PCP Car Frustration

[diseasex]

As I said earlier, a marketing person has sold you that idea.


Make the balloon payment = own the car. Don't make the balloon payment = use the equity as a deposit on your next one.
With PCH, you have nothing but monthly outgoings for something you will never get any equity or ownership from.


As you say, it's down to the deal, but earlier you also said you'd never do PCP because you paid more twice. So either you learn to deal or you accept that making grandiose sweeping statements such as "I would NEVER do something" makes you look a tad foolish/misguided and arrogant.

Like the guy above got any equity.
On lease you pay only deprecation + interest, on PCP you pay value of the car - baloon + interest . Typically you are far better off on lease.

I did a lot of research before i bought my beemer. And i'm telling you, PCP is crap financially. I mean for over a year looking I have yet to find PCP that made financial sense.

if you dont believe me, bring some examples of good PCP and lets do some maths.

[WTFH]

Like the guy above got any equity.
On lease you pay only deprecation + interest, on PCP you pay value of the car - baloon + interest . Typically you are far better off on lease.

I did a lot of research before i bought my beemer. And i'm telling you, PCP is crap financially. I mean for over a year looking I have yet to find PCP that made financial sense.

if you dont believe me, bring some examples of good PCP and lets do some maths.

When do you own, or have the option to own, or have the deposit from equity when renting (oops, sorry "leasing")


If you don't believe me, bring some examples of good marketing... :lol:

[bobspud]

Looking at PCP deals you pay over 36months the value of the car + baloon payment.
Its all down to a deal though...

Yes in the early days it was possible to borrow something like a Saab or BMW for 40k and then pay 30k over the 36 months and that would cover the depreciation leaving the lease company with the asset to cover the rest of the value + their profit however car finance companies soon caught on that the cars are often not worth what was stated so now finance or lease deals tend to look like you pay the full value of the car.

The balloon on PCP will cover the finance + profit
Handing the car back on a lease will cover the finance + profit.

The important thing to remember for contractors using leases is your milage can suddenly vary if your contract needs additional travel so worst case you end up having to pay massive milage penalties at the end or early termination fees of 50 of the remaining lease value.

I met one guy paying a grand a month for his leased 911 to sit in his garage while he drove a golf because he couldn't afford to hand it in early and had used his full 18,000 miles in the first year

[diseasex]

Yes in the early days it was possible to borrow something like a Saab or BMW for 40k and then pay 30k over the 36 months and that would cover the depreciation leaving the lease company with the asset to cover the rest of the value + their profit however car finance companies soon caught on that the cars are often not worth what was stated so now finance or lease deals tend to look like you pay the full value of the car.

The balloon on PCP will cover the finance + profit
Handing the car back on a lease will cover the finance + profit.

The important thing to remember for contractors using leases is your milage can suddenly vary if your contract needs additional travel so worst case you end up having to pay massive milage penalties at the end or early termination fees of 50 of the remaining lease value.

I met one guy paying a grand a month for his leased 911 to sit in his garage while he drove a golf because he couldn't afford to hand it in early and had used his full 18,000 miles in the first year

you can go stupid or mega stupid with pretty much everything in life.

[WTFH]

you can go stupid or mega stupid with pretty much everything in life.

Yes you can.
Some people just get interest only mortgages, because it's cheap to borrow right now. That's mega stupid if you don't have a way to pay it off and the ability to absorb changes in rates.


Some people learn from others. Some are too arrogant to learn and prefer to make the mistakes themselves.


If everything you use is on a loan or lease or interest only, then you are reliant on having the money to pay for it all the time.
Stop working for a few months, or have a sudden requirement that increases your outgoing (such as having a baby), then you might find that things become tight at which point you've got no equity in any of the things you consider to be yours.

[The_Equalizer]

Doesn't anyone buy cars outright with their own money these days?

[WTFH]

Doesn't anyone buy cars outright with their own money these days?

Not new cars, no.


But yes, I always make sure at least one car in our house is bought outright.

[diseasex]

Yes you can.
Some people just get interest only mortgages, because it's cheap to borrow right now. That's mega stupid if you don't have a way to pay it off and the ability to absorb changes in rates.


Some people learn from others. Some are too arrogant to learn and prefer to make the mistakes themselves.


If everything you use is on a loan or lease or interest only, then you are reliant on having the money to pay for it all the time.
Stop working for a few months, or have a sudden requirement that increases your outgoing (such as having a baby), then you might find that things become tight at which point you've got no equity in any of the things you consider to be yours.

Fair point. I personally am always able to repay loan in full if things go bad (except for mortgage) . I never borrow more cash that i have in bank + reserve. Playing it safe i guess...

[The_Equalizer]

Not new cars, no.


But yes, I always make sure at least one car in our house is bought outright.

Fair enough I guess. I would have trouble stomaching hefty depreciation on a new one.

[vetran]

Fair enough I guess. I would have trouble stomaching hefty depreciation on a new one.

indeed I buy old ones and wait till they are 16 then they are ready to be F*cked.