Getting a brand new car on PCP then complaining you're broke

[brexitstolemyfuture]

I don't understand why people go for these "deals", if you want a reliable car you can get a year old one and a personal loan for the same price but you get to keep it afterwards.

Friend has got one saying she had no choice, even though she's broke

I know loads of people that do this. Generally people who have bought 2nd hand before and have had their fingers burnt.

They want the peace of mind and will pay extra for it. I don't really see it as that different from people that have endless insurance for things they are unlikely to ever need. Not having to worry is worth the extra money.

Chasing with mobile contracts you own the mobile at the end, no additional large payment.

With pcp you never own the car unless you pay a huge lump sum after the contract. Otherwise the dealer just takes it back.

I'm seeing mobile contracts now where you pay per month then hand the handset back for new one after 12 months. It means you always have the latest but you never actually own the phone.

Hope I've explained that properly.!

FrancisCrawford

You are not alone - I had to google PCP + Car

old cars can be v expensive to run. I paid 2k for a car that went on to cost me 5
600quid a year minimum every year for repairs, just to drive a heap of crap with rubbish safety features. a brand new car, no repairs, sounds a good deal to me. the idea is you swap every few years for another new deal. its a bit like biying a yearly train pass.

PCPs vary. They don't all have ridiculous mileage restrictions, we were able to negotiate ours to suit, we had no deposit to pay and no arrangement fees either. It suits us to do it this way because we have had expensive repairs to contend with for our previous second hand cars. You do have to look at affordability though.

Sometimes it's the unpredictability of an old car - a new one is £200 month, an old one can be £600 one month and £60 the next.

PCP is fine if you always want a car that's between brand new and 2/3 years old.

But, in reality, cars last 5-10 years without too much in the way of costs.

If you're comparing a PCP with a 2/3 year old, then fair enough, but do you really need a 2/3 year old car?

I knew what you meant RJ although I haven't seen the 1 year phone deals you mention.
I just though that the pcp model had taken off following the mobile contract model becoming a thing. And with the 3 year old car it still has a significant value whereas the 2 year old phone doesn't.

I suppose it just goes to show that different people want, and can afford or are prepared to allocate their resources to, different things.

It's also interesting that this discussion is about loans v pcp, whereas x years ago (in my circles at least) it would have been about saving up for something instead of buying it on credit, and y years ago about if you didn't save up you just couldn't have it.
Availability of credit, and leasing deals is just another form, enabling people to have things they can't afford (I don't think this is true in all cases, many people are making a considered decision that a particular purchasing model fits their needs).

I'm with you OP but I think it depends what kind of car you want.
For example I could get a PCP on a brand new Fiesta quite cheaply but I love cars and wanted a really nice one so got a 3 series, 18 months old worth £31k new, paid £18k after haggling, got £6k for my old car (which I bought outright) so my new car costs £200 p/m with £5K at the end which I put money back per month to pay off because I don't want to trade in.
I think those that get new cars, keep them 2/3 years then trade them in for another new one have little sense.
It works for some.

While it's not for us, I can see the pull.

You never get back what you've invested in a car, however you buy it, unless it's rare, desirable and extremely expensive. We bought ours outright, under 2 years old, with low mileage, and it had still depreciated by more than 1/3. We've had it 4 years and it's likely to be worth a fraction of what we paid for it now that it's been used a heck of a lot and gained a bit of wear and tear, along the way.

Sorry chasing

It's true what you're saying too but I guess houses and cars both are so expensive compared to household incomes very few people could buy outright now and if you need a car I guess you need it so finance if some sort is your option eh?

I think they've got so complicated as well, people used to do lots of repairs themselves (well as a child in a council estate in the 80s that's what I remember) but now if anything goes wrong it's plug it into the computer st the dealer

Yeah - a bulb went on mine (well it wasn't a bulb it was a lcd unit) and the dealer charged £60 to diagnose that it needed a new lcd unit at £140. My previous car it would have been a £1.20 bulb from Halfords that I could fit myself!

I'd nearly typed about the increasing unaffordablility of housing too.

I think my feeling is that while new cars are expensive and need finance, you can as people on here have posted buy old cars for 'only' a few hundred - ie just a few months loan payments.
But the availability of credit means that people are buying the more expensive goods (and not just cars) that they wouldn't previously have brought.
But that's just the world being different to when I was young

We have always saved and bought our cars outright and then traded in every few years. When we got out last one we worked out the cost over 3 years on PCP/loan/buying it outright.
Turned out there was not much in any option we chose. So we went for pcp to give it a go.

You lose money on cars however you pay for them. It's just a case of the more you spend, the more you lose. A new car uses less fuel, needs less maintenance and it can sometimes be more cost effective than keeping an older car on the road. We all have different financial abilities.

We are looking to replace DH car. He bought it 10 years ago new and it's just reached the stage of costing money to repair.

It's also interesting that this discussion is about loans v pcp, whereas x years ago (in my circles at least) it would have been about saving up for something instead of buying it on credit, and y years ago about if you didn't save up you just couldn't have it.

It would never enter my head to take a loan. As this poster said I have always saved up and bought what I could afford. It seems these
loans enable people to buy much more expensive cars that they would otherwise. I wonder how this affects the second hand car market? Do sales people make more money on the credit deal they sell than the car? Just curious.

I lease. I did the sums and it worked out cheaper for me to do this than have a loan or PCP once depreciation is included in the calculation. Also a warranty for the full length of the lease plus breakdown cover. It's whatever fits best for an individual really.

My car is on PCP. My OH is a bank manager and a penny pincher so he did his sums before agreeing to the PCP agreement. I only needed a small car for the nursery run so in 2 years I've only clocked up 2000miles.....but I did reverse the car into my wheelie bin 3 days after collecting it from the garage so I'll probably need to repair the dent once the PCP is up if I decide to hand the car back instead of paying the balloon payment at the end.

It may be slightly more per month for a.loan than PCP, but you own the car at the end of it. Massive difference. Like renting Vs buying.

Yanbu. Your friend is an idiot for getting a PCP AND complaining they're broke.

(Unlike some I actually read the OP)

I understand the peace of mind argument for pcp but it is an expensive way to get peace of mind. The sad thing about people trapped in a debt spiral is they alway look at short term numbers and get ripped off in the long term.

There was no deposit or arrangement fee on mine.

Depends what she means by 'broke' though doesn't it? Broke to her could mean, can't afford a second holiday this year to not enough money to buy a loaf of bread. Depends where on that spectrum she actually is.