Used car & PCP
Discussion
Just a quick question, a family member is considering a PCP on a used car. I’m in no way clued up one these kinda things so I’m doing a bit of research but the my first thought was, who is liable for the repair work on the car? I understand the person leasing will be responsible for any damage but if the engine implodes, are they responsible for fixing it? Or is it up to the lease company?
Cheers!
Cheers!
Hey,
It's worth clarifying that PCP is just a way of funding a car purchase. There is no lease company like with PCH, just a supplying dealer.
When you say repair work, I'm assuming you mean mechanical stuff.
That will, I expect be wholly based on the warranty and aftersales support that comes with the car (manufacturer's, approved used, aftermarket or otherwise) and the PCP aspect doesn't really come into things. Things like rejecting a genuinely faulty car may be a bit easier under the PCP however, due to the involvement of the finance provider.
It's worth clarifying that PCP is just a way of funding a car purchase. There is no lease company like with PCH, just a supplying dealer.
When you say repair work, I'm assuming you mean mechanical stuff.
That will, I expect be wholly based on the warranty and aftersales support that comes with the car (manufacturer's, approved used, aftermarket or otherwise) and the PCP aspect doesn't really come into things. Things like rejecting a genuinely faulty car may be a bit easier under the PCP however, due to the involvement of the finance provider.
Ask them to check terms very carefully and what APR.
Then see what bank loan would cost.
Useful info here
https://www.moneysavingexpert.com/car-finance/pers...
Then see what bank loan would cost.
Useful info here
https://www.moneysavingexpert.com/car-finance/pers...
Generally speaking user car APR on PCP is significantly higher than a bank loan, for example I bought a used BMW 240i a month ago, used PCP APR from BMW was 8.9%, I got a personal loan at 2.9%, that said because of the way PCP is structured with balloon payments it can mean the initial monthly repayment is lower because of the balloon at the end.
It depends how you want to structure the finance and affordability
It depends how you want to structure the finance and affordability
As I thought tbh! Makes sense when as you all say, it's just a way of 'buying' a car.
He's looking at deposit and monthlies, doesn't want to put too much down and doesn't want to spend too much a month. I know, I know, not the most financially efficient way of getting into a car but that's what he's looking at. I've steered him away from a Range Rover Evoque, looking at approved used Mercedes now so at least the first 2 years are covered by warranty.
He's looking at deposit and monthlies, doesn't want to put too much down and doesn't want to spend too much a month. I know, I know, not the most financially efficient way of getting into a car but that's what he's looking at. I've steered him away from a Range Rover Evoque, looking at approved used Mercedes now so at least the first 2 years are covered by warranty.
A bank loan may well be cheaper than PCP but don’t forget that with a PCP at the end of the term you can hand the car back and are not at the whim of residual values. If the car is worth more than the balloon/guaranteed future value you can take the benefit of this but on the other hand....
Most PCP’s have a future value that is relatively conservatively set to allow for some equity to be built.
As others have said, service and repair is up to you.
No doubt many will want to stone you/your friend for even considering financing a car and becoming one of those people that ‘rent’ their car rather than own the most depreciating asset they own (maybe TV’s aside!). I’m sure all those people don’t have mortgages either.
Low level high horse riding complete...
A PCP is a good product and if negotiated the APR should be well under 10%
Most PCP’s have a future value that is relatively conservatively set to allow for some equity to be built.
As others have said, service and repair is up to you.
No doubt many will want to stone you/your friend for even considering financing a car and becoming one of those people that ‘rent’ their car rather than own the most depreciating asset they own (maybe TV’s aside!). I’m sure all those people don’t have mortgages either.
Low level high horse riding complete...
A PCP is a good product and if negotiated the APR should be well under 10%
I recall reading on here (or maybe somewhere else) that a driver got stung when handing back their used car at the end of the agreement.
Say the car was 4 years old, and the agreement was to use it for a further 3 years.
Upon return, they were giving back a 7 year old "well used" car, but the agreement required it to be pretty much dealership condition.
Sad times for the driver I recall, because they had to put right things that were wrong with it when they got it! The root of it was the driver not at all understanding what they'd signed up to.
I also recall that without dealer contributions and manufacturer finance deals, renting a new car was generally worse vfm than renting a new one.
Say the car was 4 years old, and the agreement was to use it for a further 3 years.
Upon return, they were giving back a 7 year old "well used" car, but the agreement required it to be pretty much dealership condition.
Sad times for the driver I recall, because they had to put right things that were wrong with it when they got it! The root of it was the driver not at all understanding what they'd signed up to.
I also recall that without dealer contributions and manufacturer finance deals, renting a new car was generally worse vfm than renting a new one.
Harleyboy said:
No doubt many will want to stone you/your friend for even considering financing a car and becoming one of those people that ‘rent’ their car rather than own the most depreciating asset they own (maybe TV’s aside!). I’m sure all those people don’t have mortgages either.
Low level high horse riding complete...
A PCP is a good product and if negotiated the APR should be well under 10%
Yeah there's a bit of hate for PCPs and the like, he just likes having a smart looking car that's relatively new. He works hard, mid 20s and he's just bought his second property so he's not spending above his means so to speak, he just uses his cash differently. Low level high horse riding complete...
A PCP is a good product and if negotiated the APR should be well under 10%
Ian Geary said:
Upon return, they were giving back a 7 year old "well used" car, but the agreement required it to be pretty much dealership condition.
Sad times for the driver I recall, because they had to put right things that were wrong with it when they got it! The root of it was the driver not at all understanding what they'd signed up to.
I also recall that without dealer contributions and manufacturer finance deals, renting a new car was generally worse vfm than renting a new one.
I will check that stuff out, thanks for the tip. I thought the same, certainly when I was looking for my car you could get some deals on new cars that were so good it made no sense to go for a used model. The cars he is looking at are about £250-£300pm with a low deposit. Equivalent new model is £500+ with a large deposit. Sad times for the driver I recall, because they had to put right things that were wrong with it when they got it! The root of it was the driver not at all understanding what they'd signed up to.
I also recall that without dealer contributions and manufacturer finance deals, renting a new car was generally worse vfm than renting a new one.
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