3 year or 4 year PCP?

Alexeales

Hi guys

So I'm looking at buying a used 911 turbo s at £110K.

I have a 50k deposit and for 6000 annual mileage the costs are below:

36 month PCP, £551.92pm, £53627.50 final value.
49 month PCP, £588.09pm, £48568.75 final value.

I don't plan on keeping the car, but to swap it for another PCP deal.

Thanks in advance, I haven't PCP financed a car before.

Alex

shiraz99

If you've no plans on keeping it then have you looked at a lease deal.

PCP is never a good way to finance a used car purchase.

ontheroad1970

shiraz99 said:

If you've no plans on keeping it then have you looked at a lease deal.

PCP is never a good way to finance a used car purchase.

Agreed.


OP, bear in mind that you can't guarantee there being any equity in the car at the end of the PCP period, let alone enough to cover the deposit for the next PCP deal.  Many people have been profiting recently, but no one knows how long that will continue, and I definitely don't think this will still be the case in 3/4 years time.  In fact it may correct itself in the opposite way, as they may adjust the GFV (Guaranteed Future Value), which is the balloon payment, bearing in mind the current situation.

DrEskimo

Alexeales said:

Hi guys

So I'm looking at buying a used 911 turbo s at £110K.

I have a 50k deposit and for 6000 annual mileage the costs are below:

36 month PCP, £551.92pm, £53627.50 final value.
49 month PCP, £588.09pm, £48568.75 final value.

I don't plan on keeping the car, but to swap it for another PCP deal.

Thanks in advance, I haven't PCP financed a car before.

Alex

You are looking at paying over £13,000 in interest charges alone for the 36month deal. 

You are free to trade the car in after 3years regardless of whether the car is on PCP or financed through a personal loan, the only time a PCP would be advantageous is if it was worth less than the £53,000 predicted value. Do realistically expect it to drop more than £70k (the expected depreciation plus the interest charge) in value in just 3 years, and if so are you really ready to stomach that sort of cost?

I suspect this is unlikely, so If you can pay cash or find alternative finance for much cheaper than £13k in interest charges it will save you a lot of money, and you can trade car in just the same.

Leasing new would have to be compared at expected depreciation costs of this used model plus any finance costs.

daveyjp

You need to factor in the monthly cost of replacing the £50,000 deposit, if you don't how do you fund the next PCP deposit?

By the time you add those figures a lease may be more cost effective.

DrEskimo

daveyjp said:

You need to factor in the monthly cost of replacing the £50,000 deposit, if you don't how do you fund the next PCP deposit?

By the time you add those figures a lease may be more cost effective.

About £1,950/month if you assume the car is only worth the GFV (unlikely IMHO).

Looking at leases they seem to be north of £2,000 before you factor in the upfront deposit and any admin fee....

Buying used probably will work out cheaper (usually does) but knocking off that £360/month interest charge will help.

Grumpy_chap

Alexeales said:

Hi guys

So I'm looking at buying a used 911 turbo s at £110K.

I have a 50k deposit and for 6000 annual mileage the costs are below:

36 month PCP, £551.92pm, £53627.50 final value.
49 month PCP, £588.09pm, £48568.75 final value.

I don't plan on keeping the car, but to swap it for another PCP deal.

Thanks in advance, I haven't PCP financed a car before.

Alex

That's over £1 per mile even if only the monthlies are considered.

Can anyone really afford a £110k car if they need finance?


EDIT - I just did the calcs.  On the three-year deal, put £50k down, pay the monthlies, that's £70k for 18k miles total so £3.88 per mile just for the car.
Plus all the other costs for maintenance, fuel, insurance, tyres, brakes.  None of those will be cheap on this type of car.
This could end up somewhere near £10 per mile!!!   Quite amazing!

Ibrahim5

I have looked at it. Apparently it has 4 seats, but only 2 doors. The back seats are so small that they are NOT USEABLE BY ADULTS. Rather impractical I would say. Think again about the make and model.

ontheroad1970

Ibrahim5 said:

I have looked at it. Apparently it has 4 seats, but only 2 doors. The back seats are so small that they are NOT USEABLE BY ADULTS. Rather impractical I would say. Think again about the make and model.

Oh dear.  

Not all cars are about practicality.  If you aren't interested in cars that are outside the practicality range, move on.  

I wouldn't want to throw away a 50k deposit myself, I wouldn't be putting in 40%+ deposit unless I intended to keep it at the end and in that situation I think I would prefer to be on proper HP terms.

DrEskimo

ontheroad1970 said:

Ibrahim5 said:

I have looked at it. Apparently it has 4 seats, but only 2 doors. The back seats are so small that they are NOT USEABLE BY ADULTS. Rather impractical I would say. Think again about the make and model.

Oh dear.  

Not all cars are about practicality.  If you aren't interested in cars that are outside the practicality range, move on.  

I wouldn't want to throw away a 50k deposit myself, I wouldn't be putting in 40%+ deposit unless I intended to keep it at the end and in that situation I think I would prefer to be on proper HP terms.

Whether you 'throw away' £50k as a deposit and pay £20k in monthly payments, or 'throw away' £20k as a deposit and pay £50k in monthly payments is just academic.

The fact is, the deposit and monthlies are all 'thrown away' as part of the expected depreciation costs and interest for running the car for 3years. The whole cost is the important bit. Quite how you divide that up is up to the individual (although I argue a larger deposit is better as it reduces interest charges).

I do agree though, by increasing the monthly payment and moving to a HP agreement, the OP could save thousands in interest charges, particularly if its at a lower rate (either secured HP, or unsecured personal loan).

Alexeales

Thanks so much guys. This is literally a pleasure purchase as I have a Tesla model 3 as a company car, and charge it at work.

The 50k deposit is a trade in of my current Porsche, plus a 25k car loan at 3.4%, which saves me thousands but is of course more interest. 

I'm not sure that I could afford the HP costs, as they would likely be almost double. 

I find the final values insane, I can't imagine that it will be worth 70k less after 4 years, considering that it is 6 years old and has probably lost 50-60k so far. I would imagine that it would still be worth 80K or so, with the difference being the deposit on the next one. 

What do we think?

Alex