Why would you PCP over lease?
Discussion
I am not sure whether I am missing something here. I am on the lookout for a new car after growing tired of the 12 year old shed I am currently driving. I want something new and the main ways to get into a new car are through PCP or leasing. Of course there's bank loan and buying outright as well but we'll skip that for now.
Forgive my ignorance but if you are not sure that you're going to want to drive the car for longer than 3+ years why would you choose PCP?
From what I can see you tend to have to put down a bigger deposit and pay higher monthlies yet still have to give the car back unless you pay the balloon at the end?
I know most of the really good leasing deals have dried up recently but you still seem to be able to get something comparable, if not better, for the same cost on a lease than a PCP deal. As I said, you're going to be giving the car back anyway so why not just lease?
Is the big saving grace the fact you can give the car back and use any equity you might have in it to use as a deposit on a new one?
Surely a 3+23 lease is going to work out better anyway as the deposit is going to be reasonably small compared to the £££ they want on a PCP (unless it's a £0 deposit in which case aren't the monthlies usually massive to cover it?)
Am I wrong?
I really don't know. If PCP is actually a good idea for some people then I honestly would like to know the pros!
Forgive my ignorance but if you are not sure that you're going to want to drive the car for longer than 3+ years why would you choose PCP?
From what I can see you tend to have to put down a bigger deposit and pay higher monthlies yet still have to give the car back unless you pay the balloon at the end?
I know most of the really good leasing deals have dried up recently but you still seem to be able to get something comparable, if not better, for the same cost on a lease than a PCP deal. As I said, you're going to be giving the car back anyway so why not just lease?
Is the big saving grace the fact you can give the car back and use any equity you might have in it to use as a deposit on a new one?
Surely a 3+23 lease is going to work out better anyway as the deposit is going to be reasonably small compared to the £££ they want on a PCP (unless it's a £0 deposit in which case aren't the monthlies usually massive to cover it?)
Am I wrong?
I really don't know. If PCP is actually a good idea for some people then I honestly would like to know the pros!
My take, I assume you don't want to own a car and that you are happy to get on the pcp roundabout
If your circumstances won't change then for me lease would win, getting out of them early usually involves a termination fee. Pcp should give you some equity but this usually makes payments higher.
The best way is to decide on a car, get quotes on both and add them up and go with the cheapest. Base spec cars work out cheaper so usually going up a trim level rather than adding options to a low spec car works out cheaper.
If your circumstances won't change then for me lease would win, getting out of them early usually involves a termination fee. Pcp should give you some equity but this usually makes payments higher.
The best way is to decide on a car, get quotes on both and add them up and go with the cheapest. Base spec cars work out cheaper so usually going up a trim level rather than adding options to a low spec car works out cheaper.
You're pretty much correct. A lot of people waste a lot of money through PCP. Often people just really want to own their own car, despite how bad of an investment it is...
Maybe you're set on an exact make/model and PCP happens to be cheaper at the time, but that's why you should be flexible with your choices e.g. if you're thinking of getting a Golf GTI but they're pushing out a Leon Cupra for the same money or even less, you should jump at the offer.
Maybe you're set on an exact make/model and PCP happens to be cheaper at the time, but that's why you should be flexible with your choices e.g. if you're thinking of getting a Golf GTI but they're pushing out a Leon Cupra for the same money or even less, you should jump at the offer.
If you could PCP a slow depreciating car for a similar monthly as a lease you may well end up financially better off.
Take for example a Focus RS and imagine the likely scenario at 2 years......
This assumes that you are not a retard and can consider all likely financial products and their benefits and cons without having preconceived ideas !
Take for example a Focus RS and imagine the likely scenario at 2 years......
This assumes that you are not a retard and can consider all likely financial products and their benefits and cons without having preconceived ideas !
Leasing is very, very restrictive and difficult to get out of - expect to see some "OMG THE HORROR" stories in the media at some point soon as idiots who don't read the paperwork get stung when their circumstances change and the lease company asks them to settle practically the whole cost of the lease to hand the car back.
PCP can be a very expensive way to fund a car, depends on the interest rate and the incentives.
Why ignore a bank loan? If there aren't big manufacturer subsides available then that can be the cheapest way to buy especially with APRs down around 3 or 4% at the moment.
Fundamentally your question is based on a faulty premise - no one type of finance is inherently better than any other, it's all about the individual deal and circumstances.
PCP can be a very expensive way to fund a car, depends on the interest rate and the incentives.
Why ignore a bank loan? If there aren't big manufacturer subsides available then that can be the cheapest way to buy especially with APRs down around 3 or 4% at the moment.
Fundamentally your question is based on a faulty premise - no one type of finance is inherently better than any other, it's all about the individual deal and circumstances.
charltjr said:
Leasing is very, very restrictive and difficult to get out of - expect to see some "OMG THE HORROR" stories in the media at some point soon as idiots who don't read the paperwork get stung when their circumstances change and the lease company asks them to settle practically the whole cost of the lease to hand the car back.
PCP can be a very expensive way to fund a car, depends on the interest rate and the incentives.
Why ignore a bank loan? If there aren't big manufacturer subsides available then that can be the cheapest way to buy especially with APRs down around 3 or 4% at the moment.
Fundamentally your question is based on a faulty premise - no one type of finance is inherently better than any other, it's all about the individual deal and circumstances.
Yes, you're quite right in that you should look objectively at each deal and not count anything out. Having said that it does seem as though PCP is the most popular method to get into a new car yet most of the time seems to be the least financially sound method.PCP can be a very expensive way to fund a car, depends on the interest rate and the incentives.
Why ignore a bank loan? If there aren't big manufacturer subsides available then that can be the cheapest way to buy especially with APRs down around 3 or 4% at the moment.
Fundamentally your question is based on a faulty premise - no one type of finance is inherently better than any other, it's all about the individual deal and circumstances.
Providing you have the necessary credit then a low APR personal loan is perhaps best for someone wanting to keep the car for a long time. My circumstances are such that I do not know whether I would want to keep the car for a long time or not. I don't do many miles so would not need to ever pay excess mileage on a lease and have circumstances which are unlikely to change in the next few years so all in all I think a lease is probably the best option for me.
The only other option I can think of is buying approved used, something 6-18 months old. With a big chunk of the depreciation gone already is this an option worth exploring for someone not absolutely dead set on owning a brand new car?
Shominy said:
The only other option I can think of is buying approved used, something 6-18 months old. With a big chunk of the depreciation gone already is this an option worth exploring for someone not absolutely dead set on owning a brand new car?
If keeping the car for 5+ years, then yes, quite possibly.If keeping for 2/3 years then I suspect many of those bargain discounted lease deals are still cheaper.
I did the maths 3 times because I didn't like the answer I kept getting - yes leasing was better and cheaper for me.
My lease deal is 1+23.
The PCP was 15+23+balloon.
My argument is that I'm either going to hand the car back at the end of the term or I'm not. If I hand it back, I've lost the initial deposit (versus renting) or if I pay the balloon then I've ultimately bought the car and it would have been cheaper to buy elsewhere and arrange own finance rather than pay full RRP at the dealership.
I'm also certain that any car I would've bought would've depreciated approx equivalent to the total lease amount in the same 2 year period.
And with it being a leaser, I have no worries, no tax, no mot, only have to do 1 service.
And the joy of driving a brand new car!
My lease deal is 1+23.
The PCP was 15+23+balloon.
My argument is that I'm either going to hand the car back at the end of the term or I'm not. If I hand it back, I've lost the initial deposit (versus renting) or if I pay the balloon then I've ultimately bought the car and it would have been cheaper to buy elsewhere and arrange own finance rather than pay full RRP at the dealership.
I'm also certain that any car I would've bought would've depreciated approx equivalent to the total lease amount in the same 2 year period.
And with it being a leaser, I have no worries, no tax, no mot, only have to do 1 service.
And the joy of driving a brand new car!
PCP makes sense if you're buying new and get a discounted rate, especially if there's an extra discount off the price of the car for taking the finance. For me though, where it really wins over a lease is the flexibility and the fact you have some legal rights. If you go over the mileage, pick up a few car park dents and curb the wheels, want to end the deal early or want to buy the car at the end then leasing can become extremely expensive.
There was a thread on here a few days ago where someone got a new job and company car, I believe the lease co wanted pretty much 100% of the remaining payments to end the deal early. I know when I left the UK my old company was quoted £9k to hand back my car early (one year into a three year deal) which was only about £3k less than the cost of keeping it to the end.
If you're 100% sure nothing is going to change then lease but personally I wouldn't.
There was a thread on here a few days ago where someone got a new job and company car, I believe the lease co wanted pretty much 100% of the remaining payments to end the deal early. I know when I left the UK my old company was quoted £9k to hand back my car early (one year into a three year deal) which was only about £3k less than the cost of keeping it to the end.
If you're 100% sure nothing is going to change then lease but personally I wouldn't.
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