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.

@DogInATent

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.

Indeed. But your pcp contract is based on the same price as a buyer pays and you get a brand new car after two/three years. A buyer doesn’t.

Because then you can use your cash savings for something else.

But that doesn't mean it makes more financial sense to 'hire a depreciating asset', just that you don't need to use your savings to buy a car. If I don't need the savings for anything else, why is pcp better than a nearly new car bought with cash? The implication with the 'depreciating asset' line seems to be that pcp saves you money. Does it? How?

@Reallybadidea

Because then you can use your cash savings for something else.

But that doesn't mean it makes more financial sense to 'hire a depreciating asset', just that you don't need to use your savings to buy a car. If I don't need the savings for anything else, why is pcp better than a nearly new car bought with cash? The implication with the 'depreciating asset' line seems to be that pcp saves you money. Does it? How?

What is this? The Spanish Inquisition? Do your own cost/benefit analysis, like I did.

All the people supporting PCP are saying why it's right for THEM. And they're all good, valid reasons. It was right for me too, until a year ago.

But it's better to consider what's right for OP, and her set of circumstances. What's right for one person and their lifestyle/driving experience/financial position isn't right for everyone. You can be a big advocate of something but still recognise it's not the best for someone else.

I'm interested in the financial concept. You chose to answer my first question, I didn't force you. Really no need to be so rude.

I've never bought a car that cost more than £1000!!

Our current car cost £300 and has passed every Mot for the last 3 years! She's a beauty

I hate credit cards and finance etc. I'd rather just go with out then ever get in debt.

I would use the money you have to buy a car.

Please think very carefully if you choose the PCP option
I took a car out on a PCP deal and it was one of the worst decisions financially I've ever made in my life.
Ended up taking out a bank loan to pay off the PCP. The bank loan was cheaper to pay off.

How long does a car last??

If I buy a nearly new car for 12k and keep it 7 years that’s £142 a month
Whereas if I buy a 3 year old car for £8.5k and keep it 4 years that’s £177 a month

And if I buy a brand new one for 14k and keep it 7 that’s £167 a month

So according to my maths it still works out cheaper in the long run to buy new but my maths must be wrong because everyone always says it’s cheaper to buy second hand so where am I going wrong?

(This is dipping into savings not getting pcp btw)

Another vote for buy outright. As a new driver you're likely to scratch or knock it, and knowing it doesn't matter is a relief.

Also I'd wonder what the situation is if someone else damages your PCP car? I've had a wing mirror smashed off by someone who didn't stop, and other small dints from other peoples doors over the years. Owning my car outright has meant I could have it fixed (or not, for small dints) and shrug it off.

My first car was £1k (although it was a heap and the garage ripped me off). It wasn't until I'd been driving for about 15 years that I spent a decent amount on a nearly new car - £8k on a 2 year old Fiat.

I'd go for option 1. You may end up keeping it for years.

Maybe reconsider pcp in the future. Get some experience driving first. Most people I know had an 'old banger' for their first car mainly because you are likely to kerb the wheels and possibly have an accident or a small bump. (I say old banger but I mean something less than a couple of thousand but still roadworthy etc.. Their insurance would often be more than the car is worth).

@MoonbeamSprinkles

How long does a car last??

If I buy a nearly new car for 12k and keep it 7 years that’s £142 a month
Whereas if I buy a 3 year old car for £8.5k and keep it 4 years that’s £177 a month

And if I buy a brand new one for 14k and keep it 7 that’s £167 a month

So according to my maths it still works out cheaper in the long run to buy new but my maths must be wrong because everyone always says it’s cheaper to buy second hand so where am I going wrong?

So are you only planning on keeping the car till its 7 years old?

My car is 14 years old and still lovely to drive.

@MoonbeamSprinkles

How long does a car last??

If I buy a nearly new car for 12k and keep it 7 years that’s £142 a month
Whereas if I buy a 3 year old car for £8.5k and keep it 4 years that’s £177 a month

And if I buy a brand new one for 14k and keep it 7 that’s £167 a month

So according to my maths it still works out cheaper in the long run to buy new but my maths must be wrong because everyone always says it’s cheaper to buy second hand so where am I going wrong?

It all depends on what you use the car for. How well you drive it. How many miles a year you do. How well built the car is. Weather you want something pristine or just a scrappy run around etc.

You can get so much for your money for £8k.

So are you only planning on keeping the car till its 7 years old?

I’d keep it as long as it lasted to be honest but the Kia warranties are 7 years so I was going off that

Ooooh well maybe you could help me.

If you had 8.5k to spend on a car, no kids so no need for a big boot, had just passed your tests so driving tech is a bonus, what would you buy??

@MoonbeamSprinkles

Ooooh well maybe you could help me.

If you had 8.5k to spend on a car, no kids so no need for a big boot, had just passed your tests so driving tech is a bonus, what would you buy??

I'd buy a cheap Heap from gumtree 😂

@MoonbeamSprinkles don’t forget that the insurance will be more expensive on a newer car.

Sorry OP, I'm very unhelpful. I'll leave it to people who actually buy decent cars!!

@blossomtoes
There's nothing to stop a buyer changing car after three years. There's not a lot in it between PCP and buying a vehicle outright, except that with PCP you are always paying a new car premium and cannot benefit from the depreciation that makes a three year old vehicle more affordable.

Our current car, bought at 3 years old has depreciated about £3k in 5 years. It still has a cash value. What cash value has a PCP at the end of the term?

What cash value has a PCP at the end of the term?

Dunno. Never needed to know because I just trade it in. 🤷‍♀️

I wouldn't get a reversing camera on a small car with a near vertical flat back, there really isn't any need. It's an expensive piece of kit in a relatively cheap car and just another thing to go wrong.

See if you like the Picanto, If you like it, buy it, the warranty gives good piece of mind.

I'd get a Skoda Citigo, Vw Up or Seat Mio (all the same car) because I've had the Skoda and thought it was a great car.

PCP works for some people, buying outright is better for others.

As a new driver I’d advise buying outright for the moment. That was you won’t stress as much if you have any scrapes or bumps (which is more likely than not in your first year!)

[quote Shortbreadbrokemytooth]@MoonbeamSprinkles don’t forget that the insurance will be more expensive on a newer car.[/quote]
Not necessarily. In the OPs case it will all be about her inexperience, lack of NCD and age if she's under 25.

Newer cars are often cheaper to insure because they're safer, more secure and parts might be easier. Also less chance of being written off due to being uneconomical to repair.

Option one .

If you do go for PCP OP, they'll likely want to sell you a load of extras. Refuse all of them, they're overpriced. If you want breakdown cover or Gap insurance, you'll almost certainly get it much cheaper elsewhere.