PCP advice

markstev27

Hi. We currently have a car on PCP until September 2025. I'm just considering whether to buy out the balloon payment or change to a new car. I've looked at new cars and as I put a good deposit into this car, I'm being asked to put a similar amount in to get good monthly payments or like for like on my car is currently twice the monthly cost with £1000 deposit. Any advice will be greatly appreciated 

DrEskimo

Money saving advice would be to pay the finance down as quickly as you can and stick with your current car. Assuming it still meets your needs. 

Is there anything that is making you need a new car, or is it just because you can?

What do you still owe on the current car and what is its value though? Whether you buy your current car, a new car or any other car (new or used) will come down to comparing the value and cost to buy across all of them. 

Ectophile

The average life expectancy of a car in the UK is about 14 years.  So I assume it has quite a few years left in it.

You could pay off the finance and have many years more motoring with no finance payments.

Or you could hand it back and end up making finance payments on cars every single month for the rest of your life.

I know which option the finance company wants.

motorguy

markstev27 said:

Hi. We currently have a car on PCP until September 2025. I'm just considering whether to buy out the balloon payment or change to a new car. I've looked at new cars and as I put a good deposit into this car, I'm being asked to put a similar amount in to get good monthly payments or like for like on my car is currently twice the monthly cost with £1000 deposit. Any advice will be greatly appreciated 

Assuming the residual value isnt crazy high relative its worth on the open market, i'd pay the residual and keep it.

If you havent got all the funds available, get a cheap loan for the difference.

PCP on new cars used to be reasonably palatable when list prices were reasonable, there were big discounts available, interest rates were low and there were finance incentives to be had.  

Those days are long gone.

Mildly_Miffed

markstev27 said:

Hi. We currently have a car on PCP until September 2025. I'm just considering whether to buy out the balloon payment or change to a new car. I've looked at new cars and as I put a good deposit into this car, I'm being asked to put a similar amount in to get good monthly payments or like for like on my car is currently twice the monthly cost with £1000 deposit. Any advice will be greatly appreciated 

Do you WANT a new car? Or are you happy with this one?

How much is the balloon relative to its current value?

The first few years of a car's life are ALWAYS the sharpest depreciation, so the money-saving approach is never to pay that unless there's a really good reason to do so.

Remember, with a PCP you finance the entire value (minus the upfront payment) - you just defer paying some of it back, in the form of the balloon.

motorguy

Mildly_Miffed said:

markstev27 said:

Hi. We currently have a car on PCP until September 2025. I'm just considering whether to buy out the balloon payment or change to a new car. I've looked at new cars and as I put a good deposit into this car, I'm being asked to put a similar amount in to get good monthly payments or like for like on my car is currently twice the monthly cost with £1000 deposit. Any advice will be greatly appreciated 

Do you WANT a new car? Or are you happy with this one?

How much is the balloon relative to its current value?

The first few years of a car's life are ALWAYS the sharpest depreciation, so the money-saving approach is never to pay that unless there's a really good reason to do so.

Remember, with a PCP you finance the entire value (minus the upfront payment) - you just defer paying some of it back, in the form of the balloon.

Indeed.

"Wanting" a new car has become a very expensive hobby.

Very hard to justify. I know i cant justify it to myself any more.