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PCP finance.

[Deleted User]

Ok so after a while of my brother and I trying to figure out the benefits of PCP we can't find any.

He's looking at getting a new Audi and we've been looking into pcp, he changes every 2 years or so and might have 15 k miles maximum on the clock so we thought pcp might suit him better.

You got to come up with a large deposit if you don't have a trade in and while your monthly payments appear low when you add in the fact you need a new deposit for the new pcp after 3 years your 300 a month pcp suddenly turns into 600+ pm.

So what's the benefit over hp or bank loan ?

The only hing with hp or loan is you pay the full interest where as pcp yup don't ?

Either way I see little benefit on a normal loan and trade in and re finance after 3 years or so. Only thing is VW bank has much lower interest than any other bank or finance.

For me doing 20-25 k miles a year pcp would leave me with not much on the gfv.

It seems to me that people could get caught out at the end because you can be damn sure you won't have much over the gfv to use as a deposit.

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mickdw

you are comparing buying a car outright over 3 years with buying the car outright over 5 to 6 years which is effectively what the the pcp deals do - you pay a portion and if you want it owned outright at the end of 3 years, most would need to finance the gfv amount over a further 2 to 3 years.
There is no magic involved. It's actually quite similar to buying your car with a 5 or 6 year loan and trading in after 3 with part of the loan still outstanding.

[Deleted User]

mickdw wrote: »

you are comparing buying a car outright over 3 years with buying the car outright over 5 to 6 years which is effectively what the the pcp deals do - you pay a portion and if you want it owned outright at the end of 3 years, most would need to finance the gfv amount over a further 2 to 3 years.
There is no magic involved. It's actually quite similar to buying your car with a 5 or 6 year loan and trading in after 3 with part of the loan still outstanding.

Unless you keep rollin rollin rollin every 3 years!

who_ru

Andres Slimy Staircase wrote: »

Unless you keep rollin rollin rollin every 3 years!

Maybe it's just me but i think point of having/owning a car is that one day you eventually stop making monthly repayments to a credit institution.

I just cannot see how being in a constant cycle of monthly repayments is a good thing.

X6.430macman

who_ru wrote:

I just cannot see how being in a constant cycle of monthly repayments is a good thing.

Keep the car fresh

Lantus

It really depends on your own circumstances. Both me and my wife drive 100+km every day and pick up and drop off kids. We spend 2 to 3 hours a day in them. They are essential tools that we want to be comfortable, safe efficient, reliable and nice. I'm happy to buy my clothes at penny's and Dunnes and shop at aldi and camp on holiday but I don't want to waste a single second worrying about a car. Don't need it don't want it. Aside from a service and a valet the only thing I need to buy is typically 2 front tyres in 3 years. That's worth something to me but it won't be to everyone. Also, I use a cheaper phone on pay as you go, cancelled sky and generally don't shop or place a lot of value on material possessions.

cart man

Lantus wrote: »

It really depends on your own circumstances. Both me and my wife drive 100+km every day and pick up and drop off kids.
Aside from a service and a valet the only thing I need to buy is typically 2 front tyres in 3 years.

You get >100k km out of your rear tyres, wow that's great, what make are they?

[Deleted User]

who_ru wrote: »

Maybe it's just me but i think point of having/owning a car is that one day you eventually stop making monthly repayments to a credit institution.

I just cannot see how being in a constant cycle of monthly repayments is a good thing.

Staying in a new car all the time, up to date on tech, no worries about issues with the car, always having the exact spec you want etc etc.

If the monthly repayments are reasonable then I don't see the issue. Owning a car is not like owning your home having the use of it and being able to keep it updated and not worry about issues is very attractive to a lot of people. A lot of people changed cars every 3 years before PCP was ever heard off, is just a more attractive way to do it.

jca

cart man wrote: »

You get >100k km out of your rear tyres, wow that's great, what make are they?

Landsail, is there any other brand?( All the taxi men use them....)

jca

Lantus wrote: »

It really depends on your own circumstances. Both me and my wife drive 100+km every day and pick up and drop off kids. We spend 2 to 3 hours a day in them. They are essential tools that we want to be comfortable, safe efficient, reliable and nice. I'm happy to buy my clothes at penny's and Dunnes and shop at aldi and camp on holiday but I don't want to waste a single second worrying about a car. Don't need it don't want it. Aside from a service and a valet the only thing I need to buy is typically 2 front tyres in 3 years. That's worth something to me but it won't be to everyone. Also, I use a cheaper phone on pay as you go, cancelled sky and generally don't shop or place a lot of value on material possessions.

All those standard of living cuts for a car? The mind boggles.

mickdw

jca wrote: »

All those standard of living cuts for a car? The mind boggles.

They are not cuts, they are choices imo.
Different people spend on different things.
I spend near zero on drink and I don't smoke.
If I buy a car, I can be guaranteed to be told it's a waste of money as a 2k car will do the same job.
One person telling me this before spends 10k per year on beer. His choice but myself not spending that is not a sacrifice, I would never be interested in drinking 2 nights each week.

air

Lantus wrote: »

It really depends on your own circumstances. Both me and my wife drive 100+km every day and pick up and drop off kids. We spend 2 to 3 hours a day in them.

Even disregarding the financial aspect that is a terrible lifestyle. Spending so long driving every day is going to be seriously detrimental to your health in the long term. Can you not move closer to work?

NIMAN

who_ru wrote: »

Maybe it's just me but i think point of having/owning a car is that one day you eventually stop making monthly repayments to a credit institution.

I just cannot see how being in a constant cycle of monthly repayments is a good thing.

Swings and roundabouts I suppose.

A lot of people in this country would buy a car thats maybe 3 years old on a 4 year loan.

So by the time they officially own the car outright, its 7. Its maybe arriving at the age where its starting to need bigger parts, more expensive repairs, NCT etc. It might be worth very little so basically many would own something of little value. As a result many would likely trade-in and start the loan cycle again.

So compare this to paying out a constant sum of money every month to drive (never own of course) an up to date, reliable car which might never need NCT'd, which shouldn't need any parts other than wear and tear.

Lantus

jca wrote: »

All those standard of living cuts for a car? The mind boggles.

Cuts?

Choices is the optimum word. I love the clothes from penny's and I'm no slave to fashion or labels. Aldi food is delicious and well made. I don't want the latest iphone at 700eu + every few years on a rolling contract. Don't smoke and rarely drink.

So a new car is very affordable for me.

You can have someone else who smokes, drinks and gamble's and can complain that only 'rich' people can afford cars.

Money can be frittered away on lots of little things without much thought. You need to scrutinise your finances if you want to achieve what you want.

Lantus

air wrote: »

Even disregarding the financial aspect that is a terrible lifestyle. Spending so long driving every day is going to be seriously detrimental to your health in the long term. Can you not move closer to work?

Thanks. So a few hundred a month on a car is bad for me but getting mortgaged to the hilt to move closer to Dublin is ' healthy'.

An hour to work is pretty normal to a lot of people whether by car or crammed into a bus or train. I find it quite relaxing. It's time to reflect, think, sing and listen to podcasts. Currently listening to one about spaceships from film, TV and books and an hour in the car is not enough!

Sam Kade

X6.430macman wrote: »

Keep the car fresh

And your pockets empty

grogi

Lantus wrote: »

Thanks. So a few hundred a month on a car is bad for me but getting mortgaged to the hilt to move closer to Dublin is ' healthy'.

An hour to work is pretty normal to a lot of people whether by car or crammed into a bus or train. I find it quite relaxing. It's time to reflect, think, sing and listen to podcasts. Currently listening to one about spaceships from film, TV and books and an hour in the car is not enough!

It is great that you are able to somehow use that time. But don't fool yourself - you are trying to make best of time otherwise lost.

Sam Kade

NIMAN wrote: »

Swings and roundabouts I suppose.

A lot of people in this country would buy a car thats maybe 3 years old on a 4 year loan.

So by the time they officially own the car outright, its 7. Its maybe arriving at the age where its starting to need bigger parts, more expensive repairs, NCT etc. It might be worth very little so basically many would own something of little value. As a result many would likely trade-in and start the loan cycle again.

So compare this to paying out a constant sum of money every month to drive (never own of course) an up to date, reliable car which might never need NCT'd, which shouldn't need any parts other than wear and tear.

What extra parts? I bought my car almost new (4 months old) 10 years ago with 7k on the clock. There's 260k on the clock now and other than normal wearing parts it hasn't given any trouble or no unexpected bills. It depends a lot on the car you buy some are more reliable than others.

NIMAN

Sam Kade wrote: »

What extra parts? I bought my car almost new (4 months old) 10 years ago with 7k on the clock. There's 260k on the clock now and other than normal wearing parts it hasn't given any trouble or no unexpected bills. It depends a lot on the car you buy some are more reliable than others.

I'd say you are the exception to the rule, to have a 10yr old car with 260k on the clock and not have had to replace something costly.

hometruths

Sam Kade wrote: »

What extra parts? I bought my car almost new (4 months old) 10 years ago with 7k on the clock. There's 260k on the clock now and other than normal wearing parts it hasn't given any trouble or no unexpected bills. It depends a lot on the car you buy some are more reliable than others.

Out of interest what is the car?

Ivefoundgod

grogi wrote: »

It is great that you are able to somehow use that time. But don't fool yourself - you are trying to make best of time otherwise lost.

I don't know what line of work you're in grogi but how can you lecture this poster about his or her career choices? If I got offered a job in Dublin that was better for my career in the morning I'd bite their hands off. As it is i've a 20 minute commute anyway, another 40 minutes wouldn't bother me and if it meant a pay rise and better opportunities I'd gladly spend an hour driving to Dublin. Telling someone they are wasting their time by commuting is ridiculous, so what everyone should just work in some local business? If he wants to drive a nice car while commuting and is happy with what he spends his money on what difference is it to any of us?

I have to laugh at those suggesting he up sticks and move to Dublin, what world are you living in? Surely nearly everyone in the commuter belt around Dublin knows people in the same situation as him/herself? Terrible way of living? Sure they could get a mortgage for a crappy house in Dublin or they could spend half that and live in a lovely house outside of Dublin. Its their choice.

bidiots

What the hell is happening this thread?

grogi

Ivefoundgod wrote: »

I don't know what line of work you're in grogi but how can you lecture this poster about his or her career choices?

I never did. I only pointed how naive quoted rationalisations of the consequences of those choices are. It's getting off-topic - thus EOT.

marc1

This is ridiculous. Get yourself a nice car if you want a nice car. Financing is a good way to do it, especially when he rates are low.

I had the money in the bank to buy myself a new car outright about 3 years ago. I still went with PCP as I got a 1.9% rate.

Invested the remainder until the ballon payment was due and made a nice profit (investment gains were far greater then the interest paid). I know this doesn't work for everyone and there is some risk, but the continuously overcautiousness seems misguided to me.

Sam Kade

schmittel wrote: »

Out of interest what is the car?

It's a Mazda 6 1.8 petrol, not exactly 10 years old as it's October 2007. It uses extra engine oil as the valve seals go I have to top it up every 2 weeks with a litre of oil, not a huge expense.

Sam Kade

marc1 wrote: »

This is ridiculous. Get yourself a nice car if you want a nice car. Financing is a good way to do it, especially when he rates are low.

I had the money in the bank to buy myself a new car outright about 3 years ago. I still went with PCP as I got a 1.9% rate.

Invested the remainder until the ballon payment was due and made a nice profit (investment gains were far greater then the interest paid). I know this doesn't work for everyone and there is some risk, but the continuously overcautiousness seems misguided to me.

What did you invest in? Also aren't you tied to a limited mileage with pcp?

marc1

Yeah there is a mileage limit - 15k a year. I never get anywhere near that.

The investment really is irrelevant, just wanted to highlight the opportunity cost of buying outright and being too "against" debt. :-) A 1.9% rate is not hard to beat over 3 years, event with any bank's cautious funds (bonds / dividend based blue chip, etc...). Personally went more risky, but this is not the forum for that discussion.

Masala

marc1 wrote: »

Yeah there is a mileage limit - 15k a year. I never get anywhere near that.

The investment really is irrelevant, just wanted to highlight the opportunity cost of buying outright and being too "against" debt. :-) A 1.9% rate is not hard to beat over 3 years, event with any bank's cautious funds (bonds / dividend based blue chip, etc...). Personally went more risky, but this is not the forum for that discussion.

My last bank loan to buy a car was a HP arrangement. They reluctant to give a loan of €20k on a car... And had me mby the short & curlies as I had the car deal ready to go!!! No big swing to me as to who owns the car during the loan period. So... What the difference between HP with a balloon payment and PCP??

With this PCP at least it puts the onus on the garage to push it thru.....so no grovelling to local bank manager. If PCP turned down on Skoda... Go down the road and try Hyundai!!!

[Deleted User]

Sam Kade wrote: »

What extra parts? I bought my car almost new (4 months old) 10 years ago with 7k on the clock. There's 260k on the clock now and other than normal wearing parts it hasn't given any trouble or no unexpected bills. It depends a lot on the car you buy some are more reliable than others.

Even wear and tear stuff can be expensive. There is a good chance a new car traded after 3 years will need nothing but standard services and one change of tyres (mileage dependant of course). You also have a warranty to cover anything major that might go wrong.

SteelyDanJalapeno

Would some kind soul put together a list of pro's and con's to PCP?

NIMAN

http://www.independent.ie/life/motoring/pcp-or-not-to-pcp-what-are-the-pros-and-cons-of-financing-31298255.html

http://www.autos.com/car-buying/pcp-car-finance-4-advantages-and-disadvantages-of-personal-contract-purchase

http://www.moneysupermarket.com/car-insurance/blog/buying-a-car-with-a-personal-contract-purchase/

http://www.honestjohn.co.uk/forum/post/index.htm?t=30062