New to buying on PCP, should I?

[chris-fm270]

Car in question is a 2018 fiesta st2 with performance pack. I get the ford privative discount which means it is £270pm with £270 deposit. However I can raise the deposit up to £1500 comfortably.

I earn 47k a year with 3k worth or bonuses.

I have never done PCP before and only ever done bangernomics however my new job has a longer commute and I could do with certainty. The ford privilege made me look at fords and the fiesta st is fun to drive.

Financially, is this really stupid. The alternative is a gt86 however they have high (10%) Apr and for a less expensive car the monthly cost is higher and the balloon payment is the same.

Anyone got advice for my situation? Not really sure the best way to buy a newish car and I need one soonish...

Thank you for any advice

[Mandat]

PCP is just a form of HP finance but with a different payment profile, and an option to hand back the car rather than paying the final balloon payment.

Because the balloon payment is also being financed, the overall interest that you will pay over the total term will be higher than with a straight forward HP plan.

To counter this, PCP's might offer a deposit contribution and/or different % ap that HP doesn't offer.

At the end of the day, you need to compare that different payment profiles, % apr, total cost payable, etc to determine which one works best for you.

Ignore anyone who suggest that PCP = Perpetual Car Prison, or renting, or some other unwitty wisdom, as these people tend to not really understand how PCP works.

[Alex Z]

There's only a miniscule saving by raising the deposit so I wouldn't bother.
£270 a month with a small deposit for a shiny new fun car seems like a decent deal to me.
What term is that over? 3 years at a guess. Is the mileage limit sufficient to cover your commute and leisure use?

[chris-fm270]

3 years. 9000 miles, and 6p per mile

I am also considering running it for 12 months, then going for either the focus st and spend a bit more, or focus st line and spend a bit less. Am I likely to be in positive equity in 12 months. I have got the list price down by 3.5k already with various discounts.

As I said, I am new to the financing world so I might be saying really stupid things

[Deep Thought]

chris-fm270 said:

3 years. 9000 miles, and 6p per mile

I am also considering running it for 12 months, then going for either the focus st and spend a bit more, or focus st line and spend a bit less. Am I likely to be in positive equity in 12 months. I have got the list price down by 3.5k already with various discounts.

As I said, I am new to the financing world so I might be saying really stupid things

No, you wont be in positive equity in 12 months. You need to be committing to this for at least 2.5 years if in a 3 year deal.

[djc206]

chris-fm270 said:

Car in question is a 2018 fiesta st2 with performance pack. I get the ford privative discount which means it is £270pm with £270 deposit. However I can raise the deposit up to £1500 comfortably.

I earn 47k a year with 3k worth or bonuses.

I have never done PCP before and only ever done bangernomics however my new job has a longer commute and I could do with certainty. The ford privilege made me look at fords and the fiesta st is fun to drive.

Financially, is this really stupid. The alternative is a gt86 however they have high (10%) Apr and for a less expensive car the monthly cost is higher and the balloon payment is the same.

Anyone got advice for my situation? Not really sure the best way to buy a newish car and I need one soonish...

Thank you for any advice

The GT86 doesn’t have to be financed at that rate, you can secure your own finance at a lower rate. Natwest offer 5.9%, or cash loan at 3.4% for example.

Go for it, it’s easily affordable.

Not likely that you’ll be in positive equity until near the end of the deal. My wife’s ST was positive from about 2 years, it’s not the end of the world though you can clear the difference if you want to trade in early.

[dmsims]

What is the APR ?

What is the total cost ?

[chris-fm270]

Apr 2.2%. Total cost was around £19k

Thanks for the advice everyone. I suppose I need to figure out if I can live with the same car for more than 2.5 years.

[Chris Type R]

We've been looking at a new family car recently - I've been quite surprised by how high the PCP/HP APR figures have been (compared to a bank loan).

[djc206]

chris-fm270 said:

Apr 2.2%. Total cost was around £19k

Thanks for the advice everyone. I suppose I need to figure out if I can live with the same car for more than 2.5 years.

You don’t need to, you just need to be prepared to buy yourself out of the agreement if you chop it in early.

[Deep Thought]

djc206 said:

chris-fm270 said:

Apr 2.2%. Total cost was around £19k

Thanks for the advice everyone. I suppose I need to figure out if I can live with the same car for more than 2.5 years.

You don’t need to, you just need to be prepared to buy yourself out of the agreement if you chop it in early.

Which then kind of defeats the purpose of a PCP deal if you have to start digging yourself out early.

[Deep Thought]

Chris Type R said:

We've been looking at a new family car recently - I've been quite surprised by how high the PCP/HP APR figures have been (compared to a bank loan).

New or used?

Used APR rates on PCP deals are usually terrible and seem to be getting worse.

New cars - some are subsidised and some have finance incentives which offset a higher APR. Some are just plain naff.

What was the car and the APR?

[Sheepshanks]

chris-fm270 said:

I am also considering running it for 12 months, then going for either the focus st and spend a bit more, or focus st line and spend a bit less. Am I likely to be in positive equity in 12 months. I have got the list price down by 3.5k already with various discounts.

What kind of discount is available without Ford Privilidge?

To be honest, I can't see how you wouldn't be quite a few £K behind at 12mths.

[JaredVannett]

Deep Thought said:

Used APR rates on PCP deals are usually terrible and seem to be getting worse.

They really are terrible right... or are we missing something?

Because when I see these absurd rates on used car ads I can't help but think why would anyone do that.

Quite often see cases where buying a 'new car' instead of the used on PCP works out better

[Chris Type R]

Deep Thought said:

Chris Type R said:

We've been looking at a new family car recently - I've been quite surprised by how high the PCP/HP APR figures have been (compared to a bank loan).

New or used?

Used APR rates on PCP deals are usually terrible and seem to be getting worse.

New cars - some are subsidised and some have finance incentives which offset a higher APR. Some are just plain naff.

What was the car and the APR?

We tried used at Suzuki on a Vitara (HP), Used (HP) and new (PCP @ 5.9% APR) on a Sportage at Kia. I think our model variant was not one that had much/any contribution on PCP. I can't remember the exact % rates (and have misplaced the paperwork), so won't guess them, but the APRs were near twice or more higher than a bank loan.

Edited by Chris Type R on Sunday 14th October 20:32

[Sheepshanks]

Chris Type R said:

We tried used at Suzuki on a Vitara, Used and new on a Sportage at Kia. I think our model variant was not one that had much/any contribution on PCP. I can't remember the exact % rates (and have misplaced the paperwork), so won't guess them, but the APRs were near twice or more higher than a bank loan.

0% on SEAT Ateca at the moment.

[Chris Type R]

Sheepshanks said:

Chris Type R said:

We tried used at Suzuki on a Vitara, Used and new on a Sportage at Kia. I think our model variant was not one that had much/any contribution on PCP. I can't remember the exact % rates (and have misplaced the paperwork), so won't guess them, but the APRs were near twice or more higher than a bank loan.

0% on SEAT Ateca at the moment.

Thanks for the heads-up.

[Wooda80]

Deep Thought said:

djc206 said:

You don’t need to, you just need to be prepared to buy yourself out of the agreement if you chop it in early.

Which then kind of defeats the purpose of a PCP deal if you have to start digging yourself out early.

Not really, he's just putting in the spare cash that he could have put in as a deposit to buy himself out when he fancies a change.

By all means pay cash for it instead and sell it when you are ready, it just depends on your attitude to tying up your cash.

Without wishing to be cavalier about it, the size of the deposit and the monthly payment are "play money" for the OP given his income.

[kieranblenk]

JaredVannett said:

They really are terrible right... or are we missing something?

Because when I see these absurd rates on used car ads I can't help but think why would anyone do that.

Quite often see cases where buying a 'new car' instead of the used on PCP works out better

This happened to me last year, a brand new Fabia Monte Carlo was actually cheaper in every way overall than a 1 year old example with 4000 miles on the clock. Reason being, I got £2k deposit contribution and 2.9% APR on the new versus something daft like 10.9% on the used with no contributions.

Often the higher APRs are easier for those with poorer credit to obtain. A mate of mine recently signed a 5 year HP deal on a Leon through a car supermarket on 31.6% APR! It was something like £280 a month for a £9k car cos his credit is miserable.

Edited by kieranblenk on Sunday 14th October 20:46

[Hilts]

chris-fm270 said:

I have never done PCP before

Thank you for any advice

I'd try a little meth first maybe just to see how you feel. After that If the PCP feels good then go all in.

It's pretty hardcore though Louis.