Why the PH hatred for PCP?
Discussion
Deep Thought said:
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.
I’d agree with this and same as you, have a credit card which I use for sundries and clear every month. Bit like a recovering alcoholic, for some of us avoiding debt altogether is the only way! 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.
It's a way of the car companies talking you into buying a series of more expensive cars by focusing solely on how to make the monthly repayments as small as possible, then by encouraging you to replace it more often than you need to.
So you end up borrowing over a longer period, paying more in interest and swapping cars constantly just to get that new car smell and to keep up with the Joneses, who are trying their best to keep up with you.
It's a brilliant idea. It's nearly as brilliant as mobile phone companies persuading us to spend up to a grand every two years on the latest phone which we think we're getting for free because it's on a contract.But of course the contract is a clever way of hiding the fact that we're really paying off a very expensive phone. And repeat.
I think PCP is a great thing. It means that there is a steady supply of punters paying the first hit of depreciation so the rest of us can pick up nearly new cars much more cheaply.
So you end up borrowing over a longer period, paying more in interest and swapping cars constantly just to get that new car smell and to keep up with the Joneses, who are trying their best to keep up with you.
It's a brilliant idea. It's nearly as brilliant as mobile phone companies persuading us to spend up to a grand every two years on the latest phone which we think we're getting for free because it's on a contract.But of course the contract is a clever way of hiding the fact that we're really paying off a very expensive phone. And repeat.
I think PCP is a great thing. It means that there is a steady supply of punters paying the first hit of depreciation so the rest of us can pick up nearly new cars much more cheaply.
Deep Thought said:
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.
Countless people literally live pay cheque to pay cheque - some as they cannot control spending whilst others it’s different in that they literally are on the breadline. 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.
So the utaopia for them to build a number of months salary into savings is pie in the Sky.
Welshbeef said:
Countless people literally live pay cheque to pay cheque - some as they cannot control spending whilst others it’s different in that they literally are on the breadline.
So the utaopia for them to build a number of months salary into savings is pie in the Sky.
Agreed. That doesn't make PCP deals or credit cards for that matter wrong for everyone else though?So the utaopia for them to build a number of months salary into savings is pie in the Sky.
Deep Thought said:
Welshbeef said:
Countless people literally live pay cheque to pay cheque - some as they cannot control spending whilst others it’s different in that they literally are on the breadline.
So the utaopia for them to build a number of months salary into savings is pie in the Sky.
Agreed. That doesn't make PCP deals or credit cards for that matter wrong for everyone else though?So the utaopia for them to build a number of months salary into savings is pie in the Sky.
If going for a mortgage though getting a PCP or HP or bank loan is going to hurt affordability calculations
Deep Thought said:
Agreed. That doesn't make PCP deals or credit cards for that matter wrong for everyone else though?
Depends what you mean by "wrong".With a PCP you are making a choice. The good news is that you get a shiny new car and a low (ish) monthly payment. The bad news is that you are locked into that car for several years, you will never own the car (unless you make a balloon payment), and you will pay more in the long run in interest because you are borrowing for a longer period. You get the big hit of the first depreciation.
If you really really want that shiny new car and you can't afford a higher repayment, then PCP is just about your only option. As long as you don't mind paying more for your motoring than almost any other choice (apart from credit cards).
PCPs aren't wrong, but they are generally better news for the car company than for the punter. That's why they were invented. One day we will probably see them in the same light as endowment mortgages or PPI.
Alucidnation said:
Anyone that has to finance a car, simply can't afford it in the first place.
Am i doing this right?
Your missing stating that you have to be mortgage free to properly claim you own the car as you still have outstanding debt and are electing to find pleasure first over clearing the house cost Am i doing this right?
OH has had 2 cars on PCP, one a good deal and one utter s
t.
The good one made perfect sense, was through work (corporate discount), she specd car how she wanted and paid a sensible monthly cost.
I have had a look at leasing as well and as long as your not fussy about what you drive can get a cracking deal.
I do around 15k business miles and worked out that running my shed Vs leasing one of those bargain Octavia's would be near on dead even, with all costs accounted for.
t. The good one made perfect sense, was through work (corporate discount), she specd car how she wanted and paid a sensible monthly cost.
I have had a look at leasing as well and as long as your not fussy about what you drive can get a cracking deal.
I do around 15k business miles and worked out that running my shed Vs leasing one of those bargain Octavia's would be near on dead even, with all costs accounted for.
MrAverage said:
OH has had 2 cars on PCP, one a good deal and one utter st.
The good one made perfect sense, was through work (corporate discount), she specd car how she wanted and paid a sensible monthly cost.
I have had a look at leasing as well and as long as your not fussy about what you drive can get a cracking deal.
I do around 15k business miles and worked out that running my shed Vs leasing one of those bargain Octavia's would be near on dead even, with all costs accounted for.
Plus the hassle of finding a good banger then repairing it vs full OEM Warranty. t. The good one made perfect sense, was through work (corporate discount), she specd car how she wanted and paid a sensible monthly cost.
I have had a look at leasing as well and as long as your not fussy about what you drive can get a cracking deal.
I do around 15k business miles and worked out that running my shed Vs leasing one of those bargain Octavia's would be near on dead even, with all costs accounted for.
It really does make you think plus then the banger you were going to get can go to a lower mile person. Win win.
Inigo Montoya said:
Deep Thought said:
Agreed. That doesn't make PCP deals or credit cards for that matter wrong for everyone else though?
Depends what you mean by "wrong".With a PCP you are making a choice. The good news is that you get a shiny new car and a low (ish) monthly payment. The bad news is that you are locked into that car for several years, you will never own the car (unless you make a balloon payment), and you will pay more in the long run in interest because you are borrowing for a longer period. You get the big hit of the first depreciation.
If you really really want that shiny new car and you can't afford a higher repayment, then PCP is just about your only option. As long as you don't mind paying more for your motoring than almost any other choice (apart from credit cards).
PCPs aren't wrong, but they are generally better news for the car company than for the punter. That's why they were invented. One day we will probably see them in the same light as endowment mortgages or PPI.
Let's say I go to a mortgage advisor and tell him I've got a monthly budget of £1k for my mortgage. He gives me options of paying a straight repayment mortgage and paying my house off in 25 years, or he arranges an interest-only mortgage and an investment, both covered by the £1k per month, and projected to pay my house off in 23 years instead. So long as he has explained the risks involved, I don't see that it is intrinsically a bad idea for me to take it?
Let's say on the other hand, he says "hey, why don't you push the boat out and spend the whole grand on an interest only mortgage, and "make an investment to build up the capital, nudge-nudge, wink-wink"? In that case, yes, I'd totally accept it as a case of mis-selling.
Similarly, if I rock up to a car dealership and say I want to buy a car and run it into the ground over the next 20 years, I'd accept that trying to get me to take a PCP would be bad selling. If, on the other hand, I say "the company says I have to spend the allowance on something fewer than six years old, I'd like to make the process as simple as possible, and I don't want to mess around having to sell a car every few years", then I'd say it would be just as bad selling to try and get me onto a 3yr old used car for cash, even if it had taken much of the depreciation hit already.
From what I can see, the maximum vehicle age stipulation on the cash allowance is probably the big deciding factor here...
Kermit power said:
Whilst I wouldn't necessarily argue the point, I think it's important to point out that there's nothing intrinsically wrong with endowment mortgages or PPI. It's the mis-selling of them which has caused all the problems.
Let's say I go to a mortgage advisor and tell him I've got a monthly budget of £1k for my mortgage. He gives me options of paying a straight repayment mortgage and paying my house off in 25 years, or he arranges an interest-only mortgage and an investment, both covered by the £1k per month, and projected to pay my house off in 23 years instead. So long as he has explained the risks involved, I don't see that it is intrinsically a bad idea for me to take it?
Let's say on the other hand, he says "hey, why don't you push the boat out and spend the whole grand on an interest only mortgage, and "make an investment to build up the capital, nudge-nudge, wink-wink"? In that case, yes, I'd totally accept it as a case of mis-selling.
Similarly, if I rock up to a car dealership and say I want to buy a car and run it into the ground over the next 20 years, I'd accept that trying to get me to take a PCP would be bad selling. If, on the other hand, I say "the company says I have to spend the allowance on something fewer than six years old, I'd like to make the process as simple as possible, and I don't want to mess around having to sell a car every few years", then I'd say it would be just as bad selling to try and get me onto a 3yr old used car for cash, even if it had taken much of the depreciation hit already.
From what I can see, the maximum vehicle age stipulation on the cash allowance is probably the big deciding factor here...
That's an important difference.Let's say I go to a mortgage advisor and tell him I've got a monthly budget of £1k for my mortgage. He gives me options of paying a straight repayment mortgage and paying my house off in 25 years, or he arranges an interest-only mortgage and an investment, both covered by the £1k per month, and projected to pay my house off in 23 years instead. So long as he has explained the risks involved, I don't see that it is intrinsically a bad idea for me to take it?
Let's say on the other hand, he says "hey, why don't you push the boat out and spend the whole grand on an interest only mortgage, and "make an investment to build up the capital, nudge-nudge, wink-wink"? In that case, yes, I'd totally accept it as a case of mis-selling.
Similarly, if I rock up to a car dealership and say I want to buy a car and run it into the ground over the next 20 years, I'd accept that trying to get me to take a PCP would be bad selling. If, on the other hand, I say "the company says I have to spend the allowance on something fewer than six years old, I'd like to make the process as simple as possible, and I don't want to mess around having to sell a car every few years", then I'd say it would be just as bad selling to try and get me onto a 3yr old used car for cash, even if it had taken much of the depreciation hit already.
From what I can see, the maximum vehicle age stipulation on the cash allowance is probably the big deciding factor here...
Dr Jekyll said:
Kermit power said:
Whilst I wouldn't necessarily argue the point, I think it's important to point out that there's nothing intrinsically wrong with endowment mortgages or PPI. It's the mis-selling of them which has caused all the problems.
Let's say I go to a mortgage advisor and tell him I've got a monthly budget of £1k for my mortgage. He gives me options of paying a straight repayment mortgage and paying my house off in 25 years, or he arranges an interest-only mortgage and an investment, both covered by the £1k per month, and projected to pay my house off in 23 years instead. So long as he has explained the risks involved, I don't see that it is intrinsically a bad idea for me to take it?
Let's say on the other hand, he says "hey, why don't you push the boat out and spend the whole grand on an interest only mortgage, and "make an investment to build up the capital, nudge-nudge, wink-wink"? In that case, yes, I'd totally accept it as a case of mis-selling.
Similarly, if I rock up to a car dealership and say I want to buy a car and run it into the ground over the next 20 years, I'd accept that trying to get me to take a PCP would be bad selling. If, on the other hand, I say "the company says I have to spend the allowance on something fewer than six years old, I'd like to make the process as simple as possible, and I don't want to mess around having to sell a car every few years", then I'd say it would be just as bad selling to try and get me onto a 3yr old used car for cash, even if it had taken much of the depreciation hit already.
From what I can see, the maximum vehicle age stipulation on the cash allowance is probably the big deciding factor here...
That's an important difference.Let's say I go to a mortgage advisor and tell him I've got a monthly budget of £1k for my mortgage. He gives me options of paying a straight repayment mortgage and paying my house off in 25 years, or he arranges an interest-only mortgage and an investment, both covered by the £1k per month, and projected to pay my house off in 23 years instead. So long as he has explained the risks involved, I don't see that it is intrinsically a bad idea for me to take it?
Let's say on the other hand, he says "hey, why don't you push the boat out and spend the whole grand on an interest only mortgage, and "make an investment to build up the capital, nudge-nudge, wink-wink"? In that case, yes, I'd totally accept it as a case of mis-selling.
Similarly, if I rock up to a car dealership and say I want to buy a car and run it into the ground over the next 20 years, I'd accept that trying to get me to take a PCP would be bad selling. If, on the other hand, I say "the company says I have to spend the allowance on something fewer than six years old, I'd like to make the process as simple as possible, and I don't want to mess around having to sell a car every few years", then I'd say it would be just as bad selling to try and get me onto a 3yr old used car for cash, even if it had taken much of the depreciation hit already.
From what I can see, the maximum vehicle age stipulation on the cash allowance is probably the big deciding factor here...
Kermit power said:
Let's say I go to a mortgage advisor and tell him I've got a monthly budget of £1k for my mortgage. He gives me options of paying a straight repayment mortgage and paying my house off in 25 years, or he arranges an interest-only mortgage and an investment, both covered by the £1k per month, and projected to pay my house off in 23 years instead. So long as he has explained the risks involved, I don't see that it is intrinsically a bad idea for me to take it?
That's not necessarily an endowment mortgage. Paying off an interest-only mortgage with, say, an index tracker investment is a perfectly legitimate and sensible strategy if you know the risks. It's not for everyone but it can make good financial sense if you know what you're doing.Endowment mortgages got a bad rep when it was revealed just how much of the repayments go back to the adviser who sold it in the first place. Explaining that to the punter doesn't make endowments a good choice.
Inigo Montoya said:
Kermit power said:
Let's say I go to a mortgage advisor and tell him I've got a monthly budget of £1k for my mortgage. He gives me options of paying a straight repayment mortgage and paying my house off in 25 years, or he arranges an interest-only mortgage and an investment, both covered by the £1k per month, and projected to pay my house off in 23 years instead. So long as he has explained the risks involved, I don't see that it is intrinsically a bad idea for me to take it?
That's not necessarily an endowment mortgage. Paying off an interest-only mortgage with, say, an index tracker investment is a perfectly legitimate and sensible strategy if you know the risks. It's not for everyone but it can make good financial sense if you know what you're doing.Endowment mortgages got a bad rep when it was revealed just how much of the repayments go back to the adviser who sold it in the first place. Explaining that to the punter doesn't make endowments a good choice.
MAS said:
Grounds for complaint
- It wasn’t fully explained to you that there could be a shortfall at the end of your mortgage term.
- You were told that the endowment would definitely pay off the mortgage.
- The fees and charges were not explained to you.
- Your adviser didn’t complete an assessment of your financial circumstances and attitude to risk.
- Your endowment policy and mortgage were set up to run into your retirement and your adviser didn’t ensure you would have the income to continue to make payments.
- Your adviser recommended that you cash in an existing endowment and then sold you another.
Sure, big fees might've been a reason for an unscrupulous financial adviser wanting to sell you one, and the same may well be true of PCPs, but that's not in itself a reason for complaint.- It wasn’t fully explained to you that there could be a shortfall at the end of your mortgage term.
- You were told that the endowment would definitely pay off the mortgage.
- The fees and charges were not explained to you.
- Your adviser didn’t complete an assessment of your financial circumstances and attitude to risk.
- Your endowment policy and mortgage were set up to run into your retirement and your adviser didn’t ensure you would have the income to continue to make payments.
- Your adviser recommended that you cash in an existing endowment and then sold you another.
Pure speculation, but I get the feeling that the hatred of PCP on here is more about the hatred of the democratisation of the prestige car.
Back in the day, buying a 2.0 BMW or Mercedes or Audi with cloth seats, hubcaps and no radio when for the same money he could have had a 2.8 Ford or Vauxhall with alloys, leather and a graphic equaliser would mark him out, in his own mind at least, as a man of discernment and taste.
When people asked him why he had done that, he could back them into a corner and bore them with anecdotes about engineering and quality and handling and and and, leaving them feeling educated and him feeling superior.
Of course now that everyone has a German car, even those who don't care about cars, nobody bats an eyelid when he turns up in his new BMW or whatever ( it's petrol, manual AND I paid cash for it don't you know! ) and so all those years of saving and dreaming are wasted.
And I suspect that that is real reason why people decry the things that have made those marques more accessible, more popular (witness the similar contempt for basic 116d / A-class / A1 / A3 models ) and ensured the growth and continuation of those brands.
Back in the day, buying a 2.0 BMW or Mercedes or Audi with cloth seats, hubcaps and no radio when for the same money he could have had a 2.8 Ford or Vauxhall with alloys, leather and a graphic equaliser would mark him out, in his own mind at least, as a man of discernment and taste.
When people asked him why he had done that, he could back them into a corner and bore them with anecdotes about engineering and quality and handling and and and, leaving them feeling educated and him feeling superior.
Of course now that everyone has a German car, even those who don't care about cars, nobody bats an eyelid when he turns up in his new BMW or whatever ( it's petrol, manual AND I paid cash for it don't you know! ) and so all those years of saving and dreaming are wasted.
And I suspect that that is real reason why people decry the things that have made those marques more accessible, more popular (witness the similar contempt for basic 116d / A-class / A1 / A3 models ) and ensured the growth and continuation of those brands.
Wooda80 said:
Pure speculation, but I get the feeling that the hatred of PCP on here is more about the hatred of the democratisation of the prestige car.
Back in the day, buying a 2.0 BMW or Mercedes or Audi with cloth seats, hubcaps and no radio when for the same money he could have had a 2.8 Ford or Vauxhall with alloys, leather and a graphic equaliser would mark him out, in his own mind at least, as a man of discernment and taste.
When people asked him why he had done that, he could back them into a corner and bore them with anecdotes about engineering and quality and handling and and and, leaving them feeling educated and him feeling superior.
Of course now that everyone has a German car, even those who don't care about cars, nobody bats an eyelid when he turns up in his new BMW or whatever ( it's petrol, manual AND I paid cash for it don't you know! ) and so all those years of saving and dreaming are wasted.
And I suspect that that is real reason why people decry the things that have made those marques more accessible, more popular (witness the similar contempt for basic 116d / A-class / A1 / A3 models ) and ensured the growth and continuation of those brands.
End of topic.Back in the day, buying a 2.0 BMW or Mercedes or Audi with cloth seats, hubcaps and no radio when for the same money he could have had a 2.8 Ford or Vauxhall with alloys, leather and a graphic equaliser would mark him out, in his own mind at least, as a man of discernment and taste.
When people asked him why he had done that, he could back them into a corner and bore them with anecdotes about engineering and quality and handling and and and, leaving them feeling educated and him feeling superior.
Of course now that everyone has a German car, even those who don't care about cars, nobody bats an eyelid when he turns up in his new BMW or whatever ( it's petrol, manual AND I paid cash for it don't you know! ) and so all those years of saving and dreaming are wasted.
And I suspect that that is real reason why people decry the things that have made those marques more accessible, more popular (witness the similar contempt for basic 116d / A-class / A1 / A3 models ) and ensured the growth and continuation of those brands.
Kermit power said:
Sure, big fees might've been a reason for an unscrupulous financial adviser wanting to sell you one, and the same may well be true of PCPs, but that's not in itself a reason for complaint.
We're not talking about reasons for complaints. We're talking about whether PCP or endowments or PPI are worth it or not. A poor deal which has been explained to you is still a poor deal.If you go into a Toyota Dealer to buy a new Aygo you can haggle to your heart's content and get the best price possible. Having done the hard bit, you then find you can buy the car at that price on PCP with 0% finance over 3 years.
Maybe I'm a mug, but that suckered me into shaking hands on my 1st ever PCP deal. In fairness, I was going to buy one anyhow 'cause Mrs R fancied one but it did seem like a win/win.
Maybe I'm a mug, but that suckered me into shaking hands on my 1st ever PCP deal. In fairness, I was going to buy one anyhow 'cause Mrs R fancied one but it did seem like a win/win.
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