Getting into the PCP Game

Arklight

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.

born_again

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....

motorguy

Ibrahim5 said:

You only look at finance when you can't afford things. If I want a washing machine I just buy it. No weekly payments at Bright House or Crazy George.

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?"

motorguy

dipsomaniac said:

You can buy a car for less than a new washing machine. I did it 18 month ago and would have no problem driving 800 miles in it today

You can yes.  I've had several cars that cost me even less than that.  One cost me £70 and i drove it for 9 months, doing a 90 mile return commute daily.

People chosing to do otherwise doesnt make them "wrong" though does it?

motorguy

dipsomaniac said:

Comparing investing for your retirement (you need a £400k pot for £20k pension) and discussing PCP is like comparing apples with brass tacks

Who compared investing for your retirement to PCPing a car? 

motorguy

Arklight said:

PCP if a finance instrument, which as others have said is designed to make people think they can afford more than they can. If you can afford it anyway then go wild, but this is a moneysaving site and brand new cars on finance are a brilliant way of dumping thousands of pounds on the experience of a year later sitting in a used car that would have cost 2/3 as much,

It can give people more for their monthly budget than they could otherwise get.  It can put someone in to a new car with a 3 year warranty, no big bills worries, no ad hoc maintenance charges, likely better MPG than an older car, no MOT worries and perhaps a servicing pack for the same monthly payment as they'd otherwise pay for a used car.  That is quite compelling for a lot of people.

I dont think too many people wake up thinking "I wish i had £25,000 to buy a new Renault Captur", however they will think "oh, for that £200 a month i planned on spending, i can get a brand new car".

motorguy

Ibrahim5 said:

I quite like the form of car ownership where you own the car.

PCPing a car and disposing of it at the end of the term is not a car ownership model, its a rental model that has a lot in common with leasing.

Many businesses lease cars / vans etc rather than lease them as do many private individuals.

Outright owning a car is not something a lot of people particularly care about - its a monthly payment that provides utility for them.

Grumpy_chap

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?

Arklight

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 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.

PCP is an amazing deal, for the motor industry.

motorguy

Norman_Castle 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.

Didn't realise you were in charge.

I like PCP. It provides stock for the used car market.

He does make a point though - why do some people seem obsessed with how others fund their cars, and feel a need to judge them for their choices?

If someone can afford the monthly payment then whats the issue?  I dont have a car on PCP as neither PCP nor PCH suit my particular needs currently, but i dont feel a need to judge and make sneering comments at those who do.

And i do agree with you - PCP and PCH on new cars puts more cars on the used market down the line, which is a good thing for those of us buying used.  Its a win / win as far as i'm concerned.

I've a 2006 630i BMW and i saw a guy pull up to drop his kids off at the primary school next to us in a new 840i.  Now maybe hes among the 1% who go out and drop £70K or so for cash on a car, but far more likely hes got a PCP or PCH deal for it.  Fair play to him.  was a lovely looking car but not worth x12 what i gave for mine IMHO. He clearly loves the car though, and i had a little smile to myself thinking that down the line thats maybe something i can pick up relatively cheaply as i did with my 6 series.  Hes happy, i'm happy, result