Best way out of a PCP

Mad_Lad

https://www.boards.ie/discussion/comment/123373959#Comment_123373959

I knew you couldn't be civil for long, and for what good does it do you ? to try and antagonise me ?

You're the one that has/had bad credit rating because you were **** with your finances, not me, no one was ever chasing me for money……

I have no mortgage or Rent since age 37 and no longer willing to be stupid wasting money on cars.

Your own words

"Got into a lot of financial trouble a few years back with failed business and burying my head in the sand and didn't deal with it well regarding my financial obligations"

Obviously you didn't learn your lesson.

I don't try to be nasty but you have been particularly nasty to me here for too long, I've tried to be civil to you mostly but you keep coming back attacking me and making things personal.

My 1 litre 3 cylinder "used" car does the job perfectly for my needs, I don't need a new VW SUV or Audi to show off my debt. If that makes me poor couldn't give a sh1t.

Buddy Bubs

https://www.boards.ie/discussion/comment/123373988#Comment_123373988

That's related to 15 years back to a failed business in 2009!

Mad_Lad

https://www.boards.ie/discussion/comment/123373933#Comment_123373933

You don't have the money to spend on cars, living the high life got you in a lot of trouble before. I didn't pay 20 odd more K to own a piece of **** that was giving me issues that would never be resolved and I couldn't get rid of it any other way.

Buddy Bubs

https://www.boards.ie/discussion/comment/123374004#Comment_123374004

Well stop telling other people they're wrong then and how to spend their money

8-10

https://www.boards.ie/discussion/comment/123373927#Comment_123373927

I wouldn't trust a free car

Mad_Lad

https://www.boards.ie/discussion/comment/123374001#Comment_123374001

And ? look I didn't want to go down this road with you but you have been an ass hole to me for a long time so just be civil, that's all I ask.

McCrack

Pcp keep the "squeezed middle" squeezed.

A fool and his money is soon parted...

User1998

Personally I simply cannot justify buying a brand new car, even if its on 0% finance. Even at 0%, you still loose thousands upon thousands in depreciation in such a short period of time. Its just not something I could live with personally. Maybe higher income folk see no problem with it.

Marcusm

https://www.boards.ie/discussion/comment/123367717#Comment_123367717

Not that many people will sell after just 12 months so there is likely insufficient data to garner reliable statistics.

pale rider

https://www.boards.ie/discussion/comment/123376589#Comment_123376589

all advertised 12 month old used car are a good reference point

Marcusm

https://www.boards.ie/discussion/comment/123376685#Comment_123376685

They might be a reference point but I doubt the good aspect; mostly will be overheld demos, cars which the owners couldn’t finance or hated. Those special circumstances would mean that they are not good reference points.

in the U.K. by contrast there will be a significant number of 12 month old cars for sales.

timmyntc

https://www.boards.ie/discussion/comment/123376547#Comment_123376547

Somebody has to take the hit so that the rest of us can get decent priced 3 year old cars

carsfan2

Whenever a PCP related topic comes up on this forum, it seems to trigger some posters to warn against what they perceive to be the evils of this form of vehicle financing.

It is just another form of finance available to buy a new car and it has its advantages and disadvantages. It is not a trap.

If this was a consumer forum, I could understand the attitude of some posters but it is a motoring forum and believe it or not, some of us on here actually like and enjoy cars. They are more than a way of getting from A to B as cheaply as possible and again if people did not buy new cars there would be no second hand market. How people choose to spend their own, or borrowed money is their own business.

blackbox

Let's say I have decided to buy a brand new car that costs €35k.

I have savings in the bank of €50k.

Am I best to:

a. buy with cash

b. buy on CPC

c. buy on hire purchase

d. get a loan from the bank.

(assume all are offering the same interest rate on borrowing but interest on savings is one fifth of this rate.)

My personal inclination would be to buy with cash.

User1998

https://www.boards.ie/discussion/comment/123377816#Comment_123377816

Realistically, financing a car for €500 a month is not much different to adding €500 a month to a savings account and eventually buying outright. If you’re going to be spending the money on a car eventually, you might as well just finance it so you don’t have to save up for months and months. A car purchase is the second biggest purchase you make in your life so theres no reason it shouldn’t be financed. Its just the depreciation thats a killer for me, not the actual financing itself.

https://www.boards.ie/discussion/comment/123377837#Comment_123377837

The ideal scenario would be to get cheap finance and invest the money you would have spent buying outright into something that has greater returns. For example The S&P 500 should return you 7% after inflation.

Also the €50k just sitting in the bank is loosing value after each passing month.

Mad_Lad

https://www.boards.ie/discussion/comment/123377816#Comment_123377816

It's form for discussing things and it's right to point out that PCP was designed to keep people coming back after 3 years, nobody can deny this and nobody can deny that if it weren't for PCP there wouldn't be the amount of people buying new and very expensive cars which was never the norm in Ireland.

84% of Volkswagens are financed on PCP.

PCP has allowed manufacturers get away with selling more and more expensive cars because the manufacturers and the finance companies know most people are only concerned about the deposit and monthly payments and once the monthly payments are low they feel they can afford the car.

It also needs to be pointed out that a low GFMV doesn't mean equity in the car, low GFMV simply means that the manufacturer/Finance company has determined the car to be worth this at the end of the contract and the buyer is the one paying for the higher calculated depreciation and any so called equity in the car after is paid for by the buyer through higher monthly payments, the finance company won't loose and you get nothing for nothing, equity doesn't come for free.

Another important thing about PCP is the fact dealers are convincing people to put down lower mileage than they're actually doing to keep the monthly payments even lower but this comes at a cost at the end of the contract if the car is handed back or trading as the car will have depreciated more but the dealer will say, "be grand, we'll do you a deal on the next car" which is nonsense.

I've no doubt that this topic will keep coming up in the future.

Mad_Lad

https://www.boards.ie/discussion/comment/123377837#Comment_123377837

For starters , think of the 15k - 20K in tax the Government get for free, why should anyone give away thousands of Euro's for free ? that's a major turn off for me now, I just won't buy a new car again just so I can have a new toy.

Of course it's always better to use cash if you can or don't buy a new car and invest the cash, car just looses thousands in tax and depreciation.

Right now I see on VW website that they're now offering 0% finance on HP and 2.5% of PCP, the reason I'd go with HP is because you know what to expect at the end, you will own the car after the final payment and can do what you want. With PCP a lot of people will be attracted to spend again on another new car to avoid the balloon.

I'm after reading the small print and you need 35% deposit or 11,974 Cash to avail of the 0% then 479PM over 48 Months.

Personally, I'd rather put 11,974 to a 2nd hand car, maybe 15K. There are cracking 2nd cars to be had for that money out there, it might take time to look but 34,960 for 1.5 TSI Golf is a lot to pay for a car including substantial amount of this to the Government.

Maybe I'm getting wiser with my spending as I get older or perhaps it's to do with living with a German Woman for so long, they do not spend a fraction on cars like the Irish and if they do they usually don't get loans. Most of the new car sales in Germany are Company cars.

User1998

https://www.boards.ie/discussion/comment/123378411#Comment_123378411

You do realise that used cars have VAT and VRT built into the price too. If the price of a brand new car is made up of 30% tax, the price of a used one will essentially be made up of 30% tax as well. The tax value doesn’t just vanish into thin air. And everything you buy has 23% VAT. EV’s have essentially no VRT, and hybrids usually only have 7% VRT. So the tax rate isn’t much different to buying a TV or home appliance etc.

Mad_Lad

https://www.boards.ie/discussion/comment/123378501#Comment_123378501

Sure, except I won't be paying the initial tax bill or the full extortionate cost of the car, I don't care if it's a couple of years old.

You're making out as if EV or Hybrid tax is cheap as that on a TV, the rate might not be a lot higher but the tax bill sure as hell is.

McCrack

Another problem with pcp is the generic bland stuff the squeezed middle buy, all the new stuff seems to be the same as the next and the colour of choice seems to be black or silver, real unimaginative

Mad_Lad

https://www.boards.ie/discussion/comment/123378541#Comment_123378541

Bland is right, cars now are like appliances and offer an appliance like experience, so refined, hardly hear the engine , no exhaust note,

Cars are so boring and bland now that manufacturers feel all they need to do is add bigger TFT screens, digital instrument clusters, all with endless menus and customisations that can be done while driving, scrolling through spotify playlists etc. Cars are all about the tech now, not about the driving experience.

I hear you about the black and silver, depressing.

raxy

https://www.boards.ie/discussion/comment/123377962#Comment_123377962

There's a huge difference between financing a car at 500/month compared to saving & then buying.

Save 500/month for 6 years & you'd have ~38k to spend on a car.

Get a loan paying 500/month & you'll have ~30k to spend on a car & pay 36.5k paying off the loan.

Problem is majority don't have the cash to spend or the time needed to build that up so are left borrowing.

geotrig

https://www.boards.ie/discussion/comment/123373094#Comment_123373094

they advertise weekly monthly as that is how people budget. A lot of people are paid weekly /monthly that is all. pcp or hp has never made me or anyone i know look at the full cost , every car in a forecourt has the price on it ,when you sit down with the paperwork you see what the pcp or hp contract is going to cost over that.Even if it was never mentioned (weekly cost) some people will always overextend for that "better" car.

John_Rambo

It's important to note that in some parts of the country an expensive European car in the driveway is an important status symbol.

It's more than a car it's part of their identity.

daheff

https://www.boards.ie/discussion/comment/123377837#Comment_123377837

Best way to buy a new car is the one that costs you least by the time it's paid for.

Mad_Lad

https://www.boards.ie/discussion/comment/123378817#Comment_123378817

I know most people are paid monthly, this is the reason PCP is pushed so heavily , because of that fact, people are buying much more expensive cars, rather than borrow for a decent 2nd hand car which they will own after 3-5 years for a hell of a lot less money , they're likely to end in a long loop of pcp contracts to avoid the big balloon.

When HP and bank loans were the only way to pay for cars, car prices were much lower but I'm convinced a lot of the ridiculous cost of new cars today is down to PCP. If People have no cheap access to credit they can't buy expensive cars and they're far less likely to pay 1200 a month on HP or bank loan over 3 years on a 40K car with 10% deposit vs 450 on PCP. Even if you stretch that out over 5 years it's likely to see higher monthly payments than on pcp over 3 years.

I guarantee if PCP was not an option, there wouldn't be a fraction of the expensive cars we see on the road today.

Ireland has a fascination with big Debt for cars and it's becoming the new norm.

Mad_Lad

https://www.boards.ie/discussion/comment/123378802#Comment_123378802

I think if people had that amount of money saved up and saw what happens when it's invested, they would realise finally that all the new cars were a waste of money.

Mad_Lad

https://www.boards.ie/discussion/comment/123379045#Comment_123379045

Most parts of the country ? I'd say all parts of the country, there's nothing many Irish People love more than living the fantasy that they're better than everyone else and a new expensive car is a way to demonstrate this.

There's plenty of people with the cash to go buy premium brand cars and drive **** boxes.

John_Rambo

https://www.boards.ie/discussion/comment/123380191#Comment_123380191

There’s not a lot of that where I’m from. Generally, the wealthy drive nice cars, and regular folks drive regular cars, pretty straightforward. But where my wife is from, it’s a completely different story. Status seems to matter a lot more. I know a couple there who are struggling enough to have given up things I’d consider essential… health insurance, pension contributions and even house insurance.

But there’s still a brand-new BMW parked outside.

So you're dealing with more than just having a nice car, it’s part of their identity, a key piece of how they’re perceived in their community. It’s woven into the social fabric.

Mad_Lad

https://www.boards.ie/discussion/comment/123380222#Comment_123380222

All true and that fake identity is costing them dearly.

Debt though is becoming the accepted norm, I remember a time when saving, not spending was encouraged a lot more than today but the financial instructions and Government are making huge sums of money and the Government has actively worked to ensure this gravy train continues by changing the registration plate to include the year and then later on to a 6 month plate, January and July, there was usually a slump in sales come July and to boost sales the Government thought of this and it worked.

So now people know what year your cars down to 6 months.