New Car - PCP vs PCH

[Ethixel]

Hi all,

I'm going to be in the market for a new car in the coming months and fancying an Audi A3 S Line.
I'm wondering what my best option is - PCP vs PCH? When I crunch the numbers, PCH always seems to come off better - yet PCP seems hugely popular in the UK, am I just misunderstanding it?

PCP wise I could go for something like a 66 plate A3 S line 1.4TFSI S Tronic - £19,990 list price:
Regular Monthly Payment
£330.54
Total Price
£19,990.00
Total Deposit - Inc. any deposit contribution
£3,000.00
Balance to Finance
£16,990.00
First Payment
£330.54
Followed by 34 regular monthly payments of
£330.54
Guaranteed Future Value / Optional Payment
£10,084.84
Term of Agreement
36 Months
Total Amount Payable
£24,653.74
APR Representative
12 %
Total Interest Payable
£4,653.74
Acceptance Fee
£0.00
Option to Purchase Fee
£10.00

So essentially £3000 deposit plus 36x £330.54 = £14,899.44, and then hand the car back after 3 years. (8k miles p/a)

on the other hand with PCH, I could lease a BRAND NEW A3 S line 1.5TFSI S Tronic
Deposit: £2,887.20 + £199 admin fee, 23 monthly payments of £320.80 = £7378.40

1) I get a brand new car over a used one
2) My monthly payments are lower, and on a shorter term (if I did it over the same length of 36 the monthly payment would be even lower)
3) I have to hand the car back in both instances so have no equity in either deal?

Am I completely misunderstanding PCP? Or am I way better off PCH?

[Sheepshanks]

PCP doesn't usually work very well on used cars - it was designed to keep car factories churning out new cars.

On new, there's often a hefty deposit contribution and a (relatively) low rate of interest.

[syl]

1) You need to compare the same hire terms (years, mileage) and roughly the same deposit. A moderate/big deposit on a 2 year term can make a sizeable difference compared to the same deposit on a 3 year term.

2) APR Representative 12% is where your PCP example really falls down. You can get 6.9% easily and down towards 3.9% without too much difficultly (eg. Halifax).

[Ethixel]

Sheepshanks said:

PCP doesn't usually work very well on used cars - it was designed to keep car factories churning out new cars.

On new, there's often a hefty deposit contribution and a (relatively) low rate of interest.

Fair enough - but don’t think I’d be able to get a similar PCP deal on a brand new Audi ? Looking at their website they offer no deposit contribution and not really that low interest rates.

[Sheepshanks]

Ethixel said:

Fair enough - but don’t think I’d be able to get a similar PCP deal on a brand new Audi ? Looking at their website they offer no deposit contribution and not really that low interest rates.

Is the lease price a special offer of some sort? It doesn't jump out as being super-cheap, but lease deals come and go quickly often just to shift a few cars.

The other thing to be aware of is leasing isn't flexible - you might be able to get out early by paying a penalty, but generally you should think in terms of being stuck with the car. Of course early-terminating a PCP could be financially painful too if the car is worth less than you owe.

[troika]

With PCP you are a retail customer. Walk into the glass palace and get bent over a shiny new bonnet. With PCH you generally deal via a broker or the fleet dept where it’s all about volume. You never see the blind discount applied so it’s the mechanism by which manufacturers shift metal to hit registration targets. Guess where you’ll get the better deal...

[Mo28]

Ethixel said:

Fair enough - but don’t think I’d be able to get a similar PCP deal on a brand new Audi ? Looking at their website they offer no deposit contribution and not really that low interest rates.

Don't look on their website, they never have any good deals on there. Use Carwow or drive the deal

[scotnoob]

PCP is nearly always terrible for second hand.

However, JLR has a bad new car rate. 5.9 or 6.9apr. They actually do 7.9 on ex demos and some 2/3 year old cars which isnt that different. As long as you drive a hard bargin it might be ok.

Forget it with the germans though. Much better going new on PCP/PCH or very old (4years+) and loan from bank.