PCP Experiences Good AND Bad please
Discussion
LA167 said:
PCP is epic!! It gives you the chance to have a car you wouldn't normally be able to afford and protects you against depreciation. We're all petrolheads here and no doubt own/want to own fast cars outright, but for mainstream/normal/volume cars (whatever you want to call it) why would anyone want to use their own money to pay for it? It is a depreciating asset afterall! 2 scenarios:
Mr X changes his car every 3 years and is a cash buyer and wants a brand new A6 Avant 2.0 TDI S-Line. He gets about a grand off the car from his local dealer and parts with £33,500 of his hard earned cash. Over the next 3 years Mr X is saving for his next car in 3 years time, putting away a healthy amount each month. 3 years later he comes to trade in and gets £17,000 in part exchange. He's lost £15,500 of his own money.
Mr Y also changes his car every 3 years but always does a PCP, he also wants a brand new A6 Avant 2.0 TDI S-Line. He gets the same approximate grand off the list price of the car from his local dealer but also gets to take advantage of the £2,250 that Audi Finance give towards his deposit. He then puts £6,000 of his own money (or equity in his PX) into the deal and pays £399 a month over 3 years. His Guaranteed Minimum Future Value is £14,000 giving him £3,000 of equity when he trades in. With his payments and his initial deposit he's paid approximately £20,000 over the 3 years, hasn't had to save any money for his next car AND has a nice bit of equity as deposit towards his next car!
Why wouldn't you do a PCP, it's the b
ks!
Brilliant man's maths.Mr X changes his car every 3 years and is a cash buyer and wants a brand new A6 Avant 2.0 TDI S-Line. He gets about a grand off the car from his local dealer and parts with £33,500 of his hard earned cash. Over the next 3 years Mr X is saving for his next car in 3 years time, putting away a healthy amount each month. 3 years later he comes to trade in and gets £17,000 in part exchange. He's lost £15,500 of his own money.
Mr Y also changes his car every 3 years but always does a PCP, he also wants a brand new A6 Avant 2.0 TDI S-Line. He gets the same approximate grand off the list price of the car from his local dealer but also gets to take advantage of the £2,250 that Audi Finance give towards his deposit. He then puts £6,000 of his own money (or equity in his PX) into the deal and pays £399 a month over 3 years. His Guaranteed Minimum Future Value is £14,000 giving him £3,000 of equity when he trades in. With his payments and his initial deposit he's paid approximately £20,000 over the 3 years, hasn't had to save any money for his next car AND has a nice bit of equity as deposit towards his next car!
Why wouldn't you do a PCP, it's the b
ks!Pugland53 said:
I can't understand why you didnt try and sell the car yourself when you lost your job. You would have had a month at least to sell it before they came to take it away. Even if you took a low bid from a trader you would surely be in a better position.
Or put it on SOR at Birds - its exactly the type of car they could shift quickly.dele said:
Had a 61' plate 335i BMW
Lost my job, didnt have GAP insurance, BMW took the car back and auctioned it off leaving a £10k deficit that ive had to repay for a car that i no longer have and my credit rating is now ruined.
Its literally been the bane of my life for the last year, think VERY long and hard before you pull the trigger, this has been a very expensive and unpleasent experience for myself that could of been avoided if i'd had a backup plan or bought within my means.
Your experience isn't really a bad PCP experience per se though, you lost your job, and couldn't afford to pay for the car, if you had taken the car on HP the same thing would have happened.Lost my job, didnt have GAP insurance, BMW took the car back and auctioned it off leaving a £10k deficit that ive had to repay for a car that i no longer have and my credit rating is now ruined.
Its literally been the bane of my life for the last year, think VERY long and hard before you pull the trigger, this has been a very expensive and unpleasent experience for myself that could of been avoided if i'd had a backup plan or bought within my means.
Edited by dele on Wednesday 5th June 13:55
PCP's are a good option if you understand them and aren't mis sold one, as some people are. If you change your car every three years then they are ideal and if, come the end of the three years, you want to keep the car you can re-finance the baloon or just pay it off, the advantage is that they give you the option, unlike a 5 year HP agreement, for example, where you are tied into it for the whole 5 years, with a PCP you are tied into it for a much shorter term, however come the end of the agreement you have the option to start again, continue paying or hand the car back and walk off.
Pugland53 said:
dele said:
Had a 61' plate 335i BMW
Lost my job, didnt have GAP insurance, BMW took the car back and auctioned it off leaving a £10k deficit that ive had to repay for a car that i no longer have and my credit rating is now ruined.
Its literally been the bane of my life for the last year, think VERY long and hard before you pull the trigger, this has been a very expensive and unpleasent experience for myself that could of been avoided if i'd had a backup plan or bought within my means.
I can't understand why you didnt try and sell the car yourself when you lost your job. You would have had a month at least to sell it before they came to take it away. Even if you took a low bid from a trader you would surely be in a better position. Lost my job, didnt have GAP insurance, BMW took the car back and auctioned it off leaving a £10k deficit that ive had to repay for a car that i no longer have and my credit rating is now ruined.
Its literally been the bane of my life for the last year, think VERY long and hard before you pull the trigger, this has been a very expensive and unpleasent experience for myself that could of been avoided if i'd had a backup plan or bought within my means.
Edited by dele on Wednesday 5th June 13:55
I don't like PCP. I get bored with cars, and put lots of miles on in a short space time. Not a great mix for PCP.
HTP99 said:
Your experience isn't really a bad PCP experience per se though, you lost your job, and couldn't afford to pay for the car, if you had taken the car on HP the same thing would have happened.
PCP's are a good option if you understand them and aren't mis sold one, as some people are. If you change your car every three years then they are ideal and if, come the end of the three years, you want to keep the car you can re-finance the baloon or just pay it off, the advantage is that they give you the option, unlike a 5 year HP agreement, for example, where you are tied into it for the whole 5 years, with a PCP you are tied into it for a much shorter term, however come the end of the agreement you have the option to start again, continue paying or hand the car back and walk off.
This!!!PCP's are a good option if you understand them and aren't mis sold one, as some people are. If you change your car every three years then they are ideal and if, come the end of the three years, you want to keep the car you can re-finance the baloon or just pay it off, the advantage is that they give you the option, unlike a 5 year HP agreement, for example, where you are tied into it for the whole 5 years, with a PCP you are tied into it for a much shorter term, however come the end of the agreement you have the option to start again, continue paying or hand the car back and walk off.
I work for a MINI dealer and PCP is our most popular financing option due to its flexibility and contributions from MINI themselves. Effectively you're funding the depreciation of the car and with low rates people are generally in positive equity just after half way through the 3 or 4 year term so if you want a new car every 2 or 3 years (which most of my customers do) then its a good way of financing a car, it's all down to how quickly they depreciate, luckily MINI's hold there value quite well.
The situation with someone losing their job WOULD have been different if they'd taken a conventional, unsecured loan for the value of the car (less deposit).
With a PCP you don't own the car and so have no choice as to what happens if you default - usually the creditor will take the car in return for a low non-negociable sum which is written-off your debt, leaving you with a balance to pay back (often inflated with penalties) - and the appropriate 'failed to pay' marks on your credit history of course.
If you'd taken conventional, unsecured finance on the car, you could have sold it privately when things got rough, most likely for quite a bit more than the PCP company would be offering, and then used the money you recouped to
a - buy a cheap car
b - maintain the payments on the finance until you get back on your feet.
That route leaves no credit record damage and no fines or penalities either. It would, of course, be most costly per month because you're not deferring a chunk of the car's value - and you're OWNING it (after a fashion).
I'm not 100% against PCPs - but if you're taking a PCP you must consider that it's not like a conventional, unsecured loan - you have less latitude and less control and if things go south it can get nasty quite quickly. Those are the downsides to the upside of it putting you into a nice car for a smaller sum.
Whether to go for a PCP or a conventional purchase is another case of 'total cost of ownership' - as with ANY car purchase - only with the added rider than you must consider the 'if it goes south' issue and have a fund put to one side to ride those things out because you have less time to bale before you drown with a PCP.
With a PCP you don't own the car and so have no choice as to what happens if you default - usually the creditor will take the car in return for a low non-negociable sum which is written-off your debt, leaving you with a balance to pay back (often inflated with penalties) - and the appropriate 'failed to pay' marks on your credit history of course.
If you'd taken conventional, unsecured finance on the car, you could have sold it privately when things got rough, most likely for quite a bit more than the PCP company would be offering, and then used the money you recouped to
a - buy a cheap car
b - maintain the payments on the finance until you get back on your feet.
That route leaves no credit record damage and no fines or penalities either. It would, of course, be most costly per month because you're not deferring a chunk of the car's value - and you're OWNING it (after a fashion).
I'm not 100% against PCPs - but if you're taking a PCP you must consider that it's not like a conventional, unsecured loan - you have less latitude and less control and if things go south it can get nasty quite quickly. Those are the downsides to the upside of it putting you into a nice car for a smaller sum.
Whether to go for a PCP or a conventional purchase is another case of 'total cost of ownership' - as with ANY car purchase - only with the added rider than you must consider the 'if it goes south' issue and have a fund put to one side to ride those things out because you have less time to bale before you drown with a PCP.
Edited by 405dogvan on Wednesday 5th June 19:26
We used PCP to buy a car three years ago (an Audi 2.0 TDI S-Line Avant 
). I didn't expect to buy a new car at all. I went into the dealer with a rough finance budget of 300 per month (can't do Sterling symbols on this mobile keyboard for some reason - bear with me) and an 11 year-old, 3k A6 to sell for the deposit. I expected to come out with a used A6 about 5 years old.
We did a deal in the end for a brand new A6 at 337 a month with 6k down and couldn't be happier. By taking out the finance we paid 10% less than the list price (28k), APR was 4.9% and the residual was an easy 15k. I've been offered 17k trade-in so we have a bit of equity after three years, but I've paid off the finance from savings and we're shopping around for a replacement with no rush.
The thing is, when I added up the actual running costs of our '99 A6 Quattro Avant, including fuel, servicing, spare parts, MOTs and remedial work, the brand new car only cost us 100 a month more to have even taking into account depreciation. The older car looked like a much cheaper proposition but the truth was that it was an expensive, unreliable car to own and PCP made the new one a completely predictable alternative.
Would we do it again? Yes, but only if the finance deal were equally good. Not many manufacturers are offering the same incentives at the moment. I don't think PCP is worse than any other secured finance arrangement, except that at the end of the deal you don't own the car. But you should end up with at least a bit of equity as a deposit for a repeat deal if that's what you want to do.
). I didn't expect to buy a new car at all. I went into the dealer with a rough finance budget of 300 per month (can't do Sterling symbols on this mobile keyboard for some reason - bear with me) and an 11 year-old, 3k A6 to sell for the deposit. I expected to come out with a used A6 about 5 years old.We did a deal in the end for a brand new A6 at 337 a month with 6k down and couldn't be happier. By taking out the finance we paid 10% less than the list price (28k), APR was 4.9% and the residual was an easy 15k. I've been offered 17k trade-in so we have a bit of equity after three years, but I've paid off the finance from savings and we're shopping around for a replacement with no rush.
The thing is, when I added up the actual running costs of our '99 A6 Quattro Avant, including fuel, servicing, spare parts, MOTs and remedial work, the brand new car only cost us 100 a month more to have even taking into account depreciation. The older car looked like a much cheaper proposition but the truth was that it was an expensive, unreliable car to own and PCP made the new one a completely predictable alternative.
Would we do it again? Yes, but only if the finance deal were equally good. Not many manufacturers are offering the same incentives at the moment. I don't think PCP is worse than any other secured finance arrangement, except that at the end of the deal you don't own the car. But you should end up with at least a bit of equity as a deposit for a repeat deal if that's what you want to do.
No one on here can tell you if it is right from wrong, good or bad, nasty or nice. Like almost every thread on the internet, there is no end, no right answer and no conclusion.
Do this....
1) Assess your personal risk
2) Know your limits
3) Build in Contingency
4) Have a back out plan
If you do that,and it still goes wrong, you are very unlucky. N
Do this....
1) Assess your personal risk
2) Know your limits
3) Build in Contingency
4) Have a back out plan
If you do that,and it still goes wrong, you are very unlucky. N
Edited by dufflecoat on Wednesday 5th June 20:09
eybic said:
luckily MINI's hold there value quite well.
In my experience not much better than anything else really. The usual 50% dep after 3 years, give or take a couple of percentage points either way..Lat year I bought a MCS with 31K miles at 39 months for £9,300. List was £21,000.
KTF said:
But if Mr Y wants to keep his car or doesn't want to renew it then he hands it back and is left with nothing or has to pay the balloon which would cost him more than buying it not using PCP in the first place.
Mr Y the fk would he keep it when he changes every 3 years!? Taking advantage of PCP! Nice bloke is My Y! Mr X is a nob though!The old chestnut raises its ugly head again
PCP can work extremely well for some people and be the worst option for others.
As has already been said it depends entirely on your circumstances and only the individual can work that out.
PCP, increasingly is not just about the customer funding the depreciation - in many cases its about funding only part of the depreciation.
Sky high GMFVs are to a customers benefit if they go into the deal with their eyes wide open.
Example
I was talking to a bloke in a dealership a couple of weeks ago - he was in the process of handing back a 3 year old car, funded using PCP. He thought it was perfect for him - he paid £86k for the car and had a GMFV of £39k - the car was actually valued at £29k.
If he had bought on HP or paid cash he'd have lost £57k in depreciation, having a GMFV meant that he lost £47k, still a silly amount but £10k less than on HP / cash
He was clearly a fairly wealthy bloke and was not only handing the car back but going to buy another - again on PCP
For that customer PCP worked very well
PCP can work extremely well for some people and be the worst option for others.
As has already been said it depends entirely on your circumstances and only the individual can work that out.
PCP, increasingly is not just about the customer funding the depreciation - in many cases its about funding only part of the depreciation.
Sky high GMFVs are to a customers benefit if they go into the deal with their eyes wide open.
Example
I was talking to a bloke in a dealership a couple of weeks ago - he was in the process of handing back a 3 year old car, funded using PCP. He thought it was perfect for him - he paid £86k for the car and had a GMFV of £39k - the car was actually valued at £29k.
If he had bought on HP or paid cash he'd have lost £57k in depreciation, having a GMFV meant that he lost £47k, still a silly amount but £10k less than on HP / cash
He was clearly a fairly wealthy bloke and was not only handing the car back but going to buy another - again on PCP
For that customer PCP worked very well
Andy665 said:
The old chestnut raises its ugly head again
PCP can work extremely well for some people and be the worst option for others.
As has already been said it depends entirely on your circumstances and only the individual can work that out.
PCP, increasingly is not just about the customer funding the depreciation - in many cases its about funding only part of the depreciation.
Sky high GMFVs are to a customers benefit if they go into the deal with their eyes wide open.
Example
I was talking to a bloke in a dealership a couple of weeks ago - he was in the process of handing back a 3 year old car, funded using PCP. He thought it was perfect for him - he paid £86k for the car and had a GMFV of £39k - the car was actually valued at £29k.
If he had bought on HP or paid cash he'd have lost £57k in depreciation, having a GMFV meant that he lost £47k, still a silly amount but £10k less than on HP / cash
He was clearly a fairly wealthy bloke and was not only handing the car back but going to buy another - again on PCP
For that customer PCP worked very well
Shock horror, a wealthy person buying a car on finance and I was under the impression, according to alot of posters on Pistonheads, that only poor people bought cars on finance and if you had the money paying outright was the best way, well I never!PCP can work extremely well for some people and be the worst option for others.
As has already been said it depends entirely on your circumstances and only the individual can work that out.
PCP, increasingly is not just about the customer funding the depreciation - in many cases its about funding only part of the depreciation.
Sky high GMFVs are to a customers benefit if they go into the deal with their eyes wide open.
Example
I was talking to a bloke in a dealership a couple of weeks ago - he was in the process of handing back a 3 year old car, funded using PCP. He thought it was perfect for him - he paid £86k for the car and had a GMFV of £39k - the car was actually valued at £29k.
If he had bought on HP or paid cash he'd have lost £57k in depreciation, having a GMFV meant that he lost £47k, still a silly amount but £10k less than on HP / cash
He was clearly a fairly wealthy bloke and was not only handing the car back but going to buy another - again on PCP
For that customer PCP worked very well
HTP99 said:
Shock horror, a wealthy person buying a car on finance and I was under the impression, according to alot of posters on Pistonheads, that only poor people bought cars on finance and if you had the money paying outright was the best way, well I never!
Why use your own money?! Keep your own in the bank.Ashley1987 said:
Why use your own money?! Keep your own in the bank.
Exactly, I read somewhere that most high end stuff is bought on finance for this reason as the cash in the bank can be 'invested' to offset the cost of the finance payment each month rather than having it all tied up in a depreciating asset.Gassing Station | General Gassing | Top of Page | What's New | My Stuff