How do you use PCP?
Discussion
Joe5y said:
I'm still struggling to understand how a PCP is attractive to anyone? To buy a c£22,500 car the total repayment could be c£30,000 with limited mileage - why would you write off £7,500 if you could afford the car in the first place? Or is it as stated only for people who can't afford the car?
Or,You could buy a car for c £22,500 'cash' from your bank account and after three years of depreciation it would be worth £11k (or less). http://www.theaa.com/car-buying/depreciation
Or,
You could take out a bank loan for £22,500, suffer the same £11,000 depreciation, and have to pay back £660 PM and £24,000 in loan payments. (3yrs @ 3.0% APR).
Joe5y said:
I'm still struggling to understand how a PCP is attractive to anyone? To buy a c£22,500 car the total repayment could be c£30,000 with limited mileage - why would you write off £7,500 if you could afford the car in the first place? Or is it as stated only for people who can't afford the car?
What? That sounds far too high.As an example, Ford currently have the Fiesta ST-2 at £225 a month for 36 months, so £8100. Deposit is £4629, optional final payment is £9655. There's a couple of £10 admin charges listed as well.
Total comes to about £1150 more than the outright price of £21245. Mileage limit is 9k per year.
Doesn't seem at all horrific to me. It's 5% higher than a cash price, yes, but I wouldn't lose sleep over it, and the mileage limit would be plenty for me.
silentbrown said:
Joe5y said:
I'm still struggling to understand how a PCP is attractive to anyone? To buy a c£22,500 car the total repayment could be c£30,000 with limited mileage - why would you write off £7,500 if you could afford the car in the first place? Or is it as stated only for people who can't afford the car?
"I'm still struggling to understand how a mortgage is attractive to anyone? To buy a c£400,000 house the total repayment could be c£500,000 - why would you write off £100,000 if you could afford the house in the first place? Or is it as stated only for people who can't afford the house?"Joe5y said:
I'm still struggling to understand how a PCP is attractive to anyone? To buy a c£22,500 car the total repayment could be c£30,000 with limited mileage - why would you write off £7,500 if you could afford the car in the first place? Or is it as stated only for people who can't afford the car?
If you don't want to own the car... A la Tesla Betamax...In the end, it only needs to be worth £20k at 3 years old and we've won by buying it outright, which on a £150k car is pretty likely, so we bought it.
Joe5y said:
I'm still struggling to understand how a PCP is attractive to anyone? To buy a c£22,500 car the total repayment could be c£30,000 with limited mileage - why would you write off £7,500 if you could afford the car in the first place? Or is it as stated only for people who can't afford the car?
Car cost £22,500At 3 years sell for £10,000
Lost opportunity cost on £22,500 @ 5% £3633
Total cost £16,133
Cost to buy PCP
Deposit £2,500
Manufacturer contribution £2,500
36 months @ 277 (5.9% APR)
(GMFV £10,000 - not paid as car handed back)
Lost opportunity cost on £2,500 @5% £404
Lost opportunity cost on 36x£277 approx £700
Total cost £16,076
Plus PCP allows you to buy the car or get rid of it if the GFMV plummets because the government/council demonises diesel.
Excellent. It must be a week since we've had this.
Let's play PH Bingo.
- One point - First poster who claims that the world's going to hell in a hand-cart because Mercedes Benz/Audi/BMW/VW have attractive finance offers that mean 24 year olds who live at home can now buy them
- One point - Anyone who finances anything can't afford it (houses, cars, women) and they're being financially irresponsible because a meteorite might hit their place of work tomorrow, making them redundant, and how will they afford it then? Eh?
- One point - There's a man who drinks in the village pub who buys all his cars for cash, lives in an expensive house (that he paid for in cash) who's got a mega investment strategy that gives 100% return, so in effect his cars are free. He can't tell me what it is, but I copy him by driving a 15 year old Corsa, living in a squat, and investing in a super secret crypto-currency whilst looking down on the plebs who drive PCP'd Audi's and mortgaged 4 bed houses on the New Build Development outside the village.
- One point - So-called prestige car brands are devaluing themselves by selling more cars to people through attractive financial packages that make more sense than buying a car. Some of the people you see driving German now would have struggled to buy a Ford, in my day. They're no-longer aspirational and they're going to go bankrupt because of it. Mark my words.
- One point - PCP is responsible for the death of car colours and the reason why we fiscally prudent individuals have to drive around in old Volvo's because we wouldn't be seen dead in a Grey, Silver or White car.
- One point - PCP should be killed because it means no-one looks after their cars anymore. Time was I could buy a 9 year old Audi and fix it using bailer twine and the hopes of a thousand small children. Now they're disposable, it's not the same anymore.
- One point - Who cares how people finance their car. My son's girlfriend's dad's a plumber, and he always buys a new X5 on Finance. Says it's cheaper and he's doing well for himself.
- One point - There's a phrase that the Upper Class use "If it flies, floats or fornicates, rent it". I apply that to cars.
- One point - Warren Buffet says always finance a depreciating asset (extra points if the car in question is an Audi A3)
Let's play PH Bingo.
- One point - First poster who claims that the world's going to hell in a hand-cart because Mercedes Benz/Audi/BMW/VW have attractive finance offers that mean 24 year olds who live at home can now buy them
- One point - Anyone who finances anything can't afford it (houses, cars, women) and they're being financially irresponsible because a meteorite might hit their place of work tomorrow, making them redundant, and how will they afford it then? Eh?
- One point - There's a man who drinks in the village pub who buys all his cars for cash, lives in an expensive house (that he paid for in cash) who's got a mega investment strategy that gives 100% return, so in effect his cars are free. He can't tell me what it is, but I copy him by driving a 15 year old Corsa, living in a squat, and investing in a super secret crypto-currency whilst looking down on the plebs who drive PCP'd Audi's and mortgaged 4 bed houses on the New Build Development outside the village.
- One point - So-called prestige car brands are devaluing themselves by selling more cars to people through attractive financial packages that make more sense than buying a car. Some of the people you see driving German now would have struggled to buy a Ford, in my day. They're no-longer aspirational and they're going to go bankrupt because of it. Mark my words.
- One point - PCP is responsible for the death of car colours and the reason why we fiscally prudent individuals have to drive around in old Volvo's because we wouldn't be seen dead in a Grey, Silver or White car.
- One point - PCP should be killed because it means no-one looks after their cars anymore. Time was I could buy a 9 year old Audi and fix it using bailer twine and the hopes of a thousand small children. Now they're disposable, it's not the same anymore.
- One point - Who cares how people finance their car. My son's girlfriend's dad's a plumber, and he always buys a new X5 on Finance. Says it's cheaper and he's doing well for himself.
- One point - There's a phrase that the Upper Class use "If it flies, floats or fornicates, rent it". I apply that to cars.
- One point - Warren Buffet says always finance a depreciating asset (extra points if the car in question is an Audi A3)
I have had PCP on a couple of cars, I did it because I did not have enough cash to buy either of them outright, and even if I had, it is good to have some cash in the bank for when things go wrong in life, for example a new boiler for the house etc.
Currently I have 2 cars, one shed type barge for commuting and one toy for the weekend, neither are on PCP as they are both around 15-20 years old. I would certainly consider PCP again if I decided to go back to having one newer car that fulfills all needs, but I find I swap cars too much to commit to something for 3 or 4 years.
Currently I have 2 cars, one shed type barge for commuting and one toy for the weekend, neither are on PCP as they are both around 15-20 years old. I would certainly consider PCP again if I decided to go back to having one newer car that fulfills all needs, but I find I swap cars too much to commit to something for 3 or 4 years.
Tom_Spotley_When said:
Excellent. It must be a week since we've had this.
Let's play PH Bingo.
- One point - First poster who claims that the world's going to hell in a hand-cart because Mercedes Benz/Audi/BMW/VW have attractive finance offers that mean 24 year olds who live at home can now buy them
- One point - Anyone who finances anything can't afford it (houses, cars, women) and they're being financially irresponsible because a meteorite might hit their place of work tomorrow, making them redundant, and how will they afford it then? Eh?
- One point - There's a man who drinks in the village pub who buys all his cars for cash, lives in an expensive house (that he paid for in cash) who's got a mega investment strategy that gives 100% return, so in effect his cars are free. He can't tell me what it is, but I copy him by driving a 15 year old Corsa, living in a squat, and investing in a super secret crypto-currency whilst looking down on the plebs who drive PCP'd Audi's and mortgaged 4 bed houses on the New Build Development outside the village.
- One point - So-called prestige car brands are devaluing themselves by selling more cars to people through attractive financial packages that make more sense than buying a car. Some of the people you see driving German now would have struggled to buy a Ford, in my day. They're no-longer aspirational and they're going to go bankrupt because of it. Mark my words.
- One point - PCP is responsible for the death of car colours and the reason why we fiscally prudent individuals have to drive around in old Volvo's because we wouldn't be seen dead in a Grey, Silver or White car.
- One point - PCP should be killed because it means no-one looks after their cars anymore. Time was I could buy a 9 year old Audi and fix it using bailer twine and the hopes of a thousand small children. Now they're disposable, it's not the same anymore.
- One point - Who cares how people finance their car. My son's girlfriend's dad's a plumber, and he always buys a new X5 on Finance. Says it's cheaper and he's doing well for himself.
- One point - There's a phrase that the Upper Class use "If it flies, floats or fornicates, rent it". I apply that to cars.
- One point - Warren Buffet says always finance a depreciating asset (extra points if the car in question is an Audi A3)
Let's play PH Bingo.
- One point - First poster who claims that the world's going to hell in a hand-cart because Mercedes Benz/Audi/BMW/VW have attractive finance offers that mean 24 year olds who live at home can now buy them
- One point - Anyone who finances anything can't afford it (houses, cars, women) and they're being financially irresponsible because a meteorite might hit their place of work tomorrow, making them redundant, and how will they afford it then? Eh?
- One point - There's a man who drinks in the village pub who buys all his cars for cash, lives in an expensive house (that he paid for in cash) who's got a mega investment strategy that gives 100% return, so in effect his cars are free. He can't tell me what it is, but I copy him by driving a 15 year old Corsa, living in a squat, and investing in a super secret crypto-currency whilst looking down on the plebs who drive PCP'd Audi's and mortgaged 4 bed houses on the New Build Development outside the village.
- One point - So-called prestige car brands are devaluing themselves by selling more cars to people through attractive financial packages that make more sense than buying a car. Some of the people you see driving German now would have struggled to buy a Ford, in my day. They're no-longer aspirational and they're going to go bankrupt because of it. Mark my words.
- One point - PCP is responsible for the death of car colours and the reason why we fiscally prudent individuals have to drive around in old Volvo's because we wouldn't be seen dead in a Grey, Silver or White car.
- One point - PCP should be killed because it means no-one looks after their cars anymore. Time was I could buy a 9 year old Audi and fix it using bailer twine and the hopes of a thousand small children. Now they're disposable, it's not the same anymore.
- One point - Who cares how people finance their car. My son's girlfriend's dad's a plumber, and he always buys a new X5 on Finance. Says it's cheaper and he's doing well for himself.
- One point - There's a phrase that the Upper Class use "If it flies, floats or fornicates, rent it". I apply that to cars.
- One point - Warren Buffet says always finance a depreciating asset (extra points if the car in question is an Audi A3)
Should be a automated reply to all PCP threadsAlways used a bank loan to fund car purchases but if I were to use PCP it would be either because I didn't have the cash to buy it and the 'want' was so much that I'd find a way of getting it anyway or it could be that I did have the cash (if it was relatively cheap) but either had better use for it or the PCP cost over the term would work out less than the depreciation
The PCP vs cash purchase “all things equal” is somewhat overly simplifying the argument.
Surely you choose the “best deal” for whatever you circumstances are. Yes, PCP can trap the financially ignorant as they may only see “low monthlies” but mostly I have used it where it gives flexibility around a financial commitment including total cost of ownership, risk-management, cash flow, vehicle choice, usage profile, taxation, and planned length of ownership.
Regardless of which method I’ve used to buy cars, the options are understood and where possible the outcomes are pre-planned. For the record I’ve bought outright, HP, PCP and contract hire in the past. I’ve never used a bank loan as it’s never been an attractive option, interestingly.
I have a car coming to the end of it’s PCP in March and am paying the settlement figure as it’s worth more than the GFV and I have decided to keep it for another few years. I also have a car on contract hire and additionally paid cash for new bike and another second hand car in the last few month.
Surely you choose the “best deal” for whatever you circumstances are. Yes, PCP can trap the financially ignorant as they may only see “low monthlies” but mostly I have used it where it gives flexibility around a financial commitment including total cost of ownership, risk-management, cash flow, vehicle choice, usage profile, taxation, and planned length of ownership.
Regardless of which method I’ve used to buy cars, the options are understood and where possible the outcomes are pre-planned. For the record I’ve bought outright, HP, PCP and contract hire in the past. I’ve never used a bank loan as it’s never been an attractive option, interestingly.
I have a car coming to the end of it’s PCP in March and am paying the settlement figure as it’s worth more than the GFV and I have decided to keep it for another few years. I also have a car on contract hire and additionally paid cash for new bike and another second hand car in the last few month.
john41901 said:
Lol. The only rule is that if you want to piss money away and are clearly financially illiterate then PCP is your 'vehicle' of choice.
What do you drive John ?Surely given that you have joined the UK’s no 1 motoring forum you’re happy to talk about cars rather than their owners ?
InitialDave said:
There's definitely an interesting division in tone and the level of explanation for their stance given in the posts on one side of the PCP argument in comparison to those on the other.
The anomaly in the whole thing that only one camp of people seems to see it as an argument in the basic”for or against” sense. Those who aren’t in the “PCP is exclusively for idiots who can’t afford cars and cash is the only way to do it” camp aren’t actually saying “PCP is the best, sole and only way forward” and never have been as far as I can tell.
Edited by anonymous-user on Tuesday 22 January 17:41
Prohibiting said:
Because a brand new BMW 320D looks amazing sat on my driveway and office car park. Everyone can see how amazingly well I'm doing in life. But shhhh, don't tell them I'm chucking £400/month for the privilege.
Oh look another empty garagist having a pop at how other people spend their money in a cliche riddled sentence or two 
It’s nothing if not predictable
Brooking10 said:
The anomaly in the whole thing that only one camp of people seems to see it as an argument in the basic”for or against” sense.
Those who aren’t in the “PCP is for idiots who can’t afford cars and cash is the only way to do it” aren’t actually saying “PCP is the best, sole and only way forward” and never have been as far as I can tell.
I agree. But there's definitely two camps, and the difference in the way they come across is noticeable.Those who aren’t in the “PCP is for idiots who can’t afford cars and cash is the only way to do it” aren’t actually saying “PCP is the best, sole and only way forward” and never have been as far as I can tell.
Joe5y said:
I'm still struggling to understand how a PCP is attractive to anyone? To buy a c£22,500 car the total repayment could be c£30,000 with limited mileage - why would you write off £7,500 if you could afford the car in the first place? Or is it as stated only for people who can't afford the car?
With your total repayment scenario, mileage limits are irrelevant.I really don’t care how people purchase their cars. It really does not interest me at all. Why the subject of PCP or indeed any other mechanism creates so much debate is beyond me.
I also don’t care who drives what, just so long as they are enjoying what they are driving if the car was their choice to buy. This notion that PCP somehow entitles the undeserved to drive a nice car, expressed by some people is utter b
ks. Since when do we sit in judgement and determine who should be driving what? Plainly ridiculous.
As with most things, people will just do what suits them. It really is not that interesting. The cars, however, are interesting...sometimes...so talk about them instead.
I also don’t care who drives what, just so long as they are enjoying what they are driving if the car was their choice to buy. This notion that PCP somehow entitles the undeserved to drive a nice car, expressed by some people is utter b
ks. Since when do we sit in judgement and determine who should be driving what? Plainly ridiculous.As with most things, people will just do what suits them. It really is not that interesting. The cars, however, are interesting...sometimes...so talk about them instead.
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