Discussion
Bought a car (for wife) on PCP 2.5 years ago, eyes open, reasonable interest, no complaints. Now wondering what to do at the end - if I want another new car I will have to order in the next couple of months. I have the cash to buy the car outright and my wife really likes it.
Car cost £55k
Discount of £5k
GMFV £28k at 3 years (in 6 months)
Trade in value on website £23k (now)!
WBAC value £26k (now)
Extended warranty will be £1k / year, plus another £250 for the tracker
Cost to buy the same car from a dealer now (with 2 years warranty and tracker) £33k
I’m going to actually go into the dealer and see what the real trade in value I can get for it is, but if it’s below £28k, would I be mad to still consider keeping the car? It’s still cheaper than it would be to buy an approved used model and other than a bit of interest I wouldn’t be any worse off than those who advocate buying outright at the beginning. Of course I can get another new one for £50k again (still with a GMFV or £28k) but I didn’t really want to go down the route of having a new car every 3 years (5 is about right I think).
Car cost £55k
Discount of £5k
GMFV £28k at 3 years (in 6 months)
Trade in value on website £23k (now)!
WBAC value £26k (now)
Extended warranty will be £1k / year, plus another £250 for the tracker
Cost to buy the same car from a dealer now (with 2 years warranty and tracker) £33k
I’m going to actually go into the dealer and see what the real trade in value I can get for it is, but if it’s below £28k, would I be mad to still consider keeping the car? It’s still cheaper than it would be to buy an approved used model and other than a bit of interest I wouldn’t be any worse off than those who advocate buying outright at the beginning. Of course I can get another new one for £50k again (still with a GMFV or £28k) but I didn’t really want to go down the route of having a new car every 3 years (5 is about right I think).
Either way
If you buy it at the end of the pcp it will cost you £28k
If it’s worth £23k now and you only want to keep it two years you’d be mad to “buy” it for £28k in six months time
You’d be better off handing it back and negotiating a fresh deal
If the dealer gives you £28k for a £23k (or less ) car against a £50k car then you have paid “at least” £5k too much for the new one
If you buy it at the end of the pcp it will cost you £28k
If it’s worth £23k now and you only want to keep it two years you’d be mad to “buy” it for £28k in six months time
You’d be better off handing it back and negotiating a fresh deal
If the dealer gives you £28k for a £23k (or less ) car against a £50k car then you have paid “at least” £5k too much for the new one
For me that's the problem PCP. Even when you have the money to pay for the car at the end of the deal you're either paying too much for it (28k vs 23/26k) or you're forced to buy something else and will lose a load more money on depreciation.
That said, if you like the car I'd take the hit and pay 28k for it. Cheaper than starting again on another 55k car losing 27k over 2.5 years... you could even keep it for another 2.5 years and throw it away and only be 1k worse off (assuming depreciation curve is exactly the same etc.)
That said, if you like the car I'd take the hit and pay 28k for it. Cheaper than starting again on another 55k car losing 27k over 2.5 years... you could even keep it for another 2.5 years and throw it away and only be 1k worse off (assuming depreciation curve is exactly the same etc.)
As well as the cost of the final payment vs what you think it's actually worth, there's an argument for considering the value in it being a known quantity to you, rather than someone else's used car.
Trade in/sale value is a factor if you were thinking of paying the car off and selling it, if you're thinking of buying an equivalent or keeping it, it's probably the cost of getting a new one that matters - even if they want £2k more than they'll give you for it to keep it, if the cheapest you can get another for is £2k+ more still, well, there you go, it's a bit of a moot point that they're not "worth" that.
Trade in/sale value is a factor if you were thinking of paying the car off and selling it, if you're thinking of buying an equivalent or keeping it, it's probably the cost of getting a new one that matters - even if they want £2k more than they'll give you for it to keep it, if the cheapest you can get another for is £2k+ more still, well, there you go, it's a bit of a moot point that they're not "worth" that.
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