Viewing 28 posts - 1 through 28 (of 28 total)
  • Buying a car on a PCP – what's the bobby?
  • globalti
    Free Member

    Car salesman is pushing this like crazy to Mrs Gti who wants to buy a used Volvo. We are about to retire to Scotland so we have no idea what mileage she will be doing.

    Anybody got any wise words on PCP?

    hebdencyclist
    Free Member

    Car salesman is pushing this like crazy

    I bet he is.

    If driving a brand-new car is very important to you then PCP is a way of attaining that goal. Unless you can afford the balloon payment it ties you into a treadmill of new-car-every-three-years which I personally think is wasteful and silly, but you may see it differently.

    Edit: Sorry I now realise the salesman is pushing PCP for a used, not new, car.

    Whether it’s worth it to you is a fairly simple calculation: Is it cheaper or more expensive than any other way you can finance the car?

    the-muffin-man
    Full Member

    PCP for us has always been a cheap way to get a new car.

    I’d be very careful using it for a second hand one (unless less than 1 yr old).

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    john_drummer
    Free Member

    I got a PCP deal on a (then) 3 & a bit year old Ford Kuga. At the time I was working from home 4 days a week so estimated 12k a year. Three months later I’d forcibly changed jobs to doing 20k a year. I can see the excess mileage pain coming from over the hill , still got a year to go and already hit the maximum mileage for the agreement.

    Although having said that, when I first looked into PCP about a year earlier, salesman told me if I stayed with the manufacturer ‘s finance company for the next car, it would probably not matter…

    earl_brutus
    Full Member

    Just get a loan out, cost of borrowing is mega cheap try 2.9% sainsburys loans

    GJP
    Free Member

    I have done what earl b says in the past, essentially structure your own PCP around an unsecured loan e.g 5 year loan, to keep the repayments down, but think in terms of only having the loan for 3 years, and then start the cycle again.

    hebdencyclist
    Free Member

    but think in terms of only having the loan for 3 years, and then start the cycle again.

    Or just keep the car until it’s old, and retire earlier with the money you save!

    simmy
    Free Member

    I agree about a loan, they are stupidly cheap at the moment.

    A loan I got 3 years ago is now £28 cheaper per month. Think it’s 3.3 % now and was 9.9 % or as close as.

    earl_brutus
    Full Member

    And….. As a cash buyer (which you are with the loan $$$$$ in your sky rocket) you may well be able to negotiate a discount for cash sale!

    hot_fiat
    Full Member

    With a PCP deal, you’re effectively taking out a loan to cover the depreciation of the car, plus some extra so you end up with some equity to use as a deposit on a new (er) car, three-ish years down the line.

    I too am in John’s predicament whereby our annual milage shot up from 12k to ~20k. Ive been told it only really matters if we hand the car back. We’ll see.

    And….. As a cash buyer (which you are with the loan $$$$$ in your sky rocket) you may well be able to negotiate a discount for cash sale!

    Doubtful, there’s next sweet fek all margin on a car nowadays. The salesman makes their commission selling the finance deal.

    chestrockwell
    Full Member

    Last few people I know who have bought new with cash have been disappointed with the wriggle room. Margins are so tight that the money is made on finance, gap insurance and the like so that’s the preferred route and best for discount.

    I have used pcp plenty of times. Great way to have trouble free motoring IMO.

    timba
    Free Member

    …so you end up with some equity…

    Don’t rely on this; if the guaranteed future value (GFV) is accurate then the lower the deposit / payments, which is attractive to the customer

    ^^ consider what will happen if your mileage suddenly increases over the term, say three years, at x pence per mile. Hopefully not an issue if you’re retiring, so maybe you’ll cover a lower mileage and buy the car to keep for 10 years??

    kerley
    Free Member

    Agree with loan. I took one out earlier this year and the monthly payments for a 5 year loan were same as 3 years of PCP payments but I could sell the car at the end or keep and pay another 2 years.
    Either of those options worked out better than the lump sum or give the car back.

    You can also do what you want with the car at any time as it is yours.

    slackboy
    Full Member

    Get a bank loan as others have suggested

    I looked at PCP rates for used cars the other week and nearly fell off my chair. 11% APR from a main dealer versus 2.9% from a bank.

    If you are planning to change in 3 years then it may work out cheaper to get a PCP deal on a new car – thats where all the dealer incentive are (0% finance, deposit contributions etc)

    hot_fiat
    Full Member

    Definitely be wary of PCP APRs or indeed any finance offered by any garage. Their standard rates will be eye-watering, though many manufacturers subsidise the rates down to sensible levels or, on occasion down to 0%.

    You can also do what you want with the car at any time as it is yours.

    It’s not leasing. The car belongs to you, just the finance is arranged in such a way that you’re only paying off the depreciation. You’re free to do with it as you wish & can sell on privately at any time, so long as you clear down the balance (just like
    With HP).

    bensales
    Free Member

    It’s not leasing. The car belongs to you, just the finance is arranged in such a way that you’re only paying off the depreciation. You’re free to do with it as you wish & can sell on privately at any time, so long as you clear down the balance (just like With HP).

    Partly correct. The contract for the PCP I’m on with Jaguar makes it quite clear that they own the car until I’ve made the final optional payment. But it’s true I can sell, but given I’d need to settle the total outstanding amount first, I’d just be selling my own car.

    I see PCP as a lease you can get out of relatively easily if you want to.

    riddoch
    Full Member

    Be wary of the figures the salesman gives you. Skoda dealerships were good at printing out exact details of APR and payments. VW on the other hand were very keen just to focus on the monthly payment and were very cagey on APR.
    I think I worked it out to be mid teens.
    Remember you are also paying interest on the ballon payment at the end and that’s included in your monthly payments, took me a while to realise that.
    One thing’ you could go down the PCP route to get a good deal and then pay it off within a week with a loan, depending on fees that may work out cheaper overall.

    iainc
    Full Member

    Doubtful, there’s next sweet fek all margin on a car nowadays. The salesman makes their commission selling the finance deal.

    +1. Recently ordered a new estate on PCP and the finance deal was a good 3k under what any dealer could do for cash. I researched it in depth, had priced from CarWow and local dealers etc. Ended up with over 20% off list price on low apr PCP deal with low deposit and 20k miles a year. It was the cheapest way to buy the car by far.

    br
    Free Member

    Whether it’s worth it to you is a fairly simple calculation: Is it cheaper or more expensive than any other way you can finance the car? [/I]

    This.

    Only you can know whether costs outway (your) risk appetite.

    FWIW we bought a new BMW recently and took out the BMW financing option. We put the minimum deposit down as the interest rate was the same as if we’d put loads down so I’d rather the money was in my bank and we ended up at less than 0.5% pa over 4 years (plus a deposit from the manufacturer and negotiated discount adding up to £10k).

    Car worked out cheaper new than same model ones I’d looked at a couple years old.

    Didn’t look at PCP-type options as I don’t like the ‘risk’ of mileage and handing-back condition.

    hebdencyclist
    Free Member

    Didn’t look at PCP-type options as I don’t like the ‘risk’ of mileage and handing-back condition.

    This.

    As per many others on the thread, I bought my new car with a personal loan. Due to a balance transfer deal I’m now paying 0% interest, and at the end of the loan (which I’m paying back early) I’ll actually own the car, and it won’t matter how many miles I’ve done or whether there’s a supermarket-car-park scrape on it.

    I intend to keep it until it dies (10+ years hopefully) so residual value is not important to me.

    simmy
    Free Member

    Doubtful, there’s next sweet fek all margin on a car nowadays. The salesman makes their commission selling the finance deal.
    +1. Recently ordered a new estate on PCP and the finance deal was a good 3k under what any dealer could do for cash. I researched it in depth, had priced from CarWow and local dealers etc. Ended up with over 20% off list price on low apr PCP deal with low deposit and 20k miles a year. It was the cheapest way to buy the car by far.

    Didn’t someone on here buy a Golf a while back on a PCP deal despite having the money sat there as they got free servicing etc ?

    If I remember correctly, they paid it off with VW finance the next day and saved a wedge.

    devash
    Free Member

    And….. As a cash buyer (which you are with the loan $$$$$ in your sky rocket) you may well be able to negotiate a discount for cash sale!

    You’d think so, but all the advice given by car mags and websites nowadays is that the dealers make their money from commission from finance deals, so cash buyers are more of a hindrance than anything else.

    Best thing to do is haggle on the assumption that you are going down a finance deal. Pay the deposit, then when you get the finance paperwork, turn down the finance deal (you have 14 days to pull out) and then agree to settle the balance in cash.

    This worked for us when buying a second hand Focus earlier this year.

    somouk
    Free Member

    Didn’t someone on here buy a Golf a while back on a PCP deal despite having the money sat there as they got free servicing etc ?

    If I remember correctly, they paid it off with VW finance the next day and saved a wedge.

    My dad did that. So long as he made one payment on the VW Finance he could then pay it off and keep all the free junk they threw in with the PCP deal that he wouldn’t have got buying cash or conventional finance.

    I have a car on PCP, don’t worry about the mileage on the deal, you won’t ever have to pay the extra unless you give them the car back at the end of the deal. I will either be changing the car for another one from the same manufacturer or selling it on to a different dealer as a part ex for another car deal. This is something I accept as part of having a nicer car for less than the equivalent loan payment. The way the dealer put it to me was that they build in some flexibility to the deal so as they can offer me a good deal on another car at the end of the term, that will help take up the slack that the extra mileage on the car will devalue it.

    They are right up above about the APR though. Be very careful you’re not being done, most dealers have different rates for new cars against used and you can often find the saving in APR between the new and used could make it worth taking the new car.

    Joe
    Full Member

    Yep. Cash buyers get a worse deal in my experience. They are so keen to push PCP/finance that they actually try and put you off paying with money.

    br
    Free Member

    The way the dealer put it to me was that they build in some flexibility to the deal so as they can offer me a good deal on another car at the end of the term, that will help take up the slack that the extra mileage on the car will devalue it.[/I]

    So you’re paying extra on the hope you might get a bit back at the end? Top Salesman… 😉

    somouk
    Free Member

    So you’re paying extra on the hope you might get a bit back at the end? Top Salesman…

    I’m expecting to be significantly over the deal mileage so questioned it at the time to justify to myself I wouldn’t end up with a big bill.

    Realistically you could say anyone buying from a dealer is paying over the odds when you could private buy cheaper. I’m just willing to accept it for the convenience of the PCP/Dealer support. I also got a two year servicing package thrown in for my time.

    rickmeister
    Full Member

    With pcp / hand back / leasing, I would be gripped putting bikes in the car, knowing that it needs to be in reasonable condition when it’s going back…

    Murray
    Full Member

    I bought a Ford Grand C-Max on PCP as the payments were low, then paid the balloon with a low interest loan at end of term. PCP interest rate was super low for 2 years. I’ve still got the car and intend to run it into the ground as usual – in my particular circumstances this was the cheapest way to get the car.

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