Buy existing Scirocco currently on PCP or new deal ????

[BRMMA]

j4xxc said:

HELP and advice gratefully received PLEASE!

Have spent a lot of time searching previous forum posts regarding PCP versus Personal Loan etc but cant seem to find someone in a similar situation to me.

Here's the deal.

1. Currently have an existing VW Scirocco on a PCP. Two year deal runs out in March. Original cost of car = £21,869 and put in £3000 deposit leaving £18869 with a final payment of £12,224.70 due March 2013. Original APR was 7.9%. Currently paying £389 per month for an 18k miles per annum deal (and I do do that mileage)
2. I could purchase at £12,224 with a loan from Tesco finance over 3 years at a cost of approx £370 or somewhere near that. So car would be 5 years old when it was paid off.
3. VW have offered me a new Scirocco (same spec GT but theyve upgraded the spec now to leather and other things as standard). The car now costs more than it did 2 years at £24,152 after 6% discount. The deal that they have offered me is £14500 for my existing car, giving me £2275 equity, plus £1500 additional deposit they will put in, plus they are wanting another £3000 from me - totalling £6775.00 deposit (more than last time but the car of course more expensive in 2013). That leaves £17377 to finance with a lower final payment than the current PCP of either £10,957 after 2 years or £9,180 for 3 years. The monthly cost will be £408 for 2 years or £340 for 3 years on a 7.1% APR.

OR

4. I could borrow £18,877 from Yorkshire Bank at a rate of 7.4% APR (thats me putting in another £3,000 plus the £2,275 equity thats in the car - total deposit £5275). YB personal loan would cost me £375.63 for 5 years for a brand new car

Am completely bamboozled at what to do next for the best - any advice very much welcomed from peeps who have been at this crossroads before with an existing PCP... Im hardly thick but not exactly mathematician of the year and am really struggling to work out which would be in my best interests...

HELP or suggestions of any other different ways to do the deal....

YF Bamboozled Scirocco Driver !

Depends how much you want a new car, if you're happy with what you've got i personally would go with option 2 and take the bank loan, cost to purchase (inc interest) of £13,320 then it will be worth about 7k when 5 years old so total cost of ownership over 3 years of £6,320 or maybe about £8k if you add a warranty for the 2 years it's not covered. where as having the new scirrocco would cost you about £15,240 (your extra 3k deposit and 36 monthly payments) over the same 3 year period so about £7-9k more to spend over 3 years for having the newer, better specced car

(i hope my maths are right, if not i'm sure i'll be put right soon enough)

[MJK 24]

Deva Link said:

That's where your argument is a bit pointless.

Why not sit in the dark and cold - saves you money from your salary?

Not really the same though. You could be senior management with an allowance of £600 per month which I presume will secure a PCP on a decent spec Mercedes E Class. But if you're driving 5 miles per day to work and back, you may be content with a 5 year old Ford Fiesta and a couple of weeks in Barbados each year instead.

[Ari]

AllNines said:

But it doesn't affect them if the alternative is to take whatever car their company chooses for them. It's giving them a choice. The OP chooses to finance a Scirocco and fair play to them; is a new PCP better than buying the existing car? No idea, sorry.

FFS! Of course it affects him because the choice isn't have a company car or spend ALL the car allowance on a PCP.

fk it, I give up. You're right, blowing a "car allowance" irrespective of whether it's good value or not rather than purchasing in a way that might be more cost efficient and banking the rest will have no effect on his finances what so ever.

Hopefully those that want to get it will get it, and those that see a "car allowance" as a way to stick a brand new car on their drive and impress the neighbours "for free" can carry on doing just that without troubling themselves that they could be paying off their overdrafts or having a better holiday or banking some extra savings or whatever else most people would do with a bit of spare cash.

[Ari]

BRMMA said:

Depends how much you want a new car, if you're happy with what you've got i personally would go with option 2 and take the bank loan, cost to purchase (inc interest) of £13,320 then it will be worth about 7k when 5 years old so total cost of ownership over 3 years of £6,320 or maybe about £8k if you add a warranty for the 2 years it's not covered. where as having the new scirrocco would cost you about £15,240 (your extra 3k deposit and 36 monthly payments) over the same 3 year period so about £7-9k more to spend over 3 years for having the newer, better specced car

(i hope my maths are right, if not i'm sure i'll be put right soon enough)

Perfect example of what I'm talking about, thanks.

Ah'm oot, as I believe the saying has it.

[BRMMA]

Ari said:

Perfect example of what I'm talking about, thanks.

Ah'm oot, as I believe the saying has it.

I guess it comes down to how much you value having the new car, i personally would be happy with the older model scirrocco and using the £2.5-3k saved per year to spend on other things, where as to others maybe having a new car is worth the extra cost to them

the whole "it's a car allowance so i should spend it all on a car" thing is stupid. i used to have a car allowance of about £350 per month but i never thought of it as £350 to spend on a car (although i pretty much did spend that) but thought of it as an extra 4k ish on my salary and i then worked out with my income and outgoings what i could afford to spend, the fact some of the income was called salary and some called car allowance was irrelevant

[Deva Link]

MJK 24 said:

Not really the same though. You could be senior management with an allowance of £600 per month which I presume will secure a PCP on a decent spec Mercedes E Class. But if you're driving 5 miles per day to work and back, you may be content with a 5 year old Ford Fiesta and a couple of weeks in Barbados each year instead.

Why is it not the same as sitting in the cold and dark (assuming you don't mind that kind of thing) and using the money you saved for a couple a couple of weeks in Barbados each year?

[Deva Link]

Ari said:

All I'm saying is, many people regard the car allowance as separate "free money" that they can just go out and blow on a PCP and it doesn't affect them as it's "car allowance".

It doesn't affect them - they've still got their salary.

You're seeing the wrong way around. If they kept the car allowance they could have more than their salary, but spending it doesn't give them less than their salary.

Ari said:

The reality is, (as you prove with your situation) it is income, and people should treat it that way and buy accordingly rather than chucking it away on some PCP that they wouldn't touch with a barge pole if it were their "own" money (because it is their "own" money, they get to keep what they don't spend, just as you do in your situation).

It's not their own money though - it's their car allowance. It could be taken away from them. I would hope a firm would recognise someone's circumstances if they were committed to a PCP etc, but if you've been using it to live on then possibly you're going to have a problem.

[Pablo16v]

Deva Link said:

It's not their own money though - it's their car allowance. It could be taken away from them. I would hope a firm would recognise someone's circumstances if they were committed to a PCP etc, but if you've been using it to live on then possibly you're going to have a problem.

That's what I do, I have always treated mine as a perk rather than part of my salary and as such I always try to spend as little of it as possible while still meeting the company's car allowance regulations. It's also prudent to have a good bit left over every month to cover insurance, tax, servicing and other running costs instead of blowing it all on monthly payments. That way you're not actually dipping into your salary.

[j4xxc]

UPDATE FROM OP

I have decided to keep my original Scirocco. It stands me at £12k in March left to pay for a car that I know is still worth between 15 and 16K. Although I could use some of my savings outright, I have decided against that and am putting in 2k and financing the other 10K over 2 years with a 5.1% APR loan from YB. That way after 4 years, I will have a car thats four years old and paid for and I can do what I want then .. :-P

I have read with interest all the debate about car allowance being treated as an extension of salaries. I personally think that seeing it as an extension of a salary and spending it on "other things" is a bit dangerous. What if you lose your job and the next job you get doesnt come with a "car allowance" ?? Then youve lost that top up income? Also what if your 15 year old Porsche goes pop and you want to buy a new one and youve used the "car allowance" as part of your income? What do you tell your company then when youve got no car to get to work .... ?
....
I have been in receipt of either car allowance or a company car for the best part of ten years now. The only reason I once opted into the car scheme was because my fuel card was paid for and I could use it for personal use for paying a bit extra in tax. Id rather have a car allowance where I can choose what I have, as to quote another poster, instead of some dull diesel passat or something...

Thanks for all the great debate and for the advice - it was a number of other posters that helped me come to the decision ....