New car sales 75% via PCP

[Borroxs]

nyxster said:

All the assumptions about PCP/finance predicate on you not losing your job and having financial problems.

It's a known fact most people live with barely a few months or less savings, and you only need to miss 3 payments and the car goes back, gets sold at auction for a fraction of the amount and then the finance company hands you a up front demand for the difference.

When you are struggling to pay mortgage/credit cards and so on with no income that 300-500 a month quickly mounts up and all the money you sank into it is gone, so you are left with no car, debt plus a credit black mark making it hard to get a replacement when you return to work.

After the 2008 crash my RS4 that was worth 37k on the open market was sold for 19k at a auction in the arse end of nowhere, even though I had a buyer for it and offered to make up the difference. Audi finance hit me with a demand for the difference plus all the accrued interest, charges and fees. Bearing in mind I'd put a 12k deposit in and had been paying 600 a month for this car I had lost the car, the cash I;d put into it which would have paid for a previous generation rs4 in cash, and had a default served on my credit record which will sit there for 6 years.

Luckily I picked up a well paid contract and raised the funds to pay it off, otherwise they were on for getting a CCJ and charge on my property.

I learnt the lesson, getting to work with no car was a real hassle making it hard to get back on my feet. for the next few years I tooled around in a 3k BMW 330 bought for cash, and saved up to buy a 3 year old E class which I intend to run until the wheels fall off.

My edx0erience of a decade of PCP deals is just constantly being stuck into negative equity on a heavily depreciating asset with a huge monthly outgoing and nothing to show for it at the end of it. If I;d kept my original Audi S8 and run it to 250k I'd have saved somewhere in the order of 100-150k in deposits, payments etc and could have bought a very nice daily driver and weekend toy with money to spare - all for the privilege of renting a new car every 3 years that i[d never own.

Given the financial outlook, i[d be very wary of having a financial commitment that can quickly become a problem then leave you with a big debt, unable to get a decent mortgage, credit card or mobile phone.

Brand new cars are terrible value compared to a well-spec fed 3-5 year old car that;s had the worse of its depreciation done. My e class typifies this - first PCP owner paid about 45k for a highly specced 350, ran it for circa 30k then traded it. I bought it for 19k - so he paid 26k, as it stands 3 years late I've lost maybe 6k in the same timeframe.

So 26k for 3 years in a new plate car or 6k in a 3 year old. For the same car.

So in a choice between 3k down on a brand new TT or 3k for a secondhand one, I'd take the cash option.

Harsh times mate. Managed to dodge the bullet myself, lost plenty but managed to keep paying the bills. Don't know how sometimes.

Good point though, you could put a good deposit down, pay two or three monthly's, then find yourself in a situation of deciding which bills must be covered and which simply cannot. You could move form a new Porsche to an old banger in weeks if there's another crash, and that's if you're lucky enough to be able to get out of a deal.

[anonymous-user]

nyxster said:

jsf said:

I am one of the people who managed to benefit from the crazy selling that went on after the 2008 crash. I bought a 3 year old car with 25K miles on the clock for half the price it was selling for pre crash. I paid cash for it.

It now has 110K miles on it and I could sell it tomorrow for 20% more than I paid for it.

I just cant stomach paying for a car I wouldn't own should the st hit the fan, I cant stomach having any requirement to pay for anything on credit. Maybe I am very old fashioned, but when I was in my early 20's I got in serious trouble with money when I made a change of career that didn't work out, that took me 5 years to sort out and there is no chance I will ever let that happen again.

That makes you smarter than the vast majority of people. Credit is like modern slavery, it's only when you are free of it do you realise what it feels like to actually have freedom to do more things. And really I don't think you get any less benefit from the car you bought than the first owner did who drove it out the showroom. It's secondhand the minute you drive it off the forecourt.

When you have been kicked in the nads the way I was back then, it changes your perspective on borrowing money. Your comparison to slavery is bang on the money. I now have enough saved up to be able to pay my way for at least 2 years without changing my lifestyle, if I had to I could probably last a lot longer if I cut out none essentials. You never know what's around the corner with work or health, should I have problems at least I don't need to worry unless its a very long term issue.

And the thing is, my car is my hobby, I have won sprint championships in it and when I want to do a mod, I can, the costs saved on regular credit payments lets me do that.

[walm]

• non

non-essential.
non-UK-built (from the Brexit thread).

You should be as frugal with your letters as you are with your finances jsf!
(Sorry, I'm a hoot at parties, honest.)

[rxe]

walm said:

irish boy said:

Dog Star said:

rxe said:

That said - your ugly bill for a brake caliper is about the same as one month's lease on a Citroen C4 Euro box. And you'll probably get off scot free for the next few months. Tyres, well they're a consumable. If you're going to drive hard, then your new lease car will need then in a year as well. If you drive like a pansy, then they'll last a lot longer!

Really? C4 for that? I'd expect a decent Merc for 350 a month. Tyres? A set of rears in 30K plus one minor service at 1 year old (150 quid). Actually a set of tyres does last a whole 30K lease if you get a set of winters and swap them on for (obviously) winter. They'll last two or three cars on the trot (assuming same size tyres, which worked for me).

But carry on - I am "stretching" myself to make these payments, as I'm driving something I "cannot afford" and doing it "to impress the neighbours" (We only have one neighbout and he's got a Bentley Continental, so I doubt he's "impressed") There's some bks spouted on this thread.

I think rxe is agreeing with you....

Yeah - Dog Star - he's on your side!!!

I don't think I am on anyone's side here! The OP was saying that his 10 year old M3 occasionally chucked expensive bills - such as a brake caliper for £350. I wondered what a much nastier car than an M3 cost a month - and typed Citroen Picasso into Google. My brother in law drives one, we both view it as a utility s**t-box. First personal deal - £339 a month for a C4 1.2 petrol thing. You might be able to get a Merc for the same, who cares.

So my point was that as long as the nothing else bust on his M3 in the next two months, he'd effectively have £660 in the kitty compared to someone driving a C4. I know which I'd rather be driving.

i think the people who are going to "lose" on this are whoever is carrying the difference between the real residuals and the residuals that are created to make these deals fly. Its either the manufactures or the lease companies.

And yes, this is PH. We're all jolly sensible and a simply pursing the best option. I suspect there are a shed load of people out there who are doing things they cannot afford, whether they are buying tellies at Brighthouse, getting iphones at £50 a month or cars at £350.

[nyxster]

Borroxs said:

Harsh times mate. Managed to dodge the bullet myself, lost plenty but managed to keep paying the bills. Don't know how sometimes.

Good point though, you could put a good deposit down, pay two or three monthly's, then find yourself in a situation of deciding which bills must be covered and which simply cannot. You could move form a new Porsche to an old banger in weeks if there's another crash, and that's if you're lucky enough to be able to get out of a deal.

That was the worst of it. I'd been an Audi finance customer for over a decade with half a dozen agreements paid in full, big deposits, never missed a payment. They made a truck load of money of me but when the 08 crash came that counted for nothing, their collections team treated me like st, refused to negotiate or give any leeway or time. If they'd given me 3 months grace I'd have been back in work and brought the payments into line. But they knew they were already well covered with all the money I paid, and as a homeowner had me by the balls for the balance.

Now I ran a very tight ship financially and wasn't over-leveraged, all it took was a couple of customers not paying to bring the house down through no fault of my own. I actually did the right thing and worked like a dog for 2 years to pay everything off, but I experienced how nasty finance companies get when you get into trouble, and there is no way I would suffer all that harassment and stress again for some bland euro-box simply for a new plate.

Funny thing 8s I took my now 6 year old E350 in for a service and they gave me a courtesy brand new c220 sport. When I came back they tried to convince me to 'trade up' for 299 a month. Fact is the C was slower, noisier, less comfortable, had less kit, wasn't as imposing looking and felt plastic compared to my E - 'but its new' they said.

Really, having lived in Norway where people still drive 20 year old ford escorts, the idea you'd trade out of a low miles E class simply for a newer plate is a peculiarity of the British they don't understand.

Anyway, I'm thankful I was young enough to get out the credit cycle and reclaim my life. I now have money left over every month, am able to pay everything annually and know I can't be harassed by debt collectors. After 6 frugal years my credit file doesn't have a single thing on it bar my current account, and i'very saving towards a nice toy with all the finance payments I would have spent.

I actually enjoy my life now. I certainly wouldn't give that up. It might only be 299 a month but people forget you are still on the hook for the entire 35k list price plus interest regardless, and if it goes to auction you can easily be on the hook for the price of a very nice secondhand car in financial liability - and the finance companies have become very aggressive in writing in clauses that they can go after your property as well.

[rossmc88]

I don't know why people get such expensive cars in PCP/Lease

I got a brand new 1.6 Leon TDI for £190 a month, about the same as a loan on something second hand over 3 years. All the car you really need, sips fuel and guarenteed to work. You don't need to spend 300-500 per month

[Amateurish]

Maybe one's horizons stretch a tiny but further than a 1.6 Leon?

[unrepentant]

rossmc88 said:

I don't know why people get such expensive cars in PCP/Lease

I got a brand new 1.6 Leon TDI for £190 a month, about the same as a loan on something second hand over 3 years. All the car you really need, sips fuel and guarenteed to work. You don't need to spend 300-500 per month

This is a car enthusiasts site?

[KTF]

rossmc88 said:

I don't know why people get such expensive cars in PCP/Lease

I got a brand new 1.6 Leon TDI for £190 a month, about the same as a loan on something second hand over 3 years. All the car you really need, sips fuel and guarenteed to work. You don't need to spend 300-500 per month

What was the up front and term?

[superlightr]

Appreciate those that have had a tough time finically now take a more frugal view.

Ive been lucky not to have had a tough time and do buy new cars. The last few outright, but recently a new RS6 on a PCP as it worked out cheaper then a used 1 yr RS6. Will probably sell it in 2 yrs and will lose money on it. But that's fine, I'm happy with spending my money that way.

Wife is just collecting her Q7 next week - also on pcp but will pay this off within 7 days so we benefit from the manufactures extra discount. Again we would not do this unless we were comfortable and happy to spend our money this way. Again when its sold we will lose money but that's fine.

We enjoy cars, spent loads on cars over the years and no reason not to if its not impacting us financially - as said I do understand the need to tighten belts and caution if when rocky times happen but until then I'm happy to spend it - cant take it with me. just wishing to give the other side of the coin that pcp's can be ok.

[KTF]

Yes, if you are planning to buy the car outright anyway and the manufacturer is offering a deposit contribution, free servicing, etc by going PCP then you would be daft not go for that option then pay it off a few days after collecting the vehicle.

[Sheepshanks]

jsf said:

I am one of the people who managed to benefit from the crazy selling that went on after the 2008 crash. I bought a 3 year old car with 25K miles on the clock for half the price it was selling for pre crash. I paid cash for it.

It now has 110K miles on it and I could sell it tomorrow for 20% more than I paid for it.

Care to share some details - car and cost? I can't get my head around a car that would now be 10-11yrs old still being worth 20% more than you paid.

Mind you, at that time a colleague bought a demo VW Tourareg for £19,500 cash - he had to come up with the money in 2 days, he thinks they needed it to pay wages and the dealer did go bust shortly afterwards. When he went back he tried to get it for £18K by saying that's all he could get together but they put the other £1500 on finance.

[Digga]

Borroxs said:

nyxster said:

All the assumptions about PCP/finance predicate on you not losing your job and having financial problems....

Harsh times...

I do think it is useful and very admirable when people post up stories of their own difficulties - there but for the grace of God go many of us, and it certainly is a worthwhile reminder that PCPs have obligations and the contracts have teeth.

My business vehicle's bought and paid for, Mrs Digga generally pays outright for her own car (own income and savings) although is currently trying a PCP for the first time. For my 'fun' wheels, I really cannot bring myself to incur a debt obligation, in order to have a frivolous ego chariot I will use but a few thousand miles a year. I'm really, genuinely wrestling with this, because I'd desperately love to trade up to a 997.2 GT3, but simply don't have cash. This is not, for one minute, to say I have anything but admiration for someone who says JFDI and takes this sort of gamble to get the wheels of their dreams - kudos to you. but I can't bring myself to.

[PurpleTurtle]

rxe said:

I don't think I am on anyone's side here! The OP was saying that his 10 year old M3 occasionally chucked expensive bills - such as a brake caliper for £350. I wondered what a much nastier car than an M3 cost a month - and typed Citroen Picasso into Google. My brother in law drives one, we both view it as a utility s**t-box. First personal deal - £339 a month for a C4 1.2 petrol thing. You might be able to get a Merc for the same, who cares.

So my point was that as long as the nothing else bust on his M3 in the next two months, he'd effectively have £660 in the kitty compared to someone driving a C4. I know which I'd rather be driving.

Cheers rxe - I should add that I've got a 2yo kid and a non-working wife. That 660 quid's already accounted for, hence the 10yo Bimmer!

But, yeah, my PH maths is that my depreciation (having saved and bought outright) is now long done, so I just need to dodge big bills if I can.

nyxster's tale is a salutory one - when sat in the showroom enjoying a nice coffee and signing on the line for £XXX/month of PCP I expect very few of us seriously do the 'what if I lose my job?' questions, simply because we're like a kid in a sweet shop and want to get into our new metal as soon as we can get our hands on the keys. If it all goes tits up and they send the Repo Men in then it's a different kettle of fish. That's why in my days of doing a cars on Finance I always did it via an unsecured personal bank loan - it might not have been the best APR on offer, but gave me control over the when and the how I would have to liquidate the car if I ever needed to, fortunately I never had to.

Edited by PurpleTurtle on Friday 6th January 15:31

[Sheepshanks]

nyxster said:

If they'd given me 3 months grace I'd have been back in work and brought the payments into line.

I know you had other stuff to pay but surely it's a bit risky to be a contractor and not have quite a decent buffer behind you?

I've always bought new and always paid cash (sometimes taking a PCP but then withdrawing) for the simple reason that if it all goes tits up (in my business it will happen one day) at least I'll have something to drive around in.

nyxster said:

Really, having lived in Norway where people still drive 20 year old ford escorts, the idea you'd trade out of a low miles E class simply for a newer plate is a peculiarity of the British they don't understand.

I think if we did away with dated plates then new car sales here would be decimated.

[chrispmartha]

Sheepshanks said:

nyxster said:

If they'd given me 3 months grace I'd have been back in work and brought the payments into line.

I know you had other stuff to pay but surely it's a bit risky to be a contractor and not have quite a decent buffer behind you?

I've always bought new and always paid cash (sometimes taking a PCP but then withdrawing) for the simple reason that if it all goes tits up (in my business it will happen one day) at least I'll have something to drive around in.

nyxster said:

Really, having lived in Norway where people still drive 20 year old ford escorts, the idea you'd trade out of a low miles E class simply for a newer plate is a peculiarity of the British they don't understand.

I think if we did away with dated plates then new car sales here would be decimated.

What if it went tits up and your older car threw up a 4 figure bill when its MOT was due?

Also if you are a contractor and had money in the bank and needed a car, would it be wiser to use the money to buy a car, or take a cheap lease deal and keep the money in the bank? what would be the better situation, no work for 3 months and no money in the bank and a car or no work for 3 months, money in the bank and £900 to find over the three months?

Again and again it amazes me why people are bothered how people finance their transport.

[Borroxs]

To be fair, 2007 people were making money hand over fist, 2008 the universe had imploded. Virtually no one saw it coming.

IT contractors went from one good contract to another, and then all of a sudden even stacking shelves was a good job.

No one saw it coming. Some were prepped, but not many.

[Sheepshanks]

chrispmartha said:

What if it went tits up and your older car threw up a 4 figure bill when its MOT was due?

That'd be annoying but I'd use some of my buffer to pay it.

chrispmartha said:

Also if you are a contractor and had money in the bank and needed a car, would it be wiser to use the money to buy a car, or take a cheap lease deal and keep the money in the bank? what would be the better situation, no work for 3 months and no money in the bank and a car or no work for 3 months, money in the bank and £900 to find over the three months?

You can invent scenarios all day, but that's not what nyxster did - he put £12K down on an RS4.

Taking a cheap lease deal is probably the worst thing to do as they're very inflexible.

chrispmartha said:

Again and again it amazes me why people are bothered how people finance their transport.

For the avoidance of doubt, I couldn't give a toss what anyone else does.

These deals are great as it gives me more options - for instance I can take a heavily subsidised PCP contribution and not care what the APR is - because I can just pay it off. I just did that.

However nyxster lost at least £20K as he couldn't make a few payments - that seems a bit daft to me. There but for the Grace of God etc though.

[rossmc88]

KTF said:

What was the up front and term?

£500 up front for 36 months, 10K per year

[SDB660]

'I suspect that most people doing it see it as paying a monthly fee for a service rather than as a debt'

This was the mistake I made, and although lease/buy debate goes on forever it seems, you can't get away from the fact that if leasing your credit report will show a large debt outstanding. This is why I went from paying £900p/m approx to Mercedes for zero hassle motoring to the random hassle of bought vehicles. Comparison cost is similar, but my credit report is much better with, in my case, 50K plus debt erased from it.