AIBU to buy a car on PCP???

[MoonbeamSprinkles]

I have never bought a car before and I'm totally confused about what's for the best.

I have just passed my test and am looking for a Kia Picanto 3, I'm not the most confident driver so I like the fact it has reversing cameras etc.
I have about 8.5K saved and earmarked for the car.

My options are

1. Buy a 3 year old car outright for about 8.5k.

2. Buy a nearly new car for around 12k and dip into rainy day savings.

3. Buy a new car on PCP put down a 5k deposit and keep the 3.5k for the monthly payments and hand the car back at the end.

The dealership offer very low rates on PCP but it looks too good to be true, I've never had a credit card or loans and I hate the thought of being in debt.
It would be nice to have a brand new car that I could 100% trust though.

If I have a PCP contract and I want to trade my car in would I need to put another cash deposit down when I give it back?

Any advice would be helpful, I'm a long time lurker of mumsnet and you always know whats what when it comes to cars.

@igotdemons

Think very carefully before you buy a car on PCP. You’ll need to pay to have it serviced every year by the dealer, as well as an MOT before you hand it back (we weren’t made aware of that until the time). You’ll also have to pay for any damage incurred, even if it’s just cosmetic or they’ll deduct it off at the end (if there’s any equity left, if not you’ll have to pay). We thought we’d have enough ‘equity’ at the end for a deposit for the next car but it turned out we literally had none, despite the car being immaculate with only 12,000 miles on the clock! I’m also assuming that if your car is worth less than the remaining finance at the end of the term, you’ll have to pay the difference in that, too. Do your research, it sounds great but it isn’t necessarily the case!

This sounds like a lease and not PCP?

I change my car every two years on PCP. The garage phones me to tell me I'm due a service and always then offer a new car. So I just take the new car. Never ever had to pay for any damage etc. But my mum had to pay damages after her leased car went back.

Okay fair enough but I was talking about cars that people can use - not put in a garage/storage and only use when it's not raining ;)

Plenty of cars you can use/rag/track and still appreciate in value. I rarely sell a car for less than I paid for it.

I agree with pp who say don’t get a brand new car when you have just passed your test. You are very likely to get scratches or minor dents. I would definitely go for option 1 in your situation.

Do consider buying a car from one of the online dealers such as Cazoo and Cinch. Their inspections are very thorough, you have a decent warranty and it cuts out having to negotiate with car dealers!

Buy 1.

I've had PCP before and it was handy and a good price, BUT that's only if nothing goes wrong. My sisters currently unable to drive.... but is locked into the contract so still has to shell out every month for a car she can't use.

It's very hard to get out of the contract once your in it and you will legally HAVE to pay even if you lose your job, become unwell, break your legs etc.

The OP is a new driver and wants a car for day to day use that's going to be easy to drive and look after and cheap to insure.

It doesn't sound like she's in a position to set herself up as an amateur car trader in whatever niche type of car bucks the trend against 99% of other cars that depreciate not appreciate in value as you keep them.

@Shade17

Okay fair enough but I was talking about cars that people can use - not put in a garage/storage and only use when it's not raining ;)

Plenty of cars you can use/rag/track and still appreciate in value. I rarely sell a car for less than I paid for it.

Blimey, you live and learn. I have never made a penny on any of mine.

Definitely option 1.

We've always bought our cars slightly used and kept them for ten years. Generally we've had car payments for the first 2-3 years via a bank loan, then own the car outright with no payments for 7-8. We tend to go for reliable Toyotas as well. All the other ways of paying are just a way for the dealerships and car companies to get more money from you. As a society in general, we don't need new cars every three years. It's the same with mobiles, and washing machines, and everything else.

@MoonbeamSprinkles

I am going for a test drive to a kia garage tomorrow with my very impulsive mother who loves her PCP car so I need the iron will of mumsnet to keep me on the straight and narrow.

@MoonbeamSprinkles

I would postpone this until you are certain of what you want. Pushy sales people. Pushy mother. Shiny cars. You could end up succumbing to pressure in the moment.

Buy a second hand car, if you scratch it, it’s on you. Reversing cameras are common these days. A quick search on autotrader found a Kia picanto with reversing camera and 9k miles on the clock for £8.5k.

Option 1, or 2 if you want something newer.

PCP looks cheap for a new car, but you end up on a treadmill of payments that never end. You effectively pay off the depreciation, then hand it back and pay off the depreciation on the next one. Repeat until you have spent ££££s that could be better invested in a pension!

Yes, you get a new car every few years, so if that’s important to you it might suit, but it isn’t “cheap”.

We buy cars that are 3/4 years old but reliable brands/models. We generally keep them until they are uneconomical to repair then buy again. Currently got a 5 year old Mercedes that we love but could never afford new.

But brand new cars aren’t important to us, not wasting money on cars is.

Could one of the 'never buy a depreciating asset' people explain why? I can understand that using finance to fund buying a brand new car will probably be a really terrible idea, but why is using cash savings to buy a used car worse than pcp? Why don't people hire all their depreciating assets - which is basically everything other than a house?

Do you run your own business?
If so you should definitely talk to your accountant about whether it would be more cost effective for the business to finance your car and for you to run it as a company car - this works especially well for electric and hybrid cars.

Well this really puts a spanner in.

Yes I do own my own business but it was my understanding that because the car would be almost 100% personal use that it would work out about the same.

I couldn't possibly do PCp as I live down a rutted overgrown country lane and the chance of scrapes is super high.

You can't claim a car is for business use then use it for wholly personal use

Option 1! Buy from a main dealer Kia, audi, whoever they give you at least one year warranty on approved cars sometimes companies give 2 year when they have offers on then u have the protection if anything goes wrong u can just get the main dealer to fix it, I got mine with Audi and also you also get Audi breakdown cover included with the warranty .

I think having your business finance your car is only strictly allowed if most or all of its use is for business purposes.

If you don't use the car for business much, it's not really allowed to put all the cost through the business. People probably do it because they think they won't get caught and maybe they won't, I don't know how often HMRC carry out compliance checks.

But it's worth asking the question of your accountant or looking on HMRC. Even if you don't put the car through the business, you could always claim the 45 p a mile for business miles without any worries that you're stretching the truth about your tax affairs.

Kia warranties are 7 years so that’s reassuring

MN hates PCP/leasing. So you really won't get a balanced view on here.

We've done PCP or leased for the last 7/8 years. It's stress free motoring, and the car needs one service in 3 years, and possibly 2 sets of tyres.

My days of old bangers and frequent garage visits are long behind me.

@Reallybadidea

Could one of the 'never buy a depreciating asset' people explain why? I can understand that using finance to fund buying a brand new car will probably be a really terrible idea, but why is using cash savings to buy a used car worse than pcp? Why don't people hire all their depreciating assets - which is basically everything other than a house?

Because then you can use your cash savings for something else. People used to hire things like TVs, then they got too cheap to make it worthwhile. There’s a huge difference between a £1k fridge and a £30k car, both in price and depreciation. We always use 0% finance for big ticket items too - why use our savings?

I really don’t think I’d want the headache of running it as a company car anyway for what would probably be a small discount in the grand scheme of things.

When I’ve gone through the numbers with my accountant in the past it’s always only saved a tiny bit for quite a lot more paper work and stress.

Unless you have no other option stay clear of PCP.

Option 1.

I don't know why the pro-PCP enthusiasts think that depreciation doesn't apply to them. It's built into the cost, and new cars depreciate fastest in the first 18 months.

Option 1.

We always buy our cars for cash.

We've had PCP cars for a few years and it works for us. We take out the added insurance for damage so don't have to worry about scratches.

I've been driving for 40 years and have had my share of old bangers and unreliable secondhand cars. I'd always chose PCP now.

@spinningspaniels

MN hates PCP/leasing. So you really won't get a balanced view on here.

We've done PCP or leased for the last 7/8 years. It's stress free motoring, and the car needs one service in 3 years, and possibly 2 sets of tyres.

My days of old bangers and frequent garage visits are long behind me.

Plus freedom from the hassle of buying and selling in the second hand market and dealing with time wasters, shysters and the illiterate idiots who hang around in FB marketplace.

When I had a PCP car, the original tyres were still just legal when I returned the car. I was planning to buy it, but I decided to go back into my company car scheme instead.

I did option 1 - a 3 year old £8000 car is still a really nice car! Mine felt as good as new (had about 35000 miles on it), still smelt newish, looked shiny and nice. I've had it since 2019 and it's sailed through services so far. I can see myself driving it for at least another couple of years easily and maybe up to about 5 more years - or just driving it into the ground! So it's not like you're getting a horrendous old banger OR that the new version will be amazingly miles better.