mwg
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Registered: 19th Feb 04
Location: South Lakes
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I'm looking at the advantages and disadvantages of getting a brand new car on PCP finance over 3 years? My Dad suggested its something I should look into (once I get a wage rise next January...) as a way of getting a brand new car instead of pissing around in my little Corsa 
Advantages I can think of are:
No MOT
Warranty
Only costs are general wear and tear such as servicing and tyres that you get on every car anyway
Every 3 years trade in the car for another brand new one
Dont get hit by depreciation directly? (you dont pay the full brand new value of the car)
Disadvantages:
Big balloon payment at the end if you want to buy the car
I cant think of other disadvantages but there maybe are some?
Wouldn't bother me about balloon payment as I'd rather give the finance people the car back and get another new car for another 3 years and carry on paying every month.
Seems a better option than pissing about with a Corsa slowly modding it and hassle of MOTs every year and also the problems modding a car always brings  Never seem to have money as something always needs fixing or I spend the money modding it and its just getting older and older so more is going to keep going wrong  Saving up for a new car isn't an option as it would take years and I dont want to wait that long.
Any other things to consider with PCP finance? I dont like rushing into things thats why I am trying to find out the facts now...
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Joe
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Registered: 20th Jun 04
Location: Hesketh Bank, Lancashire
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The main one for me would be the fact your paying say £200 a month, then after 3 years you give it back. You've come away with nothing, or if you keep swapping and getting a new one then when you finally decide to buy a car. All the money you've given them and you have nothing to sell to make some money or to Part Ex on a new car.
A mate of mine has a new Clio on this scheme but his dads paying it then at the end of the 3 years, he has to either pay the Balloon or just give it back. So hes gona be going back to a shit car or starting all over again.
Personally i'd never do it, but in certain circumstances im sure you could work it to your advantage.
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corb
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Registered: 24th Apr 02
Location: Calgary, Alberta, Canada
User status: Online
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when you p/x the car in 3years, whatever its worth beyond the final payment can be used as deposit on the new car.
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mwg
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Registered: 19th Feb 04
Location: South Lakes
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I suppose it depends what your circumstances are. Personally it wouldn't bother me paying £300 a month for a brand new car.
I dont have anything else like a house to spend it on and I dont plan on getting one for another few good years yet so may aswell get a nice fast car to enjoy in the mean time! Then when I decide to buy a house I give the car back and buy a crappy car and concentrate on a house.
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Ojc
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Registered: 14th Nov 00
Location: Reading: Drives : Clio 197
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Buying a new car, get a loan. Car finance is a rip off and if you want to sell the car before the end of the finance you will need to get a loan to pay it off.
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JadeM
Premium Member
Registered: 9th Feb 06
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What kind of new car would you get??
I see it as a bit of a con as your paying all that money to own nothing at the end of the lease term!! Id prefer to get something maybe 1 or 2 years old thats taken the big depreciation hit already but is still goign to be a good newish reliable car. Try to get a bank loan in place of finance as there giving you it all ways up the skirt no matter what a good deal they say your getting!!
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Fad
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Registered: 1st Feb 01
Location: Dartford Kent Drives: 330cd
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quote:
Originally posted by Ojc
Buying a new car, get a loan. Car finance is a rip off and if you want to sell the car before the end of the finance you will need to get a loan to pay it off.
ditto never fall into this ball pit
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mwg
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Registered: 19th Feb 04
Location: South Lakes
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But if you get a loan you have MOTs after 3 years and your warranty is up after 3 years. nice bit about finance is you get a new car every 3 years and dont have any of those worries.
And repayments on a loan are higher than finance unless you do it over alot longer length of time.
Thinking of an Astra VXR.
Wouldn't be doing the PCP through Vauxhall BTW
[Edited on 30-04-2006 by Matty G]
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mwg
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Registered: 19th Feb 04
Location: South Lakes
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If I got a loan the factor of owning the car at the end of it doesn't really swing it for me as I'd rather change the car every 3 years for a new one
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JadeM
Premium Member
Registered: 9th Feb 06
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Have you got any figures for getting a car on one of these deals??
I dunno.....I always like to think I actually have something in my hand thats mine when I spend money
If you plan to change every 3 years with a new lease then fair doo's could work out worthwhile for you!! 
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mwg
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Registered: 19th Feb 04
Location: South Lakes
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quote:
Originally posted by JadeM
Have you got any figures for getting a car on one of these deals??
Yeah have looked about and the best so far is:
£330 per month for 3 years for an Astra VXR. Thats with a deposit of 2.5k (can choose to have a smaller or larger deposit which will obviously affect monthly payment)
Mileage limited to 45,000 over 3 years so basically 15,000 a year. Balloon payment of £6,488.51. Would imagine it would still be worth more than that after 3 years. As Corb says anything on top of that £6,488.51 is taken as your deposit for your next car when you give the car back at the end of the 3 years.
Insurance as I am now would be £884. So will have gone down again by next year.
Its only worth doing PCP if you plan on changing your car every 3 years otherwise if your not I agree it is better to get a loan.
[Edited on 30-04-2006 by Matty G]
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Gaz
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Registered: 24th Aug 03
Location: Widnes, Cheshire
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is this not abit like renting a house? Dead money?
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mwg
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Registered: 19th Feb 04
Location: South Lakes
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not really. houses make money, cars dont so you lose out whichever way you do it with cars.
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Little Vik
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Registered: 30th Jun 03
Location: Herts
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have a look at www.lexfreechoice.co.uk you can do on line quotes. It is worry free motoring but you are just basically leasing the car not really paying for it.
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Fad
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Registered: 1st Feb 01
Location: Dartford Kent Drives: 330cd
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Finance is a really bad way to buy a car whether you get an Astra VXR or not at the end of the day you never own the car and allthey offer you in return is another car in exchange after the three years so the bag the Net book Value of the car and you physically have nothing to show for the car except you got to drive it around etc. Also the typical APR is horrendous unless you haggle it down.
Someone quite rightly pointed out you never own the car till the end of the payment period and by then the residual value is far less than what you paid for the car. Basically its like on a lease more or less.
Get a loan and bag a decent apr like 6.1-6.2 % and then buy the car and if you want to sell it in the future you have the ability to as the car is physically yours and to be honest mate you never know whats around the corner and you need tobe able to free the money in emergencies. Also by having the loan and paying it back etc will improove your credit rating for future borrowing for other loans/mortgages.
Also after the period where you want to exchange the car the PX deal on the car you currently have will be lower than the market value so you'll end up paying a bit more to a newer car its not just a case of handing them the keys after three years and picking another car...rember they are in it to make money.
Do the figures mate I lost so much money on car finance compared to a loan worked out over four years I lost nearly 4K on a corsa thats pretty diabolical IMO.
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JadeM
Premium Member
Registered: 9th Feb 06
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So over 3 years you pay £14380 
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Fad
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Registered: 1st Feb 01
Location: Dartford Kent Drives: 330cd
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quote:
Originally posted by JadeM
So over 3 years you pay £14380
then he'll either have to pay a settlement figure or exchange the car for another one and be robbed of more money
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JadeM
Premium Member
Registered: 9th Feb 06
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quote:
Originally posted by Fad
quote:
Originally posted by JadeM
So over 3 years you pay £14380
then he'll either have to pay a settlement figure or exchange the car for another one and be robbed of more money
Thats what I thought
Surely you will be better financing a VXR over 4 years, pay to actually own something wich after 3 years or whatever trade it in - better deal
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Fad
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Registered: 1st Feb 01
Location: Dartford Kent Drives: 330cd
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No offence matt but you seem more worried about getting a three year old car through an MOT...surely not worth paying the finance not to stomach the cost of £35 a year? Even with a loan no MOTs can be avoided by selling the car private etc and making more money than trading the car in.
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mwg
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Registered: 19th Feb 04
Location: South Lakes
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Some good points there Fad.
But after 3 years I'd be looking to get rid of the car anyway as I get bored of keeping them any longer than that. So then I'd end up having to get another loan to buy another car anyway so not really in any better position? Its a nice-ity being able to have a new car every 3 years.
PCP finance you pay £330 a month. For the same car on a loan over the same amount of time you pay around £550 a month
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Joe
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Registered: 20th Jun 04
Location: Hesketh Bank, Lancashire
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Yeah but would you be happy doing that all your life, when you finally decide you want a car thats yours, your gona take a big hit when you have nothing to show for all this money that you've given away.
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JadeM
Premium Member
Registered: 9th Feb 06
User status: Offline
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quote:
Originally posted by Matty G
PCP finance you pay £330 a month. For the same car on a loan over the same amount of time you pay around £550 a month
But thats worst case taking no deposit & full balance over 3 years!!? Try getting a finance quote with a 2.5k deposit & over 4 years instead of 3!! After 3 years you have a car sitting worth about £10k to sell & settle whats outstanding......trust me you'll be quids in & you can still get a new motor every 3 years!!
If these PCP finance things were that good dont you think everyone would do it
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mwg
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Registered: 19th Feb 04
Location: South Lakes
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I wouldn't do it all my life. It would be for about 6 years until I got a house. Just something for a bit of fun and I love cars so why not spend the money on having some nice cars till I get tied down with baggage of house and kids etc.
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Mattss Corsa
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Registered: 11th Jan 03
Location: Milton Keynes (BUCKS)
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quote:
Originally posted by Matty G
not really. houses make money, cars dont so you lose out whichever way you do it with cars.
I made my mistate wasting it on my cars, now im spendin it on my house, which will make me money hopefully 
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Joe
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Registered: 20th Jun 04
Location: Hesketh Bank, Lancashire
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yeah but then your stuck with nothing, then you'll be wanting to get a car and a house. The 2 most expensive things people buy in their lives. At the end of the day, it will suit some people and if you think it'll work for you then go for it. Personally i'd never bother until i could afford what i wanted.
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