Are the wheels about to fall of car finance?

[a]

Lucas Ayde said:

And it's not like any car over three years old is automatically going to give a massive amount of trouble.

They might be giving trouble from day one, but covered by warranty for 3 years.

On average, it makes financial sense to keep a car longer. But you might be one of the unlucky ones - paying a premium to always be covered by a proper warranty is reassuring.

[liner33]

Lucas Ayde said:

Sheepshanks said:

You say that, but the car is still depreciating, it's throwing up the odd chunky bill and you're starting to get advisories on the MOT for hefty work. If you need to make a long trip you're checking the recovery service options, etc.

Depreciation levels off considerably over time - the monster depreciation is in years 1 & 2, which is why it's a dumb idea (financially speaking) to change to a new car every 2-3 years.

And it's not like any car over three years old is automatically going to give a massive amount of trouble. Assuming the typical 6k pa mileage of a PCP deal, you could reasonably expect trouble-free motoring out to the six year mark and modest maintenance fees out to about a decade.

Its a VAG product with the 2.0 TSI engine and a DSG gearbox, I think it would be naive not to expect some bills

[J4CKO]

May have mentioned the chap I know before but in the last three years he went from a Focus "Sport" (boggo 1.6 with wheels and a body kit) and traded that for buttons for a Black edition Fiesta, that lasted a few months until he wanted an ST, got a nearly new one, went in for service and got offered a brand new one (for the same monthly payment) so got that, and then decided he needed an Auto for various reasons, got a brand new Powershift one and then decided he didn't need an auto and missed the ST so has another one coming, all for the same monthly payment of £350 a month, he owes well over 20 grand now and has an outgoing fiesta ST to show for it, or will have in like 5 years or so.

[Venturist]

Lucas Ayde said:

Except that you would OWN the current car outright in another three years (after six years total) whereas if you take on another £300 per month deal, you will either have to raise the GFV to buy that one or else give it back.

You can either own a car after six years or pay roughly the same for six years and NOT own the car (without paying another big chunk). You see the difference?

This cycle of people perpetually paying top whack to have a new car every three years or so (which they never get to own outright) is what the industry loves.

Looking at this from the other direction, you can pay a certain amount of money to OWN a 6 year old car, three years out of warranty, with the potential of starting to throw you bills - potentially big bills on modern stuff, and the car is worth peanuts until they're fixed; or for the same amount of money you can have private use of brand new cars for the entire 6 years all under warranty, any problems you throw it at the dealer, you can merrily go about your business pootling to and from work with total peace of mind.

Some people don't mind paying for the privilege of that peace of mind and place zero value on ever owning the car, especially as on a day to day basis ownership vs leasing the car is completely indistinguishable. It's not like you have to ring the lease company for permission to drive it to Tesco.

I've done both, at first I owned everything outright, then I tried PCP and swore by it for a while, lately I'm starting to lean back the other way again (for example this week I don't like that I don't have the freedom to chop and change if I get bored of a car too quickly, because the car is in pretty sizeable negative equity for a good while yet), imagine I'll come back to PCP again in future, benefits and drawbacks all round.

I think its main value is for reliability and fixed costs, so a simple relatively inexpensive thing to get you to work and back; something basic but still enjoyable, the Fiesta STs of this world maybe.

Edited by Venturist on Tuesday 16th May 17:24

[Milemuncher]

This thread again?
Some people like cars. Some people like new cars. Some people can afford a new car every 2-3 years, some can't.
There is no generic right or wrong or moral high ground here. It's all down to the individual and their personal circumstances.
Why don't we all accept that and move on?

[Globs]

Milemuncher said:

This thread again?
Some people like cars. Some people like new cars. Some people can afford a new car every 2-3 years, some can't.
There is no generic right or wrong or moral high ground here. It's all down to the individual and their personal circumstances.
Why don't we all accept that and move on?

You know this is a motoring forum right?

[HedgeyGedgey]

Milemuncher said:

This thread again?
Some people like cars. Some people like new cars. Some people can afford a new car every 2-3 years, some can't.
There is no generic right or wrong or moral high ground here. It's all down to the individual and their personal circumstances.
Why don't we all accept that and move on?

I'm gonna bump it up to the top every morning because I know it bothers you haha

[Milemuncher]

Sadly I can't stop reading it!

[irish boy]

A lot is down to priorities. Plenty of people can afford to finance the car they want, but it may mean sacrificing being on the housing ladder/holidays etc.

I certainly have a different perspective now in my 30's with a wife/child/house than I did 10 years ago.

[Derek Chevalier]

Venturist said:

Looking at this from the other direction, you can pay a certain amount of money to OWN a 6 year old car, three years out of warranty, with the potential of starting to throw you bills - potentially big bills on modern stuff, and the car is worth peanuts until they're fixed; or for the same amount of money you can have private use of brand new cars for the entire 6 years all under warranty, any problems you throw it at the dealer, you can merrily go about your business pootling to and from work with total peace of mind.

Is a manufacturer's extended warranty not an option on the six year old car?

[Sheepshanks]

Derek Chevalier said:

Is a manufacturer's extended warranty not an option on the six year old car?

Yes - but add in franchised servicing and maint, as well as ongoing depreciation, and you're probably not far off the lease / PCP monthly on a new one.

[berlintaxi]

Just to add a bit more petrol to the bonfire...

http://www.dailymail.co.uk/money/cars/article-4512...

[funkyrobot]

berlintaxi said:

Just to add a bit more petrol to the bonfire...

http://www.dailymail.co.uk/money/cars/article-4512...

Flashy cars? Who is snapping up flashy cars? All I can see are dull white, grey and black german econo boxes.

Classic Mail fodder. I love the comment below:

'These can be more than £200 a month cheaper than taking out a traditional loan, so drivers can afford more expensive cars than they would have done if they had paid in cash or taken out a traditional car loan.'

Nice quote from this chap at the end of the article too:



'Adrian Dally, head of motor finance at The Finance & Leasing Association, the trade body for car loan providers, downplayed suggestions that a bubble is forming as more motorists take on large debts.

He says: 'This is a competitive market that is working well in the interests of consumers.''

Edited by funkyrobot on Wednesday 17th May 09:45

[Granfondo]

£200 a month cheaper with PCP because your only buying half a car!

[Dr Jekyll]

berlintaxi said:

Just to add a bit more petrol to the bonfire...

http://www.dailymail.co.uk/money/cars/article-4512...

The 'cars you can PCP vs salary' comparisons seem a bit odd. I thought the basic benchmark was car value around 1 years salary as absolute max. Is the calculation based on monthly payment as proportion of take home pay or are the examples based on large deposits

[funkyrobot]

Granfondo said:

£200 a month cheaper with PCP because your only buying half a car!

Indeed. It doesn't give the full picture.

As mentioned above, I know of quite a few people who see it as £300 a month. They seem to completely forget about the balloon payment until it arises.

[Yex 450]

funkyrobot said:

Granfondo said:

£200 a month cheaper with PCP because your only buying half a car!

Indeed. It doesn't give the full picture.

As mentioned above, I know of quite a few people who see it as £300 a month. They seem to completely forget about the balloon payment until it arises.

That and the sheer number of people who believe their "deposit" will roll over into their next PCP arrangement

[easy_rider33]

Indeed! It just reduces the monthly payment at the time. I did a PCP once and never again. I always put some money down and HP the rest. I've had the usual comments of "but for the same payment you could get a more expensive car." Surely you need an exit strategy if you need to free up cash suddenly? People have different perspectives I suppose on acceptable risk etc.

[Sheepshanks]

berlintaxi said:

Just to add a bit more petrol to the bonfire...

http://www.dailymail.co.uk/money/cars/article-4512...

Must be written by a PHer - got an early mention of MX5 in!

[Sheepshanks]

Yex 450 said:

That and the sheer number of people who believe their "deposit" will roll over into their next PCP arrangement

One of the girls in our office genuinely thought she got it back at the end. Salesmen also lead people to think the car will be worth more than the GFV, so they'll get it back that way.