PCP/HP - Yes or no

cr-07

Hi all,

Looking for some advice here, if anyone is willing to share.

So I'm currently driving a 142 Vauxhall Insignia 2.0. Bought it 4-5 years ago, for about €7k all in (NI import). The car is in good nick, and have been keeping up to date with services etc. From doing a quick look on DoneDeal, I think I would get around €5-7k for it if I was to sell it. The car would be good for another couple of years I reckon.

Currently WFH, but go to office once a week (~160km round trip on the motorway). Looking to upgrade the car to something a bit flashy (presumptuous, I know 😀). I was thinking something like a Merc or BMW.

I don't have the cash for a new car, so am looking at getting one on finance (HP or PCP, not sure which is best). I am 30, and my current salary is €67k per annum (before tax). I currently have a mortgage of €450 p/m. Other than that I have no high bills (Netflix etc).

I'm not one who takes out loans often, so am quite weary of doing so. I'm sure I'd be able to keep up additional monthly repayments of €400 or so.

My question really is this: Am I mad in doing this? - The car would more than likely be a 'want' as opposed to a 'need' at the moment.

XsApollo

Well every purchase bar necessity is a want.

you can say the same about everything.

why buy premium coffee when you can get it cheaper, why buy a gant jumper when you can get a cheaper one somewhere else.

you have an insignia , do want to be driving something nicer?

People spend their money on different things, thats a small mortgage and a decent salary so , up to you what you spend your cash on.

i always spent money on a decent car.

cr-07

https://www.boards.ie/discussion/comment/121597810#Comment_121597810

The insignia is driving well, never gave a days trouble, but I am beginning to get 'bored' of it. If I had the cash, I would probably buy a new car outright, hence the hesitation with financing for one. Would you recommend any decent Merc's or BMW's within the €400 p/m price range? Preferably a saloon. I was looking at the 3 series / 330e / A-Class

Luna84

If you want a new car you may as well get one. That is a tiny mortgage too so fair play of some how managing to get that.

User1998

So is that roughly €4k take home pay each month? Minus the mortgage, still around €3.5k? I think €400 a month is a reasonable amount to pay towards a car if the above figures are correct.

kirving

If buying a new car today, I think you'd be absolutely mad NOT to buy it on PCP (or HP depending on the conditions).

The key point is that while the GMFV might be low on paper, you are at the very minimum protected to some extent on the depreciation over the next few years. Look at Tesla's price drop - a lot of existing owners of Tesla and other EVs lost thousands in depreciation.

Whether you go EV or ICE, you could stung in future by weight taxes, or fuel taxes, so if it were me, I'd be going PCP.

masterboy123

With that much earnings and a limited amount of outflow (unless you didn't highlight mandatory significant expenses), I am surprised you don't have savings to buy the car in cash.

I was earning similar at your age, and I was able to purchase Merc C class with hard cash.

User1998

https://www.boards.ie/discussion/comment/121599006#Comment_121599006

Mortgage deposits aren’t cheap these days. Wipes out most peoples bank accounts.

https://www.boards.ie/discussion/comment/121599006#Comment_121599006

The cars the OP are considering start at about €60k.

Thats a fair bit of cash to have.

Luna84

https://www.boards.ie/discussion/comment/121599266#Comment_121599266

Remember the 100% mortgages. I doubt we will ever see the likes of that again considering the banks went under during the recession.

mickdw

Pcp

New bmw 330e msport is around 575 per month on pcp with max deposit of 30 percent which is circa 18k.

Realistically when you add a nice colour, decent wheels etc, you are probably looking at 650 per month and 20k deposit.

Interest payable is too much on the bmw deals as currently advertised. 6k interest over the the term of that pcp.

27k final payment also if you want to own the car after 3 years.

You can also just walk away in which case it would have cost you €39000 or so for 3 years driving or alternatively trade it in where you are free to shop around and any value over the 27k owed is yours to go forward as deposit on next car.

On hp, 20k deposit, 40k borrowed over 5 years would amount to about 800 per month.

Buddy Bubs

There's a lot of ground to be covered between a 142 insignia and a brand new 55k car and on that ground you'll find some really nice used cars that will scratch that itch for you. Including Merc, BMW, Audi, Lexus, hot hatches anything you want really.

You sound sensible not wanting a huge amount of debt, you'd get something a bit out of the ordinary and still relatively new and exciting compared to what you have in the 20 to 30k bracket.

mickdw

True, an 18 or 19 5 series or the like would be a major step up.

masterboy123

https://www.boards.ie/discussion/comment/121599266#Comment_121599266

OP has a mortgage of €450 a month only. I doubt they got mortgage anytime recently or paid over 60% of it at this stage.

RurtBeynolds

400 per month is not enough for the cars you want. I personally couldn't spend those prices on a car. I just couldn't justify it to myself. I would need to be earning multiples of the cost of the car to consider buying it. You're looking to spend approx 1 year's salary on a car.

How are finances otherwise? Do you have ample savings? Investments? Are you making max allowed pension contributions? Are you topping up mortgage payments? I would look at these first, and set your sights lower in terms of cars.

User1998

https://www.boards.ie/discussion/comment/121600133#Comment_121600133

OP is 30 years old. At what age do you think they got a mortgage?

And one of my mates got a €350 mortgage in Mullingar recently, so a €450 mortgage isn’t out of the ordinary.

Expecting a 30 year old who is paying off a mortgage to have enough cash in the bank to comfortably buy a luxury car is a bit of an ask.

ELM327

https://www.boards.ie/discussion/comment/121600389#Comment_121600389

Exactly. Not everyone lives in south dublin and has a 7k mortgage!

Unless the OP has some undisclosed expenses there should be no issue in buying a new/er car. I'm closer to 40 than 30 and having bought a house last year, the deposit took 50k+ from my savings. There's no more 100% mortgages thankfully!

masterboy123

https://www.boards.ie/discussion/comment/121600389#Comment_121600389

After paying €450 a month on mortgage, where is the remaining ~€3500 going?

Like I said earlier, I had a similar profile and I was able to buy a brand new Merc with cash, despite paying 1/3rd of my monthly salary towards the mortgage, whereas OP is paying only about 10% of monthly income towards the mortgage.

https://www.boards.ie/discussion/comment/121600649#Comment_121600649

surely they’re on closer to €3.5k @ 40% tax on 67k p/a?

that’s about €3k after mortgage before you consider insurance, tax, fuel for the 160km round trip (and any other driving) broadband, Netflix, groceries etc they all add up.

The OP said they had no significant expenses beyond the mortgage (ie no other €450 or so p/m commitments) that does not mean they have €3k a month to do what they want with.

honestly it’s pretty ignorant of you to take very bare figures like in the OP and determine they should have €60k in savings.

In fact to make any assumptions about the OP’s finances based on Mickey Mouse information is ridiculous and tantamount to bloody gossip.

If you have no useful advice why are you even here? So far the most you’ve had to say is chastising someone who doesn’t readily have €60k cash just because you did an undetermined length of time ago.

Though it’s hardly a shock considering your first post on the matter ended with “when I was your age…”

RurtBeynolds

https://www.boards.ie/discussion/comment/121600649#Comment_121600649

No one cares.

Bass Reeves

https://www.boards.ie/discussion/comment/121600694#Comment_121600694

Less than 50 euro short of 4k/ month. Even if making a decent pension contribution they still have 3k disposable / month.

However would I advise them to take on repayments of 600+/ month for a car. Not at present I think they should build up a cash reserve in case they lose there job or get ill.

I assuming they spend any saving they had on buying and doing up there house or apartment. Definitely would not buy new with the low amount of milage they seem to be doing. The reason PCP give such low residual values is cars deprecate fast, at present we are leaving a situation where cars retained value for a few years from 2018-2022 due to Brexit and Covid.

OP do not buy a BMW they are known as Bring More Wrenches for a reason. If you want a prestige car a Mercedes or a Lexus. Second hand 6-8 years plus they are tremendous value and very easy to pick up clean low mileage examples

eastie17

PCP lad, buy assets that appreciate, rent assets that depreciate.

enjoy your money, pcp something that isn’t going to stretch you financially, maybe stress test that a bit when deciding what that amount is, happy motoring.

life’s too short, enjoy it

cr-07

Thanks for the responses all. Just to clear up a few things - so my take home would be around 3900, with the following expenses: 450 (Mortgage), 350 (Pension), Mobile (70), Other bills (~200), Groceries (400), Misc. Shopping/Activities (400), and then along with electricity, bins etc leaves me with roughly 1500 - 2000.

I got the house at a great deal and it was a bit of a 'fixer-upper', and put a deposit of 35k. Over the past 3 years or so (when I bought the house), I have upgraded the main things like the bathroom (10k), kitchen (5k), heating (1k), and a few other odd things here and there. I did a lot of the smaller work myself.

I also holiday twice a year, costing around 2-3k each holiday.

I got married a couple of years ago, which also took a fair bit of cash.

I currently have around 10k in savings, with about 5k in 'rolling' money in the current account.

I am a software engineer working in a relatively large MNC. I started 4 years ago, and have went from 36k to 67k. The company is doing well, and my position is fairly cemented (although I am very aware that things can change in an instant).

https://www.boards.ie/discussion/comment/121602088#Comment_121602088

Thanks for the advice. Would you have any recommendations on a model of Merc?

https://www.boards.ie/discussion/comment/121599751#Comment_121599751

https://www.boards.ie/discussion/comment/121599917#Comment_121599917

Yes, I was thinking about going for something older, and that might well be the sensible option, but something about the lure of a brand-new car sounds amazing. I would rather be driving a new snazzy car now, while I'm 'young' 😀. In saying that, I am open to other options depending on whats out there. I wanted to avoid buying private for this purchase, so will take a look at the car dealers around the area this weekend.

bazz26

Mercedes are no better than BMW when it comes to reliability. Timing chains, subframes, etc all common problems on certain generations of both German brands.

masterboy123

https://www.boards.ie/discussion/comment/121602457#Comment_121602457

That's the reason I sold Merc. Repeated Adblu sensor issue, expensive to maintain, etc.

lawred2

https://www.boards.ie/discussion/comment/121602305#Comment_121602305

PCP isn't really a rental either

Buddy Bubs

https://www.boards.ie/discussion/comment/121602398#Comment_121602398

Yeah go for it so, we are just giving options. I always bought heavily depreciated used big 3 litre engined cars with horrific fuel bills and motor tax, those are mainly gone now and instead it's on the purchase price and depreciation you'll feel the pinch buying new.

But I did it myself in 2022, think I've lost my nuts on the purchase of an EV if I went to sell now but circumstances dictate we will keep it and we are happy to do so.

Weighing up a very heart over head purchase myself in next 12 to 18 months but it's what I want, so if you do too then buy what you want

green123

So you can save 2k a month.

So adding your trade in, you could buy a car for about 20k in the summer with no loan and no repayments.

Start a new thread asking what to get for 20k. Lots of very nice options.