Never done PCP before - help pls
Discussion
Hi all,
Always bought cars in cash outright but never paid more than £43k for a car.
Looking at a used 2.5yr old Audi Q7 for £55k. Due to having a house built at the min we only want to put in £30k and finance the rest. I’ve never done PCP and not really 100% on it but to me the figures below look like it’s a no brainier to get a brand new one.
Audi PCP on a 2.5yr old Q7
£56k price
£29k upfront
£385 p/m over 4 years
Final payment £21k
9.9% APR
Total cost £69,480
Drive the deal PCP brand new car
£69k price (discounted from £84k list)
£30k upfront
£262 p/m over 3 years
Final payment £34,750
4.9% APR
Total cost £74,182
What am I missing here? Why would anyone choose the used car in this scenario? How can a brand new car only be costing me £5k more than the same spec car that’s 2.5yrs old?
Apologies for the numpty questions.
Always bought cars in cash outright but never paid more than £43k for a car.
Looking at a used 2.5yr old Audi Q7 for £55k. Due to having a house built at the min we only want to put in £30k and finance the rest. I’ve never done PCP and not really 100% on it but to me the figures below look like it’s a no brainier to get a brand new one.
Audi PCP on a 2.5yr old Q7
£56k price
£29k upfront
£385 p/m over 4 years
Final payment £21k
9.9% APR
Total cost £69,480
Drive the deal PCP brand new car
£69k price (discounted from £84k list)
£30k upfront
£262 p/m over 3 years
Final payment £34,750
4.9% APR
Total cost £74,182
What am I missing here? Why would anyone choose the used car in this scenario? How can a brand new car only be costing me £5k more than the same spec car that’s 2.5yrs old?
Apologies for the numpty questions.
JapanRed said:
Hi all,
Always bought cars in cash outright but never paid more than £43k for a car.
Looking at a used 2.5yr old Audi Q7 for £55k. Due to having a house built at the min we only want to put in £30k and finance the rest. I’ve never done PCP and not really 100% on it but to me the figures below look like it’s a no brainier to get a brand new one.
Audi PCP on a 2.5yr old Q7
£56k price
£29k upfront
£385 p/m over 4 years
Final payment £21k
9.9% APR
Total cost £69,480
Drive the deal PCP brand new car
£69k price (discounted from £84k list)
£30k upfront
£262 p/m over 3 years
Final payment £34,750
4.9% APR
Total cost £74,182
What am I missing here? Why would anyone choose the used car in this scenario? How can a brand new car only be costing me £5k more than the same spec car that’s 2.5yrs old?
Apologies for the numpty questions.
I have to admit, I don't understand PCP figures on nearly new cars either. They are almost always higher interest, higher monthly payments and the customer seems equally likely to not pay the optional final payment on both. Maybe they're lured in by the idea of the lower final payment and feel more savvy for buying used but often brand new is genuinely cheaper.Always bought cars in cash outright but never paid more than £43k for a car.
Looking at a used 2.5yr old Audi Q7 for £55k. Due to having a house built at the min we only want to put in £30k and finance the rest. I’ve never done PCP and not really 100% on it but to me the figures below look like it’s a no brainier to get a brand new one.
Audi PCP on a 2.5yr old Q7
£56k price
£29k upfront
£385 p/m over 4 years
Final payment £21k
9.9% APR
Total cost £69,480
Drive the deal PCP brand new car
£69k price (discounted from £84k list)
£30k upfront
£262 p/m over 3 years
Final payment £34,750
4.9% APR
Total cost £74,182
What am I missing here? Why would anyone choose the used car in this scenario? How can a brand new car only be costing me £5k more than the same spec car that’s 2.5yrs old?
Apologies for the numpty questions.
SuperNads said:
I have to admit, I don't understand PCP figures on nearly new cars either. They are almost always higher interest, higher monthly payments and the customer seems equally likely to not pay the optional final payment on both. Maybe they're lured in by the idea of the lower final payment and feel more savvy for buying used but often brand new is genuinely cheaper.
Indeed, the interest rate for a used car on PCP is twice as high and when taking into account 'deposit contributions' and the like it is difficult to see the advantage of buying used if financing via PCP.I note the with the two examples quoted by the OP one was for three years while the other was for four so not comparing apples with apples
when we were looking at new cars for my wife and settled on a Tiguan I looked at what was available nearly new and then found that we could order a new one through drive the deal for less than 1 year old models were being advertised for,
that didn't even take into consideration the different interest rates on new vs used PCP's.
another option you might want to consider is to take the new car PCP deal to get the discount then if possible get a bank loan for the remaining balance at a lower rate and pay it off straight away which is basically what we did with the Tiguan
It just shows the importance of doing some research and shopping around before spending large amounts of money on a new car.
Shug89 said:
You're missing £19,182.
Question, answered.
Not sure if you're missing the point, or being silly.Question, answered.
Edited by Shug89 on Friday 16th July 09:46
The used PCP
£29,000 up front
£18,480 in monthlies (385 x 48)
£21,000 optional final
£68,480 total, if bought outright
The new PCP
£31,000 up front
£9,432 in monthlies (262 x 36)
£34,750 optional final
£75,182 total, if bought outright
£6,702 extra cost to buy one brand new.
If helps OP, I was looking at used EVs, and currently there are plenty of examples where a used one (6-12 m/o, few thousand miles on it) is around £29k on PCP. If I order one brand new, I can get it for around £23k on PCP.
Part of this is the manufacturer offering near £2k contribution, but also the APR is half on new than it is used.
I think the semiconductor shortage is challenging people who are impatient to stump up, rather than wait 6 months for their order.
I would imagine you are one of very few people who would put 30k down on a Q7. That's why the numbers end up so similar. Most people are paying 800p/m +
You can get a much better interest rate than 4.9% from a bank for the remainder.
I would not use PCP with such a big deposit, on something that is not that special a car.
You can get a much better interest rate than 4.9% from a bank for the remainder.
I would not use PCP with such a big deposit, on something that is not that special a car.
Out of curiosity, what kind of Q7 are you looking at?
We got a facelift car delivered new just before lockdown in March 2020, if I remember correctly the “price” on the PCP document was 56k for a brand new 55tfsi Black Edition with Comfort and Sound, panoramic sunroof, and a few other nice extras. For context, we’re paying £500ish a month, we put down £4k and there was a £5k deposit contribution scheme from Audi.
Prices have just gone absolutely nuts right now hahaha
We got a facelift car delivered new just before lockdown in March 2020, if I remember correctly the “price” on the PCP document was 56k for a brand new 55tfsi Black Edition with Comfort and Sound, panoramic sunroof, and a few other nice extras. For context, we’re paying £500ish a month, we put down £4k and there was a £5k deposit contribution scheme from Audi.
Prices have just gone absolutely nuts right now hahaha
JapanRed said:
Hi all,
Always bought cars in cash outright but never paid more than £43k for a car.
Looking at a used 2.5yr old Audi Q7 for £55k. Due to having a house built at the min we only want to put in £30k and finance the rest. I’ve never done PCP and not really 100% on it but to me the figures below look like it’s a no brainier to get a brand new one.
Audi PCP on a 2.5yr old Q7
£56k price
£29k upfront
£385 p/m over 4 years
Final payment £21k
9.9% APR
Total cost £69,480
Drive the deal PCP brand new car
£69k price (discounted from £84k list)
£30k upfront
£262 p/m over 3 years
Final payment £34,750
4.9% APR
Total cost £74,182
What am I missing here? Why would anyone choose the used car in this scenario? How can a brand new car only be costing me £5k more than the same spec car that’s 2.5yrs old?
Apologies for the numpty questions.
Why not put £30k down on the 2.5 year old car, get a personal loan for the other £25k at <3% APR, pay £500 a month and own it outright at the end?Always bought cars in cash outright but never paid more than £43k for a car.
Looking at a used 2.5yr old Audi Q7 for £55k. Due to having a house built at the min we only want to put in £30k and finance the rest. I’ve never done PCP and not really 100% on it but to me the figures below look like it’s a no brainier to get a brand new one.
Audi PCP on a 2.5yr old Q7
£56k price
£29k upfront
£385 p/m over 4 years
Final payment £21k
9.9% APR
Total cost £69,480
Drive the deal PCP brand new car
£69k price (discounted from £84k list)
£30k upfront
£262 p/m over 3 years
Final payment £34,750
4.9% APR
Total cost £74,182
What am I missing here? Why would anyone choose the used car in this scenario? How can a brand new car only be costing me £5k more than the same spec car that’s 2.5yrs old?
Apologies for the numpty questions.
Total cost, well under £60k….
ExcitableBoy said:
I would imagine you are one of very few people who would put 30k down on a Q7. That's why the numbers end up so similar. Most people are paying 800p/m +
You can get a much better interest rate than 4.9% from a bank for the remainder.
I would not use PCP with such a big deposit, on something that is not that special a car.
Do you mean you wouldn't use PCP if you had the cash on hand for such a big deposit, or you would use PCP with a smaller deposit?You can get a much better interest rate than 4.9% from a bank for the remainder.
I would not use PCP with such a big deposit, on something that is not that special a car.
OP here. Thanks for all the responses.
I wasn’t aware that PCP wasn’t the done thing on used cars, so thanks to ukpolak for that. Seems like if we do go used then £30k down and £25k loan might be the best idea as per Muzzer79.
Johnjamesjack- we are looking at the 50 tdi Vorsprung. Was looking at the black edition but fallen in love with Vorsprung alloys.
I think the consensus is that if we buy used A £25k loan is the best option as it’s less than £2k in interest over the term (2.8%). This would make the total cost £58k vs £74k for a brand new one. The £16k difference is a lot of money so I think you’ve all just helped me make the decision.
I wasn’t aware that PCP wasn’t the done thing on used cars, so thanks to ukpolak for that. Seems like if we do go used then £30k down and £25k loan might be the best idea as per Muzzer79.
Johnjamesjack- we are looking at the 50 tdi Vorsprung. Was looking at the black edition but fallen in love with Vorsprung alloys.
I think the consensus is that if we buy used A £25k loan is the best option as it’s less than £2k in interest over the term (2.8%). This would make the total cost £58k vs £74k for a brand new one. The £16k difference is a lot of money so I think you’ve all just helped me make the decision.
I would say that “ordinarily” it can make sense to go new with PCP as many dealer finance houses (VWFS, BMWFS etc) slap on finance discounts on the car price if you take their finance.
Eg I bought a £52k car all told reduced to £39k because of BMW discount as well as BMWFS discount if I take out their PCP product. Whilst I’m surprised the regulator isn’t all over this type of “deal”, a lot of these have dried up because of new car shortages (self isolating staff, factory closures 2020, semi conductor parts) so fewer “take my finance and I’ll give you money off” discounts than before.
For Audi price discovery try coast2coast or drivethedeal and you’ll see they are very open with details eg “this price includes £5k discount for taking an Audi loan, if you pay cash then add £5k to the price”. This only applies to new btw.
Eg I bought a £52k car all told reduced to £39k because of BMW discount as well as BMWFS discount if I take out their PCP product. Whilst I’m surprised the regulator isn’t all over this type of “deal”, a lot of these have dried up because of new car shortages (self isolating staff, factory closures 2020, semi conductor parts) so fewer “take my finance and I’ll give you money off” discounts than before.
For Audi price discovery try coast2coast or drivethedeal and you’ll see they are very open with details eg “this price includes £5k discount for taking an Audi loan, if you pay cash then add £5k to the price”. This only applies to new btw.
ukpolak said:
I would say that “ordinarily” it can make sense to go new with PCP as many dealer finance houses (VWFS, BMWFS etc) slap on finance discounts on the car price if you take their finance.
Eg I bought a £52k car all told reduced to £39k because of BMW discount as well as BMWFS discount if I take out their PCP product. Whilst I’m surprised the regulator isn’t all over this type of “deal”, a lot of these have dried up because of new car shortages (self isolating staff, factory closures 2020, semi conductor parts) so fewer “take my finance and I’ll give you money off” discounts than before.
For Audi price discovery try coast2coast or drivethedeal and you’ll see they are very open with details eg “this price includes £5k discount for taking an Audi loan, if you pay cash then add £5k to the price”. This only applies to new btw.
Yeah we did this with my wife’s Golf. Took out VW finance to get the £2k dealer contribution then paid it off with savings during the 2 week cooling off period. Eg I bought a £52k car all told reduced to £39k because of BMW discount as well as BMWFS discount if I take out their PCP product. Whilst I’m surprised the regulator isn’t all over this type of “deal”, a lot of these have dried up because of new car shortages (self isolating staff, factory closures 2020, semi conductor parts) so fewer “take my finance and I’ll give you money off” discounts than before.
For Audi price discovery try coast2coast or drivethedeal and you’ll see they are very open with details eg “this price includes £5k discount for taking an Audi loan, if you pay cash then add £5k to the price”. This only applies to new btw.
JapanRed said:
What am I missing here?
It's that PCPs were invented to keep car manufacturers busy churning out new cars, so the deals are supported with lower interest rates and deposit contributions to make buying new look attractive. The same support isn't given on used cars - manufacturers don't really care about those.
ukpolak said:
I would say that “ordinarily” it can make sense to go new with PCP as many dealer finance houses (VWFS, BMWFS etc) slap on finance discounts on the car price if you take their finance.
Eg I bought a £52k car all told reduced to £39k because of BMW discount as well as BMWFS discount if I take out their PCP product. Whilst I’m surprised the regulator isn’t all over this type of “deal”, a lot of these have dried up because of new car shortages (self isolating staff, factory closures 2020, semi conductor parts) so fewer “take my finance and I’ll give you money off” discounts than before.
For Audi price discovery try coast2coast or drivethedeal and you’ll see they are very open with details eg “this price includes £5k discount for taking an Audi loan, if you pay cash then add £5k to the price”. This only applies to new btw.
Very much so. I just took advantage of £1750 off for taking PCP, with the rate 4.something percent.Eg I bought a £52k car all told reduced to £39k because of BMW discount as well as BMWFS discount if I take out their PCP product. Whilst I’m surprised the regulator isn’t all over this type of “deal”, a lot of these have dried up because of new car shortages (self isolating staff, factory closures 2020, semi conductor parts) so fewer “take my finance and I’ll give you money off” discounts than before.
For Audi price discovery try coast2coast or drivethedeal and you’ll see they are very open with details eg “this price includes £5k discount for taking an Audi loan, if you pay cash then add £5k to the price”. This only applies to new btw.
With dealer discounts on top, I can order new (with patience, due to chip issues globally) for around 10-20% less than used.
I would concur with others that PCPs are not ideally suited to used cars or where you have a large deposit.
They can be useful if you have t got much of a deposit and then want to change the car after 3 years or so.
I would go down the personal loan route - recently took one out over 5 years at 2.9% with M and S to fund Mrs BVDs change of vehicle.
They can be useful if you have t got much of a deposit and then want to change the car after 3 years or so.
I would go down the personal loan route - recently took one out over 5 years at 2.9% with M and S to fund Mrs BVDs change of vehicle.
Mandat said:
What's the issue with a large deposit?
If anything, putting in a large deposit reduces the amount borrowed, which results in lower interest paid, which ultimately can work out cheaper over putting in a small deposit.
OP here again. I’d be keen to hear the answers to this too as it was my thinking too initially. If anything, putting in a large deposit reduces the amount borrowed, which results in lower interest paid, which ultimately can work out cheaper over putting in a small deposit.
Just to add, the reason behind the £30k deposit being that specific amount is that that’s what we will get for the car we sell.
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