Why the PH hatred for PCP?

[Sheepshanks]

Greg66 said:

We’ve done that one already. Running out of “differences”?

I'm running out of ways of explaining that you can't go back in time - if you lose your job you have to deal with it then. If you chose a PCP rather than dip into your other various investments, then that's fine. But most people aren't doing that - they're one payday (sometimes less) away from financial disaster.

I'd also pick up on realising a loss when you sell - that's technically correct, of course, but in the real world you're getting some money back. Whereas on a PCP (or a lease) it's a double whammy - you've got to spend money to have no car.

Edited by Sheepshanks on Thursday 27th December 22:41

[jamiem555]

I bought my ST3 Focus on a 0% PCP deal almost 3 years ago. I was invited to the dealers last month to discuss my options. There is no Mk4 ST, my only choice was a pre reg Mk3 ST for £50 extra a month. No thanks, mines is nicely run in with 15k on the clock. Fortunately I have the cash now to pay the £12.5k balloon. I’ll be keeping it and not do a PCP again if I can help it.

[dmsims]

Flumpo said:

dmsims said:

Can you get PCP on used cars ?

Yes.

The APR does not seem competitive ?

[Deep Thought]

dmsims said:

Can you get PCP on used cars ?

Yes but almost always at very bad APR rates.

[Deep Thought]

Sheepshanks said:

Greg66 said:

When you signed the PCP agreement you had a job. Now you don’t.

Exactly. And now you've got to buy your way out of it, probably with a loan from a dodgy doorstep lender at a time when it's least ideal.

And there's that assumption again that people using PCP deals have no savings. But sure tell me again you're not making that assumption....

[Welshbeef]

Sheepshanks said:

Greg66 said:

Seems you’re determined to agree with me: no difference.

Big difference - when you bought the car you had a job. Now you don't.

But you cannot not have a car when inbetween jobs else how do you propose travelling for interviews etc?

I’m not sure how any situation of job loss would be possible to avoid the fact you no longer have income - specifically when you have cash4car option and vehicle must be max x years old. You do see it don’t you giving staff car allowance v company car removes all costs from the company when the individual leaves the cash for car payment stops v co car problems and far higher costs for the company.

You could buy a brand new Kia Picanto or a 3 year old one - I guess that’s what £3-4K? Sure not a great place to be doing big miles in but it’s safe economical cheap and will get you from a to b. It would also meet the car allowance requirements.
Or you could get a A7 50v as your grade + a bit more of your salary paid in monthly makes it viable.

You make a choice - choice is a gamble and you deal with it. Life is like a box of chocolates you don’t know what your going to get

[PurpleTurtle]

Lots of pontificating on here about ‘what if you lose your job?’

What if you don’t?

A high proportion of the country is paying their mortgage/bills/car/phone/broadband/credit cards bills from one payday to the next and managing just fine. Not ideal, but it is what it is.

• Most* people are not losing their jobs. They are seeing out their lease/PCP deals and, having enjoyed a new car for £XXX/month, are happy to go with another. This is how most private cars are financed. Welcome to the 21st century.

I’ve never done anything other than large deposit/bank loan for the rest myself, but the world has moved on since I last bought a new car.

[Mr Tidy]

In over 30 years of work I only ever had 1 Company Car - and my employer at the time went bust and made me redundant within less than a year of me getting the car.

Next time I qualified for a company car I opted out of the scheme (as there was nothing I could get that I wanted) and took the monthly car allowance and interest free loan - much safer!

I've no particular hatred for PCPs, but in the current employment climate I'd be less than comfortable having one!

[Kermit power]

Sheepshanks said:

Deep Thought said:

Because of course everyone who PCPs or leases has no savings at all and is living from one pay cheque to the next.

From the OP:

Kermit power said:

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.

There's a big difference between having, say, £30k in liquid cash to buy a car outright and having £5-10k to cover mortgage and other outgoings in the event of emergencies!

[fttm]

Worthless post maybe , but could someone explain what PCP is ?

[Dr Jekyll]

I don't think there is hatred towards PCPs as such. What causes all the arguments are people (often car sales staff trained to sell PCP) who dive in with utter nonsense. EG, 'you can always make more money in bank interest than the PCP interest even after tax', or 'a low deposit is financially astute', or my favourite 'interest isn't charged on the balloon so it's cheaper than a loan for the whole amount'.

[Sheepshanks]

Dr Jekyll said:

I don't think there is hatred towards PCPs as such. What causes all the arguments are people (often car sales staff trained to sell PCP) who dive in with utter nonsense. EG, 'you can always make more money in bank interest than the PCP interest even after tax', or 'a low deposit is financially astute', or my favourite 'interest isn't charged on the balloon so it's cheaper than a loan for the whole amount'.

The one I hear most frequently is people who have been led to believe they’ll get their deposit (often the value of their previous car used in p/x) back at the end of the deal. Then they get to the end and are dismayed to find they have nothing.

[Begall]

Having now done both, PCH seems much better to me than PCP - not only is it usually cheaper month-to-month anyway, but you know that your going to hand the car back at the end with no possibility to buy it. This means that a. You don’t try to justify a more expensive deal by assuming that some equity will be left at the end and b. There’s no worrying about resale value.

[Deep Thought]

Dr Jekyll said:

I don't think there is hatred towards PCPs as such. What causes all the arguments are people (often car sales staff trained to sell PCP) who dive in with utter nonsense. EG, 'you can always make more money in bank interest than the PCP interest even after tax', or 'a low deposit is financially astute', or my favourite 'interest isn't charged on the balloon so it's cheaper than a loan for the whole amount'.

'you can always make more money in bank interest than the PCP interest even after tax'. I dont think anyone has said "always", or even termed it like you have, which of course ISNT just to make your point, BUT it could be true - lots of PCP deals around at 0% APR, or very low APR.

'a low deposit is financially astute' - There are merits in a low deposit. Personally, i prefer a low deposit because it doesnt skew the monthly payments. And any time i've had a PCP i've aimed for 0% or certainly no more than 1.9% APR so the "saving" on the interest of the deposit is minimal. Would rather have them money being used elsewhere, or even just in a savings account for a rainy day

'interest isn't charged on the balloon so it's cheaper than a loan for the whole amount' - well thats just plain wrong. Most often bandied about by people who dont have and or dont understand PCP (or who want to be contentious on an internet forum )but its certainly very clear in the paperwork from memory.

Edited by Deep Thought on Friday 28th December 10:09

[Deep Thought]

Sheepshanks said:

The one I hear most frequently is people who have been led to believe they’ll get their deposit (often the value of their previous car used in p/x) back at the end of the deal. Then they get to the end and are dismayed to find they have nothing.

Hear most frequently from whom? Very stupid people? I've never know anyone whos used the product whos actually said or believed that.

Or is that another one of your assumptions - along with "people who have PCP deals have no savings"

[Deep Thought]

Sheepshanks said:

But most people aren't doing that - they're one payday (sometimes less) away from financial disaster.

Another flawed line of thought - "A lot of people live from one pay cheque to the next". "A lot of people use PCP to finance a car", therefore "A lot of people who use PCP to finance a car live from one pay cheque to the next".

[Deep Thought]

Sheepshanks said:

I'd also pick up on realising a loss when you sell - that's technically correct, of course, but in the real world you're getting some money back. Whereas on a PCP (or a lease) it's a double whammy - you've got to spend money to have no car.

But you havent used savings - as the O/P has now told us they've £5K-10K of savings, to fund the car, so they still have their savings?

Put £20K in to a new car and suddenly "have" to sell it three months later, and you've be lucky to get back £15K, so even with a cash sale you're getting an awful lot less back than you put in, and as you've "had" to sell it, you've no car anyway? So your double whammy still applies - you've spent £5K to have no car.

Edited by Deep Thought on Friday 28th December 10:05

[Welshbeef]

Deep Thought said:

Sheepshanks said:

I'd also pick up on realising a loss when you sell - that's technically correct, of course, but in the real world you're getting some money back. Whereas on a PCP (or a lease) it's a double whammy - you've got to spend money to have no car.

But you havent used savings - as the O/P has now told us they've £5K-10K of savings, to fund the car, so they still have their savings?

Put £20K in to a new car and suddenly "have" to sell it three months later, and you've be lucky to get back £15K, so even with a cash sale you're getting an awful lot less back than you put in, and as you've "had" to sell it, you've no car anyway? So your double whammy still applies - you've spent £5K to have no car.

Edited by Deep Thought on Friday 28th December 10:05

If you could tell there was an outside possibility of employment issues down the line and you’d spent all your cash on it - and would need to retain that car then quickly get a personal loan job done

[Deep Thought]

I've always looked at the best funding option for me when i'm looking at how to finance my next car. That has tended to be either cash, PCP or bank loan. Last bank loan i got was at 2.9% APR. Last PCP deal i got was at 1.9% APR (and further incentivised by the manufacturer).

If a small number of people cant handle / dont understand what their getting themselves in to then frankly thats their problem. I dont use that as a reason not to use PCP or a bank loan for that matter.

Same applies to credit cards. I clear mine monthly and never accrue charges or interest, yet there would be people who have seriously screwed up with credit cards. That doesnt make it a bad product though.

I've always many months worth of savings to fall back on and TBH even if i wasnt working ever again we can easily cover our outgoings with my wifes salary.

The use of credit is not a bad thing. The inappropriate use of credit is where the issues lie.

[anonymous-user]

I think when you’re younger (20-30s) it’s quite normal to want it all and want it now. Did it myself with many low interest credit cards and loans to supplement my millionaire’s lifestyle. Over time I realised all my earnings were servicing debt and I had nothing left over for when the inevitable happened and I lost my job. That was years ago and now I’m approaching 50, I’d not not borrow to buy/rent anything as it’s just not worth it IMHO.

Debt is a mug’s game as those of us who’ve worked through recession, redundancy and frankly, stty times know too well.