Are Car Pcps Worth It?

[Flyflyfly]

So I’m (hopefully!) just about to pass my driving test at the grand age of 34. I’ve been driving in an SUV, a decent sized one and now am after my first car and my
friends have a PCP and say it works out brilliantly for them. I’m interested.

However, my DH thinks it’s a waste of money, and for that price he wants to own the car. I disagree. I see the interest payments etc as a guarantee at the end of my 4 years on the deal I can get another brand new car. He either wants to own the car outright or buy second hand, which I think it’s nuts, as in a few more years it’ll need replacing……

What does/do the mumsnet world think?

I see it as just renting a car and not worth the money with nothing to show for it except a shiny new vehicle. And probably not the best option for a first car. I passed a couple of years ago at 33 and my insurance was £1500 on a 10 year old car. For a sporty SUV, you might have a sky high premium, coupled with the cost of the PCP.

I agree with your DH; if you’re investing in an asset I’d want to own it fully at the end. But I have no interest in switching cars every few years.
my DH has cars on PCP before and said it felt like a bit of a scam. We just took our a bank loan to buy a car - whilst we now owe the bank, at least we own the car so could sell if necessary, and part exchange if we did need a replacement car

I agree with your DH, much prefer to actually own the car.

Thank you for your replies :)

at least we own the car so could sell if necessary, and part exchange if we did need a replacement car

You can sell or p/x a car on PCP you know!

OP - there is no right or wrong answer, you’re going to to paying for depreciation either way, just do the sums and see what works out cheapest. With the rate rises and supply chain issues the days of 0% PCP deals are gone which is a shame as they were brilliant, only an idiot would buy a car outright when there’s 0% available.

It depends what you want and what you can afford, both in monthly payments, upfront deposit and balloon payment at the end. If it’s new it won’t need road tax for a year, or MOT for three years and you might get a service pack cheaply or free and membership of AA or RAC. So trouble free motoring at a price.

As you say, you can trade it in for a newer model, or a different brand at any time in the PCP period, if that’s what you want. Or pay the settlement figure at the end and keep it.

There is one instance where PCP definitely is brilliant dealers usually give a large discount on new cars if buying on PCP so although we always pay cash we go down the route of PCP but then pay off in full during the first month that way we always benefit from the discount and incur none of the interest charges. on our last car we saved nearly £8000 by doing this!

I agree with your DH; if you’re investing in an asset I’d want to own it fully at the end.

A car is not an asset.

OP it is very much dependent on personal circumstances

There is absolutely no way, as a new driver, I'd get a car on PCP. 1 in 5 new drivers have a crash in their first year of driving. You'd need gap insurance on a brand new car if you're getting a PCP to make sure there's insurance to make up the shortfall of the finance total vs the car's value.

Get an older car for the first year or two until you build up your experience.

A PCP is pretty much a car rental. You pay out thousands and don't own it at the end. A HP is more expensive but much more appealing as you'll own it at the end of the agreement and by then, you'll have a chunk of equity to put down as a deposit on a new car if you do want to trade in at that point.

I think it varies a lot depending on your circumstances. For the past six or so years, we've had our cars on PCP. We tend to buy one that is around three years old, put a deposit of around £1500 down, and then keep the car for around three years before moving to a newer one. For us, the fact that the cars have full main dealership warranties for the period of the PCP is a big selling point - we don't want unexpected bills. We also want something modern, safe and also the option to hand it back at the end of the term. We're in a city that recently introduced a Clean Air Zone, so had we bought our car, rather than had it on PCP, we'd be stuck trying to sell it when no-one wanted a Euro 5 diesel as it would incur a charge for entering the zone. As it was, we simply swapped to a new PCP deal with a Euro 6 diesel and had no issues.

In many ways it is an expensive way of owning a car - I could have bought ours outright for only one more year of payments on HP and owned it in full - but then we don't know what future technologies will look like, we may want to explore an EV at some point and older cars require more in maintenance.

So it's swings and roundabouts really.

Why do people keep saying that with PCP, you pay out but never own the car? If you pay the balloon payment, of course you'll own the car.

With PCP you have options. Walk away, use any equity towards another car or pay the balloon payment.

I have a car on 0% PCP. I'll probably keep this one.

I made the mistake with my last car of doing PCH. I realised after there was no method to buy the car at the end.

Of course a car's an asset.

It may, or may not be, a depreciating asset, but it's still an asset.

Ok fair enough.

I just wouldn't consider something that actively costs money and loses value to be an asset.

I prefer to buy a car outright as I like to have as few monthly commitments as possible . I also don’t want to have to watch the amount of miles I drive or pay extra to do so , or be concerned if someone scratches the car in a car park etc . I’m not the target market though as I tend to buy new and then keep until the car dies and am not bothered about driving an elderly car .

As others have said I wouldn’t get a split new car after just passing, an old banger is better till you are more experienced, my sister passed her test then ran up a banking the next day, thankfully she has an old car so it didn’t matter

as for PCP we do it and it’s worked for us so far. Our current car we’ve had for 2 years DH took it for its service and the garage said we had £2,500 in equity; we have gone for a new car with dealer reduction and contribution. Everyone’s situation is different

I should add I used to get cars on HP but it was pointless as I never keep cars past 3-4 years

I had pcp for 2 years and ended up selling it and paying off finance last year the car was still a 17 plate and I’d had it from 2020. It was £266 a month with 3 doors. I hated it.

I now have the opportunity to lend money from a relative and buy a second hand car outright. I’ve done the checks on cars read all the mot certificates and wont go too old or too high on the mileage. But I’d much prefer to buy one out right and use it till it dies than pcp it again right now. It’s so much more worth it.

I've always done PCP and love it. Love driving a new car every few years.

What we did rather than to buy the car outright was to get a PCP agreement with 0% interest (there are deals around).
Put the final payment in a bond for 3 years earning interest. Pay the deposit on a 24 month interest free credit card and stash the deposit money in an easy access savings account earning interest ready to pay off the balance in 2 years.

I think they're a waste of money, you're locked into that manufacturer unless you pay off the large lump at the end. I would only ever buy with a straightforward loan where at the end of it you own the car outright. Nothing wrong with used cars by the way.

I had a PCP when I had to use my own car for business and was racking up 1,000s of miles per month.

I was happy to switch to buying a car when I was in a job that didn't need me to use my car. A car loan to eventually own a car with low mileage made sense to me.

My last 3 cars have been PCPs and it works really well for us.

But I wouldn’t get one just after passing my test! Wait a few years and get some more experience driving first.