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Hire purchase or PCP?
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Hi guys, looking for some advice. I’m a young professional (24) and I’ve always had my 2010 Renault Clio. It’s recently gone to the mechanics and they’ve said it’s more expensive to fix than to buy a new one and it’s worth about £1000 at the moment. The car probably costs me £1500 in repairs a year at the moment.
I’m looking into getting a new car but they’re very expensive currently. I’ve never needed something fancy but I do want a car that is likely to last, therefore less miles.
I don’t like the idea of paying monthly for years to then not own the car. Currently I’m looking at a 2016 Vauxhall corsa with 30,000 on hire purchase for £150 a month for 4 years. The price is £7500 asking. Is this a better idea than PCP? It’s all so confusing!
Any advice greatly appreciated.
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PCP puts me off as I feel like for paying the same amount as HP each money, surely you’d want to own it right? However then I guess you have more flexibility to give the car back.
Its an almost 7 year old car, which by the time you have finished paying for it will be 11 years old. You are paying top whack because its from a dealer.
At some point during the loan period there is a good chance it will need money spending on it so you will be in a worse position than now. A low value car needing repairs and a loan to pay.
If cash is tight I'd be looking for that well looked after vehicle being sold privately for £3-4k and taking out a bank loan paid off over 12-18 months.
- buy used,
- never spend more than 50% of my total annual income,
- don’t spend any money towards interest.
My Nephew had a 2011 Clio needing a new gear box which he considered was not worth spending the money on. He took it to WBAC who gave him £660 for it.
That was recently - first week November 2022.
It seems odd that you are in a situation where the car is costing a lot of money each year to maintain, repeatedly fixing the same issues - are the symptoms of the issues being treated and not the root causes? Unless the car is going rusty, structurally unsound, or being driven on rough terrain or challenging conditions, I would not expect electrical and suspension faults to re-occur if they are properly fixed in the first place.
It might be worth sharing some more information about the work you have had done to the vehicle and the work it now needs. If it's had new springs and dampers at the front last year, then at this year at the read, I'd understand.
If the car is structurally sound, personally, I'd continue to maintain it. The value of the car is not in it's resale value, but how long it will continue doing car things before experiencing catastrophic failure - and by that I mean becoming structurally unsound due to rust or accident damage.
- suspension has broken completely (somehow I didn’t realise - but this happened a year ago too and I got it fixed then)
- spring on front left side has broken (also fixed about 3 months ago and then 6 months before that at different mechanics)
- 3 tyres need completely replacing
- the water pump needs replacing
- brake fluid contaminated
- rear exhaust broken and unsafe
in addition the aux has broken and so has the A/C. But on the bright side it’s never broken down
it’s probably cost me about £1000 this year already just in repairs and these repairs would cost me quite a lot more so it’s difficult. It also has a lot of problems with its electrics which seem to reoccur constantly!
Ive now found a deal for a 2015 corsa for £7000 with 41,000 miles. Unfortunately I think it would be irresponsible to use my savings as I would have little leftover for emergency payments. The car is 1/4 of my annual income.