PCP deal calculation help
Discussion
Fox- said:
Isn't that exactly what the finance does too? The car doesn't not depreciate just because it's on finance.
PCP is a decent enough product for those who want it but it's not some sort of super secret way of avoiding depreciation on a car. You can't avoid depreciation, you either suffer it directly on a cash purchase or you suffer it indirectly as it drives the cost of your PCP.
At the end of the term you've still lost £Xk whether through depreciation on a car you paid cash for or through finance payments.
All of that is true although PCP and leasing are a way of paying someone else to assume the depreciation risk, albeit up to a certain threshold only and with some loss of flexibility.PCP is a decent enough product for those who want it but it's not some sort of super secret way of avoiding depreciation on a car. You can't avoid depreciation, you either suffer it directly on a cash purchase or you suffer it indirectly as it drives the cost of your PCP.
At the end of the term you've still lost £Xk whether through depreciation on a car you paid cash for or through finance payments.
For instance, some of Mercedes' PCP future values look extremely optimistic as trade-in prices at the end of the deal; if you stick within the mileage, keep the car clean and actually want to trade it in at the end of the term, I'm confident you would lose less in depreciation than if you'd paid cash (or paid the finance off early). Whether that offsets the interest and whether it blinds the buyer to the overall quality of the deal they're getting is another question of course.
daemon said:
This example?
BMW z4 sDrive28i - list price £37,390
Customer deposit £5799 - probably £5K customer cash, and an extra £799 discount from dealer.
BMW UK deposit contribution £6,500
Dealer deposit contribution £1,389
Repayments £322, residual £14,429.
The BMW UK finance contribution you cant otherwise get as discount, its only if you use their PCP deal.
No the example on the bmw finance link of the base model z4 , £28k model , the link you posted. I suspect that over 4 years on most you'd be looking at paying 10% of the retail value in interest charges. BMW z4 sDrive28i - list price £37,390
Customer deposit £5799 - probably £5K customer cash, and an extra £799 discount from dealer.
BMW UK deposit contribution £6,500
Dealer deposit contribution £1,389
Repayments £322, residual £14,429.
The BMW UK finance contribution you cant otherwise get as discount, its only if you use their PCP deal.
Not saying tha pcp is a good thing or a bad thing but it is not the cheapest way to put you in a new car. it's the only option some people have and it does offer a structure that people are more comfortable with
liner33 said:
No the example on the bmw finance link of the base model z4 , £28k model , the link you posted. I suspect that over 4 years on most you'd be looking at paying 10% of the retail value in interest charges.
Not saying tha pcp is a good thing or a bad thing but it is not the cheapest way to put you in a new car. it's the only option some people have and it does offer a structure that people are more comfortable with
Theres a drop down to select other cars inc the 28 modelNot saying tha pcp is a good thing or a bad thing but it is not the cheapest way to put you in a new car. it's the only option some people have and it does offer a structure that people are more comfortable with
Fox- said:
daemon said:
This example?
BMW z4 sDrive28i - list price £37,390
Customer deposit £5799 - probably £5K customer cash, and an extra £799 discount from dealer.
BMW UK deposit contribution £6,500
Dealer deposit contribution £1,389
Repayments £322, residual £14,429.
The BMW UK finance contribution you cant otherwise get as discount, its only if you use their PCP deal.
Of course you can get it otherwise through discount.BMW z4 sDrive28i - list price £37,390
Customer deposit £5799 - probably £5K customer cash, and an extra £799 discount from dealer.
BMW UK deposit contribution £6,500
Dealer deposit contribution £1,389
Repayments £322, residual £14,429.
The BMW UK finance contribution you cant otherwise get as discount, its only if you use their PCP deal.
Broadspeed can arrange that same z4 sDrive28i M Sport for £26950 in cash - a saving of over £10k.
Infact that represents a much greater discount than that from the deposit contribution?
The car would need to be worth under £10k at 3 years old for the PCP to be cheaper than a cash purchase in this particular example. Which isn't going to happen on a Z4.
The benefit of a PCP in this example above is for those who do not have £27k in cash. If you do have £27k in cash why would you not buy it outright, discounted, and save a pile of money?
Grandfondo said:
daemon said:
Grandfondo said:
So on top of depreciation you want to add interest as well?
When its managed in a controlled cost effective way, and when it means you're not putting a large amount of your own hard earned in, then yes, happy to.Rather that than put in £30K, and watch it drop to £10K
The depreciation is something you can work out yourself , it's hardly rocket science you can find out the predicted residual value on a car quite easily
As for warranty , servicing, breakdown etc many cars come with three years free servicing and breakdown cover/warranties are pretty standard now .
As for warranty , servicing, breakdown etc many cars come with three years free servicing and breakdown cover/warranties are pretty standard now .
daemon said:
Grandfondo said:
daemon said:
Grandfondo said:
So on top of depreciation you want to add interest as well?
When its managed in a controlled cost effective way, and when it means you're not putting a large amount of your own hard earned in, then yes, happy to.Rather that than put in £30K, and watch it drop to £10K
You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
Edited by Grandfondo on Thursday 18th December 12:02
A rough back of envelope sum gives the total cost, including the deposit divided by the term of about £500 per month; the interest on £23k at 4% flat (about 7.5% APR?) works out at about £75 per month. so really there are two questions:
1 Is it worth £75 per month to have the use of £23k now rather than four years in the future?
2 Is it worth £425 per month to have anew S3 on your drive? I assume that the depreciation is the same however you finance it so your £13k has gone down the toilet in any case.
My answers would be 1 Quite probably, depending on my circumstances. 2 Never in a million years. But each to their own.
1 Is it worth £75 per month to have the use of £23k now rather than four years in the future?
2 Is it worth £425 per month to have anew S3 on your drive? I assume that the depreciation is the same however you finance it so your £13k has gone down the toilet in any case.
My answers would be 1 Quite probably, depending on my circumstances. 2 Never in a million years. But each to their own.
Justin Case said:
My answers would be 1 Quite probably, depending on my circumstances. 2 Never in a million years. But each to their own.
See your answer to number one. I'd tend to agree with you generally but I can foresee a possibility that a weird set of circumstances would make the PCP loan more attractive and there's a long time for that set of circumstances to occur in a million years crazy about cars said:
Right final discount £2657 bringing price down to £33218. Go for it??? Need decide in few hours.
I guess it's time for you to make the decision. I don't need anyone else can advise as to whether you can afford it or not.Reading back through this thread it seems there are really strong arguments both for and against, but at the end of the day the only person that can decide if you're happy with the package being offered is got to be you.
Grandfondo said:
So yes is the answer!
You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties? You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
liner33 said:
The depreciation is something you can work out yourself , it's hardly rocket science you can find out the predicted residual value on a car quite easily
As for warranty , servicing, breakdown etc many cars come with three years free servicing and breakdown cover/warranties are pretty standard now .
Oh yes, exactly.As for warranty , servicing, breakdown etc many cars come with three years free servicing and breakdown cover/warranties are pretty standard now .
The point of a PCP deal is that it wraps that up into a monthly outlay, as opposed to a massive cash outlay, then another massive cash outlay at some point in the future.
Not saying PCP is the be all and end all. As i've said before 80% of the cars in my profile have been cash purchases not PCP deals, and 2 out of the four outside our house currently were cash purchases.
daemon said:
Grandfondo said:
So yes is the answer!
You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties? You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
Grandfondo said:
daemon said:
Grandfondo said:
So yes is the answer!
You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties? You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
I'll bear that advice in mind.
daemon said:
Grandfondo said:
daemon said:
Grandfondo said:
So yes is the answer!
You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
You're assuming all my cash is in a low interest paying bank account and not, say, spread across various properties? You want borrow your own money at 7.9% in the OPs scenario so that you can make it work for you @7.9% tax free to stand still?
Good luck with that!
I'll bear that advice in mind.
(just signed up to this forum for this very topic!)
I've had PCP deals now for 6 years, Corsa (awful), fiesta (lovely), fiesta (outstanding!) but I have found it is way too expensive!!
I owe 7k on my car, it's two year old with 45k on the clock, runs like a dream but I need to get off this deal, they will only pay £6100 so I still need to cough up £1k to settle the finance *cry!* lets hope this used (1 owner) low mileage Mondeo will be better option for me financially, damn PCP!
I've had PCP deals now for 6 years, Corsa (awful), fiesta (lovely), fiesta (outstanding!) but I have found it is way too expensive!!
I owe 7k on my car, it's two year old with 45k on the clock, runs like a dream but I need to get off this deal, they will only pay £6100 so I still need to cough up £1k to settle the finance *cry!* lets hope this used (1 owner) low mileage Mondeo will be better option for me financially, damn PCP!
Gassing Station | General Gassing | Top of Page | What's New | My Stuff