Anyone lease or pcp their car?

[lightnesspixie]

Hey! Looking to replace car which has no finance on it. Will need to trade in to finance new (or nearly new) replacement. I have never leased a car or got one on pcp before. Was thinking of a Mini Cooper, a VW polo (which I have currently) or an Audi A1. Does anyone out there have finance on their cars and how much is everyone paying for their cars? I was looking to not spend more than £180 max a month and exchange my 2013 polo with 35,000 miles on the clock. That might be worth £5000. So trade that as deposit. Any advice?

I paid £3000 deposit and will pay £300 x 48 months on a £24k 2019 bmw

Honestly I’d keep the Polo. You won’t get anything like £5k for it-we bought a 2013 Polo 2 years ago for £6k.
I’ve had 2 cars on pcp, and I’m due to change mine, and I’ll be going back to buying rather than leasing.
The money you put down as a deposit you’ll never see again, and unless you’re exceptionally lucky, when you come to the end of your lease, the car will be “worth” exactly the amount outstanding on the finance, so despite you putting down a decent deposit, you’re back to square 1, but with no car and no deposit.
Don’t get me wrong, it’s a good way to keep your outgoings fixed, but it’s a total swizzled dreamed up by the car industry to keep “selling” new cars.

I have a polo gti 2016 on pcp. I pay £230. About to trade in as deal ending soon

If you can't pay cash in full then get a personal loan. PCP, HP and leasing are much more expensive options and bear no relation to current interest rates.

I paid £3000 deposit and will pay £300 x 48 months on a £24k 2019 bmw

So you’re paying £17,400 for a £24,000 car?
How does that work??

I paid £3000 deposit and will pay £300 x 48 months on a £24k 2019 bmw

But you won't own it at the end of the term unless you hand over another wedge of cash, will you? You're basically paying £18k to rent a car for 4 years.

We have a car on pcp. This is my fourth car on this plan. My husband is a car salesman.

We like the fact that we put in a smaller deposit of £1000 then pay monthly. At the end of the 2.5-3 years we trade the car in which acts as our deposit on the next car. So we don't need to find another deposit.

I also like the fact that we don't worry about mots. We usually include a servicing plan within our monthly costs so we don't need to find that during the year. If it's new it comes with breakdown cover for 3 years too

Forgot to add that ours is on a 0% interest plan.

It makes sense if you put in a small deposit. It's also a great idea for expensive cars.

I had a mini countryman (bought it on HP) decent deposit, threw more cash at it a few months later... I had to sell it as we needed a bigger car. Over two years I lost close to 15k. (I had paid 20k got back 5k).

With a PCP would have had a similar monthly payment but nowhere close to 13k in cash thrown at it. Comparatively with HP I was 8k worse off. Never again.

Question - what if you have a PCP agreement then you lose your job through coronavirus? Can the agreement be cancelled and you give the car back? I've only had it for 6 months but am now unemployed :(

I lease mine. At the start of the contract I pay 3 months rental as deposit, then usually around 200/250 monthly rental depending what I have. I always go for a maintained plan so service costs are included, road tax is also included. All I pay on top is insurance and petrol, usually have it for 2 years.
I never own the car, but like renting a house it does mean maintenance isn't my problem.

@AmandaHoldensLips

I just asked my husband. He said your best option would be to speak to the finance company and explain your situation.

If you were to give the car back you would be in a large amount of negative equity which you would have to pay back as the cars lose a lot of value in the first year.

@AmandaHoldensLips

Question - what if you have a PCP agreement then you lose your job through coronavirus? Can the agreement be cancelled and you give the car back? I've only had it for 6 months but am now unemployed :(

Not sure about at 6 months but if you are more than 1/2 way through a contract you can usually return the vehicle, they are not keen on it though. You need to look at your agreement.

Yes there will be a balloon payment at the end if I want to own the car or I give it back and start on a new car.

We paid £180 per month for dds car.

We were going to buy her a 2nd hand car but by the time we looked at depreciation and getting it through it’s MOT, repairs and extra fuel costs it didn’t work out as much differently. The only difference was she was driving a new car.

I would look around for a website that you enter in what exactly you want and it tells you the garages that give you the best deal.

A type of “confused/money supermarket.com for lease cars.

Work out the total cost over the years you have the car as sometimes it is cheaper to put nothing down but pay a higher amount each month.
The difference in amounts can be huge.

For us it worked out cheaper to pay £180 per month and put nothing down than it was to put money down and pay what looked like a lesser amount each month.

Car showrooms have a “sale” on this type of car leasing and you can pick up a bargain.

With the car industry in the state it is in I think there will be a lot of “sales” in the coming months.

James Brown PCP'd his car.

So you’re paying £17,400 for a £24,000 car? How does that work??

You're just renting it. At the end, it's not yours. You hand it back or "buy" it if you want to keep it.

Ah right I see, thanks for explaining !

So we just got a car with PCP and had previously purchased a car starting with HP.

In 2016 we got a Toyota Yaris (16k at the time). We had it on HP for a year, then inherited some money and so paid it off in full. Now that car has to pay congestion charge so we upgraded it to a leaf which we purchased on PCP. £10k was accepted as trade in for our Yaris, and then financed the 10k gap. That's costing £304/month for 36 months with a final balloon payment of £1k.

By making the balloon payment as small as possible you make PCP more worth it. This is because the interest you pay on a PCP is always on the total amount of finance- including the balloon payment. Which means if you go for a cheap monthly deal with a huge balloon payment at the end, you've paid far more interest than you would otherwise. I'm still intending to get a personal loan though, because despite it being a good deal at 8.9%, I can get 3% from a personal loan and save £500/year.

Essentially PCP costs loads because of the way the financing works- you pay loads of interest of you try and minimise the monthly payment, and you end up with less equity. If you want a new car every two years though they will get you that fairly easily, but you'll be paying that cost forever. You have to think of it in terms of capital depreciation- if I owned the car how much value would it lose?

That's costing £304/month for 36 months with a final balloon payment of £1k.

It's only costing so little because you're only financing half the cost because of the deposit you've paid.

In 3 years when you want to replace it, it'll cost £608 per month as you won't have a part exchange to use as a deposit.

I've seen it far too often (I'm an accountant). People get sucked into the leasing model which looks cheap the first time because they've a part exchange to use as the deposit. 3 years later, the monthly payments shoot up for the next car.

People get sucked into the leasing model which looks cheap the first time because they've a part exchange to use as the deposit. 3 years later, the monthly payments shoot up for the next car

No part exchange, no down payments in our case just £180 per month for 2 years. So about £4500 in total.

Having owned older cars for most of my life we know the running costs are high and know how much we have spent in the past keeping a car on the road
The car we were going to buy was 2nd hand. About £6000. We did our research and it would have lost about £2500 over the 2 years.
Getting it through it’s MOT would have probably cost us another £5-600 per year then if we added in one other repair per year and the extra petrol costs and the fact Dd does a lot of unsociable hours in her work that if she was getting into her car at 3am on a cold dark night that we had confidence that when she turned the key it did work and it was a no brainer that a brand new lease car was the way to go.

We went back to the same dealership and the price was £280 per month.

But we looked on line and found a dealership that was doing a better deal.