PCP deal calculation help
Discussion
liner33 said:
daemon said:
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties? 
Well if you are a landlord then you would know that it's more tax efficient to borrow against property than it is a car so that's another tick in the box to buy with cash. Let alone trying to clear 8%+ profit on a rental property (that's above the national average before tax ) 
liner33 said:
daemon said:
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties?
Well if you are a landlord then you would know that it's more tax efficient to borrow against property than it is a car so that's another tick in the box to buy with cash. Let alone trying to clear 8%+ profit on a rental property (that's above the national average before tax ) Although it raises an interesting point.
I'll have a chat with our accountant. Due to meet with him at the turn of the year.
Cheers
daemon said:
liner33 said:
daemon said:
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties?
Well if you are a landlord then you would know that it's more tax efficient to borrow against property than it is a car so that's another tick in the box to buy with cash. Let alone trying to clear 8%+ profit on a rental property (that's above the national average before tax ) Although it raises an interesting point.
I'll have a chat with our accountant. Due to meet with him at the turn of the year.
Cheers
daemon said:
Oh well. Worse things happen at sea.
If you're buying a ford mondeo from a ford dealer, you might not necessarily be getting the best deal?
Have you checked out car supermarket prices?
Have you checked what the likes of We buy any car or their ilk will offer you?
You could also try some of your local indy dealers who stock similar types of cars - ask to speak to the "used car buyer"
OR - as has been suggested, you could try to punt it yourself to get a better price.
Nah not approved used...well I need to view the mondeo first to see if it's actually any good and yes to all the above If you're buying a ford mondeo from a ford dealer, you might not necessarily be getting the best deal?
Have you checked out car supermarket prices?
Have you checked what the likes of We buy any car or their ilk will offer you?
You could also try some of your local indy dealers who stock similar types of cars - ask to speak to the "used car buyer"
OR - as has been suggested, you could try to punt it yourself to get a better price.
the dealer is offering the best price for the fiesta!shocka144 said:
Nah not approved used...well I need to view the mondeo first to see if it's actually any good and yes to all the above the dealer is offering the best price for the fiesta!
Grand - was just brain dumping any options i could think of, but sounds like you've covered them all the dealer is offering the best price for the fiesta!You taking a straight HP loan on the Mondeo?
liner33 said:
daemon said:
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties?
Well if you are a landlord then you would know that it's more tax efficient to borrow against property than it is a car so that's another tick in the box to buy with cash. Let alone trying to clear 8%+ profit on a rental property (that's above the national average before tax)shocka144 said:
daemon said:
Grand - was just brain dumping any options i could think of, but sounds like you've covered them all
You taking a straight HP loan on the Mondeo?
Bank loan has better APR so that route, plus should be able to haggle betterYou taking a straight HP loan on the Mondeo?
TA14 said:
liner33 said:
daemon said:
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties?
Well if you are a landlord then you would know that it's more tax efficient to borrow against property than it is a car so that's another tick in the box to buy with cash. Let alone trying to clear 8%+ profit on a rental property (that's above the national average before tax)liner33 said:
PCP is worth it , if you cant pay by any other method or if maths really isnt your strong point
What's your reasoning for that?I took out a PCP with Audi this summer and my monthly payments are around £350 per month. With a comparable HP / loan purchase, the montly payments would be around £900.
I know that with the HP / loan purchase I would be able to realise the residual value upon p/x ing the car at 3 years, but in the overall scheme of things the the total cost of ownership will be braodly similar whichwever purchase method I chose.
The PCP scheme allows me to have a lower monthly liability, which was the main deciding factor.
Mandat said:
I took out a PCP with Audi this summer and my monthly payments are around £350 per month. With a comparable HP / loan purchase, the montly payments would be around £900.
These two numbers in isolation are completely meaningless though and tell us nothing about total cost.Fox- said:
These two numbers in isolation are completely meaningless though and tell us nothing about total cost.
Well, they're not meaningless to my monthly budget.In terms of total cost, the PCP will work out higher becuase the GFV is not reducing over the term, however in my situation I chose the higher overall cost for the benefit of lower monthly payments.
The point is that PCP works for some people and not for others, but this thread seems to be slating PCP as a viable financing option.
Mandat said:
The point is that PCP works for some people and not for others, but this thread seems to be slating PCP as a viable financing option.
I would agree with the former but not the latter; there are some on here who think that is the best for all options and say that if you have £30K in the bank earning 1.5% you should still take out a PCP and invest in property at a return in the teens of %Mandat said:
Fox- said:
These two numbers in isolation are completely meaningless though and tell us nothing about total cost.
Well, they're not meaningless to my monthly budget.In terms of total cost, the PCP will work out higher becuase the GFV is not reducing over the term, however in my situation I chose the higher overall cost for the benefit of lower monthly payments.
TA14 said:
Mandat said:
The point is that PCP works for some people and not for others, but this thread seems to be slating PCP as a viable financing option.
I would agree with the former but not the latter; there are some on here who think that is the best for all options and say that if you have £30K in the bank earning 1.5% you should still take out a PCP and invest in property at a return in the teens of %Its entirely down to the individual.
I personally wouldnt put £30,000 of my own hard earned into a run of the mill car, but that is just my personal preference. If other people want to and do, then thats fine by me. Thats just my viewpoint.
The difference between that stance above and the minority "anti PCP" stance is that with their viewpoint comes attached the view that people who use or have used PCP deals are "financially naive", "cant do simple maths", "cant afford the car", etc, etc.
Also i didnt say i would recommend investing in property and use PCP deals, i responded when challenged as to where i could possibly be getting a return greater than the small return from savings these days - and thats from equity in the properties which is increasing comfortably.
It was also then questioned if i was "a real landlord", then i would know that i could actually borrow money cheaper from a tax perspective against the proporties. Well, i'm a landlord but not an accountant, and again in particular the BMW that we have we dont want to own it outright as it will be run for a specific term and returned and replaced using my wifes company car allowance.
TA14 said:
So how can the PCP be better for your monthly budget? Presumably you've made a big down payment at the beginning of the PCP which could have been left in your bank to part pay the £900 per month down to a value below £350. Otherwise the PCP overall cost would not be higher.
Very simply i would have thought.A £36,000 car can be financed on a PCP deal with roughly £3K down and £320 a month.
A £36,000 car with a £3K discount and a £3K deposit and a £30,000 loan over three years would cost you £900 a month.
Simples.
Fox- said:
These two numbers in isolation are completely meaningless though and tell us nothing about total cost.
You're missing the point.Why be our £900 a month or £30,000 out of your savings when you can PCP the car for £300 a month for three years anyway?
Its not a holistic all encompassing answer - its an option.
daemon said:
TA14 said:
So how can the PCP be better for your monthly budget? Presumably you've made a big down payment at the beginning of the PCP which could have been left in your bank to part pay the £900 per month down to a value below £350. Otherwise the PCP overall cost would not be higher.
Very simply i would have thought.A £36,000 car can be financed on a PCP deal with roughly £3K down and £320 a month.
A £36,000 car with a £3K discount and a £3K deposit and a £30,000 loan over three years would cost you £900 a month.
Simples.
PCP cost is 36 x 320 plus £3K = £14,520
Loan cost is 36 x 900 plus £3K = £35,400 so the PCP overall cost is lower. If you say the car is worth half of the £36K when three years old then the loan options costs £17,400 so the PCP overall is still cheaper.
You need an example where the PCP monthly payments are lower but the overall cost is higher.
TA14 said:
If we run with that example by my maths:
PCP cost is 36 x 320 plus £3K = £14,520
Loan cost is 36 x 900 plus £3K = £35,400 so the PCP overall cost is lower. If you say the car is worth half of the £36K when three years old then the loan options costs £17,400 so the PCP overall is still cheaper.
Yes, "broadly speaking" if you do it right with a PCP deal, it should cost you "roughly" the same +/- ££PCP cost is 36 x 320 plus £3K = £14,520
Loan cost is 36 x 900 plus £3K = £35,400 so the PCP overall cost is lower. If you say the car is worth half of the £36K when three years old then the loan options costs £17,400 so the PCP overall is still cheaper.
TA14 said:
You need an example where the PCP monthly payments are lower but the overall cost is higher.
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