PCP: How many people actually pay the balloon
Discussion
HumanDoing said:
djc206 said:
Of course I could or I could just enjoy the life I have the way I choose. Again it's really none of your concern and I don't understand why you're getting your panties in a twist about me wasting a fairly insignificant amount of money on a very low interest finance package. You never know one day I might buy a car you really like and you'll get to buy it once I've had my fun and gotten bored.
I get to retire at 57 from a job I love doing. That seems pretty reasonable to me, that's about 25-30 years retirement, maybe in the future I'll decide that's not enough and stop spending money on cars, nice meals, booze and holidays to expedite that. Either way I'm a happy bloke, you seem a little less cheery.
Is life expectancy in the UK 87 now then? I get to retire at 57 from a job I love doing. That seems pretty reasonable to me, that's about 25-30 years retirement, maybe in the future I'll decide that's not enough and stop spending money on cars, nice meals, booze and holidays to expedite that. Either way I'm a happy bloke, you seem a little less cheery.
https://www.ons.gov.uk/peoplepopulationandcommunit...
HumanDoing said:
Owning outright = the car will depreciate. Depreciation is an unavoidable fact of life for almost all cars.
PCP = paying the same depreciation, plus interest, and have shat-all at the end of it.
'
Jesus, this sPCP = paying the same depreciation, plus interest, and have shat-all at the end of it.
'
t again.You've already been told that you're wrong, therefore you must obviously be trolling, as I can't believe that you can be truly so ignorant.
CraigyMc said:
So you link to a source stating life expectancy is 79 years for males and 82 years for females as proof that life expectancy is 87. Ok then. HumanDoing said:
The very definition of financial incontinence, personified in some choice quotes there. PCP enthusiasts, I think we have found your poster boy:
'I don't give a fk about the interest'
'I'm having a hard time worrying about a couple of grand interest on a car'
'I didn't have to wait for it'
'It's my money to burn'
Perhaps if you cared more about your outgoings on a car that is sitting there doing shat all most of the time, you could get that mortgage interest down and shave years, literally years, off your working life?
Hello HumanDoing - I’m intrigued ... why does this all bother you so much? I wouldn’t dream of buying a car on PCP because I don’t like new cars but I couldn’t give a toss what other people do. So what’s up?'I don't give a f
k about the interest''I'm having a hard time worrying about a couple of grand interest on a car'
'I didn't have to wait for it'
'It's my money to burn'
Perhaps if you cared more about your outgoings on a car that is sitting there doing shat all most of the time, you could get that mortgage interest down and shave years, literally years, off your working life?
Mark-C said:
Hello HumanDoing - I’m intrigued ... why does this all bother you so much? I wouldn’t dream of buying a car on PCP because I don’t like new cars but I couldn’t give a toss what other people do. So what’s up?
A better question would be 'why does Pistonheads condone outright bullying and doxxing, undertaken by the likes of daemon and nick frog, yet when i respond apparently im the dhead?' Am I not entitled to defend my wife from abuse by
s on the internet? 
Mandat said:
HumanDoing said:
Owning outright = the car will depreciate. Depreciation is an unavoidable fact of life for almost all cars.
PCP = paying the same depreciation, plus interest, and have shat-all at the end of it.
'
Jesus, this sPCP = paying the same depreciation, plus interest, and have shat-all at the end of it.
'
t again.You've already been told that you're wrong, therefore you must obviously be trolling, as I can't believe that you can be truly so ignorant.
Own a new car for two years, the same car bought cash, on a PCP or Lease, it will more or less cost the same amount of money, it isnt that hard.
So you pay your last lease Payment, hand the car back on a PCP or sell it if you own it, when all added up it will have cost you, say seven grand over two years, give or take a few hundred, there is the answer, that is what the drop in value of having the use of a new car costs !
Whichever way, you have "Cock all" of that seven grand or so, if you spent that same amount at the start of the period on a similar, but four year old second hand car, you may have £3500 value left in that, but critically, you didnt have the use and advantages of a car nobody else had used, and that is what you are paying for.
All these financial methods do is make it more accessible to more people to acquire, at least for the term, a brand new car.
If, like me at the moment, you feel seven grand is a lot to spend over two years, then those methods aren't perhaps currently for you.
Its a cost vs benefit vs available disposable income question.
I think it makes depreciation very visible, each month you see a payment exit your bank but for the owners of a car purchased outright, they dont see that until trade in time, my wife struggles with this, she paid ten grand for her car, it doesnt cost her anything each month woo ! unlike those silly sods paying monthly, of course her car doent depreciate at all each month, it just drops six grand in the seven minutes from parking it as the Ford dealer in 2020 when she wants a new one and the salesman giving her a trade in value !
I maintain that buying a fairly new car with a personal loan at a good APR (3 percent) is probably about the most cost effective method to get the newest car for the lowest financial outlay but the other products work for people, but it isnt always night and day different between each method, key thing is to understand the figures and not get bamboozled by monthly cost when presented with a shiny things, add it up, work it out and know what you are signing up for, it is easy to get tucked up. I have a mate who goes, like a lamb to the slaughter and doesnt haggle, pays list, trades in early and generally is the local Ford dealers favourite b
h. J4CKO said:
Own a new car for two years, the same car bought cash, on a PCP or Lease, it will more or less cost the same amount of money, it isnt that hard.
Indeed, it's usually quite close. But there are exceptions, the M135i over 2 years proved far cheaper to own than to lease. Same for the Megane.On the other hand the Tiguan was £5k to lease vs £8k depreciation.
The only mistake to make is to have pre-conceived ideas about any method and to assume that one method is always cheaper. There are NO hard and fast rules and the conclusion, even if it's the result of a decent actuarial method, can vary from brand to brand, model to model, trim level to trim level, week to week or from the start to the end of a day. Some lease deals are pretty much a question of reacting within hours, as a result of intense yield management before prices start creeping up, a bit like booking a flight, nothing exotic or particularly hard to understand indeed.
HumanDoing said:
Mark-C said:
Hello HumanDoing - I’m intrigued ... why does this all bother you so much? I wouldn’t dream of buying a car on PCP because I don’t like new cars but I couldn’t give a toss what other people do. So what’s up?
A better question would be 'why does Pistonheads condone outright bullying and doxxing, undertaken by the likes of daemon and nick frog, yet when i respond apparently im the dhead?' Am I not entitled to defend my wife from abuse by
s on the internet? nickfrog said:
J4CKO said:
Own a new car for two years, the same car bought cash, on a PCP or Lease, it will more or less cost the same amount of money, it isnt that hard.
Indeed, it's usually quite close. But there are exceptions, the M135i over 2 years proved far cheaper to own than to lease. Same for the Megane.On the other hand the Tiguan was £5k to lease vs £8k depreciation.
The only mistake to make is to have pre-conceived ideas about any method and to assume that one method is always cheaper. There are NO hard and fast rules and the conclusion, even if it's the result of a decent actuarial method, can vary from brand to brand, model to model, trim level to trim level, week to week or from the start to the end of a day. Some lease deals are pretty much a question of reacting within hours, as a result of intense yield management before prices start creeping up, a bit like booking a flight, nothing exotic or particularly hard to understand indeed.
Doesn't make you super canny not doing it either, my motoring is costing pennies currently but I get to drive a seven year old Citroen.
You can end up like a Daily Mail comment, "more money than sense" about it, eating Aldi Custard creams in your bedsit, life isn't fair, some people have nice stuff, however they pay for it, best to not worry about it.
HumanDoing said:
Mark-C said:
Hello HumanDoing - I’m intrigued ... why does this all bother you so much? I wouldn’t dream of buying a car on PCP because I don’t like new cars but I couldn’t give a toss what other people do. So what’s up?
A better question would be 'why does Pistonheads condone outright bullying and doxxing, undertaken by the likes of daemon and nick frog, yet when i respond apparently im the dhead?' Am I not entitled to defend my wife from abuse by
s on the internet? So I now understand your anger but still don’t understand why you are so anti-PCP
There are people in this world who delight in being cost efficient, and good luck to them.
If you bought a Life sized Velvet Zebra they'd know a way you could have got 20% off and if you have used a canny website got £10 cash back as well.
However a lot of the time people don't have the time / energy / inclination to do the chasing about and hence pay a higher price for the convenience of being able to say "That one in yellow" and walk away.
When it comes to cars it's no different. PCP / Lease / buy outright / buy used are all valid methods. Some people choose the cheapest option and some like convenience.
If you earned £85 an hour and were self employed how much 'shopping about' would be cost effective?
Point?
Live and let live.
If you bought a Life sized Velvet Zebra they'd know a way you could have got 20% off and if you have used a canny website got £10 cash back as well.
However a lot of the time people don't have the time / energy / inclination to do the chasing about and hence pay a higher price for the convenience of being able to say "That one in yellow" and walk away.
When it comes to cars it's no different. PCP / Lease / buy outright / buy used are all valid methods. Some people choose the cheapest option and some like convenience.
If you earned £85 an hour and were self employed how much 'shopping about' would be cost effective?
Point?
Live and let live.
Stick Legs said:
Some stuff and then ...
Point?
Live and let live.
This completely. I bought an XJS for £5k ages ago and spend around £1.5k a year on maintenance (not including petrol and insurance). Have I made a profit? No! Am I happy? Yes!Point?
Live and let live.
It works for me and that’s all that matters to me. What’s it got to do with anyone else?
The original question for the thread was straightforward but people seem to be capable of getting emotional/shouty about anything on the internet ...
Mark-C said:
Well I thought mine was a fair question but i’m not a fan of doxxing and can’t see it on this thread so if it’s happened to you and it’s not been dealt with by mods then that’s a bad reflection on PH. Of course you’re entitled to defend your wife.
No one doxxed anyone. He claimed to have shown his wife his replies to a thread, and that she was proud of him, which resulted in him being soundly mocked.InitialDave said:
Mark-C said:
Well I thought mine was a fair question but i’m not a fan of doxxing and can’t see it on this thread so if it’s happened to you and it’s not been dealt with by mods then that’s a bad reflection on PH. Of course you’re entitled to defend your wife.
No one doxxed anyone. He claimed to have shown his wife his replies to a thread, and that she was proud of him, which resulted in him being soundly mocked.
Let me share a few absolute numbers. Sure, it's only one example, and the plural of anecdote is not data, but bear with me. I'm coming at this from the perspective of "maybe I got this wrong" rather than "I'm right so everyone else is wrong". Hopefully that's refreshing enough to hold your attention for a moment.
Details, because somebody will ask for them anyway:
The year is 2013. After a decade of toy cars, we now need a family wagon for muddy boots and push chair. (Dull, eh? Don't worry, I get to keep the toys too!)
The plan was always to do what my parents have always done. Buy a good car new (so you know it's never been abused, properly serviced, good oils etc) then run it until it fails an MOT for something uneconomical to repair. Keep it in good condition so it never looks shabby.
That's got to be the cheapest way to own a car, right? Run it forever. Lets see...
Nice 0% deal on the last of the Mk6 Golfs, as the Mk7 is just around the corner. Fine, I don't care what shape the headlights are, lets get a deal.
Mk6 Golf TDi 140 estate, manual. Nice spec, top model, but not fully loaded., Alcantara, DAB, cruise.
RRP £26,999
Agreed on £23,600 sale price. Also got good trade in, so maybe won another £1,500 there vs book, so maybe closer to £22,000 real cost, but that's in the past, so lets use £23,600 as our total paid. (OK, I'm not the world's greatest negotiator.)
Purchased on PCP to get the 0% finance, then settled at the end so we own the car. The £8,700 balloon was about private sale book value at the time, but I'd have bought it anyway to stick to the plan to keep it for 10 years.
So, obviously, now that the whole car was paid off in 2016 at the end of year 3, the monthly outgoings are nil, and the running costs are minimal.
Sorry, that's the background, here's the point:
Including tax, an annual service, MOTs and some reasonable guesstimates for used value of the asset (dropping each year) and some repair bills (increasing each year), what will it cost me, total, per month based on how long I keep it? We do about 10-12k miles each year.
At the end of 3 years, to own the car outright, I'd paid a total of £663/month for 36 months. Yeah, ok, but it's mine. If we subtract the used book value of £8,700 then I've paid £421/month at the 36 month mark. Yikes. But that's ok, because it's free from now on, right?
So how long do I need to keep it? How quickly does that average out to a "reasonable" monthly cost for that sort of car?
4 years: £359
5 years: £316
6 years: £305
7 years: £283
8 years: £257
9 years: £236
10 years: £219
Remember, that's taking into account the used value of the car, not the total spent, which is more (but I don't get some of it back until I sell).
Gut feel, if I'd been leasing this particular car for £283/month I'd feel like I was getting ok value. it's a lot nicer than an Octy VRS, but not as performancy, so they're about on a par. If the timings were right I could just about get an Octavia VRS 10k lease for £280-300 so I think that's a good guide.
So, about 7 years is a fair "break even". That's ok. That was the plan.
But does it drop of massively after 7 years and start costing me nothing at all? Not really. That average monthly does not fall nearly as fast as it feels it should.
I wonder if any of you, like me, felt that the pay off would come a lot sooner than 7 years. Or that after 10 years I'd really only be paying £60/month less than a new car lease?
It seems by buying I haven't saved all that much, certainly less than £1000/year. I've just massively front-loaded the payments.
I'm ok with the purchase in this case. I needed any half-decent family wagon, and don't mind running it into the ground, so it looks like it works out well.
However, I have kind of looked at the Octavia VRS deals and thought, hmmm, right now that's a lot cheaper than I've paid so far. I'm "trapped" on this path, because if I bail out now I can never take advantage of the savings I was planning to make later.
Hope you found that real-world example interesting from the perspective of a buyer who maybe should have leased.
Details, because somebody will ask for them anyway:
The year is 2013. After a decade of toy cars, we now need a family wagon for muddy boots and push chair. (Dull, eh? Don't worry, I get to keep the toys too!)
The plan was always to do what my parents have always done. Buy a good car new (so you know it's never been abused, properly serviced, good oils etc) then run it until it fails an MOT for something uneconomical to repair. Keep it in good condition so it never looks shabby.
That's got to be the cheapest way to own a car, right? Run it forever. Lets see...
Nice 0% deal on the last of the Mk6 Golfs, as the Mk7 is just around the corner. Fine, I don't care what shape the headlights are, lets get a deal.
Mk6 Golf TDi 140 estate, manual. Nice spec, top model, but not fully loaded., Alcantara, DAB, cruise.
RRP £26,999
Agreed on £23,600 sale price. Also got good trade in, so maybe won another £1,500 there vs book, so maybe closer to £22,000 real cost, but that's in the past, so lets use £23,600 as our total paid. (OK, I'm not the world's greatest negotiator.)
Purchased on PCP to get the 0% finance, then settled at the end so we own the car. The £8,700 balloon was about private sale book value at the time, but I'd have bought it anyway to stick to the plan to keep it for 10 years.
So, obviously, now that the whole car was paid off in 2016 at the end of year 3, the monthly outgoings are nil, and the running costs are minimal.
Sorry, that's the background, here's the point:
Including tax, an annual service, MOTs and some reasonable guesstimates for used value of the asset (dropping each year) and some repair bills (increasing each year), what will it cost me, total, per month based on how long I keep it? We do about 10-12k miles each year.
At the end of 3 years, to own the car outright, I'd paid a total of £663/month for 36 months. Yeah, ok, but it's mine. If we subtract the used book value of £8,700 then I've paid £421/month at the 36 month mark. Yikes. But that's ok, because it's free from now on, right?
So how long do I need to keep it? How quickly does that average out to a "reasonable" monthly cost for that sort of car?
4 years: £359
5 years: £316
6 years: £305
7 years: £283
8 years: £257
9 years: £236
10 years: £219
Remember, that's taking into account the used value of the car, not the total spent, which is more (but I don't get some of it back until I sell).
Gut feel, if I'd been leasing this particular car for £283/month I'd feel like I was getting ok value. it's a lot nicer than an Octy VRS, but not as performancy, so they're about on a par. If the timings were right I could just about get an Octavia VRS 10k lease for £280-300 so I think that's a good guide.
So, about 7 years is a fair "break even". That's ok. That was the plan.
But does it drop of massively after 7 years and start costing me nothing at all? Not really. That average monthly does not fall nearly as fast as it feels it should.
I wonder if any of you, like me, felt that the pay off would come a lot sooner than 7 years. Or that after 10 years I'd really only be paying £60/month less than a new car lease?
It seems by buying I haven't saved all that much, certainly less than £1000/year. I've just massively front-loaded the payments.
I'm ok with the purchase in this case. I needed any half-decent family wagon, and don't mind running it into the ground, so it looks like it works out well.
However, I have kind of looked at the Octavia VRS deals and thought, hmmm, right now that's a lot cheaper than I've paid so far. I'm "trapped" on this path, because if I bail out now I can never take advantage of the savings I was planning to make later.
Hope you found that real-world example interesting from the perspective of a buyer who maybe should have leased.
TartanPaint said:
Hope you found that real-world example interesting from the perspective of a buyer who maybe should have leased.
If I understand your numbers correctly, you have been sinking £414 per month into the car.If instead of buying it after 36 months of that, you had rolled over into a new PCP on another car with the same pricing, you'd be paying £414 per month indefinitely, for a new car every 3 years.
(£23600 - £8700 = £14900. £14900 over 36 months is £414 per month, give or take pennies - is this what you were paying?)
If I'm missing something, what am I missing?
In any case, you're also not accounting for the effect having credit tied up in the car has on your credit rating (other credit gets more expensive, the closer to your personal limits you get - so while you might go from PCP to PCP, don't expect it to have no effect on new mortgage deal pricing).
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