So, who here is on a PCP/Leasing plan?

[JaredVannett]

As the financially savvy part of the forum I'm curious to know how you fund your cars, in particular from those who are 'comfortable' financially.

A blanket opinion would assume most have bought their cars with cash, so they own the 'asset' rather than having scheduled payments (a liability).

But this got me thinking:

1. Is a car an asset or a liability? - is this dependant on how the car has been purchased? eg. cash = asset or finance plan = liability
2. Isn't Leasing/PCP a really smart idea? - Why pay the full amount for a car when you can just 'lease' for far less, throw the rest of the capital into a SS ISA/Fund and let it grow.

I've often read that wealthy people own assets and have no liabilities. So in this context I'm trying to work out what is financially best when it comes to car buying.


Thoughts and opinions welcome

[JaredVannett]

Interesting viewpoints so far, thanks

Butter Face said:

I for one am very happy that we’re covering this on PH again

Lol, oh I'm all to aware of the many PCP threads on here. My intention with this thread was to gain an understanding what those who are financially comfortable choose to do. For example, is PCP simply for people who cannot afford to pay in full for a new car.... or do those who are smart with money also see it 'opportunity' to drive a new car with minimal outlay and throw the rest of their capital into investments? 'sidicks' post (above) makes a good point.

I have done PCP once, and bought all my other cars for cash - I'll expand on that shortly...

DSLiverpool said:

PCP1, Lease 1, bought 1,
On the pcp I buy used but with makers warranty, and sell it with at least 6 months makers warranty privately.
I want a Range Rover but the 2 year warranty isn’t transferable (because they know they just don’t last I guess). So trying to decide what to do next.

Used PCP? - Hmm, isn't the APR typically horrendous on those?



I only every bought one car on PCP (new), it was a performance vehicle that I could not buy outright. I enjoyed having the new car but after one year I got rid because:

1. Once the novelty had worn off (a few months), the monthly payments started to irritate me. I could afford them, no financial hardship or anything but they were high (performance car).

1. To make the above worse, six months later the manufacturer had already updated the model (facelift), and folks on forums were reporting the new PCP deals they were getting with lower deposits and lower montlies by £100-£150. I had bought the first production year and got the 'best' deal at the time.

I sold the car with small positive equity and ended the PCP. I now drive around in an old 2002 Merc and I'm enjoying a bit of bangernomrics. But it's funny, I feel like this car is an asset and liability. I own the whole thing, but I fear given the age/mileage potential MOT failures and repair bills.

[JaredVannett]

Interesting responses... pretty much a subjective topic then.

I guess it's a case of do what is right for you.

One thing I will say for PCP/Leasing is to truly work out the cost over the term, if your ok with the number looking back at you go for it. I say this from experience as it's so easy to concentrate on the monthlies and miss the big picture.