AIBU to get this car on PCP?

[Yummyy]

It costs £17000… we have a deposit of around £5000 and pcp payments would be around £200 per month for 4 years. Then £5000 to pay if we want to keep it. We are very likely to be in a better financial position in 4 years time (due to not having to pay childcare anymore and potential pay rises) and will probably just go for a different car.

What are the pros and cons of PCP?

You absolutely can get a decent second hand car for less than £10k, all those who say you can't are talking bollocks.

I've never had a "new" car. All of my cars have been second hand, and I've never paid more than £2500 outright. As long as you're smart and do your research you can absolutely find a decent car which will last you years. My current car was 7 years old when I bought it for £2300 - it had low mileage for its age, one careful lady owner, and nothing wrong on MOT etc - I've had barely anything go wrong with it in the 5 years that I've now owned it. The worst I had was some rust/corrosion which wasn't expensive to get sorted.

But then again I'm someone who doesn't care about aesthetic. If the car has 4 wheels and drives me from a to b I'm happy. I don't care about scratch marks etc. So if you're like me and you just need a car to transport you then you absolutely CAN find a good value second hand car which won't break the bank.

Financing cars IMO (unless you have absolutely NO outright cash to buy a cheap one) is madness to me. As previous posters have said, they only decline in value.

@MoonbeamSprinkles

Depends what you mean by respectable for 5k I’ve just looked on the AA website and for that price your looking at a car that’s about 8 years old and has done about 70k miles Obviously there’s some outliers but unless you know loads about cars that kind of car is a risk to buy. You could easily spend that 5k and then in a years time the car completely clap out and you have to buy a new one.

Exactly. You can't get anything good for 5k.

@Mymilk

You absolutely can get a decent second hand car for less than £10k, all those who say you can't are talking bollocks.

I've never had a "new" car. All of my cars have been second hand, and I've never paid more than £2500 outright. As long as you're smart and do your research you can absolutely find a decent car which will last you years. My current car was 7 years old when I bought it for £2300 - it had low mileage for its age, one careful lady owner, and nothing wrong on MOT etc - I've had barely anything go wrong with it in the 5 years that I've now owned it. The worst I had was some rust/corrosion which wasn't expensive to get sorted.

But then again I'm someone who doesn't care about aesthetic. If the car has 4 wheels and drives me from a to b I'm happy. I don't care about scratch marks etc. So if you're like me and you just need a car to transport you then you absolutely CAN find a good value second hand car which won't break the bank.

Financing cars IMO (unless you have absolutely NO outright cash to buy a cheap one) is madness to me. As previous posters have said, they only decline in value.

I agree with all this

I would just get a loan, rather than the balloon payment at the end.

@Valeriane

Its debt and its not smart debt. By a second hand car outright.

This. We own both our cars and husbands motorcycle. Ok they're not brand new, but not old and all OK, but we holiday 4 to 5 times per year. Id rather spend my money on holidays. My friend has a new Porsche SUV, costs her £560pm, but she moans every time i go away that she can only afford a one week holiday per year.

My current car was 7 years old when I bought it for £2300 - it had low mileage for its age, one careful lady owner, and nothing wrong on MOT etc - I've had barely anything go wrong with it in the 5 years that I've now owned it. The worst I had was some rust/corrosion which wasn't expensive to get sorted

Well yeah five years ago you could get a decent second hand car cheaply.
The house I live in was also 30% cheaper and my household bills were cheaper too.

I would just get a loan, rather than the balloon payment at the end.

But then your getting a loan for the full amount.
If you get pcp you’re only paying the amount minus the balloon payment.

You don’t have to pay the balloon payment you can always give the car back.

You absolutely can get a decent second hand car for less than £10k, all those who say you can't are talking bollocks.

These goalposts have moved, we were saying you it would be difficult to find a decent one for 5k.

And I'm saying that's not accurate.

Even now I've just had a look on gumtree in my local area and there are plenty of cars in the 2k range which look plenty decent as a basic runaround.

If you want a 2 year old car with no marks and 500 miles on the clock then yes you'll struggle, but my point that it's absolutely false to state you cannot get a decent car for a low price.

Yeah but if you buy a car from gumtree unless you’re a mechanic or know loads about cars it’s pretty much a gamble.
You aren’t under any warranty, it could literally fall apart the next day and you’d just have to suck it up.
Of course you could get lucky and get a car that runs and runs but you could also get sold a bum.

The second hand car market is like the Wild West at the moment.

I'm not a mechanic.

True, you could be unlucky. But if you're savvy enough to do your research, view it in person (don't buy a car off gumtree you've not physically been to view/test drive like one of my colleagues did), check the service history/MOT etc you can be fairly confident.

Always do people pcp or leasing
Just work out total cost over the 3 years and see which is best

Consider road tax is included in lease

Work out what the car will be worth after 3 years (loads of depreciation calculators online)
If it's more than the balloon payment, you might make a bit selling it. I did this last time and sold it for £1.5k more than the balloon. You can do it via Motorway for ease//speed/if you don't like the idea of selling privately

I buy via pcp. I pay the monthly payment and save monthly for the lump sum at the end. I don’t have an issue with it if it’s used correctly, it’s just a loan

[quote daimbarsatemydogsbone]@Daddydog
Often with leasing you can beat the depreciation
What does this mean?[/quote]
I change cars every 2 years - my car was £50k and monthly payments plus deposit in total was £13.5k for the 2 years which includes maintance. I can see exact same spec cars, age, millage on autotrader now for £36k. I've still got 4 months left of my lease! By that time when the '22 new plates are out the value drops further where as I'm fixed on 13.5k! Had a £350 service this week, didn't pay a dime. Need 2 new tyres - again won't pay a penny. Where as if I owned the car it would owe me about £1000 in service costs over the 2 years and the difference between what I paid vs what I could sell it for would be bigger than what I paid by leasing - so I beat the depreciation.

I’ve just put a deposit down on a brand new car on PCP. I always buy cars on finance, usually 3-4 year old and generally change them every 4 years.
I’ve never had a brand new car but this time around it was cheaper, I’m paying 0%APR. The fact I’ll never really own it doesn’t bother me as I change mine every few years anyway.

What I would say is check the mileage. I only do around 6000 miles a year (less during Covid) and my payments have only gone up about £3 a month to increase it. So it’s worth checking different options x

@MoonbeamSprinkles

Depends what you mean by respectable for 5k I’ve just looked on the AA website and for that price your looking at a car that’s about 8 years old and has done about 70k miles Obviously there’s some outliers but unless you know loads about cars that kind of car is a risk to buy. You could easily spend that 5k and then in a years time the car completely clap out and you have to buy a new one.

Precisely just what's happened to me. After my hire purchase car was written off in an accident a while ago, I decided to buy a 7 year old Citroen outright. 59k on the clock, £4900, thought I'd be able to run it into the ground and get a good 5 years out of it.

I expect to pay for e.g. new tyres and brakes, and the odd thing going wrong with a slightly older car.

But as well as new brake pads and 4 new tyres, it's had a radiator leak and has developed an oil leak, it needed a new clutch, a new timing belt(/chain?) and a new starter motor, and - my favourite - both front suspension springs went within 2 months of each other. The second one went while I was driving on a dual carriageway, pinging the spring deep into my tire. The force of my tyre being suddenly dragged at speed nearly made me crash at 60mph and broke the drive shaft. At that point - having spent a fortune getting the fucker repaired and constantly living in fear during my (only weekly but long-ish) commute because I didn't know what else was going to break that apparently isn't covered in an MOT - I was just absolutely done. Maybe my dad's right on both of his mantras (that I have some kind of motoring curse and that French cars are the devil's work) but it was just not worth the constant hassle and unpredictability.

I don't have a car now, I can get the train to work so I've just started doing that, but next time I will be going for nearly new or a new one on PCP. Worth the peace of mind.

Oh my god Scarpa that sounds utterly terrifying!!

And expensive.

@MoonbeamSprinkles

Oh my god Scarpa that sounds utterly terrifying!!

And expensive.

It was the scariest driving experience I've ever had, and I regularly drive the M62 at rush hour haha 😅!

I think the car could sense my hatred of it though - when I bought it the central locking didn't work properly so I spent a lot of time calling it the Bastard Bus. I think it was trying to spite me...

Only ever had a car on PCP. Works for me

I've tended to do similar deals and had a nearly new car every three to four years.

You are sensible to be putting a decent deposit in, as you are unlikely to end up in negative equity (ie needing to sell the car but finding it is worth less than you owe).

What you must factor in is that in 4 years time, you will have nothing left. The car will be worth £5k and you will owe them £5k. You either need to put aside around £100 per month additional (to create a similar deposit for next time), or reduce the final balloon payment to say £2500 by setting a higher monthly figure.

Otherwise, in four years time, you'll be back to an old car as you won't have any deposit to put towards the next one.

We bought previous cars outright - what’s the point? Apart from the current weird situation where there is a huge demand, generally your standard car does not appreciate in value so there is nothing to be gained from buying outright, esp if your mileage is low, as ours is.

We just bought an electric car second hand on PCP: £270/month for 3 years with deposit of £2500.
By the end of the 3 years we would have paid about £13k for a £25k car and then we will upgrade.

We could afford to buy outright but we’d probably be worse off financially as a result.
The car is electric so we anticipate in 3 years there will be significant improvements so we don’t want to be stuck with a unsellable old tech.

We know several people who use a work salary sacrifice scheme i.e. you are taxed on your income after your PCP payment has been deducted from your monthly salary. However, you would need to consider the impact on pension contributions.

Don’t do it !

If at any stage, you don’t make a payment, the car may be take me off you. It’s not like a car loan where you own some of the car, everything will be gone.

Go to the credit union and get a car loan instead. Don’t do pcp it is a trap. Good luck.

The low mileage bit didn’t make sense and I can’t remember why I brought mileage into it!

I’ve always been sceptical about PCP, but have done it with my new car. Because I love it and am confident I’ll still love it at the end of the 0% finance deal. (I’m hoping to pay it off early, which is fine, because 0%, but have set up a monthly transfer to a savings account to cover the end payment, to make sure) (one of the things I don’t like about PCP is it encourages us to change cars every 2-3 years. Which is really bad for the environment. So I won’t be a part of that)

@TotallySuper

The naysayers seem to be those who still think £2000 will get you an amazing solid and reliable car that will run for years. Even £10k won't get you that at the moment.

This. Honestly, we've been considering a banger but for 10k you get a shitload of potential hassle and a deeply mediocre 14 plate car which will still depreciate.

We worked out my DH was paying 600 a month in loan (0%) fees, depreciation and servicing on his old car. I only pay 310 for the lease of a new SUV, add on service and insurance & you're still better off with a newer car under warranty.

Must admit, I'm very aware its not 'mine' though.