PCP the way forward!!!!
Discussion
To get some debating going (as recent posts have been quite naff)
I honestly think that come time to change, i will see out the best PCP / lease deal over 2 years (either by lings cars or otherwise) thus having the following advantages :-
(a) quantifiable depreciation costs up front
(b) the ability to compare cars running cost against running cost (as opposed to list price against list price)
(c) hand the car back come trade in time, thus meaning no hands tied when buying next car
(d) all costs declared in a monthly payment
(e) new car every two years
Wont suit a lot of people but those buying new (and somebody has to), surely its the way forward?
I honestly think that come time to change, i will see out the best PCP / lease deal over 2 years (either by lings cars or otherwise) thus having the following advantages :-
(a) quantifiable depreciation costs up front
(b) the ability to compare cars running cost against running cost (as opposed to list price against list price)
(c) hand the car back come trade in time, thus meaning no hands tied when buying next car
(d) all costs declared in a monthly payment
(e) new car every two years
Wont suit a lot of people but those buying new (and somebody has to), surely its the way forward?
The main downside, apart from the fact that it brings into stark reality just how much money you're hosing away every month, is that you're pretty stuck with car for the full term, especially as prices fall.
So if your circumstances change then it could be expensive to get out of the car, and you can't hand it back as on a HP deal because the 50% point is pretty well the full term (as the other 50% will be the GFV).
So if your circumstances change then it could be expensive to get out of the car, and you can't hand it back as on a HP deal because the 50% point is pretty well the full term (as the other 50% will be the GFV).
Edited by Deva Link on Saturday 8th November 23:54
ukdavvy12 said:
Great reasons to lease
Unless you pay 3-6 months payments up front and then your company goes bust after your first drive to the offy and your back to a Raleigh Shoppe
Not that things like that happen these days n the credit crunch
Cheers
True, but usually 3 months payment up front. not that i should be mentioning audi on a bmw forum but they were doing an a6 with leather, nav, autochanger, 18's and all the toys for around £345 (inc vat) inc road tax which worked out at > £330 all in, with just 3 months deposit.Unless you pay 3-6 months payments up front and then your company goes bust after your first drive to the offy and your back to a Raleigh Shoppe
Not that things like that happen these days n the credit crunch
Cheers
I've 'redundancy' insurance, which i would strongly recomment btw.
Good deal on the Audi
Who was that with?
And as an aside Ive always struggled with personal leasing
If you cant afford it would or shouldnt buy it versus paying it off per month with the rest of your cash offsetting the mortgage is more difficult maths than A level Pure and Applied can cope with
Yes you know how much you are in for at 3 years but I generally keep my cars for twice as long
These days the next will be definitely bought second hand at a year so finding a sensible GFV after this will prob be a nightmare
Cheers
Lots of people try to argue against PCP's by quoting their ownn circumstances.
PCP's aren't for everyone - but if you're in the habit of buying a new car every 2-3 yrs then it's worth serious consideration.
They're also good (but not necessarily a "good thing") for people who have nothing and can get into a new car, with no repairs etc etc to worry about, for £99 or so per month.
PCP's aren't for everyone - but if you're in the habit of buying a new car every 2-3 yrs then it's worth serious consideration.
They're also good (but not necessarily a "good thing") for people who have nothing and can get into a new car, with no repairs etc etc to worry about, for £99 or so per month.
I believe ,not 100% sure,that if your lease is UNDER £25000 ,after you have paid half the term you can hand it back and there is nothing the lease company can do.Reckon your credit rating will go kaput, but if you get into trouble it would be good to be able to do that.If im wrong apologies but a year ago a guy in a lease finance house told me this,when i was thinking of using him.
The £25000 figure is a strange one ,because when i used to sell secured loans over £25000 was NOT fsa covered. Less was,hence under £25000 i used to have to put on the paperwork the total cost.However a loan OVER i didnt have to .I was dealing with a lot of of sub prime people Or filthy as we in the trade called them(terrible i know).So the ones who saw the total cost on the paper work on loans under £25000 a lot of the time didnt go for it ,because the interest rate was pretty high (around 13-14% a year ago).However over £25000 the total wasnt on the paperwork and they usually went with it .None of them bothered to work it out for themselves.This to me proves the nonsense that the FSA is.
They were mainly"consolidation" loans so these poor sods were putting themselves even more in the doggy do.
The £25000 figure is a strange one ,because when i used to sell secured loans over £25000 was NOT fsa covered. Less was,hence under £25000 i used to have to put on the paperwork the total cost.However a loan OVER i didnt have to .I was dealing with a lot of of sub prime people Or filthy as we in the trade called them(terrible i know).So the ones who saw the total cost on the paper work on loans under £25000 a lot of the time didnt go for it ,because the interest rate was pretty high (around 13-14% a year ago).However over £25000 the total wasnt on the paperwork and they usually went with it .None of them bothered to work it out for themselves.This to me proves the nonsense that the FSA is.
They were mainly"consolidation" loans so these poor sods were putting themselves even more in the doggy do.
Edited by carlovers on Sunday 9th November 00:48
Deva Link said:
The main downside, apart from the fact that it brings into stark reality just how much money you're hosing away every month, is that you're pretty stuck with car for the full term, especially as prices fall.
So if your circumstances change then it could be expensive to get out of the car, and you can't hand it back as on a HP deal because the 50% point is pretty well the full term (as the other 50% will be the GFV).
I cant see keeping a car for two years being a big hardship, can you?So if your circumstances change then it could be expensive to get out of the car, and you can't hand it back as on a HP deal because the 50% point is pretty well the full term (as the other 50% will be the GFV).
Edited by Deva Link on Saturday 8th November 23:54
If you've bought a new car, and your circumstances change within 2 years, it will be expensive to get out of anyway relative to purchase price no matter how you buy it.
ukdavvy12 said:
Good deal on the Audi
Who was that with?
And as an aside Ive always struggled with personal leasing
If you cant afford it would or shouldnt buy it versus paying it off per month with the rest of your cash offsetting the mortgage is more difficult maths than A level Pure and Applied can cope with
Yes you know how much you are in for at 3 years but I generally keep my cars for twice as long
These days the next will be definitely bought second hand at a year so finding a sensible GFV after this will prob be a nightmare
Cheers
That was with audi themselvesWho was that with?
And as an aside Ive always struggled with personal leasing
If you cant afford it would or shouldnt buy it versus paying it off per month with the rest of your cash offsetting the mortgage is more difficult maths than A level Pure and Applied can cope with
Yes you know how much you are in for at 3 years but I generally keep my cars for twice as long
These days the next will be definitely bought second hand at a year so finding a sensible GFV after this will prob be a nightmare
Cheers
it was working out something like £9000 to run a new a6 with all the toys for two years. Cant be expensive?
On a PCP deal, you can do what you like to it,it's only another form of HP. As long as you can put it back to standard if you are going to hand it back to the finance co as your preferred end of contract option.Depends what the mod is. Some mods add value, so if you are going to trade in and have another, it may be to your advantage to add mods to the car, if the mods make it desirable.If they don't, the dealer may not want to take in px.Leases are also only a finance plan with different tax allowances.Contract hire's ARE different, they are like renting a car from AVIS over a long term, you must leave the car standard for these.
I think PCP deals are getting more and more attractive if you want a new car, mainly cause the market is on its arse and the manufatcurers are giving the cars away to get business.
New A6, costs £30k, but it only costs Audi UK £24k, they can sell it to you for £330x3 x 24 months at £330 = £9000.
That means at the end that car owes them £15k, they will retail it for £19k (remember it is a £30k car really not a £24k car), they have kept the factory busy and they hope to make £4k at the end.
Depends what way the deals go, if interest rates drop to 2 or even 1% then we may start to see deals like in the states with .9% apr on new cars, if that happens then who knows what will be best??
New A6, costs £30k, but it only costs Audi UK £24k, they can sell it to you for £330x3 x 24 months at £330 = £9000.
That means at the end that car owes them £15k, they will retail it for £19k (remember it is a £30k car really not a £24k car), they have kept the factory busy and they hope to make £4k at the end.
Depends what way the deals go, if interest rates drop to 2 or even 1% then we may start to see deals like in the states with .9% apr on new cars, if that happens then who knows what will be best??
I got a quote for PCP on a second hand 120d from a dealer, and although the monthly figure looks good, unless you absolutely need the hand-back facility because you can't be bothered to sell it (for more than the balloon), it didn't appear to actually work out very cost effective.
I think from memory the figures I were given are as follows, 3 year old car costing £13k, pay £4k (30%) deposit, then £180 a month over 3 years with a hand-in value of around £5k. When you work that out, the total amount you pay out is around £10500 in 3 years, then you hand back (most likely) £6-7k's worth of car or fork out £5k to keep it.
I found I'd be much better off by borrowing the entire £9k I'd need financing (£13k-£4k deposit), but to keep the monthly's down borrow it over a term that gives the same £180 a month repayments, i.e about 5 years. After 3 years, I'd only have about £4k left on the loan as a "balloon payment" if I wanted to get rid of the finance at that point (so over £1k up on the PCP balloon), or I have a car almost certainly worth a lot more than the remaining £4k loan, which means if I wanted shot of the car at that point, at absolute worse case I could give it away for £4k and still be even compared to giving the car back on a PC plan.
Granted its a little more hassle than simply handing back the keys if you take that option, but given the fact the car is almost always going to be worth significantly more than the balloon payment set by PCP, most are unlikely do that anyway I'd think, therefore will sell privately anyway.
Maybe the figures add up better on new cars I don't know, but with less depreciation Id have thought second hand PCPs should if anything be more attractive?
I think from memory the figures I were given are as follows, 3 year old car costing £13k, pay £4k (30%) deposit, then £180 a month over 3 years with a hand-in value of around £5k. When you work that out, the total amount you pay out is around £10500 in 3 years, then you hand back (most likely) £6-7k's worth of car or fork out £5k to keep it.
I found I'd be much better off by borrowing the entire £9k I'd need financing (£13k-£4k deposit), but to keep the monthly's down borrow it over a term that gives the same £180 a month repayments, i.e about 5 years. After 3 years, I'd only have about £4k left on the loan as a "balloon payment" if I wanted to get rid of the finance at that point (so over £1k up on the PCP balloon), or I have a car almost certainly worth a lot more than the remaining £4k loan, which means if I wanted shot of the car at that point, at absolute worse case I could give it away for £4k and still be even compared to giving the car back on a PC plan.
Granted its a little more hassle than simply handing back the keys if you take that option, but given the fact the car is almost always going to be worth significantly more than the balloon payment set by PCP, most are unlikely do that anyway I'd think, therefore will sell privately anyway.
Maybe the figures add up better on new cars I don't know, but with less depreciation Id have thought second hand PCPs should if anything be more attractive?
Edited by LocoBlade on Tuesday 11th November 09:34
LocoBlade said:
I think from memory the figures I were given are as follows, 3 year old car costing £13k, pay £4k (30%) deposit, then £180 a month over 3 years
How much dearer than that is a new one? LocoBlade said:
Granted its a little more hassle than simply handing back the keys if you take that option, but given the fact the car is almost always going to be worth significantly more than the balloon payment set by PCP, most are unlikely do that anyway I'd think, therefore will sell privately anyway.
Maybe the figures add up better on new cars I don't know, but with less depreciation Id have thought second hand PCPs should if anything be more attractive?
Look, you're doing what I said not to do - looking at your own circumstances. PCPs don't suit everyone.Maybe the figures add up better on new cars I don't know, but with less depreciation Id have thought second hand PCPs should if anything be more attractive?
PCP's are designed by car manufacturers to put people in NEW cars for relatively low initial outlay. The idea is to boost new car sales and to encourage people to change every 2-3 years.
Often they're heavily subsidised, either with the deposit paid, or low interest rate, or sometimes both. Those incentives won;t be available on a used car.
I don't like PCPs as I think they're designed as traps - generally, once you get to the 3yr changeover point, the most sensible thing to do is take a new car and start another PCP - which is exactly what the manufacturers want.
However some of the PCP deals are now so good and with the residual value of cars being so uncertain, then a PCP can make a lot of sense at the moment.
Deva Link said:
LocoBlade said:
I think from memory the figures I were given are as follows, 3 year old car costing £13k, pay £4k (30%) deposit, then £180 a month over 3 years
How much dearer than that is a new one? Deva Link said:
Look, you're doing what I said not to do - looking at your own circumstances. PCPs don't suit everyone.
What I quoted above has nothing to do with my personal circumstances, whoever applied for the deal above would be getting a bad deal! Im not saying all PCP is bad, all Im saying is do the maths first to make sure its actually a good deal, don't blindly look at the monthly payment and think its only way of getting the car with low monthly repayments. Im sure if you took BMW HP finance on a new car there would be just as many incentives / offers in place to buy as with PCP, so you could still buy in the way I indicated and still get those benefits, but rather than PCP for 3 years, consider taking out BMW HP for 5 years for example.
PCP is probably the most cost effective way of buying a car.
Why?
1) You keep more of your money to spend on other things e.g. mortgage
2) You generally* get a guaranteed future value to protect you from any further drop in residuals (Porsche do not provide this)
3) You can hand back the car after 50% of the term - VT (Voluntary Termination)and your credit rating is NOT affected
4) You can sell the car once you are in equity during the PCP term
5) PCP provides lower monthly payments than HP
6) Secured finance is much easier to get over personal loans in the current climate as the loan is secured against the asset
7) Manufacturer PCP deals often provide higher incentives to dealers, so greater discounts on many cars
That's about all I can think of... I don't work for a finance company, but I do work in the industry.
Buying new or expensive cars for cash is lunacy IMO in this day and age!
Why?
1) You keep more of your money to spend on other things e.g. mortgage
2) You generally* get a guaranteed future value to protect you from any further drop in residuals (Porsche do not provide this)
3) You can hand back the car after 50% of the term - VT (Voluntary Termination)and your credit rating is NOT affected
4) You can sell the car once you are in equity during the PCP term
5) PCP provides lower monthly payments than HP
6) Secured finance is much easier to get over personal loans in the current climate as the loan is secured against the asset
7) Manufacturer PCP deals often provide higher incentives to dealers, so greater discounts on many cars
That's about all I can think of... I don't work for a finance company, but I do work in the industry.
Buying new or expensive cars for cash is lunacy IMO in this day and age!
Dr Jekyll said:
So if there are all these incentives to buy on PCP, HP, whatever, do you get an equivalent discount if you just buy the thing for cash? Or does the dealer need to sell on credit to get the backing from the manufacturer?
A dealer is generally paid commission for each and every finance deal.If the finance deal is manufacturer (captive) provided e.g. BMW FS, BMW could be offering additional incentives, bonuses or discounts on the vehicle.
Generally the manufacturer finance company will offer 0% deals which normal finance companies cannot offer.
You will not get the same deal as a cash buyer... why would you? The dealer will not have the margin to provide the same discounts.
Edited by moff135 on Thursday 13th November 18:38
Gassing Station | BMW General | Top of Page | What's New | My Stuff