Getting a car on PCP - tell me what it's all about!

[Audidriver]

Posting for traffic!

I’m looking to buy another car at some point in the near future (not at this very moment due to COVID). I have an Audi A3 which I absolutely love and would ideally like another one. As the one I have is getting older now and doing a lot of miles (which is down to my job but can’t be helped) it is starting to cause me some expensive problems.

I took this car on a HP arrangement over 5 years (in order to minimise the monthly payments) however I still have another 4 years to go and once the car is paid off I imagine it will have done at least over 12000 miles and will be 13 years old. I have to say looking back now the deal wasn’t fantastic and the APR is extremely high but I was in a rush to get it at the time as my previous car gave up on me. I'm also the 5th owner of this car so god knows how well it's been looked after.

I’ve been looking at newer ones on PCP but as I’ve always had cars on HP I have no idea what PCP involves or what’s the process.
I’ve realised that cars aren’t reliable and I really don’t want to be wasting money on something that will eventually give up on me, so I like the idea of PCP as I can trade the car in after so many years (right?)

I’ve been looking on Auto trader and found some lovely ones which are well in my budget and meet all my requirements but their only on a HP agreement. Can any car be put on PCP or is it down to the individual dealership?

Thanks for any help!

I normally buy my cars using a bank personal loan so I own it outright. My bank(s) usually have the best interest rates, always less than 4%. But I did just get a car with what you call a HP type loan because the interest rate was 0% so long as you put 50% down as a deposit. Our old cars part exchange value towards the deposit was over the 50%, so that worked out perfectly. The car is also under warranty so I won’t have to pay for any repairs.

But here is a website that explains the different car loan types and how they work,
www.moneyadviceservice.org.uk/en/articles/car-finance-explained

@Audidriver - yes, I've been selling cars for years and am Specialist Automotive Finance compliant so I would hope I know what I am talking about.

It's nothing to do with the dealership, it's the finance company. They will have age/mileage parameters where PCP wont be available. One manufacturer finance company I've worked with wont PCP a car that will be over 10 years old at the end, because the GMFV will be buttons. From what you're looking at, I'd expect a PCP option, but PCP varies so some websites dont offer it online. For example, we both want the same car but you want it over 3yr PCP with 6000 miles and I want it over 4 years with 20000 miles. Your car will be 3yo with 18000 miles and mine will be 4 with 80000. Different finance companies will offer different GMFVs regardless of APR. No two deals are the same

Avoid 0% APR on a used car if you can. It's a scam.

Think about it, who would offer you say £20k interest free? The manufacturer would because they're selling a new car and will make money that way. A used car belongs to the garage and no finance company will lend without getting something. Usually a couple of grand will go on the price and that will go to the finance company as their cut to offer you 0%.

I know of a garage who offered 0% but you had to put 60% deposit down, could only borrow £5k at 0% and the rest was 12 9%. So that £20k car needs £12k downpayment and £3k at 12 9% - and you've paid more than you needed to than if you took a "normal" APR.

Hope this helps.

@Pumpkinpie1 as per my previous post, 0% on a used one is a non starter. Your payment would be higher than with a normal APR at a proper list price

Pcp is usually over 3 or 4 years, my dealer will do pcp on a car up to 6 years old but only a 3 year pcp term. Basically the car can't be older than 9 years when it comes back in. (mostly because you can't finance a car over 10 years old on a standard car finance agreement).

You're probably best giving a dealer an idea of budget and annual mileage and see what they can do for you. Bear in mind, most advertised PCP deals are based on 8k miles a year and every extra 2k miles a year will cost you about £25 a month (roughly)

My DP would love to do PCP. I don't I always get a low interest loan which I can over pay if I wish, I use it to buy either a showroom model ie used for test drives or an ex hire car. I used to just ask the hire companies when they would be changing the fleet and which garage they were using. I always go high spec models with low mileage and a full service at a great price.
PCP really would not work for me as I do high mileage on crap roads.

All the premium brands such as Audi, BMW, Mercedes and Jaguar are expensive to maintain. The parts for the cars are astronomical in price. You mention someone has a Toyota that they have had no problems with. Japanese and South Korean branded cars tend to be more reliable and reasonable in price. Unless you have plenty of money for the upkeep I would look at Toyota, Nissan, Kia, Honda and Hyundai for instance.

@Mistletoeandgrime a couple of thousand miles a year is nowhere near £25 a month. A fiver, maybe a tenner tops. But even at a tenner, that's £480 more in payments over four years and you've got 8000 more miles. If you only do the lesser miles, you will get the £480 back in equity. If you do the higher miles, then at least your car is being valued correctly against a realistic GMFV and you're less likely to be in negative.

I know dealers who push 6000 lines on people because it's a lower payment. I always, always guide them a little higher because the peace of mind for a few quid is worth it (I dont get paid anymore or less based on your payment; so if I am fair with you, you'll come back to me when its time to change).

@jimdugganseye I work for JLR and that's what it costs with us so I can only go from that, apologies if its not the same across the board.
All of our deals are advertised at 6k a year so it's a conversation I have literally every day and it's an adjustment I make on 95% of the deals I do.

@mistletoeandgrime

Fair dos. I've worked at the more volume end and even when I worked in prestige, it was more Smart than Mercedes. I suppose when the possible depreciation in pounds and pence is as big at it is on prestige, then it could easily be as high as that.

Apologies.

0% is only a scam if you don’t bother to do any research and negotiate the price and your part exchange value. It’s so easy nowadays to negotiate because we have calculators on our phones. It takes seconds to plug in the different numbers and see whether you’ve hit your negotiation objective for total cost to you or not.

What most people are bothered about is the payment. A normal APR will be cheaper than a 0% because the subsidies the finance company require to offer "0%".

My current manufacturer offer 0% on new cars and no-one takes it because there is no discount or over allowance on the part exchange available if you take 0%. Would you rather pay 0% on £20000 or 5.9% on £17000? The monthly payment is lower on the 5.9. Some people only want 0% and would rather pay more to think they have got a deal than to actually get a deal.

@Audidriver:

I think with cars it is just luck of the draw

Er, no.

Japanese cars (bar Nissan, cos they are shit) always top the reliability rankings, year in, year out.

Audi are shit too. All "premium German" marques are shit too.

None of them have EVER topped the reliability charts in nearly 40 years and likely never will either.

Its not luck of the draw. Japanese and now Korean cars rule the roost.

You would think when you pay more money for a car you'd get better reliability. It's madness. I guess I am just paying for the "name" @FartingInTheFence

I had a Suzuki swift on a PCP. It was £200 deposit, £170 a month for 4 years and 0% finance. When I was just over 3 years into my finance agreement, my partner got a new job with a company car meaning he no longer needed his car. He couldn’t really get rid of his as his is a HP, so I looked into my options. I terminated my PCP, drove it to the site the finance company asked me too (British car auctions), took pictures of the mileage and condition and had a letter 2 weeks after saying all was sorted and it shows on my credit report as a settled account. Couldn’t have been easier and no money lost 😊 Although obviously that was an 11k car rather than a 20k+ car if you’re looking at an Audi

Thank you @JimDuggansEye - your comments have been extremely helpful. It has definitely given me a lot to think about.

JimDuggan,
I assume you’re responding to my post.
No, I would rather pay 0% on £17,500. And I’d probably get that kind of deal as I don’t go in unprepared and blind.

I agree some people do not prepare and can’t do math and end up agreeing to bad deals but this happens at any APR and at any price.

It’s the combination of the two (plus the time factor) that tell you what is a good deal or not.
It is not true that 0% is always a bad deal, a “scam” you called it. Just like it is not always true that the price offered with a higher APR is always the best deal.

I have bought a car on PCP. I can heartily recommend taking Angel Dust before buying a.car it's hallucinatory qualities add a real edge over the negotiations over whether the price includes the car mats.

Anyone have any experience with SEAT cars?

Coming to grips with the fact that Audi probably isn't the best car for me right now especially with the job that I have. I need something more practical and economical.

I have been looking at the new seat Ibiza's which are lovely. Brand new/or only a year old, 1 litre engine. Can pretty much get a brand new one for half the price of what I'd pay for a new Audi A3. I also like the fact that there are some sporty versions (which is what I like) so it looks nice but is also cheap to run etc.

Are they a reliable brand?

BMW and Audi - right down the bottom.

You are paying for bling and badge snobbery.

SEAT are part of the same group. When I had an A3 many of the SEAT parts were interchangeable. The SEAT Leon I had was way better than my A3.

That is shocking @Hingeandbracket! Definitely just paying for the brand then. I can't quite believe that to be honest, how they can justify the car prices when the quality/reliability is shit is beyond me. Makes sense that Vauxhall are quite high up, I had a corsa for 4 years before my Audi and it was absolutely brilliant, never missed a beat.

SEAT are part of the same group. When I had an A3 many of the SEAT parts were interchangeable, including a lot of the interior. The SEAT Leon I had was way better than my A3.

They share the same running gear and a lot of the same components. As do the VW Golf and the Skoda Octivia they are designed so they can be built on the same production lines if needs be. The Audi might have slightly better ambience in the cabin, but not enough to justify the mark up on three essentially mechanically identical cars.

Fair play to VW for finding a way of marketing a sub-premium (not subbpar) car at premium prices. I suppose they bank on people parting with 1000s more for something with a badge with more snob appeal.

You would think when you pay more money for a car you'd get better reliability. It's madness. I guess I am just paying for the "name

Higher price does not equate to reliability.

Certainly not when it comes to the overpriced, under-equipped German cars.

www.buyacar.co.uk/cars/used-cars/157/most-reliable-cars-2020

www.thesun.co.uk/motors/11213880/audi-a3-diesel-least-reliable-car/

Countless websites show Japanese/Korean cars leading reliability. I would always pick reliability ahead of a stupid "named" brand. They all have names.

I just find it astonishing that you have a crap Audi A3, that you have had one year, and now you want another A3?

You are trading dogshit for camel shit. EIther way, like all Audi's, they'd both still be.....shit.

I listened to a programme on R4 about buying cars, PCP etc (? "Moneybox Live", might be available on BBC Sounds). One guest said something that decided it for me along the lines of, the car industry relies on people buying cars that they do not need and that they cannot afford.
I think PCP is an expensive way to fund a car "purchase"

Re Seat cars, me & my family have had and are on about our 12th Seat. Sister has a 13 plate ibiza, bro in law a leon FR on an 18 plate & dm has a 17 plate leon. To date we've found them all to be very reliable & with a good amount of spec for their prices. They tend to get good reviews from the motoring press & as its now common knowledge that they are in effect VW under the bonnet then they tend to hold their value pretty well in comparison to some of their competitors. I currently have an 11 plate Mini but after this for me its either another Mini or a Seat again. Hope this helps