PCP, lease, bank loan or other

[Draculaw]

Hi everyone

I am in need of a new commuter vehicle. I have a relatively small cash budget, circa £3,000 which has cause me to walk down the path of credit. We're just in the process of purchasing a house (hence low cash budget), so once that's gone through I'll be free to explore other options (at last!). My options are as follows:

1a. Look for an older (c. 2005-2008) 1 series, or a 2008-2010 ish Focus and purchase outright;
1b. As above, but up the budget with a bank loan (2010 ish 1 series or 2014 ish Focus);
2. Go down the lease route and either do 2 years on a Focus (£210/month or so) or 4 years on a 1 or 2 series (£220+ a month); or
3. Go down the PCP route and get whatever.

For the purposes of this exercise, let's assume my budget is sufficient deposit for PCP and I'll likely not purchase at the end of the term.

My question is twofold really; as I will be doing a lot of miles (c. 18,000), is PCP/lease a viable option, or would I be paying through the nose due to my high mileage? My commute is approximately 15,000 p.a. excluding any work from home, so I want to build in sufficient buffer to keep below contracted, if possible. Secondly, from a maintenance/efficiency perspective, how likely am I to offset the monthly costs of lease/PCP against maintenance on an older vehicle? I have to admit, the idea of brand new, no MOT hassle and warranty is appealing, particularly if I were to look at a BMW driven general maintenance costs.

Realistically I will be seeing a significant increase in income plus a car allowance in around 2 years, so that may inform the decision slightly and kakes me wonder if a leased focus would be best short term.

Thanks in advance. Alternate suggestions are more than welcome. I would really like something with a bit of "fun", hence the RWD options.

[Chainsaw Rebuild]

You could buy something outright for £3000. The choice is broad; from MX5s to sensible hatches to barges. It will save you lots of money for a house/toys

[Draculaw]

Thanks Chainsaw. I am tempted to just keep to capital payment, however I am a little concerned about older vehicles. I got stung the last time I purchased a 10-ish year old car with it needing £1,000 worth of work within a couple of months of purchase (it was only £1,500 to start with). How were older BMWs for reliability? I would really like to have a 1 or 2 series, purely on the basis that I want something a little more fun to commute with, but I don't want to have to shell out a bucket load to repair. I'm very tempted by an approved used with either car finance or a bank loan as a reasonable compromise between brand new and very old. A 120d M Sport appears to be ~£11,000, which isn't too shabby, given that in 4 years I'd still expect it to be in the £6,000-7,000 region.

[CallorFold]

I've just used Lloyds Bank for their Car Finance loan (Hire Purchase). 3.5% which I thought was pretty good. I believe it's only available to existing customers, but other banks seem to offer similar and the rates are better than dealer options. They do a PCP option too. Enabled me to increase my budget and buy something newer and the repayments can be somewhat tailored by you deciding over what term you want to loan X amount.

Edited by CallorFold on Wednesday 11th April 09:37

Edited by CallorFold on Wednesday 11th April 09:49

[KhabibSmesh]

What makes you think a 120d would only lose £4-5k over 4 years?

[Integroo]

It is really up to you. If you borrowed 10k and bought a two year old, low mileage car, that is probably the safest bet of value vs risk. Spending a lot less outright is likely to be the cheapest way of motoring, even taking into account repairs etc, but it does mean that you need to have liquid capital available to replace the clutch when it goes on Christmas eve etc (presuming you are not mechanically minded and can do the work yourself). However, deals on brand new cars with deposit contributions and 0% APR can mean that new is not necessarily that much more expensive than two year old. For example, I have just PCP'd a Fiat 124 Spider with an RRP of 21k but an OTR of 15.5k with 0% APR - 250 down, 214 a month - a two year old example is currently 14-15k. To me, that seems like good value motoring at 2.5k a year. If you do decide to lease/PCP, I would suggest hanging about to find a great deal, rather than saying "I want a 1 Series" walking into Arnold Clark and taking the deal that is offered.

[figtree]

Integroo said:

It is really up to you. If you borrowed 10k and bought a two year old, low mileage car, that is probably the safest bet of value vs risk. Spending a lot less outright is likely to be the cheapest way of motoring, even taking into account repairs etc, but it does mean that you need to have liquid capital available to replace the clutch when it goes on Christmas eve etc (presuming you are not mechanically minded and can do the work yourself). However, deals on brand new cars with deposit contributions and 0% APR can mean that new is not necessarily that much more expensive than two year old. For example, I have just PCP'd a Fiat 124 Spider with an RRP of 21k but an OTR of 15.5k with 0% APR - 250 down, 214 a month - a two year old example is currently 14-15k. To me, that seems like good value motoring at 2.5k a year. If you do decide to lease/PCP, I would suggest hanging about to find a great deal, rather than saying "I want a 1 Series" walking into Arnold Clark and taking the deal that is offered.

Care to share the Fiat details? The other half is looking at these, thanks

[Integroo]

figtree said:

Care to share the Fiat details? The other half is looking at these, thanks

I think the deposit contribution was only available if registered in March (at least that's what I was told), but I suppose no harm in ringing to find out. I went with Fiat Ashington.

Deal was base trim (Classica) only option pearlescent paint (no free ice white left, got pearlescent for same price as metallic). 250 down, 214pcm, 24 months, 0% APR. RRP was c21k with a 5300 deposit contribution and a small dealer contribution making OTR c15.5k and GFV c10.3k.

Lussso trim was I think 258pcm. (Leather, heated seats, touch screen, keyless entry, automatic climate control).

Seems a good deal given nearly new models were c 16 to 17k and two year olds are c 14 to 15k!

[Draculaw]

Thanks for the input. I think I might just use my current capital, and perhaps a bit of credit card debt short term, to get a ~2008 1 series with the newer engine (I realise something like a focus is more practical, but I like BMWs). The PCP deals I could see weren’t all that favourable annoyingly, especially not when insurance costs were added in. I’m generally pretty good when it comes to have liquidity available for repairs etc., so I think that should be ok.

Next year I’ll go down the full credit route and get a new 2 series or similar. It seems like it’s not all that much cheaper to go used in terms of monthly cost, just the depreciation.

KhabibSmesh said:

What makes you think a 120d would only lose £4-5k over 4 years?

Just based on the current second hand market. Given that this is (I believe, could be wrong) the last set of 1 series before they switch to FWD I imagine the later RWD 1 series will hold their value fairly well.

[figtree]

Integroo said:

I think the deposit contribution was only available if registered in March (at least that's what I was told), but I suppose no harm in ringing to find out. I went with Fiat Ashington.

Deal was base trim (Classica) only option pearlescent paint (no free ice white left, got pearlescent for same price as metallic). 250 down, 214pcm, 24 months, 0% APR. RRP was c21k with a 5300 deposit contribution and a small dealer contribution making OTR c15.5k and GFV c10.3k.

Lussso trim was I think 258pcm. (Leather, heated seats, touch screen, keyless entry, automatic climate control).

Seems a good deal given nearly new models were c 16 to 17k and two year olds are c 14 to 15k!

Great, thanks so much.