PCP vs current used car market

jcrennie

Wondering if some friendly forumers could give some advice, I ideally have a budget of £15-16k, this will be made up of a personal loan through work for £10/11k, part ex and some savings. I currently have a Seat Ibiza - 14 years old now (owned for nearly 8 years), low mileage & runs great but it has a lot of things wrong with it. I've decided it's time to upgrade.

With the used car market as it is, ideally what I am looking for is an automatic Seat Arona. I've never been one for PCP but am I worth paying for a 2nd hand car or finding a good PCP deal whilst the market as it is and then re-assessing in 2-3 years? The conundrum I have is that once I go PCP, I'm not sure I'll ever mentally be able to go back to not having a nice new car every few years! Plus while I own a property, I am looking to move & increase the mortgage in 2-3 years time.

Just wondering if anyone has been in a similar situation to me with the buyant 2nd hand car market (although likely to crash hard) and what they have done, or would do hypotectially!

motorguy

We bought our last car new on PCP then changed it over to a cheap personal loan as we intend to keep it long term.

We've no issues with that as we love the car and we know it. 

iwb100

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

jcrennie

iwb100 said:

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

Thanks - I think in the event of a PCP, I'd just rent the car and hand back unless things changed. Guess the big thing for me would be how it would affect what I could borrow for a mortage when I look to move. Can find a good 18/19 plate Arona for £12k, but they are the manual models rather than the automatic ones. Most of my miles are city centre driving, so thinking of making the switch.

iwb100

jcrennie said:

iwb100 said:

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

Thanks - I think in the event of a PCP, I'd just rent the car and hand back unless things changed. Guess the big thing for me would be how it would affect what I could borrow for a mortage when I look to move. Can find a good 18/19 plate Arona for £12k, but they are the manual models rather than the automatic ones. Most of my miles are city centre driving, so thinking of making the switch.

The manual Arona is good.  The lady over the road has one. She loves it. I went to help her look at the new ones and she ended up going to an auto on pcp. But yeah. The decision is not really about the car it’s about what your finances dictate. I’d say that you need to decide your mortgage affordability and factor any decision in, because that’s the risk of taking on more debt.

Have you thought about leasing? You can lease the Arona automatic for £207 a month with £1800 deposit. Based on 5000 miles a year. 

If you want a new car and to keep your costs down that might be worth considering. Whether leasing or PCP you will have a wait for a new car…keep that in mind. Unless you stumble on a dealer with some stock coming in will be 4 months plus up to a years wait. 

jcrennie

iwb100 said:

jcrennie said:

iwb100 said:

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

Thanks - I think in the event of a PCP, I'd just rent the car and hand back unless things changed. Guess the big thing for me would be how it would affect what I could borrow for a mortage when I look to move. Can find a good 18/19 plate Arona for £12k, but they are the manual models rather than the automatic ones. Most of my miles are city centre driving, so thinking of making the switch.

The manual Arona is good.  The lady over the road has one. She loves it. I went to help her look at the new ones and she ended up going to an auto on pcp. But yeah. The decision is not really about the car it’s about what your finances dictate. I’d say that you need to decide your mortgage affordability and factor any decision in, because that’s the risk of taking on more debt.

Have you thought about leasing? You can lease the Arona automatic for £207 a month with £1800 deposit. Based on 5000 miles a year. 

If you want a new car and to keep your costs down that might be worth considering. Whether leasing or PCP you will have a wait for a new car…keep that in mind. Unless you stumble on a dealer with some stock coming in will be 4 months plus up to a years wait. 

I've thought about leasing too yes. I think I would prefer to own outright as even though the asset depreciates, I lose less vs just renting. Guess with the used car market right now, I can't help but feel I am overpaying for something which will decrease massively as the price is inflated e.g. 16-17k for a 18/19 played Arona with automatic gearbox.. brand new on the basic specs they are 22k!

iwb100

jcrennie said:

iwb100 said:

jcrennie said:

iwb100 said:

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

Thanks - I think in the event of a PCP, I'd just rent the car and hand back unless things changed. Guess the big thing for me would be how it would affect what I could borrow for a mortage when I look to move. Can find a good 18/19 plate Arona for £12k, but they are the manual models rather than the automatic ones. Most of my miles are city centre driving, so thinking of making the switch.

The manual Arona is good.  The lady over the road has one. She loves it. I went to help her look at the new ones and she ended up going to an auto on pcp. But yeah. The decision is not really about the car it’s about what your finances dictate. I’d say that you need to decide your mortgage affordability and factor any decision in, because that’s the risk of taking on more debt.

Have you thought about leasing? You can lease the Arona automatic for £207 a month with £1800 deposit. Based on 5000 miles a year. 

If you want a new car and to keep your costs down that might be worth considering. Whether leasing or PCP you will have a wait for a new car…keep that in mind. Unless you stumble on a dealer with some stock coming in will be 4 months plus up to a years wait. 

I've thought about leasing too yes. I think I would prefer to own outright as even though the asset depreciates, I lose less vs just renting. Guess with the used car market right now, I can't help but feel I am overpaying for something which will decrease massively as the price is inflated e.g. 16-17k for a 18/19 played Arona with automatic gearbox.. brand new on the basic specs they are 22k!

If you are doing a PCP and planning on handing the car back then that’s effectively a lease. You are gaining more flexibility in pcp…sell the car when you want and clear finance or buy it, in exchange for higher payments and total cost.

Not sure I follow your logic unless you think you can realise equity from a pcp deal which is very possible but not guaranteed. And you could end up in negative equity. In which case a lease would have been far cheaper.

jcrennie

iwb100 said:

jcrennie said:

iwb100 said:

jcrennie said:

iwb100 said:

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

Thanks - I think in the event of a PCP, I'd just rent the car and hand back unless things changed. Guess the big thing for me would be how it would affect what I could borrow for a mortage when I look to move. Can find a good 18/19 plate Arona for £12k, but they are the manual models rather than the automatic ones. Most of my miles are city centre driving, so thinking of making the switch.

The manual Arona is good.  The lady over the road has one. She loves it. I went to help her look at the new ones and she ended up going to an auto on pcp. But yeah. The decision is not really about the car it’s about what your finances dictate. I’d say that you need to decide your mortgage affordability and factor any decision in, because that’s the risk of taking on more debt.

Have you thought about leasing? You can lease the Arona automatic for £207 a month with £1800 deposit. Based on 5000 miles a year. 

If you want a new car and to keep your costs down that might be worth considering. Whether leasing or PCP you will have a wait for a new car…keep that in mind. Unless you stumble on a dealer with some stock coming in will be 4 months plus up to a years wait. 

I've thought about leasing too yes. I think I would prefer to own outright as even though the asset depreciates, I lose less vs just renting. Guess with the used car market right now, I can't help but feel I am overpaying for something which will decrease massively as the price is inflated e.g. 16-17k for a 18/19 played Arona with automatic gearbox.. brand new on the basic specs they are 22k!

If you are doing a PCP and planning on handing the car back then that’s effectively a lease. You are gaining more flexibility in pcp…sell the car when you want and clear finance or buy it, in exchange for higher payments and total cost.

Not sure I follow your logic unless you think you can realise equity from a pcp deal which is very possible but not guaranteed. And you could end up in negative equity. In which case a lease would have been far cheaper.

I am favouring the personal loan option - yes, not a new vehicle but I still have an asset even though it depreciates. My conundrum really is I feel I am overpaying based on what the car will be worth in 3-4 years, as new cars are not depreciating at the same value post covid, although who knows what will happen.

motorguy

jcrennie said:

iwb100 said:

jcrennie said:

iwb100 said:

jcrennie said:

iwb100 said:

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

Thanks - I think in the event of a PCP, I'd just rent the car and hand back unless things changed. Guess the big thing for me would be how it would affect what I could borrow for a mortage when I look to move. Can find a good 18/19 plate Arona for £12k, but they are the manual models rather than the automatic ones. Most of my miles are city centre driving, so thinking of making the switch.

The manual Arona is good.  The lady over the road has one. She loves it. I went to help her look at the new ones and she ended up going to an auto on pcp. But yeah. The decision is not really about the car it’s about what your finances dictate. I’d say that you need to decide your mortgage affordability and factor any decision in, because that’s the risk of taking on more debt.

Have you thought about leasing? You can lease the Arona automatic for £207 a month with £1800 deposit. Based on 5000 miles a year. 

If you want a new car and to keep your costs down that might be worth considering. Whether leasing or PCP you will have a wait for a new car…keep that in mind. Unless you stumble on a dealer with some stock coming in will be 4 months plus up to a years wait. 

I've thought about leasing too yes. I think I would prefer to own outright as even though the asset depreciates, I lose less vs just renting. Guess with the used car market right now, I can't help but feel I am overpaying for something which will decrease massively as the price is inflated e.g. 16-17k for a 18/19 played Arona with automatic gearbox.. brand new on the basic specs they are 22k!

If you are doing a PCP and planning on handing the car back then that’s effectively a lease. You are gaining more flexibility in pcp…sell the car when you want and clear finance or buy it, in exchange for higher payments and total cost.

Not sure I follow your logic unless you think you can realise equity from a pcp deal which is very possible but not guaranteed. And you could end up in negative equity. In which case a lease would have been far cheaper.

I am favouring the personal loan option - yes, not a new vehicle but I still have an asset even though it depreciates. My conundrum really is I feel I am overpaying based on what the car will be worth in 3-4 years, as new cars are not depreciating at the same value post covid, although who knows what will happen.

They're not currently, but its an almost odds on certainty that they will revert back to previous depreciation levels.

Firstly, for the big manufacturers its all about market share, so once cars are flowing freely again, they'll discount heavily to get more of their cars on the road.  That will impact used car values

Secondly, we are almost certainly heading for a recession in the country, and / or at very least exceptionally difficult times ahead.  That will impact people buying / changing their cars too, so again i think values will be driven down.

iwb100

motorguy said:

jcrennie said:

iwb100 said:

jcrennie said:

iwb100 said:

jcrennie said:

iwb100 said:

This comes down to personal situation and priorities. The new Arona, facelift model is nicer than the older ones, so that would be a point in favour of PCP. The interior is quite a bit nicer and the dash has been redesigned. So I’d consider that.

I’d price up a PCP for the car you want. Work out what it would cost. Then look at the second hand market.

You can take a PCP deal and clear it with a much cheaper personal loan which is the cheapest thing to do. And would mean you own the car. But would increase your monthly payments unless you extend the term.

End of the day in your position it’s about what makes most sense and nobody can really advise on that. 

On auto trader you will easily find an Arona under 30K miles for around £11,000-£14,000 if you are happy with the 1 litre engines. So second hand would be comfortably under budget if your loan is comfortable and cheap.

Thanks - I think in the event of a PCP, I'd just rent the car and hand back unless things changed. Guess the big thing for me would be how it would affect what I could borrow for a mortage when I look to move. Can find a good 18/19 plate Arona for £12k, but they are the manual models rather than the automatic ones. Most of my miles are city centre driving, so thinking of making the switch.

The manual Arona is good.  The lady over the road has one. She loves it. I went to help her look at the new ones and she ended up going to an auto on pcp. But yeah. The decision is not really about the car it’s about what your finances dictate. I’d say that you need to decide your mortgage affordability and factor any decision in, because that’s the risk of taking on more debt.

Have you thought about leasing? You can lease the Arona automatic for £207 a month with £1800 deposit. Based on 5000 miles a year. 

If you want a new car and to keep your costs down that might be worth considering. Whether leasing or PCP you will have a wait for a new car…keep that in mind. Unless you stumble on a dealer with some stock coming in will be 4 months plus up to a years wait. 

I've thought about leasing too yes. I think I would prefer to own outright as even though the asset depreciates, I lose less vs just renting. Guess with the used car market right now, I can't help but feel I am overpaying for something which will decrease massively as the price is inflated e.g. 16-17k for a 18/19 played Arona with automatic gearbox.. brand new on the basic specs they are 22k!

If you are doing a PCP and planning on handing the car back then that’s effectively a lease. You are gaining more flexibility in pcp…sell the car when you want and clear finance or buy it, in exchange for higher payments and total cost.

Not sure I follow your logic unless you think you can realise equity from a pcp deal which is very possible but not guaranteed. And you could end up in negative equity. In which case a lease would have been far cheaper.

I am favouring the personal loan option - yes, not a new vehicle but I still have an asset even though it depreciates. My conundrum really is I feel I am overpaying based on what the car will be worth in 3-4 years, as new cars are not depreciating at the same value post covid, although who knows what will happen.

They're not currently, but its an almost odds on certainty that they will revert back to previous depreciation levels.

Firstly, for the big manufacturers its all about market share, so once cars are flowing freely again, they'll discount heavily to get more of their cars on the road.  That will impact used car values

Secondly, we are almost certainly heading for a recession in the country, and / or at very least exceptionally difficult times ahead.  That will impact people buying / changing their cars too, so again i think values will be driven down.

Yeah the second hand car market won’t stay like this. Though the war and oil prices might keep it buoyant for longer than was initially expected.

It’s a good time to ride PCP and get the equity out. But I do worry about people being sucked in now thinking it will always be like this.

BillyT57

I'm collecting my new car, on PCP, on Friday. Two years interest free. there are all sorts of incentives out there at the moment, but there are also horrendous delays for some models. I'm reasonably lucky as I ordered mine mid-Feb but orders have been slipping.