My head is spinning.

We would like a Nissan X Trail. Looking at around £360ish per month on a PCH, or I could get a loan for the same monthly payment (albeit over 7 years) and buy a 1 year old version with about 5k on the clock.

Pros of PCH? Hand back and get a new one
Cons…limited mileage (around 10-12k pa)

Pros of buying? It becomes mine, have a bit of equity in it – although not sure how much with an 8 year old car
Unlimited mileage
Cons…keep car for 7 years at least…?

The payment is no problem, so all ‘buy a car for £10, you ponce’ comments will be noted. But probably ignored. My wife has been through some shit over the last couple of years and she fancies a nice car.

Any advice?

Pros of buying? It becomes mine, have a bit of equity in it – although not sure how much with an 8 year old car
Unlimited mileage
Cons…keep car for 7 years at least…?

Your pros and cons don’t match up here.

If your total amount outstanding on the loan is less than the resale value at any point, then you can “swap” for a new car without incurring any additional cost (by selling your car, paying off the loan, taking out another loan and buying another car).

So, for example, if the car is worth £15,000 and you are paying £250 per month over 5 years (discounting interest to make the calculation easier), then if you decide to get a new car at 3 years, you will have paid off £9k. So provided the car is worth £6k or more you can sell it and pay off your remaining loan.

I could’ve leased rather than bought when I got my car. 5 years of loan seemed like a lot at the time. However I’m almost done with the loan, and oh look – I now have a free car instead of a big payment to make or no car!

You could get something a lot fancier than an X Trail for that kind of money, take a look at contracthireandleasing.com – some great Mercedes deals at the moment. I just ordered a new BMW M3 cabriolet , it’s going to cost me £13k over 2 years. I would lose that the moment I drove out of the dealership if I paid cash (£63k list price).

Personally I don’t think buying a car outright makes financial sense unless you are looking at a really cheap and cheerful motor (my current Vauxhall cost me £800, and it won’t die) – but if you’re looking at spending tens of thousands of pounds I would keep most of the money in the bank and budget a monthly spend. Certainly if you are going to borrow the money to buy the car, do you really want to be paying a couple of hundred pounds a month in 7 years time for a car that will likely be worth peanuts?

Cars are not assets in the traditional sense – take advantage of cheap finance deals and run a new car 🙂

360 a month? FACK.

My lease car is 100 @ month on 15k miles a year.

Better to buy a 3-4yr old on privately IMO in your circumstances

Looked into this in the past, never really convinced on the lease thing but as you can tell from my car choices I’m not really too fussed.

Don’t forget to consider any maintenance add ons you might decide to opt for…you’ve had some shit luck with cars…

I just ordered a new BMW M3 cabriolet

Bet it felt great writing that; congrats!

Financially comes down to this:

The cars will be pretty similar until you chop in the PCP one at 3 yrs?

Value of your 8 year old X-Trail is £5-6k. Are you prepared to spend that money to drive around a car that’s 3-4 years newer, for 3-4 years. That’s between £100 and £200 a month for those years.

There would be other considerations, such as flexibility or accident based differentials between the two approaches.

Aye cheers 🙂 A present to myself for getting through a mental breakdown in one piece, and out the other side!

I was looking at that monthly (as we buy one new nice car on PCP every few years) and I was thinking there’s something major wrong there.

But I hadnt looked up the list price. Crikey. My advice – got to different garages. And be flexible.

a BMW M3 convertible

You are either a middle-aged woman or a drug dealer.

Cheers all. Worth noting I am talking about Personal Contract Hire (PCH), rather than Personal Contract Purchase (PCP). With PCP, I would have the option of paying a balloon payment, not with PCH.

For a comparison, the grade of X Trail we want would be around £470 per month v the PCH of around £360

Don’t forget to consider any maintenance add ons you might decide to opt for…you’ve had some shit luck with cars…

Agreed – which sways me towards the lease. New car = warranty.

Hmmm.

I just ordered a new BMW M3 cabriolet

Where you gonna put the bikes?

Randomjeremy – enjoy the m3 and enjoy the 20mpg fuel economy. I also have one, great car despite the terrible fuel economy.

Re leasing vs buying just calculate the total cost of the lease over the period,and the total cost of the depreciation plus the cost of any finance and whichever is the lowest is the best financial option.*

* as long as you get your depreciation estimate right.

You are either a middle-aged woman or a drug dealer.

Middle aged fabulously queer bloke, close 😉

Where you gonna put the bikes?

I’ll keep the knackered old Vectra for that!

Noted – my mistake. For most folk though there’s not a big difference between PCH and PCP until it come to buy back option. So are you saying you’ll definitely be buying it at the end of the term? Or have I got the totally wrong end of the stick?

I’m much more likely to want to change it – which is why I am more drawn to PCH. it will be a set amount for renting a car each month…

sc-xc I’ll admit to being a bit confused, or maybe either of us has the wrong end of the stick?

At the end of a PCP (well usually 6 months before) the dealer will try to get you to renew the car / PCP (a new car for another X years). If you say yes – you get a new car (usually for the same / similar PM), No: then they collect the car and the payments stop. Or you make the balloon payment and own the car.

Interestingly though, at that 6 month before point, you get a “statement” from the finance company, bring that letter around another manufacturer / dealer and it’s pretty much transferrable (assuming the value is > min future value).

My missuses gets £X PM for a car (has to have X seats, less than 3 years old, yada….) and the best deal is always changing manufacturer.

Lastly however, none of these is the cheapest way of driving about, but circumstances and all that….

I think the only difference with PCH/PCP is that with PCH you don’t get the option to buy. This means cheaper monthly payments – as with a PCP you pay a bit more to make the ballon payment less than the car is worth…allowing you to build up equity in the vehicle.

Ah – Ok. I’ve learnt something else today. I hope you dont think I was wasting your time.

😀 it’s a flipping minefield! I only found this ^ out yesterday….

When I looked leasing was a good option vs buying a new car. Leasing was however a bad option vs buying a nearly new car. I bought a 6 month old 8k mile car in the end, near enough new for me but a whole lot cheaper. You pays your money.

Pros of PCH? Hand back and get a new one

Nah, you’ll never have enough ‘equity’ in the previous lease to cover the cost of the new car you want. The balloon payment will be about the same cost as using it as part-ex, there’ll be next to nowt left, certainly not the thousands you’ll need for the next deposit.

I’m much more likely to want to change it – which is why I am more drawn to PCH. it will be a set amount for renting a car each month…

tbh If you are wanting to change often (say 1-2 years) you’d be far better buying something 2-4 years old, that way you’ll own more of it when you come to px and won’t be re-financing, finance.

But really with any depreciating asset you ought to only pay out whatever cash you’ve already got. Paying interest is just compounding the loss. Once I learnt that its meant that whatever financial problem has hit has been a far less of a problem because we don’t owe.

Hang on. I have a straight forward lease from the manufacturer/handback no money etc etc. Can I get rid earlier than the end without paying the remaining months in full? I think not?

Have you looked at lingscars for leasing. Have a look at it for the website alone.

£360 for an X-Trail! Christ I would want something nicer for that money.

What kind of deposit are you putting in too?

Personally I think PCP’s are ok, just keep the deposit very very low, and treat it as hire.

Nah, you’ll never have enough ‘equity’ in the previous lease to cover the cost of the new car you want. The balloon payment will be about the same cost as using it as part-ex, there’ll be next to nowt left, certainly not the thousands you’ll need for the next deposit.

No balloon in PCH…

tbh If you are wanting to change often (say 1-2 years) you’d be far better buying something 2-4 years old, that way you’ll own more of it when you come to px and won’t be re-financing, finance.

Most of the PCH deals (as opposed to PCP) ask for a (for e.g.) 3+35…3 monthly payments down as a deposit. I’ll never own a car, and just pick a new one every three years – costing me the monthly rent and every time I change the extra couple of payments.

£360 for an X-Trail! Christ I would want something nicer for that money.

What kind of deposit are you putting in too?

Personally I think PCP’s are ok, just keep the deposit very very low, and treat it as hire.

We really like it 😀 I feel like the Fall Guy.

No deposit, just the 3 x upfront payments

@randomjerry, enjoy the car. However I do feel complelled to mention a Porsche Boxter S or Caymen S is close to £10k cheaper than the Beamer. If you went for the ” standard” non-S models they are a smidge over £40k in a reasonable spec, so £20k less than the Beamer

Audi A3 Sportback (silly name for 5 door) – £181 per month on PCH, 65mpg
We were running a Discovery II 24mpg (my work vehicle), as a primary car and an old Mercedes C240 24mpg (V6 2.4 petrol which we got for free) as a run around.
The Mercedes got smashed in the snow in February so we got thinking about PCH/PCP etc or buying an ’07 Golf 45mpg.
After numerous spreadsheets we worked out that the money we’d save by not running the Mercedes or Discovery as a primary car would save around £200 a month in fuel costs alone for the mileage we currently do. That’s at today’s fuel costs which are only going to go up, probably at a rate higher than inflation. Plus the running costs of the Discovery are terrible! So it was a choice between the Golf or a new A3…
Our calculations showed that IF we got a peach of a Golf, then that car made financial sense. However IF we got a ‘Friday afternoon’ Golf then the A3 would make more financial sense. Purely for piece of mind (servicing included) and to have a newer (better) car on the drive, we went for the A3.
Do your figures and take into account everything (mileage, tyres, servicing, estimated future fuel costs, resale etc etc) and make your financial decision. Chances are, your heart will overrule your head/wallet and you’ll be able to justify to yourself why you need a shiney new car!

interesting thread. got me thinking too 🙂

when you hire a car, do you get servicing, tyres, maintenance cost in with that? you just pay for petrol?

i was just thinking the other day how we take out a loan over a few years, but when its paid off we pretty much need another loan for when we change over and part ex. i wondered myself whether there was any mileage (pun not intended) in constantly hiring a car and changing it whenever you wanted, but just didnt know what you get for your money and didnt get round to looking into it.

It depends on the deal. Limited mileage means that the manufacturer can estimate the cost of servicing/tyres etc and some work it into the price or it can be negotiated…
You’ve really got to do your sums with the exact vehicles that your considering.

@randomjerry, enjoy the car. However I do feel complelled to mention a Porsche Boxter S or Caymen S is close to £10k cheaper than the Beamer. If you went for the ” standard” non-S models they are a smidge over £40k in a reasonable spec, so £20k less than the Beamer

Aye but I don’t want a coxster or a gayman; I’ve had Porsches in the past, overrated IMO 🙂

I worked for one of the UK’s largest Contract Hire companies for years :shudders:. I always thought it was funny that the head of department rolled around in a crappy old Vauxhall Vectra that he paid cash for in an auction. Sums up my thoughts on buying new vehicles….

I worked for one of the UK’s largest Contract Hire companies for years :shudders:. I always thought it was funny that the head of department rolled around in a crappy old Vauxhall Vectra that he paid cash for in an auction. Sums up my thoughts on buying new vehicles….

When I last had a company car I choose a Vectra. My boss thought this was odd as I could’ve had a 530d (he ran a 535d). But the difference in overall (tax, lease, allowance-saving etc) between the two was £100 per week, net. This money paid for a new Freelander for my wife.

So you had two rubbish cars and he had one good car? Couldn’t you make your wife get the bus?

If someone didn’t make money out of it they wouldn’t offer it, thus if you can buy it outright it’s cheaper in the long run and gives you a much better bargaining power in terms of the sale.