Some PCP questions
Comments
-
Fair point!
The OP maybe one of those who are happy to pay for the privilege of buying new cars every few years, and happy to give finance companies extra thousands £££ in interest as well.
In which case we are all happy :beer:
My other half has a car allowance with an expectation of getting something reliable and with some prestige (a nice problem to have). The frustration is she's fixated on the brand and it was a struggle to get her to change her mind on the model (nearly got a sports version which would just guzzle petrol but I managed to talk her out of putting down a deposit - which she's grateful of). Currently she's specced up a petrol when i've been doing all my work on a diesel, telling me she just wants to go for it and then asking if I think it's a good deal?!
:rotfl: "The future needs a big kiss"0 -
typeractive wrote: »My other half has a car allowance with an expectation of getting something reliable and with some prestige (a nice problem to have). The frustration is she's fixated on the brand and it was a struggle to get her to change her mind on the model (nearly got a sports version which would just guzzle petrol but I managed to talk her out of putting down a deposit - which she's grateful of). Currently she's specced up a petrol when i've been doing all my work on a diesel, telling me she just wants to go for it and then asking if I think it's a good deal?! :rotfl:
Unlike yesteryear I dont think the four ringed brand produces cars as well as they used to, in terms of reliability.
Make sure your warranty covers the duration of your PCP agreement, buy extended if needed.
Was recently a post on here from somebody that was in their last PCP year and had a very expensive repair on their "prestige" car, which was the same make.
If I wanted something prestige and reliable I would be buying a Lexus, though I guess thats not one the kids of today consider cool.0 -
typeractive wrote: »Yes, and the overall payment. I'm more fussed about it than my other half! 5.9% is what they're offering.
To be honest, it's unlikely to make a vast difference even if we assume you can get the headline rate on a relatively large sum.
For illustration, the difference between 3% APR and 5.9% APR on £10,000 over 4-years is £12.53 per month. You would be better off economising in some other areas of you finances (food, coffee, takeaways, utility bills, mobile, etc etc.) to save that £12 and direct it as an overpayment towards the car debt.
As mentioned, paying down the GFV is where you will save the most with respect to interest and total cost.typeractive wrote: »Thanks for all your responses Dr E!
Pleasuretyperactive wrote: »My other half has a car allowance with an expectation of getting something reliable and with some prestige (a nice problem to have). The frustration is she's fixated on the brand and it was a struggle to get her to change her mind on the model (nearly got a sports version which would just guzzle petrol but I managed to talk her out of putting down a deposit - which she's grateful of). Currently she's specced up a petrol when i've been doing all my work on a diesel, telling me she just wants to go for it and then asking if I think it's a good deal?!
I can empathise! I had a Audi S5 on PCP a couple of years back. First and only one, and i've learned ALOT about car finance since then!
It's very easy to convince yourself it is worth it when you can skew your perception of the costs and the risks. Typically the two main arguments in favour of it are:
1/ The cost difference isn't that great vs saving a large capital upfront and buying used
2/ The reliability is worth it
In all my research, I've come to the conclusion that it doesn't cost the same, it cost several thousands more. I also think the risk of perpetual and catastrophic failures on cars out of warranty is grossly overestimated, exacerbated by the fact that companies won't make the data on reliability public in any meaningful way to draw valid evidence based decisions.
Oh and only go with diesel if her mileage is >12k a year. It doesn't make theoretical or economical sense on mileage less than that....:beer:0 -
To be honest, it's unlikely to make a vast difference even if we assume you can get the headline rate on a relatively large sum.
For illustration, the difference between 3% APR and 5.9% APR on £10,000 over 4-years is £12.53 per month. You would be better off economising in some other areas of you finances (food, coffee, takeaways, utility bills, mobile, etc etc.) to save that £12 and direct it as an overpayment towards the car debt.
As mentioned, paying down the GFV is where you will save the most with respect to interest and total cost.
Good points, and we'll probably stick with the pcp as she will be happier without the hassle. She's finding haggling quite a hard.
I can empathise! I had a Audi S5 on PCP a couple of years back. First and only one, and i've learned ALOT about car finance since then!
Nice wheels. I'd like to be back in my S3It's very easy to convince yourself it is worth it when you can skew your perception of the costs and the risks. Typically the two main arguments in favour of it are:
1/ The cost difference isn't that great vs saving a large capital upfront and buying used
2/ The reliability is worth it
In all my research, I've come to the conclusion that it doesn't cost the same, it cost several thousands more. I also think the risk of perpetual and catastrophic failures on cars out of warranty is grossly overestimated, exacerbated by the fact that companies won't make the data on reliability public in any meaningful way to draw valid evidence based decisions.
So what do you drive now / how have you gone about financing your car? My old boss leased hired from online and found it much easier to just find a nice car but he was flexible and that got him a good deal. When you're specific on make and model it's harder.Oh and only go with diesel if her mileage is >12k a year. It doesn't make theoretical or economical sense on mileage less than that....:beer:
Yeah, it will be circa 17k. Took me some convincing of the savings and the torque to pull a 354kg heavier model. I'd imagine the petrol variant swallowing juice as the returns are never near the advertised numbers!"The future needs a big kiss"0 -
typeractive wrote: »So what do you drive now / how have you gone about financing your car? My old boss leased hired from online and found it much easier to just find a nice car but he was flexible and that got him a good deal. When you're specific on make and model it's harder.
I had the S5 for 21m of the 2-year agreement and sold it to a dealer using Tootle. It ended up costing me an eye watering £13,500. £10,000 in depreciation and £3,500 in interest...
I ended up changing to a job in London and was commuting by train, so a car wasn't needed. Been over a year and half and I just can't justify buying a car, since I only need one to visit my family on a Sunday...! Just share my GF's Mini when I really need to.
I've saved an absolute fortune. My income has increased substantially, but I am now sitting on about £20k that I could use to fund a car purchase. I am going EV so have been on the look out for a cheap Zoe (big battery/battery owned) or may keep saving and go for a Tesla in a couple of years. Again, justifying the expense, even with dramatically lower running costs, is hard...but I do miss having a car! First time since I past when I was 18!
Thing is, I had used cars and was always able to use the capital tied up in the car, along with savings, to continually upgrade. Went from a Clio, to a Golf to a Audi A5. When I chopped that in and got the new S5 on PCP I used most of the money from the A5 for the upfront payment, and was unable to save as much as I could normally given I was paying so much to the PCP monthlies. It means that at the end of the deal, you are left either having to borrow smaller amounts and get a much lesser car, or PCP a lesser car because you have less upfront to maintain the same PCP monthly. Car prices are increasing and interest rates are only going to increase.
As a long term solution to having to own a car for several decades, it really doesn't make much sense....0 -
Purely out of interest, what would you do? Get a second hander with some miles? I've also been there and done it (well doing it), and sometimes I think it wasn't the best idea, then other times I think I've done the right thing as my personal circumstances allowed it. I had to change my car for a lot more miles as I used to have a sporty little number which I owned outright and loved - I hope to get another one day![/QUOTE]
I bought a 3 year old car for £12k, which I intend to run for 7 years. By then it will have 150000 miles on the clock. I budget £75 a month for maintenance. If the car is worth nothing in 7 years time it will have depreciated by, and therefore cost me, £143 a month. Even including the maintenance it’s less than £220 a month.
The realisation for me was that a £300 a month pcp payment is £3600 a year, plus servicing, tyres etc etc. Plus you’ve probably also sunk your own money in as a deposit, need gap insurance to cover your debt, it’s a just a black hole of debt.When you get to the end of your rope, tie a knot and hang on
0 -
I had the S5 for 21m of the 2-year agreement and sold it to a dealer using Tootle. It ended up costing me an eye watering £13,500. £10,000 in depreciation and £3,500 in interest...
I ended up changing to a job in London and was commuting by train, so a car wasn't needed. Been over a year and half and I just can't justify buying a car, since I only need one to visit my family on a Sunday...! Just share my GF's Mini when I really need to.
I've saved an absolute fortune. My income has increased substantially, but I am now sitting on about £20k that I could use to fund a car purchase. I am going EV so have been on the look out for a cheap Zoe (big battery/battery owned) or may keep saving and go for a Tesla in a couple of years. Again, justifying the expense, even with dramatically lower running costs, is hard...but I do miss having a car! First time since I past when I was 18!
Thing is, I had used cars and was always able to use the capital tied up in the car, along with savings, to continually upgrade. Went from a Clio, to a Golf to a Audi A5. When I chopped that in and got the new S5 on PCP I used most of the money from the A5 for the upfront payment, and was unable to save as much as I could normally given I was paying so much to the PCP monthlies. It means that at the end of the deal, you are left either having to borrow smaller amounts and get a much lesser car, or PCP a lesser car because you have less upfront to maintain the same PCP monthly. Car prices are increasing and interest rates are only going to increase.
As a long term solution to having to own a car for several decades, it really doesn't make much sense....
Thanks for sharing. Nice to see you're making good savings. Similar story to myself, fiesta, A3, S3 moving up the levels, currently Merc. I love cars and usually hang onto them (like most things) for years! I don't have an option but to have a car really due to the miles and my lifestyle.
Sounds as though whilst you know the savings you still have the itch for a car, and having owned an S5 you're done well to detox to nothing! ha. I'd really like an RS variant one day, but I like saving up too - polar opposites! :rotfl:"The future needs a big kiss"0 -
TheMoonandBack wrote: »
I bought a 3 year old car for £12k, which I intend to run for 7 years. By then it will have 150000 miles on the clock. I budget £75 a month for maintenance. If the car is worth nothing in 7 years time it will have depreciated by, and therefore cost me, £143 a month. Even including the maintenance it’s less than £220 a month.
The realisation for me was that a £300 a month pcp payment is £3600 a year, plus servicing, tyres etc etc. Plus you’ve probably also sunk your own money in as a deposit, need gap insurance to cover your debt, it’s a just a black hole of debt.
Good plan. I'm unsure what I'm going to do at the end of my PCP, but I think I should do some planning."The future needs a big kiss"0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards