Are the wheels about to fall of car finance?

[ashleyman]

Ares said:

Why the pull to get off the PCP cycle? Sensible money is going the other way. Risk free motoring with (currently) no real like-for-like financial penalty.

I like my current car so much it seems silly to pay the PCP for another year and incur interest on the whole lot (including balloon) then have to pay the balloon or order a new car and need to stump another deposit. Instead, I can take out a personal loan for the settlement but it'll be MY car and I won't be on the hook for a £13k final payment as I'd have already paid it off.

The new monthly payment is what we would be paying if we ordered a new car on PCP anyway but again, need to find a balloon or re-PCP.

I'm probably wrong. If I am. Tell me so I can halt my purchasing.

[Mandat]

ashleyman said:

Mandat said:

I'm note sure what point you are actually trying to make.

Irrespective of whether you pay a monthly fee for PCH, HP, PCP or bank loan, or even if you are saving up to buy a car outright, there is still going to be a monthly cost of £x associated with the ownership / use of the car. There is no getting away from this universal truth.

The £x amount will be greater or smaller than depending on your combination of circumstance, but it will be there nonetheless.

There is always monthly cost associated with a car unless you pay with cash.

My point was that if you've got a PCP because it's affordable motoring, if you can't afford to also save for a car and have a PCP at the same time then you're forever going to be on 'the cycle'.

Even if paying cash, there will be an associated monthly cost due to amortization.

I was questioning your view that only PCP leads to being on "thy cycle", when other forms of purchase finance all have an associated monthly cost. Surely, this is not something that is specific to PCP finance?

[gizlaroc]

ashleyman said:

I like my current car so much it seems silly to pay the PCP for another year and incur interest on the whole lot (including balloon) then have to pay the balloon or order a new car and need to stump another deposit. Instead, I can take out a personal loan for the settlement but it'll be MY car and I won't be on the hook for a £13k final payment as I'd have already paid it off.

The new monthly payment is what we would be paying if we ordered a new car on PCP anyway but again, need to find a balloon or re-PCP.

I'm probably wrong. If I am. Tell me so I can halt my purchasing.

No, I think what you are doing is the sensible option.

With many sub £15k loans now at under 3% apr it is usually far cheaper to do this now than carry on with a PCP for another year and then take out a loan for the £13k balance.


I did this 2 years ago with my Merc E350 estate, in 5 months time I will own it outright. OK, so it is not £40k's worth of metal, but it is mine and still worth around £11-12k so it feels nice.

[Ares]

Granfondo said:

Ares said:

No signs here.

Friend just picked up a brand new, £86k FF Range Rover for £66k. He's pushed it through a PCP and is paying £525/mth (+VAT).

Must be paying a large deposit?

No. £525. But a £45k balloon.

[Ares]

ashleyman said:

Ares said:

Why the pull to get off the PCP cycle? Sensible money is going the other way. Risk free motoring with (currently) no real like-for-like financial penalty.

I like my current car so much it seems silly to pay the PCP for another year and incur interest on the whole lot (including balloon) then have to pay the balloon or order a new car and need to stump another deposit. Instead, I can take out a personal loan for the settlement but it'll be MY car and I won't be on the hook for a £13k final payment as I'd have already paid it off.

The new monthly payment is what we would be paying if we ordered a new car on PCP anyway but again, need to find a balloon or re-PCP.

I'm probably wrong. If I am. Tell me so I can halt my purchasing.

That's fine if you are happy to keep paying the same, but effectively start a different cycle with an old car (even if it is your old car). The trade of is obviously the value of the car after the loan expires, minus the increased running costs of an older car.


I've done my latest on a straight lease. Over it's term, I will pay less than the car will depreciate, not pay £40/mth RFL and at the end, just hand the car back and start again. Fixed cost, zero risk motoring.

[ashleyman]

Mandat said:

ashleyman said:

Mandat said:

I'm note sure what point you are actually trying to make.

Irrespective of whether you pay a monthly fee for PCH, HP, PCP or bank loan, or even if you are saving up to buy a car outright, there is still going to be a monthly cost of £x associated with the ownership / use of the car. There is no getting away from this universal truth.

The £x amount will be greater or smaller than depending on your combination of circumstance, but it will be there nonetheless.

There is always monthly cost associated with a car unless you pay with cash.

My point was that if you've got a PCP because it's affordable motoring, if you can't afford to also save for a car and have a PCP at the same time then you're forever going to be on 'the cycle'.

Even if paying cash, there will be an associated monthly cost due to amortization.

I was questioning your view that only PCP leads to being on "thy cycle", when other forms of purchase finance all have an associated monthly cost. Surely, this is not something that is specific to PCP finance?

Of course, my point was, if you're on a PCP because it's all you can afford you'll be hard pressed to leave 'the cycle' because you have no other income to put to other cars therefore having no choice but to PX and get a new PCP thus signing up for another term.

I think this makes sense but I'm not the best at explaining this stuff.

[Granfondo]

Ares said:

Granfondo said:

Ares said:

No signs here.

Friend just picked up a brand new, £86k FF Range Rover for £66k. He's pushed it through a PCP and is paying £525/mth (+VAT).

Must be paying a large deposit?

No. £525. But a £45k balloon.

Is it a PCP or HP with balloon?

[Ares]

Granfondo said:

Ares said:

Granfondo said:

Ares said:

No signs here.

Friend just picked up a brand new, £86k FF Range Rover for £66k. He's pushed it through a PCP and is paying £525/mth (+VAT).

Must be paying a large deposit?

No. £525. But a £45k balloon.

Is it a PCP or HP with balloon?

PCP

[4941cc]

ashleyman said:

Of course, my point was, if you're on a PCP because it's all you can afford you'll be hard pressed to leave 'the cycle' because you have no other income to put to other cars therefore having no choice but to PX and get a new PCP thus signing up for another term.

Hence the term Perpetual Car Prison.

[daemon]

4941cc said:

ashleyman said:

Of course, my point was, if you're on a PCP because it's all you can afford you'll be hard pressed to leave 'the cycle' because you have no other income to put to other cars therefore having no choice but to PX and get a new PCP thus signing up for another term.

Hence the term Perpetual Car Prison.

Oh Christ not this old chestnut again.

People may chose to continue to use PCP deals - and lets be honest it suits a lot of people to do so - however its very easy to simply swap to an HP deal or take out a cheap bank loan if you dont have cash lying about OR rustle up £1,000 or so and buy something with a bit of MOT on it.

Edited by daemon on Tuesday 9th January 18:18

[Granfondo]

4941cc said:

ashleyman said:

Of course, my point was, if you're on a PCP because it's all you can afford you'll be hard pressed to leave 'the cycle' because you have no other income to put to other cars therefore having no choice but to PX and get a new PCP thus signing up for another term.

Hence the term Perpetual Car Prison.

[otolith]

Mandat said:

Even if paying cash, there will be an associated monthly cost due to amortization.

I was questioning your view that only PCP leads to being on "thy cycle", when other forms of purchase finance all have an associated monthly cost. Surely, this is not something that is specific to PCP finance?

I suspect a lot of people aren't putting by money for when their car needs to be replaced, so don't perceive the ongoing cost.

[Ares]

otolith said:

Mandat said:

Even if paying cash, there will be an associated monthly cost due to amortization.

I was questioning your view that only PCP leads to being on "thy cycle", when other forms of purchase finance all have an associated monthly cost. Surely, this is not something that is specific to PCP finance?

I suspect a lot of people aren't putting by money for when their car needs to be replaced, so don't perceive the ongoing cost.

People who have bought cars outright, and 'own' the car often sit in blind smugness when viewing people who spend £500/mth over 3 years on a new car, totally ignorant to the fact that their own car is costing them £600/mth over the same 3 years in depreciation.

[Granfondo]

Ares said:

otolith said:

Mandat said:

Even if paying cash, there will be an associated monthly cost due to amortization.

I was questioning your view that only PCP leads to being on "thy cycle", when other forms of purchase finance all have an associated monthly cost. Surely, this is not something that is specific to PCP finance?

I suspect a lot of people aren't putting by money for when their car needs to be replaced, so don't perceive the ongoing cost.

People who have bought cars outright, and 'own' the car often sit in blind smugness when viewing people who spend £500/mth over 3 years on a new car, totally ignorant to the fact that their own car is costing them £600/mth over the same 3 years in depreciation.

Porsche 911 GT3 Leasing from £979.88 + VAT

Or buy outright?

[Ares]

Granfondo said:

Ares said:

otolith said:

Mandat said:

Even if paying cash, there will be an associated monthly cost due to amortization.

I was questioning your view that only PCP leads to being on "thy cycle", when other forms of purchase finance all have an associated monthly cost. Surely, this is not something that is specific to PCP finance?

I suspect a lot of people aren't putting by money for when their car needs to be replaced, so don't perceive the ongoing cost.

People who have bought cars outright, and 'own' the car often sit in blind smugness when viewing people who spend £500/mth over 3 years on a new car, totally ignorant to the fact that their own car is costing them £600/mth over the same 3 years in depreciation.

Porsche 911 GT3 Leasing from £979.88 + VAT

Or buy outright?

Can you buy one outright?

But it's not really a typical example. Very few new cars appreciate, or lose less than 50% in 3yrs.

[NomduJour]

Ares said:

People who have bought cars outright, and 'own' the car often sit in blind smugness when viewing people who spend £500/mth over 3 years on a new car, totally ignorant to the fact that their own car is costing them £600/mth over the same 3 years in depreciation.

Yes, we’re so lucky that the manufacturers and finance companies are charities.

[nickfrog]

I agree the GT3 is quite a poor example, not that any "non-binary" thinker ever said that all lease deals always beat depreciation+opp cost.

[Granfondo]

Ares said:

Can you buy one outright?

But it's not really a typical example. Very few new cars appreciate, or lose less than 50% in 3yrs.

My wife's Audi Q5 retained 50% after 6 years!

[daemon]

NomduJour said:

Ares said:

People who have bought cars outright, and 'own' the car often sit in blind smugness when viewing people who spend £500/mth over 3 years on a new car, totally ignorant to the fact that their own car is costing them £600/mth over the same 3 years in depreciation.

Yes, we’re so lucky that the manufacturers and finance companies are charities.

No, we're so lucky that they buy 100's at a time, cut our the dealers all together and go straight to the manufacturer and get massive discounts that you or i can only dream of, and that the market is hugely competitive and they operate on waifer thin margins.

Or do you think that leasing companies just get the discount you or i get?

[NomduJour]

Do you think the average punter getting finance saves money over buying it outright? The headline deals are the minority.