So my wife’s car is coming to the end of it’s Pcp and I’m trying to decide what to do. It’s a 2011 Kia Ceed. The final balloon payment is 4500. Trading in the car will get us approximately a grand towards a new one.

My wife got all excited about getting a bigger car but on looking into these they would significantly increase the monthly payments (not to the point of inaffordability ability but certainly to the point of resentment). Trading it in and just getting another the same size seems a bit mental to me.

My suggestion, was to get a personal loan to cover the balloon and pay it off over two years. At which point we will have had two years use of the car and hopefully, because depreciation should be starting to slow, may have a slightly larger deposit for the next car.

Does this sound a crazy idea. I am not the greatest of mathematicians and may be missing something glaringly obvious. Of course I do run the risk that because the car is now a bit older it will magically explode (at least that’s what she thinks).

Comments about how stupid PCP finance is are very welcome. Also advice that I should save up and buy a car instead of using finance!

Exploding is fine as you’re still covered for another 3 years with Kia 🙂

Keep the car IMO

Keep the car for another 4-5 years, then you will have enough forward deposit.

We’ve done what you are suggesting twice. Worked well for us.

You’re servicing costs won’t be much different to now and like weeksy says your major items are still covered under warranty.

PCP finance is only stupid if you don’t buy the car at the end of it.

The first 3 years is where a car suffers the greatest deprecation.

Buy it and run it for another 5 years then buy a 3 – 5 year old car s/h to replace it.

given the 7 yr warranty with Kia, and the fact that you know and like the car I’d say keep it.

We have an 11 Kia Soul (wife’s car), which we bought on 3 yrs interest free Kia finance as an ex demo. It was paid off end December there and still only has 24K miles on it, so hoping for hassle free cheap motoring with it for next few yrs

Why does your wife want a bigger car? Most cars are bigger externally but internally they can have shocking use of real volume/space.

People are convinced they have new/better but really it isn’t.

If its due to bikes- why not fit a towbar and invest in a carrier? (better than a roof/faff etc).

I’m shocked, a car thread and every post is sensible, down-to-earth advice!

Keep it.

Keep it, as much as it is nice to get a new car, its only new for the first day but the payments keep going.

I’m shocked, a car thread and every post is sensible, down-to-earth advice!

get rid, and buy a fast estate for ‘making progess’. any less than 300 BHP and I think it will feel underpowered and unsafe.

Your wife wants a new, bigger car. That is the correct answer.

keep it but make sure you have a huge gap when pulling into traffic – its just not fast enough to keep with the traffic (knobs making progress)

Do exactly what hora says. Removable tow ball racks are awesome and modern cars just get bigger on the outside to accomodate larger crash protection zones, at the expense of interior space for a given body size.

The Kia, while probably dull and bland (I’m assuming they fit the stereotype) will just run on forever, or until corrosion eventually kills it some time past 2020. By which point you’ll have laughed all the way to the bank and back again.

What was the reasoning behind getting the contract in the first place?
If it was to run a new car for peace of mind then trading in for a similar ‘new’ car keeps that ball rolling.

If you pay the final payment you end up paying top whack for that car, was that part of the original plan?

PCP finance is only stupid if you don’t buy the car at the end of it.

Equally unstupid for me is trading in having looked after the car and done less than the agreed mileage, getting more for it than the final payment, using that as deposit on a new one, and keeping my wife happily in a new car every 3 years.

Because when she’s happy, we’re all happy 😉

OK, we’re ‘resigned to’ the fact that we will probably never ‘own’ a car for her again, equally as they’re always under warranty we won’t get any unexpected repair bills either.

Hora, just as you assume she wanted a bigger car for reasons unknown (she wanted a mum wagon basically, and a newer car just for the sake of having a newer car) , and pointing out that they are only really bigger on the outside for the most part seems to have got through.

Theocb there was no great plan when the car was bought and she did it on her own which resulted in no haggling etc. It was an 8 month old factory demo and as such fairly good value in that respect.

In two years time our financial situation will have changed for the better and we will have a better idea where we are in terms of another kid so I think decisions on size and type of car are best put off till then when we aren’t just gu swing about what we need (notwithstanding the fact that the ceed is plenty big enough for two children of any age).

Thanks for the advice so far folks.

To enable you keeping the car/i.e. keeping the missus happy you need to give her a diversion/reward- talk about a nice holiday instead.

I have similar situation but I saved the final payment throughout the period of the initial finance. I am going to have a nice smile on my face paying off the balance.

FYI I was astonished at the deal they offered me to trade in. Considering its a £10k car new they offered me £5200 trade in which is probably about £800 off what I would get selling it privately quickly.

BUT the big thing that took me back was the deposit contribution they offered to renew the finance on a new one. £2500.

Basically meant I was getting the new car for way less than they sell for (Even discounted). Oh I still intend to pay off the car though. Just turned 3yrs old. 15,000mls and will do the kids in 4-5yrs time as a 1st car. By which time I will buy the wife something else

Point of the post is to ensure you are not just being offered the standard costs for a bigger car. If you are renewing a PCP type deal there is usually a much bigger incentive for it.

Equally unstupid for me is trading in having looked after the car and done less than the agreed mileage, getting more for it than the final payment, using that as deposit on a new one, and keeping my wife happily in a new car every 3 years.

It may make the wife happy but it’s a massive waste of money.

Unless you’re really unlucky, a modern car will run without any major issues for 5 – 7 years. The OP has a Kia Ceed, which by all accounts is a pretty straight forward and robust car, just about bomb proof and it’s still under warranty. I would keep it and run it into the ground.

No I’m afraid the deposit contribution I have been offered is 1 grand.

And again, hora is right, for the hard work she does my wife deserves to be driving around in a proper Bentleycedes SuperGTcontinental Sportback and she does deserve that new car feeling, but maybe in two years time.

BUT the big thing that took me back was the deposit contribution they offered to renew the finance on a new one. £2500.

Why do you think they do that?

From the goodness of their hearts? Or because they make shed loads of money from selling a new car and a finance package? Also, they can probably quite easily shift a well maintained 3 year old mainstream car.

New cars are an indulgence. They make no financial sense whatsoever. I bought a brand new car in 1998, when I had far too much money to burn. Never again.

How much is a 4yr old Kia Ceed worth these days in similar spec to yours?

If its less than £4500 you may want to consider comparing the deal you would get for going in again and starting afresh. Unless they are giving you MORE than the £4500 PLUS the £1000, where is the incentive?

I have just checked out Evans Halshaw site and they are giving £1500 deposit contribution on Kia Ceed 1.4 Hatch. Just make sure you are getting the full whack mate

In your position I would get the loan and pay the balloon. The depreciation has now substantially slowed so keep it another 2 or so years and you should have a car worth roughly 2 – 2.5k. Decent dipper for another that.

However you could get a personal contract hire where more of the depreciation is taken care of by the vast (usually much bigger than retail) manufacturer discount available and therefore get a much better car for your money.

gobuchul. Trust me I know exactly why they did it and with nearly 20yrs of dealing with these type of deals in my job I would hope I did.

New cars are an indulgence. They make no financial sense whatsoever.

Yep. Sometimes my wife makes no sense either, but I love her dearly and if having a new car every 3 years keeps her happy, who am i to argue.

Buying new bikes makes no sense either……….

For me it just comes down to the choice of ‘new’ car or old car..
A new car for some is ‘worth’ quite a bit extra (worth is not always financial.)
But financially an older car is always going to be a better bet.

I have always bought old cars and my current car has travelled 30000 miles without any issue and is still worth the same as what I bought it for. (This makes me happy!)

A friend has had a ‘new’ monthly contract for the last 8 years and seems to manage to swap without any big deposits before the term is up.. they seem very happy with the hassle free motoring for small weekly payments!

I have similar situation but I saved the final payment throughout the period of the initial finance. I am going to have a nice smile on my face paying off the balance.

Why would this put a smile on your face? You have paid the full price for a new car. That’s a genuine question, always felt like I’m missing something with these deals and it reads as though you have outsmarted them.. all I can see is that you have paid at least £4000 to travel 15000 miles.

ocb you misread me. I will have a big smile on my face as I will own the car entirely. No other reason.

I actually stated the annual mileage on the car as 25,000 per annum to intentionally bring the payments UP and the final payment down. I intend to own the car forever so it is £4000 for now but in reality it has been £10000 plus 0.2% interest (Yep that’s how much I paid) for as long as I own the car.

Gotcha 😉 thought I was missing a good deal (I love a bargain.)

For you I am assuming the good deal was in the ‘worth’ of a new car plus the very good interest free deal (more or less.)

I can see how that balances out against the ‘financial only’ reasoning of others.

Whens the last time it had a proper good interior/exterior valet? I had a £15/come to your work jobbie done. It looked like a new car inside. I was gobsmacked.

Within 2 weeks it looked like I’d lost it in a flood/flood damage again though 😀

I worked this out a while back when looking to change.
It was (over total lifespan) considerably cheaper to buy on contract, change it every two years than it was to buy it either outright or on finance.
By the time the depreciation kicks in, running costs, interest, etc – not owning it was cheaper!
With a nominal balloon option to keep it if I wanted to it was a no-brainer.
Unless I was planning to run it into the ground for 10yrs+ it made no financial sense.

Littlest Hobo. Apologies I used deposit contribution wrongly there. The balloon/gft is 4500.they have valued it as trade in of 5500 thus giving me a grand to use as deposit. This is roughly in line with the parkers blue book valuation.

They will either sell it at auction or give it a good clean and refurbish one alloy wheel and sell it themselves . If I was to get rid then I imagine someone will be buying it for 6500 eventually, which again is the parkers blue book price for a car of it’s age and spec from a dealer.

Again thanks for all your comments guys.

£4500 final payment
£5500 value for trade in
£1000 equity

So what is the deposit contribution they are offering you? Is it more than Joe Bloggs gets for just walking in off the street? They usually give more because you are a loyal ‘captive’ customer. It was £1500 on that Evans Halshaw one I looked at

Without wanting to confuse you, one of the sneaky things dealers do is not mentioning the deposit contribution. They get you to focus on the value they are giving on your car and you think “oh, a grand towards the next one”. But then they write the deposit contribution out of your car and suddenly they have given you the equivelant of £4000 for your car (Based on the example I found of £1500 dep contribution).

Remember you don’t have to take it back to the supplying dealer. If another dealer wants your custom, they might offer you more. When we changed ours, we got an initial offer from the supplying dealer, shopped around and got a better offer from another, which the supplying dealer then matched so we stuck with them for convenience*.

* from what i understood at the time, we’d have had to pay the balloon payment and own the car, then use that as deposit with the 2nd dealer at their higher offer rate for the new contract – and given we were only really using them for a counter offer i didn’t pay a lot of attention as to whether that really meant paying over cash or if it could be done by offsetting transactions.

If the final payment is £4500, and its worth substantially less than this (which it sounds like it is if its only worth £1000 as a trade in), then just hand it back, and buy another identical one on the open market for its true market value.

You wouldnt pay £4500 for a car thats worth £1k.

Edit – just read the rest of the thread, so the misunderstanding about it being worth £1k. You could see what a used equivalent sells for on the open market and if substantially less than you would need to pay, just hand yours back and buy on the open market. Although you will be buying a car you dont know the history of, so it may be worth paying a premium for that alone.

I don’t think you have to settle the finance just because you aren’t taking it back to the supplying dealer. As long as its a Kia dealer I would expect them to be able to deal with it as though they were the supplying dealer and settle it off themselves as part of the deal. I have done this hundreds of times for trade ins which have outstanding finance on them both within the same brand and those outside of our brand

You have that incorrect julians. Its worth £5500 and the settlement is £4500. Equity is therefore £1000

Keep it, but you’ll obviously need a remap to maintain progress

I’d keep the car, Ce’eds are pretty decent.

The ‘funny’ thing is followers of TopGear will tell you its shit.

The ironic thing is May owns a Panda, Clarkson owned for a bog-standard MKI Focus for years. Clarkson even said the Focus was great as it was soo anonymous. you could leave it for days in a train station carpark and no one would bother with it. Both of these have far less than the magic 300bhp+ 😀

I see nothing wrong with keeping the Ce’ed. For 11months I ran a Xsara Picasso as a stop-gap. I actually miss it and that was a terrible car compared to the Ce’ed! 🙁