Why the PH hatred for PCP?
Discussion
If you want to be a PCP renter all you life, over 30 years of paying a month average PCP of £300 it will have cost you:
£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
I don't know why there is even a discussion about new vs used. Buying / PCPing etc. a new car every few years will always be more expensive than going used. (unless you are very unlucky with the reliability of the used cars you own)
If you want a new car, borrowing money for it might make sense.
If you want cheap motoring, buy used.
It's not rocket science.
If you want a new car, borrowing money for it might make sense.
If you want cheap motoring, buy used.
It's not rocket science.
Inigo Montoya said:
Okay, so let's do the maths.
You've spent £1,500 on the Saab. Add in the £500k you paid for it and we're in for £2k. At any point we could sell the car and get something back, but not as much as we've put into it.
The golf costs £300 a month. You don't mention whether your mate had to pay a deposit. I'm in a generous mood, so we'll let that one go. I'd guess the deposit would be several thousands.
So in year 1, your Golf costs you £3,600 plus the deposit but you don't own the car. In year 2, it costs you another £3,600 and you still don't own the car. And it keeps on costing you £300 per month or £3,600 per year until you get to the end of the deal. At that point you still don't own the car. You either have to start another PCP deal or find the cash to buy the car.
Is your Saab going to cost you £3,600 a year in repairs?
Having a maintenance contract sounds like it's an easy life but it's very little difference from booking your car in the garage and paying for the repairs as you go. The cost of the contract is always set high so the garage makes a profit.
Your £300 a month Golf is actually £300 a month for the foreseeable future.
Still tempted?
This is a straw man argument though, as you're comparing a new car with an old clunker. However you pay for it, a new car is always going to cost more.You've spent £1,500 on the Saab. Add in the £500k you paid for it and we're in for £2k. At any point we could sell the car and get something back, but not as much as we've put into it.
The golf costs £300 a month. You don't mention whether your mate had to pay a deposit. I'm in a generous mood, so we'll let that one go. I'd guess the deposit would be several thousands.
So in year 1, your Golf costs you £3,600 plus the deposit but you don't own the car. In year 2, it costs you another £3,600 and you still don't own the car. And it keeps on costing you £300 per month or £3,600 per year until you get to the end of the deal. At that point you still don't own the car. You either have to start another PCP deal or find the cash to buy the car.
Is your Saab going to cost you £3,600 a year in repairs?
Having a maintenance contract sounds like it's an easy life but it's very little difference from booking your car in the garage and paying for the repairs as you go. The cost of the contract is always set high so the garage makes a profit.
Your £300 a month Golf is actually £300 a month for the foreseeable future.
Still tempted?
LarsG said:
If you want to be a PCP renter all you life, over 30 years of paying a month average PCP of £300 it will have cost you:
£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
That's more compelling as an argument, although I'd have to figure out the impact of the "no cars over six years old" clause in the company allowance.£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
Kermit power said:
LarsG said:
If you want to be a PCP renter all you life, over 30 years of paying a month average PCP of £300 it will have cost you:
£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
That's more compelling as an argument, although I'd have to figure out the impact of the "no cars over six years old" clause in the company allowance.£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
Probably only on the initial purchase, if not then keep it a year less and you still save.
LarsG said:
If you want to be a PCP renter all you life, over 30 years of paying a month average PCP of £300 it will have cost you:
£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
It doesn't as it compares new to second hand and it assumes that one can't be frugal if they rent.£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
I'll ask the question again with no hope of getting a reply : if I insist on new and always want a car under manufacturers warranty, why would I pay more by owning rather than renting if renting is cheaper than depreciation which it has been for me over the past few years. Surely the frugal choice is to rent, is it not ?
LarsG said:
You could put that money aside each month and buy a house, save for children, a wedding, holiday etc.
The bottom line is that you should buy a car you can afford and can afford to service and repair and buy tyres for.
However if you want to be someone who rents all his life carry on.
Why all their life ? Simply choose the method that is cheapest at the time or for a particular car. Some cars are far cheaper to own, some are cheaper to rent. That can change too in time. The bottom line is that you should buy a car you can afford and can afford to service and repair and buy tyres for.
However if you want to be someone who rents all his life carry on.
Edited by LarsG on Saturday 29th December 13:01
Why the assumption that someone is compromising their children/wedding/holiday because of the way they choose to pay for depreciation ? They may compromise nothing and still save for retirement, I know I do and I can't be alone in that. Sure there are idiots out there but not particularly more than before. This kind of answers the OP's original question actually : people make assumptions about other people's financial position and simplistically generalise to end up at their pre-conceived conclusion.
nickfrog said:
LarsG said:
You could put that money aside each month and buy a house, save for children, a wedding, holiday etc.
The bottom line is that you should buy a car you can afford and can afford to service and repair and buy tyres for.
However if you want to be someone who rents all his life carry on.
Why all their life ? Simply choose the method that is cheapest at the time or for a particular car. Some cars are far cheaper to own, some are cheaper to rent. That can change too in time. The bottom line is that you should buy a car you can afford and can afford to service and repair and buy tyres for.
However if you want to be someone who rents all his life carry on.
Edited by LarsG on Saturday 29th December 13:01
Why the assumption that someone is compromising their children/wedding/holiday because of the way they choose to pay for depreciation ? They may compromise nothing and still save for retirement, I know I do and I can't be alone in that. Sure there are idiots out there but not particularly more than before. This kind of answers the OP's original question actually : people make assumptions about other people's financial position and simplistically generalise to end up at their pre-conceived conclusion.
Donbot said:
I don't know why there is even a discussion about new vs used. Buying / PCPing etc. a new car every few years will always be more expensive than going used. (unless you are very unlucky with the reliability of the used cars you own)
If you want a new car, borrowing money for it might make sense.
If you want cheap motoring, buy used.
It's not rocket science.
My bold; it's not always cheaper - you potentially have hassle and eye wateringly high repair costs, especially as newer cars seem to designed to be prohibitively expensive to repair, needing a '..complete xyz unit...' rather than just a part of the unit which costs a few quid. A new fancy headlight could cost a grand to replace for example. Stuff needs 'coding' to a car to make it work.If you want a new car, borrowing money for it might make sense.
If you want cheap motoring, buy used.
It's not rocket science.
Spannering isn't like it was in the old days, maintenance and repair costs will get dearer and more specialised.
Cost aside, there are intangibles which can't be measured in purely financial terms - for me knowing my car won't suddenly need a grand or two spending on it (which is 'lost' money as it won't bump the value of the used car up, merely maintain it..) is a major consideration, as is not tying up savings in a car.
Different strokes for different folks.
Edited by Funk on Saturday 29th December 16:08
nickfrog said:
LarsG said:
If you want to be a PCP renter all you life, over 30 years of paying a month average PCP of £300 it will have cost you:
£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
It doesn't as it compares new to second hand and it assumes that one can't be frugal if they rent.£108,000.
By the same token in 30 years you could own 4 cars as they last well beyond 10 years.
You could buy 4 top of the range all bells and whistles second hand cars for around £15,000, less if you are more frugal.
£60,000 over 30 years.
Saving you £48,000.
A little simplistic but it makes the point.
I'll ask the question again with no hope of getting a reply : if I insist on new and always want a car under manufacturers warranty, why would I pay more by owning rather than renting if renting is cheaper than depreciation which it has been for me over the past few years. Surely the frugal choice is to rent, is it not ?
You forget the PCP contract you pay is the depreciation cost the car goes through during the time you lease it. As most cars are reliable if serviced regularly you shouldn't be hit by big bills.
If you buy a used car on a three year loan, every year after the loan has ended you save money. If you lease you will be in a never ending rental.
I bought a one year old car last December for £19,000 (-800 to 18,200), original OTR price £38,000. It has a three year warranty. I traded in my old car a 62 plate for £7800. This left me with a balance of £10,300. I then put £5000 towards it and took the rest out on a dealership loan at 2.4% over three years (which also gave me a bit more discount and they reduced the car by £800). ( mainly because I also had a holiday to pay for ). This left me with a monthly loan of around £150. I paid extra each month and have just had the letter to say the car is now mine.
I could sell it today for over £15,000
From now on I save having nothing to pay out.
By the same token, if you buy a house it is yours in 25 years and if you sell it all that money bar the tax is in your pocket. If you rent all your life you have no asset at the end of it yet still have paid out as much as a mortgage.
As to frugal, too many people take on PCP leases in cars they could not afford to buy or Change a set of four tyres on. All about image and nothing about common sense.
I do wonder how many people who have PCP leases still live at home.
Funk said:
My bold; it's not always cheaper - you potentially have hassle and eye wateringly high repair costs, especially as newer cars seem to designed to be prohibitively expensive to repair, needing a '..complete xyz unit...' rather than just a part of the unit which costs a few quid. A new fancy headlight could cost a grand to replace for example. Stuff needs 'coding' to a car to make it work.
This a nonsense argumentFrom new for example
Toyota have a 6 year warranty
VW is 3 but you can extend up to 100K miles for £200-300 p.a.
LarsG said:
Buying a 1-2 year old car still with warranty, (5-7 years with some manufacturers) doesn't mean you will have big bills in repairs. Also you own an asset that someone has already paid the depreciation on. In other words you buy a nearly new car for 40-60% what it originally cost.
You forget the PCP contract you pay is the depreciation cost the car goes through during the time you lease it. As most cars are reliable if serviced regularly you shouldn't be hit by big bills.
If you buy a used car on a three year loan, every year after the loan has ended you save money. If you lease you will be in a never ending rental.
I bought a one year old car last December for £19,000 (-800 to 18,200), original OTR price £38,000. It has a three year warranty. I traded in my old car a 62 plate for £7800. This left me with a balance of £10,300. I then put £5000 towards it and took the rest out on a dealership loan at 2.4% over three years (which also gave me a bit more discount and they reduced the car by £800). ( mainly because I also had a holiday to pay for ). This left me with a monthly loan of around £150. I paid extra each month and have just had the letter to say the car is now mine.
I could sell it today for over £15,000
From now on I save having nothing to pay out.
By the same token, if you buy a house it is yours in 25 years and if you sell it all that money bar the tax is in your pocket. If you rent all your life you have no asset at the end of it yet still have paid out as much as a mortgage.
As to frugal, too many people take on PCP leases in cars they could not afford to buy or Change a set of four tyres on. All about image and nothing about common sense.
I do wonder how many people who have PCP leases still live at home.
I don't know, you seem to have the data when you say "too many people". Or are you just assuming ?You forget the PCP contract you pay is the depreciation cost the car goes through during the time you lease it. As most cars are reliable if serviced regularly you shouldn't be hit by big bills.
If you buy a used car on a three year loan, every year after the loan has ended you save money. If you lease you will be in a never ending rental.
I bought a one year old car last December for £19,000 (-800 to 18,200), original OTR price £38,000. It has a three year warranty. I traded in my old car a 62 plate for £7800. This left me with a balance of £10,300. I then put £5000 towards it and took the rest out on a dealership loan at 2.4% over three years (which also gave me a bit more discount and they reduced the car by £800). ( mainly because I also had a holiday to pay for ). This left me with a monthly loan of around £150. I paid extra each month and have just had the letter to say the car is now mine.
I could sell it today for over £15,000
From now on I save having nothing to pay out.
By the same token, if you buy a house it is yours in 25 years and if you sell it all that money bar the tax is in your pocket. If you rent all your life you have no asset at the end of it yet still have paid out as much as a mortgage.
As to frugal, too many people take on PCP leases in cars they could not afford to buy or Change a set of four tyres on. All about image and nothing about common sense.
I do wonder how many people who have PCP leases still live at home.
I think the bit about image vs common sense also answers the OP's question about the hatred. You judge others by your own standards.
The cars I want only have a 3 year warranty and have proved cheaper to lease even compared with second hand at 1/2 years. The Karok is cheap as chips at £4,500 total over 2 years (you have almost lost that in 1 year, so who is frugal now ?). I have no issues if you prefer second hand. I don't at that price as I am confident even a pre reg Karoq would have lost more, not to mention opportunity cost. And I didn't buy for image purposes, it's a white Skoda that won't impress the neighbours. Buying a Kia and keeping it for 7 years might work a bit cheaper, but if you look at all parameters, the gap is surprisingly small in relation to a lease with no MOT nor consumables nor tax nor opportunity cost, not even a service with a bit of luck, not to mention the convenience.
Lease and pcp are different btw.
Edited by nickfrog on Saturday 29th December 18:09
nickfrog said:
The cars I want only have a 3 year warranty
You researched that well then 
Skoda - "A warranty that you can now extend up to 5 years/100,000 miles"
Toyota - "5 years or 100,000 miles"
Audi - "three-year warranty (with a 60,000-mile limit in the third year). It’s also possible to upgrade to a four or five-year warranty"
Renault - "Any vehicle up to 3 years with less than 60,000 miles and still within manufacturer warranty can purchase an additional year of warranty coverage (year 4)."
Funk said:
Donbot said:
I don't know why there is even a discussion about new vs used. Buying / PCPing etc. a new car every few years will always be more expensive than going used. (unless you are very unlucky with the reliability of the used cars you own)
If you want a new car, borrowing money for it might make sense.
If you want cheap motoring, buy used.
It's not rocket science.
My bold; it's not always cheaper - you potentially have hassle and eye wateringly high repair costs, especially as newer cars seem to designed to be prohibitively expensive to repair, needing a '..complete xyz unit...' rather than just a part of the unit which costs a few quid. A new fancy headlight could cost a grand to replace for example. Stuff needs 'coding' to a car to make it work.If you want a new car, borrowing money for it might make sense.
If you want cheap motoring, buy used.
It's not rocket science.
Spannering isn't like it was in the old days, maintenance and repair costs will get dearer and more specialised.
Cost aside, there are intangibles which can't be measured in purely financial terms - for me knowing my car won't suddenly need a grand or two spending on it (which is 'lost' money as it won't bump the value of the used car up, merely maintain it..) is a major consideration, as is not tying up savings in a car.
Different strokes for different folks.
Edited by Funk on Saturday 29th December 16:08
dmsims said:
nickfrog said:
The cars I want only have a 3 year warranty
You researched that well then Skoda - "A warranty that you can now extend up to 5 years/100,000 miles"
Toyota - "5 years or 100,000 miles"
Audi - "three-year warranty (with a 60,000-mile limit in the third year). It’s also possible to upgrade to a four or five-year warranty"
Renault - "Any vehicle up to 3 years with less than 60,000 miles and still within manufacturer warranty can purchase an additional year of warranty coverage (year 4)."
The Skoda and the Audi do come with a 3-year warranty and not interested in paying for extended warranties as it would hardly be offset by the smoother depreciation curve at the lease rates I got (which are nowhere near as favourable now btw).
As I said though I am very open minded and may well opt to pay cash on a car with a longer warranty like the Toyota or a KIa when the Skoda goes back or even extend initial warranty if the figures work out. I'll take a view then, as I always do, I make no assumptions.
But thank you for your research work, shame I didn't learn anything I didn't already know
Edited by nickfrog on Saturday 29th December 21:04
Just to muddy the waters a bit further, I've been looking at 1-2 year old cars on Autotrader.
I kept to PHEVs, since I have one at the moment and like it, so the Merc C350e, Volvo XC90, X5 and so on...
How on earth do some people rack up such high mileages?!?!? They almost all seem to have done around 50k miles per annum!
I know my mileage is low at around 7k per annum, but 50k? How do people find the time to actually do any work when they stop driving???
I kept to PHEVs, since I have one at the moment and like it, so the Merc C350e, Volvo XC90, X5 and so on...
How on earth do some people rack up such high mileages?!?!? They almost all seem to have done around 50k miles per annum!
I know my mileage is low at around 7k per annum, but 50k? How do people find the time to actually do any work when they stop driving???
Kermit power said:
Just to muddy the waters a bit further, I've been looking at 1-2 year old cars on Autotrader.
I kept to PHEVs, since I have one at the moment and like it, so the Merc C350e, Volvo XC90, X5 and so on...
How on earth do some people rack up such high mileages?!?!? They almost all seem to have done around 50k miles per annum!
I know my mileage is low at around 7k per annum, but 50k? How do people find the time to actually do any work when they stop driving???
A hundred miles each way commute can be only 1 1/2 to 2 hours each way. I kept to PHEVs, since I have one at the moment and like it, so the Merc C350e, Volvo XC90, X5 and so on...
How on earth do some people rack up such high mileages?!?!? They almost all seem to have done around 50k miles per annum!
I know my mileage is low at around 7k per annum, but 50k? How do people find the time to actually do any work when they stop driving???
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