Personal Contract Plans for a new car

bbungay

I have been looking at 3-year PCP's for new cars for the first time and some seem very attractive if I want to repeat the process with the same supplier in years to come. They also seem quite competitive should I need to change supplier if I initially invest an amount that will pay the Optional Final Payment to own the car, or return the car and use my investment as a deposit for the next car (which ever is the best). I have no experience with these plans and wondered whether they were like insurance policies, i.e. the first one is great, but the renewal is much more expensive and will force me to go elsewhere (unless I haggle). Any information based on experience would be appreciated. 

ontheroad1970

You don't have to turn the car in at the same dealer - in fact it's often in your best interests not to do so.  Depending on the market conditions you might be better off trading it in at the point of the end of the term or even before if advantageous.  They aren't designed to leave much or any equity at the end of the term, the current situation is an anomaly which will end up getting corrected.

shiraz99

bbungay said:

I have been looking at 3-year PCP's for new cars for the first time and some seem very attractive if I want to repeat the process with the same supplier in years to come. They also seem quite competitive should I need to change supplier if I initially invest an amount that will pay the Optional Final Payment to own the car, or return the car and use my investment as a deposit for the next car (which ever is the best). I have no experience with these plans and wondered whether they were like insurance policies, i.e. the first one is great, but the renewal is much more expensive and will force me to go elsewhere (unless I haggle). Any information based on experience would be appreciated. 

You talk about "investment", what do you mean by that?

As mentioned, the recent hike in used car prices and unusual depreciation trends are only an anomaly cause by current events and you shouldn't expect to have any equity in the car come the end of the contract under normal circumstance.

Herzlos

You can do pretty much whatever you want with the car at the end of the term - buy it, hand it back or trade it in.
You will find that once the term is up you'll usually not have much equity in the car so will likely need to put more money in to get something similar, but the same would apply with whoever you dealt with at that point.

daveyjp

And unless you get a 100% deposit contribution from a manufacturer you need to factor in the monthly cost of replacing any deposit you pay.  The old car value will be guaranteed, but this may not be enough to pay a depoait on a new vehicle.

This deposit replacement amount needs to be added to the PCP monthly payment for a true monthly cost.

Sandtree

bbungay said:

I have been looking at 3-year PCP's for new cars for the first time and some seem very attractive if I want to repeat the process with the same supplier in years to come. They also seem quite competitive should I need to change supplier if I initially invest an amount that will pay the Optional Final Payment to own the car, or return the car and use my investment as a deposit for the next car (which ever is the best). I have no experience with these plans and wondered whether they were like insurance policies, i.e. the first one is great, but the renewal is much more expensive and will force me to go elsewhere (unless I haggle). Any information based on experience would be appreciated. 

There is no parallels with insurance because your existing deal wont in any way "auto renew" at the end of the three years.

You are free to buy the car (either directly or by trading it in) or return the car and walking away. If you decide you want another car on finance then that would be an independent deal, the pricing of which will be more impacted by where you are in the sales cycle and macro-economic events than the fact you're a repeat customer.