To PCP or not to PCP...

[ClubMan]

There is no downside to 0 percent finance

This is moot in this case because...

The PCP interest rate is 5.9%

 

[Blackrock1]

This is moot in this case because...

Yes, in this case, but I wasn't referring to higher interest rate pcp.

 

[CharlieMac]

A downside with 0% finance is those terms dupe people in to spending more on a car than they need to.

But fair enough if people have extra money to indulge themselves that's their choice.

 

[Cameo]

A downside with 0% finance is those terms dupe people in to spending more on a car than they need to.

I'd see it more as encouragement. Bottom line is new cars generally always depreciate more than second hand, so what you notionally save on cheap financing you lose on eye watering depreciation

Never ceases to amaze me that otherwise sensible people blow masses of money on new cars

I have a fair bit of a car habit myself which I'm trying to ween myself off but I am acutely aware of the costs, I generally try to avoid huge depreciation but all too easy to get sucked in n

 

[Des Pondent]

I was offered 0% finance on the last car I bought but it was off the list price.
I paid in full and got a €2k discount off the list price.
Taking the 0% finance offer would have cost me €2k.

 

[Blackrock1]

A downside with 0% finance is those terms dupe people in to spending more on a car than they need to.

If you are buying a new car you are spending more than you need to, no matter how you pay for it.

 

[Leo]

and have a guaranteed value locked in which im told is about 15k.

It's only guaranteed if there is no damage to the car and your mileage is within the limits. But the biggest catch on the final value is that it is set the dealer's favour and in the majority of cases the car will be worth more. I used PCP to buy my previous car, paying the 'final value' to keep it. 5 years later I traded it in for more.

 

[Blackrock1]

It's only guaranteed if there is no damage to the car and your mileage is within the limits. But the biggest catch on the final value is that it is set the dealer's favour and in the majority of cases the car will be worth more. I used PCP to buy my previous car, paying the 'final value' to keep it. 5 years later I traded it in for more.

how is it a catch?

 

[ClubMan]

how is it a catch?

Because the guaranteed trade in value is set in the dealer's favour below what the fair market resale value is likely to be?

 

[Blackrock1]

Because the guaranteed trade in value is set in the dealer's favour below what the fair market resale value is likely to be?

And how is that a catch? At the end of the term you can buy it from them at this price. Or trade it and avail of the extra value. And it's a contract with a financial institution not a dealership.

 

[Leo]

And how is that a catch? At the end of the term you can buy it from them at this price.

Because a large cohort of people are being conditioned that the final value is all it is worth and they are simply rolling from one PCP deal to the next. Granted it is really only a catch for those who don't understand the full terms of the deal, but the ESRI and other bodies have been flagging how bad these deals are for consumers for years yet many continue to fall for it.