouldn't be far away from what you'd get selling it.

The depreciation curve on new cars means that without a huge deposit it's almost certainly not worth the settlement figure.

BOWFER

Herzlos said:

The depreciation curve on new cars means that without a huge deposit it's almost certainly not worth the settlement figure.

Well I've done it several times and often just get settlement figures online out of curiosity.
But OK, whatever.