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?

I don’t think of it that way - I see it as something of finite lifespan, which will be worth less than I paid for and will eventually cost a huge amount to run

Where is this idea that old cars cost a huge amount to run come from?

By the time OP has paid off the loan the car will be costing way less to run than most people are spending on pcp payments to have the latest model.

Cars are engineered and built very well nowadays. The times when cars turned to rust after ten years are long gone. I recently got rid of my first car, it had made it to the grand old age of 18 years and 115k miles all on its original clutch and turbo.

@addictedtotheflats

I've had a number of cars on PCP. All brand new (apart from my current which was 18 months old). I view it as a lease, I don't plan to keep them at the end, ive never put a deposit down as it makes hardly any difference to payments and all been 0% interest. I don't have to worry about MOTs, services have all been with no advisories and I've got peace of mind. I've always had around 2K equity which I transfer to the next car, so kind of a deposit actually. You just need to be careful with damage to the car as if you did plan to hand it back once you have paid 50% of the loan you could be hit with repair charges.

If you don't plan to keep the car at the end of the PCP term, why are you not leasing instead?

We are considering PCP for the first time.

We've always had second hand cars, our current car is 12 years old and starting to cost us too much money and cause too much stress. We can't find anything suitable second hand within our price range- prices really are mad at the moment.

A big factor for me is that it'll be brand new and under warranty. I shouldn't have to worry as much about big repair bills. (The stress of getting the repairs done in order to pass the MOT this year nearly pushed me to the edge! I know that'll sound dramatic but it really was awful. So I feel like paying for that peace of mind is worth it to help my mental health.) The limited mileage wouldn't be an issue for us, the only worry is how strict they are with regards to wear and tear when you hand the car back.

@Mymilk

Agree 100% with *@StillPerplexed*

The difference is whether you consider aesthetics a necessity. The fact is you CAN get a perfectly decent running car for under £2k. For me a car is a means to drive from a to b. I don't care if it has scratches, I don't care if it doesn't have built in sat nav - as long as it gets me where I need to go, great.

If you're someone who specifically wants a new car with the latest tech/spotless interior/exterior then yes you'll struggle to find something "cheap".

But the point is if all you need is a car that drives you can do it without taking out loans/finance/major debt.

Nope, you can't.

On autotrader within 100 miles of me there is 1 car on there under 2k.

1 car, and it's a 15 year old 2 seat convertable.

That's it.

Well apologies susie, there are tons within 20 miles of me (Scottish highlands) - guess it can't be the same all over!

[quote StillPerplexed]@TotallySuper okay sure, how about this old Honda Jazz with good mileage, £850:
www.autotrader.co.uk/car-details/202111159591323?advertising-location=at_cars&maximum-mileage=70000&price-to=1000&postcode=SO14%206SG&model=Jazz&page=1&make=Honda&include-delivery-option=on&sort=relevance

I've driven these before, perfectly fine car, deceptively large boot space. Not perfect for everyone's needs, but good for kicking around town in

(I know I'm a terminal cheapskate, but there's probably a nice middle point between my stinginess and having to make repayments on an asset you don't even own.)[/quote]
So you never had a mortgage then? You don't own that fully til it's paid off and plenty of people save up the balloon payment on PCP to buy the car at the end. A bit like an interest only mortgage. It's no different really, a reliable, safe decent car is just as important as paying for a house for a lot of people.

These are the sort of prices on the cars I'm thinking of, so 5 years old and it's got 75k miles on it - over 8 grand
I'm not just saying that second hand cars (especially 1-3 year old ones with low mileage) are expensive, I work in a car dealership!
Customers are selling new cars back and losing maybe 1k on them even 3 years later
Demand for servicing and MOT is high because the people that never kept cars that needed an MOT has skyrocketed as well. They can't get a new one so they are keeping the old one

Get a Car loan. The rates are dirt cheap if you have good credit. PCP always works out more expensive

@SusieBob

Just to illustrate how mad used car prices are at the moment, I've had my current car 2 years, and paid just under 10k for it. 2 years later with 25k miles done, I have a quote from a dealer for 8.8k as I'm considering moving to an electric car.

To only lose 1k on a car over that period of time is utterly crazy. The problem is, of course, that lead times on new cars can be anything up to a year and so demand for used cars has increased massively.

I've just looked at cars the same as mine (67 plate bought 1.5 years ago with my current mileage) and they now cost about 5k more than I paid for mine! (Obviously know I wouldn't get that from a dealer but the price I paid was standard at the time)

We've done every form of car ownership over the years. My DH is a car obsessive and changes regularly / had multiple cars on the go, plus I have one too.

We are now both on PCP deals, because we have decided for us it offers the best chance at reliability and ease. We are time poor. My DH can fix pretty much anything (we have a classic car under going a full rebuild in the garage) but we got sick to death of Sunday nights under lamps trying to fix a car ready for the Monday morning commute. We both drive long commutes and need to know we will get to work the next day.
People who say you can get a great car for

@SusieBob

I've just searched for cars on autotrader within 100 miles of where I am, and actually 5k really doesn't get you very much apart from little city cars with >60k on the clock or just complete bangers.

I'll say it again -> used car prices are MENTAL at the moment. If I go on WBAC I am being offered 8k for a 5 year old astra with 40k on the clock.

Which, frankly, is extremely tempting.

Based on this I just plugged my cars details in. £4k for an 8.5 year old Honda jazz. I paid £8k 5.5 years ago for it!

I love my PCP car. I've had it for three years and pay £150 a month. On top of that I've only needed to pay for an MOT or yearly service. It hasn't needed any additional work and has been reliable. A second hand car might have been reliable or it could have cost a fortune in repairs. I prefer the certainty.

I think I must be missing why owning it outright with a car loan is better than having it on a pcp deal with a balloon payment.

So say the car is 10k and worth 5k in 3 years

(Figures are obviously just plucked out the air)

Car loan of 10k over 3 years plus interest of 3%

That would be £299 a month and £10750 paid overall.
You could sell your car for 5k at the end which could go to your next car so you’ve spent £5750 for your car.

Pcp

£10K car let’s say 3% interest again even though there are lots of interest free or ones where the garage puts in money for your deposit that offset your interest.

The garage says it’ll be worth 4K at the end (they usually underestimate) so you’ll need to pay 6k plus interest so £6750 which is £187.50 a month.
Then at the end if the car is worth 5k you can buy it off the dealer for 4K and sell it yourself for 5k.
You’ve still paid £5750 for your car but your monthly payments are way way cheaper and if the market goes tits up land your car is only worth 3k at the end it’s the garage that’s taken that risk.

Pcp works on economy of scale for the dealers, it ensures a steady supply of new and second hand cars changing hands through the system which is obviously how they make money. They incentivise it because they make money every time a car changes hands.
With a loan they’ll never have to talk to you again but with pcp it guarantees in 3 years time your going to have a conversation with them about what to do with your car with the likelihood of you either buying another car off them or selling your old car to them at a reduced rate really high (sometimes even both).
They’re making money off keeping you as a customer; like a loyalty card.

My mother has bought Toyotas on pcp from the same garage for 15 years. Before she was on pcp she’d hop from garage to garage.

Madness, madness... they call it madness