How do people afford to PCP brand new cars?!

[JusWunderin]

DH recently mentioned looking into us getting the car I’ve had my eye on for many eyes now. But we’ve looked at prices for financing one and my good god alive it’s not what I expected!

I’m struggling to imagine someone having £400 a month to comfortable pay for a car, we had a budget of about £200 a month.. which I thought would get me something pretty nice!😂

My heart is a little sore, I’ve never really had anything ‘proper nice’ we don’t buy anything designer, branded/luxury. We live modestly, both work full time in what we thought were good jobs on relatively good money for where we live. this car was the one thing I just thought would be my little bit of luxury in life.. but it turns out it’s quite far out from ‘a little bit’ of luxury 😂 it’s big luxury and now I’m pretty gutted as I can’t imagine us ever having that sort of money to fork out every month for a car 😅

If you lease/brought a brand new car recently.. how? What job do you do? How much do you earn (if you don’t mind me asking)? I need to know where I’m going wrong 😂

We bough our latest car partly with a trade in deal on our older car and the rest via a bank loan, at a very reasonable APR.
It was a better deal than any PCP we looked at and after three years we will own the car outright (and will probably keep it for a further three to four years after that.)

Also, I worked for a main car dealership. PCPs are an absolute scam. Save and buy second hand if you can

@Windsofchange99 why do you think working for a car dealership qualifies you to declare PCP a scam? Commission rate scandal aside, we are all adults and able to understand the terms and conditions of PCP and the amount owed, weighing up the pros and cons, I do not want an old car. Are mortgages a scam because you end up paying potentially hundreds of thousands of pounds of interest? No, they're a viable option for people who want to own a home and have a secure income but do not have the funds to pay up front.

I change my car every 4to 5 years, at the moment I save £250 per month to pay for this. I always haggle to get the best discount and the best trade in price. Any form of finance is too expensive for me to consider.

Well said! Of course they're not a scam! They are a finance option which some people like and suits them well (for various reasons), and which some people would rather not use/don't see the point of/don't like.

It's a classic case of horses for courses.

What's wrong with owning a 7-8 year old car?

If it's been properly serviced and driven carefully, that'll be half the average lifespan of a car, with the potential for it to last 15-20 years!

One of our cars is 16 years old and has not needed any repairs other than the service schedule and consumables etc (tyres, brake pads, spark plugs, timing belt etc). We worked out the costs over it's lifespan to date which comes out at less than £1,000 per year (average £83 per month) for servicing, MOT and repairs. Try finding a PCP/lease car for that money.

How are they a scam ? That would suggest something illegal, which is clearly not the case given we're talking about massive multinational car brands backed by major financial institutes. The T&Cs are clearly set out, if someone signs up without fully understanding it then that's their problem.

Some people want to save and buy a car outright, some people want to take a personal loan for a used car, some people want to use PCP for a new car. As long as you can afford it and it's your money then neither option is wrong.

Indeed. It's the perfect example of sheep mentality.

You may as well lease eternally, akin to renting a house forever.
Very few customers ever paid the full balloon payment and owned the car at the end of the term. Infact I worked at the Dealership 6 years and can't remember one.
It's effectively a con to lure people into long term leasing, that just rolls on and on and on, whilst continuing to throw money down the drain for something that you'll never own.
With a mortgage the house will eventually be paid off and owned outright but very few people who take on PCPs ever own their vehicles.
So yes, it's a scam to lure people in. Even the sales staff who were flogging them didn't have PCPs when setting their families up with new cars!

Unless the balloon payment is paid at the end, its never your car. So yes, I feel its luring people into debt. Most return and renew, hence a cycle of forever leasing something you'll never own. We are of course living in an era where people are happy to just throw money away each month on something they'll never own outright. I'm not one.
It's akin to renting a house forever. With a mortgage at least the house will one day be yours.

You couldn't, but I don't want a 16 year old car. If you do, that's fine.

My point was that the previous poster was paying a similar amount to me per month. After a five year period they'll own an older second hand car, be liable for any repairs and maintenance it may need and be starting to think about saving for their next car. I - personally - don't think that's a better position than not owning the car at the end of a PCP. I don't think my choice is better either, just different.

All I'm trying to point out here is those posters who think those of us with cars on PCP are mugs, forking out far more money than needed to keep up with the Jones' aren't necessarily correct. Buying and running a decent second hand car isn't necessarily cheaper now. It's just a different choice.

Also the average age of a car being scrapped in the UK is 14 years old apparently.

Why the obsession with owning it ? It's not like once you've bought a car it'll last forever and further replacement would only be a choice. You'd have to buy another car at some point, and potentially pay out for significant wear and tear maintenance before that. I'm choosing to reduce that risk of those kinds of costs by keeping a newer car.

Also the car not being yours if you don't make the balloon payment doesn't make it a scam. The options at the end of the deal are very clearly laid out.

Whereas I’m quite happy in my grey german car, knowing that it doesn’t stand out from the crowd. It’s very comfortable, excellent to drive, full of all the latest tech, 100% electric and reliable. But it’s just a grey saloon car that doesn’t attract any attention at all. Perfect :)

@Windsofchange99 well we paid our balloon payment on one of our cars actually because it was far less than the value of the car so made sense to keep the car, my mum also did because she loved the car as it proved reliable.

But so what if people do continually have PCP? What is the actual harm? If the payment is affordable for you (which PCP helps because you only pay on 2/3 of the value of the car) and it means you have a newish car which for some people is important due to reliability, not just snobbery (though no judgement if they do like having a new car, we all have our preferences!), it's just another option? Owning a car isn't important to me (though I do) it drops in value, it becomes unreliable, I then need a new one, I will always need a car so will always have money coming out of my account for a car, what difference is it if it is in savings to buy in full or for PCP?

@Windsofchange99 and it is absolutely nothing like renting a house forever. That would only be true if the car lasted you forever (and went up in value) which it doesn't, unlike a house. The worst comparison you can make to disprove your own point.

This

And also this. My house is 115 years old, by the time I pay off my mortgage there's no reason it couldn't stand for another hundred years. What's it's worth now is more than 500% more than the first sold price I can find for it in the early 90s.

The vast majority of cars will be scrapped within 20 years of first registration, with a significant number by 15 and only a very small number will go up in value.

Owning a house makes sense. It’s an appreciating asset over the long term. Owning a car comes down to a personal choice in terms of what you want from a car, as in the end there comes a point when all cars are worthless junk.

Some people are happy to run a round in older, less economical, less age, more expensive to maintain cars. Some want the latest tech and safety features. Some want predictable costs for a period of time.

So while in the long run it almost always makes sense to buy a house vs renting, that’s not always the case for a car unless your only criteria is the lowest cost of ownership. In which case, buying a brand new base level diesel Dacia Duster and keeping it until just before the maintenance costs escalate is probably the rational choice.

But, not everyone wants to drive a base model Dacia, and no one can predict exactly when the maintenance costs will escalate. So, we all drive different cars, and we all fund them in different ways. There is no right answer or one size fits all approach :)

Hi OP
i’ve sent you a DM 😊

Why buy a new car, the minute you drive it off the forecourt you lose thousands and why would anyone want to pay such a lot of VAT to the Government?
We will need a new car in the next couple of years as ours is nearly 20 years old, we are struggling to find a low tech car, if anyone knows of a 5 ish year old model that has low tech please let me know.

My first car was third hand one bought for cash (after remortgaging) for £7k. Drove it for 2 years, spent £3k repairing it during that time. Sold it for £4k towards part-ex for the next one.

Two years cost me £6k for a ten year old unreliable car - £292 pcm. (Not including the interest on my mortgage!)

My next car was on PCP, brand new and cost £320 pcm. Sold it three years later and ended up with £5k after settling the finance. Think I got lucky but not complaining!

And affects your pension.

there’s lots of hidden costs.

Get a bank loan. £300 a month on a newish low mileage Ford focus.

I buy my cars outright. Never had a hire agreement, partly as I want to be able to do what I like with it and not have to agree to any terms.

In what way are they a scam? I always do pcp and have been happy with that so I am curious why you say that?