PCP on an approved, used vehicle. Good idea or not?

[JambalayaC]

Hello!

New here, but understand that this is the place to come for good car advice!

I have just landed a new job with a greater car allowance than I've ever had before.

I really fancy something a bit special, and am thinking either a Range Rover or something a bit sleek and sporty - a Merc cabriolet for example.

Anyway, I haven't made any decisions yet, but I've been looking at PCP on manufacturer-approved, used vehicles, under 3 yrs old with mileage on the lower side (looking at around the <30k mark)

I can seemingly get a car I want, with a great spec, good mileage & decent mileage allowance, for a low deposit and low monthly payment.

I'm not fussed about owning the car - I'd do 2 or 3 yrs then change it.

But what's the catch?! There must be one!

[VeeReihenmotor6]

If that is your plan (swap out every 2/3 years) then PCP (or lease) is an OK way to go about your business. PCP works by the financer guarenteeing the future value (i.e. in 3 years time) and you pay a monthly fee on the rest. The interest is calculated on the entire balance, so including the future value and will work out to be hefty amount.

Of course there is a whole arguement on not financing (and paying interest) on a depreciating asset and buy something outright however if buying something outright means you're driving around in a car that presents big bills and stops you getting to work then PCPing/leasing makes sense.

[spreadsheet monkey]

JambalayaC said:

I'm not fussed about owning the car - I'd do 2 or 3 yrs then change it.

But what's the catch?! There must be one!

The catch is that you don't own the car at the end of the PCP agreement. But you've already said you're fine with that.

In the old days before Covid, manufacturers offered big discounts and deposit contributions on PCP on new cars, so there was less incentive to buy a "nearly new" car on PCP. However, this is no longer the case.

[Truckosaurus]

JambalayaC said:

...But what's the catch?! There must be one!

The catch might be (depending on Small Print) if the car is worth less than the 'guaranteed value' figure by the end of term - would you have to fund the difference, or hand the car back (losing out on whatever value is left in it). (especially if there use a generous figure to get the monthly payment low)

[Andy86GT]

Another consideration would be to check the quality of the warranty as usually new car PCPs are within the 3 year fully manufacturer back warranty. I'm not sure how it works if you buy, say a 2 year old car, on a 3 year PCP. I e. will you have 2 years where you have to fund an extended warranty or take the risk?

[jon-yprpe]

spreadsheet monkey said:

JambalayaC said:

I'm not fussed about owning the car - I'd do 2 or 3 yrs then change it.

But what's the catch?! There must be one!

The catch is that you don't own the car at the end of the PCP agreement. But you've already said you're fine with that.

In the old days before Covid, manufacturers offered big discounts and deposit contributions on PCP on new cars, so there was less incentive to buy a "nearly new" car on PCP. However, this is no longer the case.

Not true. You can own the car at the end of a PCP if you pay the GFV. You can get a settlement figure and pay the balance at any point and own the car. It’s PCH you can’t own the car.

[FourGears]

Um there isn't one.

Historically a used car PCP has a higher finance rate than a new car, which often made them very unattractive