Why the PH hatred for PCP?

[Deep Thought]

Bob-2146 said:

Even on this forum there's too many threads of people being trapped in these and wanting to get out, e.g.:

https://www.pistonheads.com/gassing/topic.asp?h=0&...

PCP should come with massive warnings. They are fecking expensive in most cases as you're paying interest on the balloon over the term.

"consider every method of purchasing" ; good financial advice would be to rule out these overpriced 'traps' across the board.

Covered already but the guy falls in to the category of "fancies a change".

And "too many threads"? How many new cars are sold every year? 3.7 million or so? How many used cars? Maybe 3 times as much.

Edited by Deep Thought on Thursday 17th January 11:24

[jimPH]

Deep Thought said:

I'm expecting a common sense answer like that based on real world experience to either

(a) be ignored
(b) have some minor detail extrapolated out and be analysed as a means of distraction
(c) have some detail you've let slip in your past posting history to be thrown in an attempt to make you look incompetent

Thats usually the form with the top nay-sayers anyway....

Edited by Deep Thought on Thursday 17th January 09:27

Ahh, right on que, the PH dissected multi quote response, sure to bring triumph in any online discussion.

I'm not good with birthdays, but it's not hard for me to remember my nephew's age seeing as he was born at turn of the millennium in January, so he's just had his 19th birthday. Having failed his GCSE's, got kicked off his college course, he's just turned his part time occupation into full time employment over the summer. Since passing his test around his 18th birthday, his father bought him a 52k mile perfectly adequate, 02 plate VW. Unfortunately, after his mates ticked of sporty little Renault, the small VW was no longer good enough and ended up broken at the end of my drive. He had since secured finance on a 3yo Vauxhall that I'd never heard of since he bought it.

Now looking at your responses, I fail to see what adequate tests were used to approve his finance. The job he's doing at the local hungry horse is in my opinion, below his potential, but unfortunately he doesn't have the drive and determination to better his prospects. Tying himself down to finance is an unnecessary burden at his young age. I can assure you, neither myself, my sister or my mother has been guarantor.

I hope he's still pleased with his shiny Vauxhall when he's still paying it in 3 years time, my gut feeling says he wont. I'm happy for him in a way, he's got a car he wants and he's happy, but we both know he's got a lot of experiences to come that may or may not throw a few curve balls and I don't think financing a car at his age is a good thing.

This all could have been avoided if the finance wasn't available so easy. I was very surprised how it was, but there we are. Less than 3 months full-time employment, driving less than a year, barely any established spending or income patterns, a lack of direction in life with endless possibilities, yet still secured finance. There are many more out there I'm sure.

[jimPH]

Edit to the above post, should be in response to the aforementioned multi quoted post, not the post I responded too. I am on my phone though.

[Butter Face]

The wonderful thing about learning from your mistakes is being able to make them in the first place. It may have been a mistake him buying the car on finance, it may be one of the best moves he'll ever make.

Just because you've had your go, made your mistakes (which I'm sure you've mentioned you have), don't expect anyway to learn from your fk ups

[TheStigsWeeBrother]

Butter Face said:

Just thought I'd illustrate something on this too:

Here's a illustrative quote on a £9995 car with a £500 deposit on 48m PCP, 48m HP and 60m HP (48m PCP and 60m HP to get similar payment, all at 6.9% APR.

48m PCP - 48x £188.37 + OFP of £2297.13 - Total interest: £1650.89 - Total payable £11646.89
48m HP - 47x £227.25 + 1x £228.25 - Total interest: £1413 - Total payable £11409
60m HP - 59x £187.66 + 1x £188.66 -Total interest: £1764.60 - - Total payable £11760.60

Now which is the best deal? Depends on if you want to pay £40pm more and own the car after 4 years, or pay the lower amount over 4 years and change it, or pay the lower monthly amount over 5 years and own it.

All within £350 range of interest charges.

Looking at the 3 examples and if the OFP is a true reflection for what the car will be worth then for less than £40pm I would go for option 2 and have equity of £2.3k as opposed to finding £2.3k to own it.

[Deep Thought]

jimPH said:

Ahh, right on que, the PH dissected multi quote response, sure to bring triumph in any online discussion.

I'm not good with birthdays, but it's not hard for me to remember my nephew's age seeing as he was born at turn of the millennium in January, so he's just had his 19th birthday. Having failed his GCSE's, got kicked off his college course, he's just turned his part time occupation into full time employment over the summer. Since passing his test around his 18th birthday, his father bought him a 52k mile perfectly adequate, 02 plate VW. Unfortunately, after his mates ticked of sporty little Renault, the small VW was no longer good enough and ended up broken at the end of my drive. He had since secured finance on a 3yo Vauxhall that I'd never heard of since he bought it.

Now looking at your responses, I fail to see what adequate tests were used to approve his finance. The job he's doing at the local hungry horse is in my opinion, below his potential, but unfortunately he doesn't have the drive and determination to better his prospects. Tying himself down to finance is an unnecessary burden at his young age. I can assure you, neither myself, my sister or my mother has been guarantor.

I hope he's still pleased with his shiny Vauxhall when he's still paying it in 3 years time, my gut feeling says he wont. I'm happy for him in a way, he's got a car he wants and he's happy, but we both know he's got a lot of experiences to come that may or may not throw a few curve balls and I don't think financing a car at his age is a good thing.

This all could have been avoided if the finance wasn't available so easy. I was very surprised how it was, but there we are. Less than 3 months full-time employment, driving less than a year, barely any established spending or income patterns, a lack of direction in life with endless possibilities, yet still secured finance. There are many more out there I'm sure.

So you've got a sample size of 1. Or probably a few if you include his mates. Does that make PCP deals generally wrong though?

Maybe there should have been some parental responsibility exercised there OR as you've said hes happy with the car and his life at this point and just let him get on with it. None of us were terribly sensible fresh out of school and no matter what we're told, we just have to learn for ourselves.

Any chance the finance is in a parents name BTW?

FWIW i do AGREE that a big commitment at that age is not a good idea, but i dont let that skew my overall view of the product. Some people get in to massive problems with credit cards, but that doesnt mean the majority of people dont use them responsibly.

Looking at my own family the four 20 something nephews and nieces three of the four have cars on finance. All four are in full time employment, decent enough jobs, making progress. All four use the cars as enablers to get them about and get to work. They drive a Clio, Golf, Leon and Passat. None of them are new, but three definitely on finance. The fourth one drives a 2009 Passat which he bought for cash for a couple of thousand (he had an insurance claim for whiplash and bought the car with the claim).

I heard one of them talking about changing his Leon to an Audi. He has no need to but he perceives it as "progress". I will try to dissuade him away from it, but at worst just assist and advise to try to get him a half decent deal.

All of them are clueless about maintenance and service schedules so arguably their cars will need changed at some point sooner than needed due to lack of maintenance and care.

At least one of them took out a PCP deal on a brand new car when they got their first job. Again, it would have been an enabler to get them to work reliably (young girl, longish commute) but less would have done.

They all rent houses not own, and i hear lots of talk of the latest iphones for "just £70 a month" and gym membership for "just £50 a month". It all adds up. I try to point them to cheaper options - some times they listen, sometimes you dont. I dont get upset about it though. You can only advise when asked.

[Butter Face]

TheStigsWeeBrother said:

Butter Face said:

Just thought I'd illustrate something on this too:

Here's a illustrative quote on a £9995 car with a £500 deposit on 48m PCP, 48m HP and 60m HP (48m PCP and 60m HP to get similar payment, all at 6.9% APR.

48m PCP - 48x £188.37 + OFP of £2297.13 - Total interest: £1650.89 - Total payable £11646.89
48m HP - 47x £227.25 + 1x £228.25 - Total interest: £1413 - Total payable £11409
60m HP - 59x £187.66 + 1x £188.66 -Total interest: £1764.60 - - Total payable £11760.60

Now which is the best deal? Depends on if you want to pay £40pm more and own the car after 4 years, or pay the lower amount over 4 years and change it, or pay the lower monthly amount over 5 years and own it.

All within £350 range of interest charges.

Looking at the 3 examples and if the OFP is a true reflection for what the car will be worth then for less than £40pm I would go for option 2 and have equity of £2.3k as opposed to finding £2.3k to own it.

Well yes, that's the right answer if you're happy to spend the extra £40pm, some people aren't. That's where PCP shines, for an extra £250 interest over 4 years (£5pm roughly) you 'save' £40pm on the payments (£35pm real world) compared to the HP.

Horses for courses and all that.

[Deep Thought]

Butter Face said:

The wonderful thing about learning from your mistakes is being able to make them in the first place. It may have been a mistake him buying the car on finance, it may be one of the best moves he'll ever make.

Just because you've had your go, made your mistakes (which I'm sure you've mentioned you have), don't expect anyway to learn from your fk ups

Indeed. Hindsight is 20/20. If asked by a family member, i advise, and if not asked, i try to subtly pitch ideas where appropriate. No point in getting peoples backs up just because they want to do something different than me.

[jimPH]

Butter Face said:

The wonderful thing about learning from your mistakes is being able to make them in the first place. It may have been a mistake him buying the car on finance, it may be one of the best moves he'll ever make.

Just because you've had your go, made your mistakes (which I'm sure you've mentioned you have), don't expect anyway to learn from your fk ups

A suprisingly irresponsible post in this new age of health and safety culture (key word here, culture), where past mistakes are the very foundation, with which to ensure no repeat occurence. But thanks for your contribution.

[Deep Thought]

TheStigsWeeBrother said:

Butter Face said:

Just thought I'd illustrate something on this too:

Here's a illustrative quote on a £9995 car with a £500 deposit on 48m PCP, 48m HP and 60m HP (48m PCP and 60m HP to get similar payment, all at 6.9% APR.

48m PCP - 48x £188.37 + OFP of £2297.13 - Total interest: £1650.89 - Total payable £11646.89
48m HP - 47x £227.25 + 1x £228.25 - Total interest: £1413 - Total payable £11409
60m HP - 59x £187.66 + 1x £188.66 -Total interest: £1764.60 - - Total payable £11760.60

Now which is the best deal? Depends on if you want to pay £40pm more and own the car after 4 years, or pay the lower amount over 4 years and change it, or pay the lower monthly amount over 5 years and own it.

All within £350 range of interest charges.

Looking at the 3 examples and if the OFP is a true reflection for what the car will be worth then for less than £40pm I would go for option 2 and have equity of £2.3k as opposed to finding £2.3k to own it.

And thats the correct answer for your circumstances, but does that make someone who choses A or C "wrong"? They might just have a different but perfectly valid perspective than you

[Sheepshanks]

Butter Face said:

Just thought I'd illustrate something on this too:

Here's a illustrative quote on a £9995 car with a £500 deposit on 48m PCP, 48m HP and 60m HP (48m PCP and 60m HP to get similar payment, all at 6.9% APR.

48m PCP - 48x £188.37 + OFP of £2297.13 - Total interest: £1650.89 - Total payable £11646.89
48m HP - 47x £227.25 + 1x £228.25 - Total interest: £1413 - Total payable £11409
60m HP - 59x £187.66 + 1x £188.66 -Total interest: £1764.60 - - Total payable £11760.60

Now which is the best deal? Depends on if you want to pay £40pm more and own the car after 4 years, or pay the lower amount over 4 years and change it, or pay the lower monthly amount over 5 years and own it.

Car salesmen have insisted to me that "no-one" ever pays the GFV so it's irrelevant - a Honda salesman genuinely seemed baffled why I would even ask what the GFV was.

They plan to get people out of the PCP 6 months early and into a new car. If that's true, then arguably the 3rd option would be cheapest, although likely there's more incentive in the industry to get people onto the PCP treadmill. Indeed Honda were prepared to pay £500 to get us to take a 0% PCP.

[TheStigsWeeBrother]

Butter Face said:

TheStigsWeeBrother said:

Butter Face said:

Just thought I'd illustrate something on this too:

Here's a illustrative quote on a £9995 car with a £500 deposit on 48m PCP, 48m HP and 60m HP (48m PCP and 60m HP to get similar payment, all at 6.9% APR.

48m PCP - 48x £188.37 + OFP of £2297.13 - Total interest: £1650.89 - Total payable £11646.89
48m HP - 47x £227.25 + 1x £228.25 - Total interest: £1413 - Total payable £11409
60m HP - 59x £187.66 + 1x £188.66 -Total interest: £1764.60 - - Total payable £11760.60

Now which is the best deal? Depends on if you want to pay £40pm more and own the car after 4 years, or pay the lower amount over 4 years and change it, or pay the lower monthly amount over 5 years and own it.

All within £350 range of interest charges.

Looking at the 3 examples and if the OFP is a true reflection for what the car will be worth then for less than £40pm I would go for option 2 and have equity of £2.3k as opposed to finding £2.3k to own it.

Well yes, that's the right answer if you're happy to spend the extra £40pm, some people aren't. That's where PCP shines, for an extra £250 interest over 4 years (£5pm roughly) you 'save' £40pm on the payments (£35pm real world) compared to the HP.

Horses for courses and all that.

This is exactly the point though,if £10 per week is the deal breaker then £2.3k at the end is going to seem like a lottery win.

Edited by TheStigsWeeBrother on Thursday 17th January 11:57

[jimPH]

Deep Thought said:

Indeed. Hindsight is 20/20. If asked by a family member, i advise, and if not asked, i try to subtly pitch ideas where appropriate. No point in getting peoples backs up just because they want to do something different than me.

No one's got their back up about anything on a personal level. I did advise, it was ignored and I don't have any problem with his choice, it's his choice. I don't agree with it, but I'm certainly not telling him that. This is just my opinion from the sidelines, I'm still there for him in every other way. Who's extrapolating assumptions now?

[Deep Thought]

jimPH said:

Butter Face said:

The wonderful thing about learning from your mistakes is being able to make them in the first place. It may have been a mistake him buying the car on finance, it may be one of the best moves he'll ever make.

Just because you've had your go, made your mistakes (which I'm sure you've mentioned you have), don't expect anyway to learn from your fk ups

A suprisingly irresponsible post in this new age of health and safety culture (key word here, culture), where past mistakes are the very foundation, with which to ensure no repeat occurence. But thanks for your contribution.

Its a realistic pragmatic view though - advise family members if asked, suggest if not asked, but no point in getting angry on the internet because they dont listen.

[Butter Face]

jimPH said:

But thanks for your contribution.

Appreciated, thanks for the kudos.

FWIW I believe in offering advice where appropriate, but expecting your teenage nephew to base any of his buying decisions with his own money around the things you did 20/30/40 years ago is pretty damn stupid and getting all mad because he wanted the 'shiny shiny' on the 'never never' (not your words, but they're phrases I like when they get thrown around) is just a bit odd.

[Butter Face]

Sheepshanks said:

although likely there's more incentive in the industry to get people onto the PCP treadmill.

Not really, in most cases the dealership gets paid a % of the amount finance regardless of HP, PCP, term etc.

It retains customers better, as they have to do something at the end, and you're right that the majority ('no-one' is of course a silly comment) of people don't every pay the GFV, but in most cases they were never going to do so anyway.

[Deep Thought]

Sheepshanks said:

Butter Face said:

Just thought I'd illustrate something on this too:

Here's a illustrative quote on a £9995 car with a £500 deposit on 48m PCP, 48m HP and 60m HP (48m PCP and 60m HP to get similar payment, all at 6.9% APR.

48m PCP - 48x £188.37 + OFP of £2297.13 - Total interest: £1650.89 - Total payable £11646.89
48m HP - 47x £227.25 + 1x £228.25 - Total interest: £1413 - Total payable £11409
60m HP - 59x £187.66 + 1x £188.66 -Total interest: £1764.60 - - Total payable £11760.60

Now which is the best deal? Depends on if you want to pay £40pm more and own the car after 4 years, or pay the lower amount over 4 years and change it, or pay the lower monthly amount over 5 years and own it.

Car salesmen have insisted to me that "no-one" ever pays the GFV so it's irrelevant - a Honda salesman genuinely seemed baffled why I would even ask what the GFV was.

They plan to get people out of the PCP 6 months early and into a new car. If that's true, then arguably the 3rd option would be cheapest, although likely there's more incentive in the industry to get people onto the PCP treadmill. Indeed Honda were prepared to pay £500 to get us to take a 0% PCP.

And they're probably not far wrong. The point i think being though that for PCP to be being billed as such a bad thing, in the above example theres only a few pounds difference in interest charges involved and some people might find merit in the lower payment.

Yes, the sales people will want you to change your car and do the same again but thats their job. Cant fault anyone for that.

[Deep Thought]

Butter Face said:

Sheepshanks said:

although likely there's more incentive in the industry to get people onto the PCP treadmill.

Not really, in most cases the dealership gets paid a % of the amount finance regardless of HP, PCP, term etc.

It retains customers better, as they have to do something at the end, and you're right that the majority ('no-one' is of course a silly comment) of people don't every pay the GFV, but in most cases they were never going to do so anyway.

.... on the basis that only a small minority will buy a car and run it for > 4 years anyway.

[anonymous-user]

jimPH said:

Deep Thought said:

Indeed. Hindsight is 20/20. If asked by a family member, i advise, and if not asked, i try to subtly pitch ideas where appropriate. No point in getting peoples backs up just because they want to do something different than me.

No one's got their back up about anything on a personal level. I did advise, it was ignored and I don't have any problem with his choice, it's his choice. I don't agree with it, but I'm certainly not telling him that. This is just my opinion from the sidelines, I'm still there for him in every other way. Who's extrapolating assumptions now?

It’s clearly caused you enough consternation to come on the Internet, repeatedly, and assert that somehow a commercial organisation should have acted as a member of your family’s financial and decision making compass.

[Deep Thought]

jimPH said:

Deep Thought said:

Indeed. Hindsight is 20/20. If asked by a family member, i advise, and if not asked, i try to subtly pitch ideas where appropriate. No point in getting peoples backs up just because they want to do something different than me.

No one's got their back up about anything on a personal level. I did advise, it was ignored and I don't have any problem with his choice, it's his choice. I don't agree with it, but I'm certainly not telling him that. This is just my opinion from the sidelines, I'm still there for him in every other way. Who's extrapolating assumptions now?

It was more from a you can lead a horse to water... type scenario. None of us can force relatives to do any particular thing and i apologise if you felt the insinuation was that you got your relatives backs up doing it

See - people can be nice to each other on forums.

But it does make you come across as angry on the internet about it. Cant change it, so why be angry about it. The products not necessarily a bad product. People may misuse it though.