PCP Advice

ev51

There are some pretty large discounts available on the MG4 at the moment, ranging from £7k - £10k off, which makes the GFV on previous sales look pretty optimistic. The finance company will have to take the hit if more owners hand the car back and walk away.  The other consideration is if they try to recoup some of their loss by being tougher on charging for minor damage etc. so reading up on the BVRLA fair wear and tear guidelines could be worthwhile!

born_again

SP218 said:

Herzlos said:

If you don't hand the car back at the end then the mileage is irrelevant. Then it may make sense to pay off the entire finance and buy the car. BUT

If you're planning on handing the car back, or the value is much below the GFV then it may make more sense to pay the partial settlement but not the GFV and just take a hit on mileage.

How old is the car and what is it? You said it was new and a 4 year PCP but I don't see how far into it you are, because the depreciation isn't linear. The car will lose more value in year 1 than 2 and so on. There will also be a drop outside of warranty but that could be 3/5/7 years.

Yes - the mileage was one of the reasons why I thought of paying the car off in full because if I save £2k in interest by making a partial settlement but then have to pay £1-2k in excess mileage, it's all a bit pointless.

The car is an MG4 registered in May 23 so I'm 18 months into it - in terms of the 'value', I know I need to run the car for longer or else I'm just taking a hit on the larger up front depreciation.

I think my options seem to be - make the partial settlement to save some interest and keep the VT option open and keep re-assessing depending on how much lower the used cost goes or, as someone else said, maybe I should be ignoring the market value and just run the car until I feel like I've gotten an acceptable 'cost per year' of running it before trading it in. I think worse case, if I pay off the car in full now and it was worth £10k in four year, I would have paid about £6.5k per year which I'm happy with.

Ouch Mg4 @ £33K.
Can even pick up a new MG4 trophy for £23K. Or others in range for less. (Autotrader)

Might be a good time to see if you can get another PCP deal on a new version. At a lower rate.

Have a look on carwow & see what PCP deals are. Certainly a lot cheaper then the £400 you are paying now.

Or even MG site. £10K p/x over 4 years = £292 a month on a Trophy

SP218

born_again said:

SP218 said:

Herzlos said:

If you don't hand the car back at the end then the mileage is irrelevant. Then it may make sense to pay off the entire finance and buy the car. BUT

If you're planning on handing the car back, or the value is much below the GFV then it may make more sense to pay the partial settlement but not the GFV and just take a hit on mileage.

How old is the car and what is it? You said it was new and a 4 year PCP but I don't see how far into it you are, because the depreciation isn't linear. The car will lose more value in year 1 than 2 and so on. There will also be a drop outside of warranty but that could be 3/5/7 years.

Yes - the mileage was one of the reasons why I thought of paying the car off in full because if I save £2k in interest by making a partial settlement but then have to pay £1-2k in excess mileage, it's all a bit pointless.

The car is an MG4 registered in May 23 so I'm 18 months into it - in terms of the 'value', I know I need to run the car for longer or else I'm just taking a hit on the larger up front depreciation.

I think my options seem to be - make the partial settlement to save some interest and keep the VT option open and keep re-assessing depending on how much lower the used cost goes or, as someone else said, maybe I should be ignoring the market value and just run the car until I feel like I've gotten an acceptable 'cost per year' of running it before trading it in. I think worse case, if I pay off the car in full now and it was worth £10k in four year, I would have paid about £6.5k per year which I'm happy with.

Ouch Mg4 @ £33K.
Can even pick up a new MG4 trophy for £23K. Or others in range for less. (Autotrader)

Might be a good time to see if you can get another PCP deal on a new version. At a lower rate.

Have a look on carwow & see what PCP deals are. Certainly a lot cheaper then the £400 you are paying now.

Or even MG site. £10K p/x over 4 years = £292 a month on a Trophy

Do you mean pay off the finance in full and then use the car as a p/x to get a new one at a cheaper rate?

Goudy

SP218 said:

For me the main driver behind the settlement was about saving the most money I can and ultimately reducing interest was a big driver of this but the really bummer was realising that the bulk of the interest sits in the GFV.

If that's the case, paying it all off (including GFV) will save you the most in interest, as long as the money used isn't making more.
Start sticking what you would have paid monthly into a interest paying account will help balance out some of the interest already paid.

Then running the car as long as it's viable will save on more interest on a new car (even if you can get one cheaper  now on a lower rate)
This shouldn't be overly worry some as MG's come with long warranties, 7 years or 80,000 miles I think. That might be a good target to think about swapping it.
It's a EV so keeping it in the dealer network for servicing shouldn't break the bank.

As you've paid it off you aren't bound by the contracted PCP mileage limits, but mileage and condition will effect it's used value when it's time to move it on.

If you do keep it for around 7 years/80,000 miles, it's value will be want it is at the end, basically what you can get for it.
But when you work things out at the end of the day, instead of the starting point of what you paid in total being £33K plus all that interest (£40k or so), the total paid out is less as you saved a chunk of that interest, which narrows the "what it cost me" in your ownership.