Normally I try to get something around 3 years old with lowish mileage, and take a personal loan out so I can make the purchase in cash. This always felt like a sweet spot to me, getting a reasonably new car, big depreciation hit out of the way etc, and using a personal loan instead of car company finance to get a better rate.
Now looking at a getting a new motor for the family, and with the state of the used market (prices are high), thought I'd have a look at new, just out of interest. I was struck by how little I would potentially be saving if I did find a suitable used car, and in particular the PCP deal on offer almost seems too good to be true.
Some rough figures, for a Skoda Octavia Estate 1.5 SE, with metallic paint the only additional option:
3 year old used, approx 15-17k for something with ~25k miles on the clock. Cost of financing that over say a 5 year loan at 4% would be about £1700, so call it 16 + 17 = 17700 leaves you with an 8 year old car after 5 years.
Brand new (newer shape as well), headline price £24k, carwow brings in a few offers of £21,800 cash price. PCP deal cuts another £1250 off as a "deposit contribution", but the PCP deal APR is 0% - so an interest free loan over 3 years, with lower payments than the personal loan but of course a residual to pay (if you want to) of £9k after three years to buy the car outright (probably far less than the used value at that time).
I won't further bore you with any more of the finances, but the headline seems to be a comparison between £17,700 and £20,000 once financing costs are taken into account, with benefit of the latter being a 3 year younger car, and a car you get to specify for yourself and own for its entire life. Also some warranty benefits etc. I appreciate that a chunk of this difference is due to the exceptionally strong used car market, but we are where we are.
Am I missing anything? Why would Skoda want to chip in an extra grand to get me to take a PCP deal that has a 0% APR? I'd mostly discounted PCP as a concept in the past, thinking it must be for suckers, but (I don't think) the numbers lie. Yes, paying more of course for the new one, but so little more that it is strongly tempting - and perhaps not even more at all if you really drill into residual value of younger car, warranty benefits etc.
Now looking at a getting a new motor for the family, and with the state of the used market (prices are high), thought I'd have a look at new, just out of interest. I was struck by how little I would potentially be saving if I did find a suitable used car, and in particular the PCP deal on offer almost seems too good to be true.
Some rough figures, for a Skoda Octavia Estate 1.5 SE, with metallic paint the only additional option:
3 year old used, approx 15-17k for something with ~25k miles on the clock. Cost of financing that over say a 5 year loan at 4% would be about £1700, so call it 16 + 17 = 17700 leaves you with an 8 year old car after 5 years.
Brand new (newer shape as well), headline price £24k, carwow brings in a few offers of £21,800 cash price. PCP deal cuts another £1250 off as a "deposit contribution", but the PCP deal APR is 0% - so an interest free loan over 3 years, with lower payments than the personal loan but of course a residual to pay (if you want to) of £9k after three years to buy the car outright (probably far less than the used value at that time).
I won't further bore you with any more of the finances, but the headline seems to be a comparison between £17,700 and £20,000 once financing costs are taken into account, with benefit of the latter being a 3 year younger car, and a car you get to specify for yourself and own for its entire life. Also some warranty benefits etc. I appreciate that a chunk of this difference is due to the exceptionally strong used car market, but we are where we are.
Am I missing anything? Why would Skoda want to chip in an extra grand to get me to take a PCP deal that has a 0% APR? I'd mostly discounted PCP as a concept in the past, thinking it must be for suckers, but (I don't think) the numbers lie. Yes, paying more of course for the new one, but so little more that it is strongly tempting - and perhaps not even more at all if you really drill into residual value of younger car, warranty benefits etc.
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