Why the PH hatred for PCP?
Discussion
Afternoon chaps,
I have observed on here frequent disparaging comments with regards to the funding of cars through PCP, and was wondering why?
For the last 7 years or so, I've had a company car. That's nice and easy. It has a monthly cost that covers absolutely everything except for fuel. Recently, however, my employer announced that they're canning company cars and are just going to pay an allowance instead, so when the lease on my current car expires, I'm going to have to find an alternative.
Assuming that I don't happen to have many thousands of pounds sitting around doing nothing which I can use to purchase the vehicle of my choice, I am, in one form or another, going to have to set myself a monthly budget towards motoring costs.
Option one would be to take out a loan and get whichever car I want. Yes, this gives me the option of buying used as well as new, which isn't necessarily a bad thing, but on the other hand, means I've actually got to purchase the car and then go through all the hassle of selling it when I want something different.
Option two is the PCP-type arrangement, where I can just say "I want that car for a defined period of time, then I'll give it back and choose something new".
On the one hand, I assume there's more profit margin baked in to the PCP deal, but on the other, there's far less uncertainty, as I don't have to worry about trying to second-guess depreciation rates.
If I go second-hand, yes, I might well get far more car for my money with far less depreciation, but on the other hand, it'll be harder to get the car I actually want (a curse on all the weirdos who insist on buying dull as f
k cars with monochrome interiors and exteriors! You can have any colour you want so long as it's black, white, or any shade of silvery-grey in between!), and there's more uncertainty over running/servicing costs.
As someone coming out of a company car, it just strikes me that so long as I can find something I like within my monthly budget, then a PCP or similar deal with as much of the cost included into one single payment (in the ideal world, I'd like a deal similar to my company car, where fuel is my only variable) just seems like the sensible, logical approach to take?
What am I missing?
I have observed on here frequent disparaging comments with regards to the funding of cars through PCP, and was wondering why?
For the last 7 years or so, I've had a company car. That's nice and easy. It has a monthly cost that covers absolutely everything except for fuel. Recently, however, my employer announced that they're canning company cars and are just going to pay an allowance instead, so when the lease on my current car expires, I'm going to have to find an alternative.
Assuming that I don't happen to have many thousands of pounds sitting around doing nothing which I can use to purchase the vehicle of my choice, I am, in one form or another, going to have to set myself a monthly budget towards motoring costs.
Option one would be to take out a loan and get whichever car I want. Yes, this gives me the option of buying used as well as new, which isn't necessarily a bad thing, but on the other hand, means I've actually got to purchase the car and then go through all the hassle of selling it when I want something different.
Option two is the PCP-type arrangement, where I can just say "I want that car for a defined period of time, then I'll give it back and choose something new".
On the one hand, I assume there's more profit margin baked in to the PCP deal, but on the other, there's far less uncertainty, as I don't have to worry about trying to second-guess depreciation rates.
If I go second-hand, yes, I might well get far more car for my money with far less depreciation, but on the other hand, it'll be harder to get the car I actually want (a curse on all the weirdos who insist on buying dull as f
k cars with monochrome interiors and exteriors! You can have any colour you want so long as it's black, white, or any shade of silvery-grey in between!), and there's more uncertainty over running/servicing costs.As someone coming out of a company car, it just strikes me that so long as I can find something I like within my monthly budget, then a PCP or similar deal with as much of the cost included into one single payment (in the ideal world, I'd like a deal similar to my company car, where fuel is my only variable) just seems like the sensible, logical approach to take?
What am I missing?
Lease deals, by the sound of it.
No option to purchase, but keeps things simple with a deposit (sometimes) and a monthly payment, Some do include maintainence etc - Just what you're looking for really.
I'm sure someone will be along shortly with the finer figures for identifying a good lease deal, but if you're getting an allowance, whatever floats your boat should do the trick.
No option to purchase, but keeps things simple with a deposit (sometimes) and a monthly payment, Some do include maintainence etc - Just what you're looking for really.
I'm sure someone will be along shortly with the finer figures for identifying a good lease deal, but if you're getting an allowance, whatever floats your boat should do the trick.
If it works for you then go for it.
The reason so many used cars have dull spec is because they are ex-lease.
The argument against it will be that your allowance will get you further if you go for used. You'll either get a higher spec car or more money in your pocket at the end of the month.
The other argument is as you've hinted, once you start on a PCP you're sort of stuck in the loop. You're unlikely to have the funds to buy a car at the end of the deal so you left leasing another. Over a few years it's a lot of money to spend and not have anything to show for it. But if the car is just an appliance and if the money you spend on running a car as a service it worth it to you then it doesn't matter what anyone else thinks.
The reason so many used cars have dull spec is because they are ex-lease.
The argument against it will be that your allowance will get you further if you go for used. You'll either get a higher spec car or more money in your pocket at the end of the month.
The other argument is as you've hinted, once you start on a PCP you're sort of stuck in the loop. You're unlikely to have the funds to buy a car at the end of the deal so you left leasing another. Over a few years it's a lot of money to spend and not have anything to show for it. But if the car is just an appliance and if the money you spend on running a car as a service it worth it to you then it doesn't matter what anyone else thinks.
It's implied by some people on PH than PCP means you can't afford to buy the car, car is depreciating asset etc. Of course, that might be or might not be true. But I remember the same snobbery about HP when I was growing up - parents were very averse to any form of credit. PCP is nearer rental than credit - so in theory is even less risky from a credit perspective - though possibly a large waste of monthly disposable income. I guess the latter point is very subjective and causes the contention oft seen on these forums.
My next runaround will probably be PCP. I can afford to buy the car outright but I want to chop the car in after 12/24 months and the numbers work for me. Others use it to buy a car they cannot 'afford' in the conventional sense. Then there's everything in between.
My next runaround will probably be PCP. I can afford to buy the car outright but I want to chop the car in after 12/24 months and the numbers work for me. Others use it to buy a car they cannot 'afford' in the conventional sense. Then there's everything in between.
Kermit power said:
...What am I missing?
Nothing. Running any car costs money, especially if you want to do plenty of miles or want to have something 'nice'.So whether that cost is depreciation, lease payments, PCP repayments, personal loan payments, payments into a savings account so you can buy 'cash', it all comes out of your pay packet somehow.
Even buying a banger for pennies and running it into the ground is still going to cost you insurance, road tax, maintenance, tyres, brakes and other consumables that might be 'free' with a lease/PCP car.
If it makes sense to you then do it.
It's a bit like everything from British gas homecare to an iphone 12 on payment plan though, you have a nice no risk manageable monthly for the thing you want/need. Not for me personally because I do the math and each one costs you more in the long term, but if you're happy with that for peace/convenience fine. Only thing that makes me laugh are people who insist there's some benefit, probably as a way of building a value case to justify something wanted rather than needed.
It's a bit like everything from British gas homecare to an iphone 12 on payment plan though, you have a nice no risk manageable monthly for the thing you want/need. Not for me personally because I do the math and each one costs you more in the long term, but if you're happy with that for peace/convenience fine. Only thing that makes me laugh are people who insist there's some benefit, probably as a way of building a value case to justify something wanted rather than needed.
Oh goody, another PCP thread.
It won't be long before somebody tells you it is madness to buy a depreciating asset, and as a true PH'er type, you can invest your money for an annual return of 35% which makes far more sense than buying.
I was also going to say the other favourite is if you can't afford it purchase outright you can't afford it, but I see I have already been beaten to that one
Who cares how you buy or pay for your cars, do what suits you and don't worry about what anyone else thinks, and if it means you can punch above your driveway weight, so what. Teach them Jones's a lesson, about time they were brought down a peg or two.
It won't be long before somebody tells you it is madness to buy a depreciating asset, and as a true PH'er type, you can invest your money for an annual return of 35% which makes far more sense than buying.
I was also going to say the other favourite is if you can't afford it purchase outright you can't afford it, but I see I have already been beaten to that one
Who cares how you buy or pay for your cars, do what suits you and don't worry about what anyone else thinks, and if it means you can punch above your driveway weight, so what. Teach them Jones's a lesson, about time they were brought down a peg or two.
Because you should be buying a 15 year old black German 2ltr diesel barge and sticking M/AMG badges on it, for cash that will cost you more in maintenance than the pcp on its own would cost on a new car that will use half the fuel, and have no maintenance costs... Or you could lease and have to find £2k every 3-4 years to replace it.
Or you could get PCP and a new car every 3 years with no deposits or get PCP with a big deposit and interest free....
Or you could get PCP and a new car every 3 years with no deposits or get PCP with a big deposit and interest free....
Kermit power said:
Recently, however, my employer announced that they're canning company cars and are just going to pay an allowance instead,
What am I missing?
Most lease/pcp junkies are not on company allowances, from your view it makes sense. What am I missing?
Most just want a base spec white Evoque as a status symbol, hence the collective pity on them by PHers as they begin a cycle of continuous contractual debt so they feel good about themselves and special.
I mean £400+ a month for a f
king evoque? 
Edited by hyphen on Thursday 27th December 14:00
No hatred here, but I've I prefer the flexibility of being able to sell when it's convenient for me, not when the contract says.
I think it's important to consider the possibility that your car needs might change or you no longer want to make the payments. If that happens, how will you exit the contract?
I think it's important to consider the possibility that your car needs might change or you no longer want to make the payments. If that happens, how will you exit the contract?
LeoSayer said:
No hatred here, but I've I prefer the flexibility of being able to sell when it's convenient for me, not when the contract says.
I think it's important to consider the possibility that your car needs might change or you no longer want to make the payments. If that happens, how will you exit the contract?
In the same way as you would with HP. But yes, the O/P should consider the possible exit costs if their needs were to change unexpectedly.I think it's important to consider the possibility that your car needs might change or you no longer want to make the payments. If that happens, how will you exit the contract?
Kierkegaard said:
Because it's renting, and renting something's is bad.
I remember back when my parents (and most others) rented TVs. Nowadays people rent phones. When land line phones first became common, they too were rented, you never owned the house phone, you just rented it together with the line. I bought my first car on HP, subsequent cars were bought cash, after keeping the previous cars for 10+ years.
Also, I guess the same PH’ers who wax lyrical about bangernomics, would never buy a coat from a charity shop.
Kermit power said:
Cheers all. I guess the fact that I sell Software as a Service for a living goes some way to explaining why "Car as a Service" seems more logical to me than it does to many others!
Now that is the way I think about it!! In a similar industry... I get a car allowance and finance my cars...could not care less what others think whether I PCP of PCH. Of course I do have to adhere to a company policy meaning that the car cannot be too old and not exceed a certain engine capacity and be appropriate (no 2 seaters).. I used to have many company cars in the past and hated the constant K tax codes! driven by BIC.. have found car allowance much better, just make sure you budget for it currently.. G
Kermit power said:
Cheers all. I guess the fact that I sell Software as a Service for a living goes some way to explaining why "Car as a Service" seems more logical to me than it does to many others!
Not really. Business and domestic requirements are often different... Not much point attempting to sell office 365 to your average Joe who is happy with his office 2007.Pretty poor salesman to not know this
hyphen said:
Kermit power said:
Cheers all. I guess the fact that I sell Software as a Service for a living goes some way to explaining why "Car as a Service" seems more logical to me than it does to many others!
Not really. Business and domestic requirements are often different... Not much point attempting to sell office 365 to your average Joe who is happy with his office 2007.Pretty poor salesman to not know this
You'd think that this far into the history of the automobile, the evolution of bells and whistles would be starting to plateau, wouldn't you? Personally, I think with all the new stuff coming out around hybrid drivetrains and technology interfaces like Android Auto, it's developing faster than it has for a couple of decades or more.
Kermit power said:
What am I missing?
You might lose your job and not be able to make the payments.Kermit power said:
Cheers all. I guess the fact that I sell Software as a Service for a living goes some way to explaining why "Car as a Service" seems more logical to me than it does to many others!
I guess the nearest to that is Peugeot's 'just add fuel'. The trouble with PCP/Lease at the moment is they're over a relatively short duration so the costs are high. I reckon as we move to electric cars rental duations will be extened so costs will drop.
hyphen said:
Kermit power said:
Cheers all. I guess the fact that I sell Software as a Service for a living goes some way to explaining why "Car as a Service" seems more logical to me than it does to many others!
Not really. Business and domestic requirements are often different... Not much point attempting to sell office 365 to your average Joe who is happy with his office 2007.Pretty poor salesman to not know this
Not all of us want an unsupported ten year old product.
I guess cars and software have a lot of commonality.
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