Why should I buy a car with a PCP - I don't get it

[Eagerbeaver]

I'm just about to buy a car and I'm not going to get any finance. I've got the cash sloshing about in a savings account doing nothing.

I've been offered a PCP but I can't really see the benefit of this. I'd just end up with the money still sloshing about and paying for the use of it?

So why would I get one and what coould I do with the money to make it worth doing?

[kryten]

If you can beat the finance rate by 25% (40% for higher rate taxpayer) then you can make more money than the finance is costing.

However, that ain't going to happen with 'safe' investments if you're getting the finance from a dealer/normal bank!

The only other reason is if you have something else you want to do with the money. PCP just lets you reduct the monthly payments over a normal loan...

[mcflurry]

If you know you are likely to sell the car is x years time it saves the worrying about selling the car on as there is a guaranteed value for it...

[Eagerbeaver]

Thanks for the answers. I don't know what to put savings in right now so the last thing I want is to take on a loan to pay interest on. The assured value is not much good as I'm buying a car that I doubt will be anything like as worthless as predicted.

Am I likely to be able to negotiate a further discount if I take a PCP?

[jshell]

mcflurry said:

If you know you are likely to sell the car is x years time it saves the worrying about selling the car on as there is a guaranteed value for it...

Doesn't really work that way, they use any excuse to knock that value down when you actually come to hand it back....

[mcflurry]

jshell said:

mcflurry said:

If you know you are likely to sell the car is x years time it saves the worrying about selling the car on as there is a guaranteed value for it...

Doesn't really work that way, they use any excuse to knock that value down when you actually come to hand it back....

In my experience, DCUK and Toyota have both been fine taking back the cars both as VTs and at the end of term

[Four Cofffee]

I had that exact conversation with myself and concluded there wasn't much in it either way. Althouh having chosen my car unwisely ( New Merc B Class) and being able to just hand it back 2 years later at the bottom of the market and start again I could see the value and was quite relieved!

[northandy]

jshell said:

mcflurry said:

If you know you are likely to sell the car is x years time it saves the worrying about selling the car on as there is a guaranteed value for it...

Doesn't really work that way, they use any excuse to knock that value down when you actually come to hand it back....

We just handed back a BMW 1 series that had done 83k in our possession, not a single repair charge levied. It was in good condition, but IMO not perfect.

[northandy]

Eagerbeaver said:

The assured value is not much good as I'm buying a car that I doubt will be anything like as worthless as predicted.

So you say, but who really "expected" the level of economic crisis last year ?, where used car values dropped through the floor ?. However finance companies have adjusted all GFV's down a lot recently, so you are probably right.

If you have the cash, pay cash, savings interest rates are poor, and finance rates are high as banks/lenders look to clear the holes in the finances.

[LeoSayer]

Eagerbeaver said:

...what coould I do with the money to make it worth doing?

Buy another car?

[jshell]

Pleasantly surprised at all the comments from people having no problems with values when handing cars back. Really good to see! I'd heard horror stories locally so just kept my Merc...

[Deva Link]

jshell said:

Pleasantly surprised at all the comments from people having no problems with values when handing cars back. Really good to see! I'd heard horror stories locally so just kept my Merc...

You might have heard horror stories from people who have cars on PCH - Personal Contract Hire - but with PCP they should pay the GFV without question if the car mileage is not beyond that agreed and the condition is reasonable.

If you've got the money then it's only worth getting a PCP if there's some mega supporting deal. Merecedes does these from time to time rather than discounting the price of the cars it wants to shift.

Otherwise, avoid PCP's - they're a bit of a trap to the unwary. The industry loves them as buyers have to do something at the end of the term - they can't just do nothing as if they owned the car.
Usually the only sensible thing to do is to take another PCP, so the manufacturers get to shift another car, the dealer has a decent used car to sell and so the merry-go-round continues.

[dvs_dave]

It's not for everyone and it's cheaper in the long run to buy the car outright, but many people don't like tying capital up in a depreciating asset if it can be put to better use elsewhere. It's bit like a long term rental agreement really.

[bogie]

cash or straight finance for me ....never got the PCP thing ...sure they fool punters into thinking they can 'afford' a more expensive car than if on straight repayment, as a lot of the captial is deferred....but then, as said above you end up in the 3 year cycle and trapped ....only a tiny number of people actually save up the final payment so they "own" the car at the end


...I mean...what an old fashioned concept ...actually "owning" a car, rather than renting on a 3 year cycle that lines the finance houses pockets with extra interest, and keeps those used cars, and new cars going around...and around