PCP Experiences Good AND Bad please
Discussion
Hi Everyone.
Can someone explain to me the process behind a PCP deal. what experience have you had with one? Was it good? Bad? (I am talking about car finance by the way)
I recently bought a 61 plate A6 DIEsel and we are scrapping the company car scheme so I might be able to get out of the boring land of diesels and into something a lot more high end! I'm thinking Audi RS, BMW M etc.
Many thanks in advance.
Can someone explain to me the process behind a PCP deal. what experience have you had with one? Was it good? Bad? (I am talking about car finance by the way)
I recently bought a 61 plate A6 DIEsel and we are scrapping the company car scheme so I might be able to get out of the boring land of diesels and into something a lot more high end! I'm thinking Audi RS, BMW M etc.
Many thanks in advance.
dele said:
Got a 61' plate 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 own and my credit rating is now ruined.
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.
Bloody hell. 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 own and my credit rating is now ruined.
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.
dele said:
Yes, PPI, christ why couldnt i remeber that? Anyway it wouldnt of helped as i think they only offered to pay for 3 months and in the end i was out of work for 6, only just started a new job this month.
Anyway OP, You asked for bad experiences and ive given you one, im not saying it will happen to you but i think you should really consider if you are in a strong position to be able to afford it if s
t hits the fan, you might actually be in a good position to go down the PCP route but i dont really recall hearing many "good" experiences with PCP.
I dont think its put me off the idea of PCP forever, plenty of people out there do it, just remeber though your paying £x amount a month for a car that isnt yours, that didnt sit well with me in the end.
If i could do it all again i would of got a loan for an E46 CSL rather than PCP on a newer car that will depreciate like a brick, that way i would of had options to sell the car on privately without hassle of finance hanging over my head.
Thanks for the heads up. Anyway OP, You asked for bad experiences and ive given you one, im not saying it will happen to you but i think you should really consider if you are in a strong position to be able to afford it if s
t hits the fan, you might actually be in a good position to go down the PCP route but i dont really recall hearing many "good" experiences with PCP.I dont think its put me off the idea of PCP forever, plenty of people out there do it, just remeber though your paying £x amount a month for a car that isnt yours, that didnt sit well with me in the end.
If i could do it all again i would of got a loan for an E46 CSL rather than PCP on a newer car that will depreciate like a brick, that way i would of had options to sell the car on privately without hassle of finance hanging over my head.
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.nonuts said:
Bought first car a Clio 1.2 on PCP, deposit was affordable, monthly payments were affordable. Free first years insurance that was going to cost me around £3k made any interest etc. irrelevant and was the right decision at the time.
Excellent experience, I also looked into giving it back after 2 of the 3 year term as I'd bought an S3 and after making 50% of the payments giving it back was no hassle as long as it was in fair condition, it ended up staying in the family as my mum wanted it, finance company were happy to change who was paying the remaining payments.
Good experience. Thanks. Excellent experience, I also looked into giving it back after 2 of the 3 year term as I'd bought an S3 and after making 50% of the payments giving it back was no hassle as long as it was in fair condition, it ended up staying in the family as my mum wanted it, finance company were happy to change who was paying the remaining payments.
J4CKO said:
I think every case is different, its a great way to run a car if you are sensible about it but I think here are a lot of people that bite off more than they can really chew. I think even people who would have in the past bought a car cash now do it, its gone the same way as a mobile phone, not many people have £600 spare to buy that Iphone 5 but £40 a month is more palatable, even if it does end up costing you £800
i have no need to at the moment but if I did, I would consider it but with the proviso that I could well afford the payments for the duration of the agreement and had a couple of months in hand, just in case.
I wonder how many people get blinded by "the shiny", that lovely new car for only £400 a month that they could never in a million years actually save up £30,000 for, then realise that on a household budget of 2 grand a month it doesnt really stack up.
A lot of people forget tyres, tax, insurance, fuel, servicing (I'd get this thrown in if possible) These are the deal breakers. i have no need to at the moment but if I did, I would consider it but with the proviso that I could well afford the payments for the duration of the agreement and had a couple of months in hand, just in case.
I wonder how many people get blinded by "the shiny", that lovely new car for only £400 a month that they could never in a million years actually save up £30,000 for, then realise that on a household budget of 2 grand a month it doesnt really stack up.
HTP99 said:
I was being facetious, there are many car buying threads on Pistonheads here where if you so much as mention finance you are pilloried, many on here think that if you have the available funds then why would you even entertain finance.
I sold a car this weekend just gone to a family who had the money available in savings, originally they were after finance however in the end they borrowed the money off off parents, why did they do this, because they didn't want to sink a huge proportion of their savings into a depreciating asset and would rather the money remained in the bank for emergencies, which is a far more sensible option.
Yeah I was actually agreeing with you. I sold a car this weekend just gone to a family who had the money available in savings, originally they were after finance however in the end they borrowed the money off off parents, why did they do this, because they didn't want to sink a huge proportion of their savings into a depreciating asset and would rather the money remained in the bank for emergencies, which is a far more sensible option.
oyster said:
I'll no doubt get flamed for this but I fully expect a large proportion of people who use PCP and other forms of credit to buy brand new cars are the same ones who moan that they will never be able to raise enough deposit to buy a house. Or that they don't have enough spare income to save for retirement.
My whole reason is to find a good balance between just that. I have had direct debits to accounts for a long time now just putting money away to buy a house. I could go out and whack a deposit on something now and have a very low monthly payment. I won't do that though. I'll just keep the money in the bank and strike a good deal when the time is right. As a lot of people have said it works for some people and it doesn't work for others. I always put too much money away just in case. That is a rule of thumb so I am not going to go and PCP an R8 (As much as I would like to!) because its pretty dangerous/stupid. You never know what is around the corner!
Dr Jekyll said:
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 bks!
Where's that 'Not sure if serious' image?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!
threadlock said:
OP, something I forgot to mention when I typed my reply yesterday was that you might be able to get a better-spec car for no extra outlay on a PCP deal, because of the higher residual values of choosing the right options.
For example, if you buy a basic model for -say- £15k that's worth £7k in three years, you're funding depreciation of £8k.
If you buy a high-spec version of the same model for -say- £18k that ends up worth £9k because of its more desirable engine or whatever, you're still only funding £9k of depreciation, and your monthly payments won't be massively different. When I bought my Audi I was able to choose the LeMans special edition S-Line spec for virtually the same cost as the basic SE model, and I've enjoyed three years of imagine as a result.
Might be worth asking the dealer to run some scenarios through their finance calculator if you're not yet put off the idea of PCP.
For example, if you buy a basic model for -say- £15k that's worth £7k in three years, you're funding depreciation of £8k.
If you buy a high-spec version of the same model for -say- £18k that ends up worth £9k because of its more desirable engine or whatever, you're still only funding £9k of depreciation, and your monthly payments won't be massively different. When I bought my Audi I was able to choose the LeMans special edition S-Line spec for virtually the same cost as the basic SE model, and I've enjoyed three years of imagine as a result.
Might be worth asking the dealer to run some scenarios through their finance calculator if you're not yet put off the idea of PCP.threadlock said:
OP, something I forgot to mention when I typed my reply yesterday was that you might be able to get a better-spec car for no extra outlay on a PCP deal, because of the higher residual values of choosing the right options.
For example, if you buy a basic model for -say- £15k that's worth £7k in three years, you're funding depreciation of £8k.
If you buy a high-spec version of the same model for -say- £18k that ends up worth £9k because of its more desirable engine or whatever, you're still only funding £9k of depreciation, and your monthly payments won't be massively different. When I bought my Audi I was able to choose the LeMans special edition S-Line spec for virtually the same cost as the basic SE model, and I've enjoyed three years of imagine as a result. Might be worth asking the dealer to run some scenarios through their finance calculator if you're not yet put off the idea of PCP.
Yes it has crossed my mind. After all you are funding the depreciation. If you're careful and don't get the last of the old model with a red interior for example. It's still about a fine balance of course. For example, if you buy a basic model for -say- £15k that's worth £7k in three years, you're funding depreciation of £8k.
If you buy a high-spec version of the same model for -say- £18k that ends up worth £9k because of its more desirable engine or whatever, you're still only funding £9k of depreciation, and your monthly payments won't be massively different. When I bought my Audi I was able to choose the LeMans special edition S-Line spec for virtually the same cost as the basic SE model, and I've enjoyed three years of imagine as a result.
Might be worth asking the dealer to run some scenarios through their finance calculator if you're not yet put off the idea of PCP.Thanks for your input.
405dogvan said:
Ashley1987 said:
Yes it has crossed my mind. After all you are funding the depreciation. If you're careful and don't get the last of the old model with a red interior for example. It's still about a fine balance of course.
Absolutely that - BUTFew people are going to choose a nicer spec "because it's cheaper overall" - most people will use PCPs to get a car which is, in all honestly, beyond their means.
It's really, really hard to work out a 'total cost of ownership' when you're looking at a new car and comparing PCPs with purchases - because there are so many variables (mileage, options, depreciation and so on).
A lot of people think a PCP is 'motoring costs struck to the bone' - e.g. your outlay is purely the actual 'cost' of motoring, which is
depreciation (your PCP payment)
maintenance
petrol
insurance
tax
But they forget that dealers (and the PCP providers) are in business to make money - the idea that you're "sharing economies of scale" (as a company leasing a fleet might be) is mildly deluded...
I've only ever once heard of someone giving a car back at the end of a PCP because it's value had dropped more than the residual had been setup for so it wasn't worth paying the balloon - and that was an RS Ford
p.s. mileage - in itself - is a PCP issue because you need to specify it upfront, exceeding it is VERY expensive and, of course, underdoing it is costing you money - and the only thing worse than wasting money is having a car you cannot afford to use
Good Lord I just outed my spreadsheet fetish on the internet
405dogvan said:
Nothing wrong with spreadsheets but they don't have a function to tell if your lifestyle will change enormously in the next 2/3 years resulting in much greater/lesser mileages on your car.
I've varied, over the years, between 2.5K a year and 35K a year - all based on the job I was doing at the time.
Some PCPs will allow some renegociation if your circumstances change (pay more for more miles - cheaper than the penalty) - none I've ever seen allowed the opposite tho.
Yeah I know thats why I feel there needs to be a lot of contingency built into the workings so that a worse case scenario if realised can be worked around. I've varied, over the years, between 2.5K a year and 35K a year - all based on the job I was doing at the time.
Some PCPs will allow some renegociation if your circumstances change (pay more for more miles - cheaper than the penalty) - none I've ever seen allowed the opposite tho.
Gassing Station | General Gassing | Top of Page | What's New | My Stuff