It is what you can buy the car for at the end of the agreement thats it, not complicated.
For me it makes sense - 0% loan, hassel free motoring for three years and I'll have the purchase price in cash in the bank to buy the car outright at then end anyway so can decide what do do then. If there is equity I might go again if not I might buy it myself and run it into the ground who knows!
Car 1 45k.
Deposit 10k
Brand: Audi ??
3 year PCP monthly 460
including servicing plan ??
After 3 years GMFV 20k
At the end of month 36 i could hand the car back, buy it for 20k or trade it against a new PCP deal.
Car 2 45K
Deposit Zero
? Year PCP Monthly 490
Service plan ??
GMFV 21.5 K
In actual fact i traded after 20 months or so to a new car, , monthly payments including the service plan around 490 GMFV a little higher maybes 21.5k
Questions:
1. Brand name of first car, Don't just say Audi give me the real thing. What is it in Audi's, number I think. Like an Audi 6
2. Where did you get the 10K deposit
3. What was the interest rate on each PCP.
4. What is the duration of each PCP
5. When did you start the second PCP, month and year please
6. What is the service plan? How much is this costing annually. Why do you need one for a new car?
7. What is your annual mileage
Figures
Car 1. 460 X 20 = 9200 paid plus deposit = 19,200
Owe Zero
But you've spent 19K !! IN A YEAR AND A HALF.
Car 2
490 X? =
Firefly and Demoivre, have I asked all the right questions. As you can see I'm not great on cars.
Ditto here. Bought mine when it was 4 years old and running like a clock since. Would get nothing for it now so happier to save away and buy a car when I need to (remember that concept?!!)
for someone getting so exorcised by this the one thing that shines through is that you arent particularly knowledgeable on cars
Ain't that the truth. I'll see if I can work out the figures instead. To justify those alloy wheels. I used to test my husband on those, which cars had them and which hadn't. They all look the same to me. LOL.
Just asked himself what was the company audi he had a couple of years ago. It was an Audi A6, how ironic is that. I hated it. He only had it for two months thank god. It had cream carpets, how mad is that. And I hated that it was automatic. You had to sink into it rather get into it. And the chhidlren still laught about it. It had heated front seats tough, and while I liked that, they were leather so they were cold when you got in first. (see now I'm actually good on cars)
Blackrock, the one point you've missed there is at at the end of the 5.25 years you will still owe the remaining 20K if you want to actually own the car. You can of course roll it on to a new deal and keep paying 7.4K per annum for the privilege but it's a big gap in your story that you never actually own the car if you do opt for this approach.so if i keep to the end thats 5.25 years motoring at a cost of 39k, or 7.4k per annum or 620 a month on the assumption that i have no deposit left at the end of the second PCP.
Blackrock, the one point you've missed there is at at the end of the 5.25 years you will still owe the remaining 20K if you want to actually own the car. You can of course roll it on to a new deal and keep paying 7.4K per annum for the privilege but it's a big gap in your story that you never actually own the car if you do opt for this approach.
The alternative view on this would be for someone who comes along after you, picking up your old car every 3 years. It will be a car in good condition (given the terms of the PCP deal) and let's say the dealer factors in 20% on top for themselves. So this buyer could buy your 3 year old car for say 24K cash (assuming the GMPV was 20K) and by the end of the 3 year term that car would still be worth around 12K (possibly more if looked after well). So that buyer is paying just 4K per annum and they actually own the car.
Obviously it's different strokes for different folks. You might prefer a new car and the warranty that goes with it. You might not mind that you don't own the car outright. You might just have the cash and are happy to spend it.
But as this is a financial website it is hard to ignore the fact that there is an alternative which costs much less money and I don't think anyone would say these days that a 3 year old car is old or likely to cause you problems.
You're taking the example too literally Blackrock. The example was based on the market value provided for your car (20K for a 3 year old in your case) is close to the actual market value after 3 years. Maybe it's low as you say but given the number of these PCP deals going I wouldn't be surprised if it is not too far off the mark. So in my example there should be plenty of 3 year old cars available when your 3 years are up so someone looking to buy one should get one without too much trouble. So I think 24K is not low based on that. Time will tell.Also the point you are missing is that if i don't buy the new car someone cant come along and buy the second hand one! and they will have to tie 24k in cash up immediately.
Also the 24k price is low and assume all equity is gone
You're right in that they need to have the 24K in cash but if you can change your thinking to saving for 3 years before purchasing, instead of purchasing on credit and paying off over 3 years, I think you'll view this as being a better approach (or at least I do!).
But as this is a financial website it is hard to ignore the fact that there is an alternative which costs much less money and I don't think anyone would say these days that a 3 year old car is old or likely to cause you problems.
lads lets get some perspective here, whats the very worst that can happen to you on a PCP deal? you lose your initial deposit, thats it.
Ok its not ideal but as long as you are sensible about keeping that low and comfortable with the risk of losing it then whats the issue.
With all due respect Leo, I don't think you can compare purchasing a car with clothes! A car is probably the second biggest purchase people ever make (after house obviously) so financial terms form (or at least should form!) a massive part of the decision in buying a car.Charity shop (or even the likes of Tesco or Dunnes) clothing costs a lot less than many other alternatives, but a majority still choose more expensive options. Very few people base all or even a majority of purchasing decisions purely on financial terms.
Depends . If you can't keep up the repayments you will indeed lose the car. But you still owe them the difference between what you bought the car for and whatever payments you have made to date, i.e. the balance. If the finance company can recoup this amount by selling your car, then you're OK. If they can't (which is more probable unless you had a very big deposit, given the price of imported cars from the UK) you will be chased for the difference. After all that then at best you are left with nothing and you've lost your deposit, at worst you now have to find extra money at a time when you were not in a position to pay for the car anyway.
Why are you getting so defensive about it? All we're doing is pointing out some gotchas in the PCP approach. As has already been said, if you're good with those and are happy to spend the extra cash to buy new then go for it. All we're doing here is pointing out that it is not without it's flaws and that some of us prefer to buy from savings, not credit, and buy second hand.so can we summarise this thread as follows,
the people who only purchase from savings and who only buy 3-6 year old cars see PCP as the work of the devil
the people who for one reason or another see a rationale for buying a new car on 0% or very low levels of financing at a monthly cost that comfortably fits in their household budget can see a benefit in doing it, understanding that there will be a decision to be made at the end of the process
Why are you getting so defensive about it? All we're doing is pointing out some gotchas in the PCP approach. As has already been said, if you're good with those and are happy to spend the extra cash to buy new then go for it. All we're doing here is pointing out that it is not without it's flaws and that some of us prefer to buy from savings, not credit, and buy second hand.
There is no right and wrong here, each of us can decide what's best for our own circumstances.
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