So as Leo did, you'd be much better off paying the final balloon payment and either keeping the car for a few more years
or selling it privately then rolling onto a new PCP contract and paying more for a car then you should
To PCP or not to PCP...
- Thread starter ArthurMcB
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or selling it privately then rolling onto a new PCP contract and paying more for a car then you should
Blackrock1
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What point are you making? I mean you'd be better off not buying new in the first place if you want to extend your argument. Whatever you are into but this rhetoric that pcp is inherently bad is a bit silly.
Well I thought my point was clear enough to understand, maybe have another go at trying to understand what I wrote
and no where in this thread have I ever said that PCP is "inherently bad"
I have no issues with buying a car using PCP in fact I'd go as far as saying if you don't have the resources to buy the car for cash then PCP is a good option but where I'm finding it hard to understand or comprehend is if rolling from one PCP contract to another is a good deal for the buyer
To me so far I'm yet to be convinced that it is a good deal for the buyer
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Blackrock1
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It's a good idea where
A interest rate is 0 or very low and
B you want to limit the impact of depreciation as it sets a floor
Blackrock1
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If you could keep the passive aggressive attempt at condescendion to a minimum it would aid the discussion I think. I know you didn't say it's inherently bad but that has been stated in this thread by other posters.
You say yourself you are struggling to comprehend if rolling a pcp is good for a consumer or not after previously saying on Leo's case buying the car outright at the end was the a good idea.
A pcp is just the financing method, trading your car to buy a new one is a standalone decision regardless of how you financed a purchase, I'd argue it's rarely a sensible decision financially speaking but people buy cars for more than financial reasons.
I'll say it again, if you can get 0 percent or an interest rate below prevailing inflation pcp can be a good way of financing a car, it offers protection against depreciation to a point (important with evs at the moment as the market is still volatile)
At the end of 3 or 4 years you can either pay the final payment and keep the car, you can trade it in against a new car (from any brand or dealer) if its trade value is higher than the gmfv, you can sell it privately and repay the final payment and pocket the difference or you can hand it back and walk away if it's value is lower than the gmfv.
Taking the above into account whar concerns your or is unclear?
Blackrock1
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At 5.9 percent it wouldn't be for me either, are you particularly wedded to this car or are their other evs you may be interested in, happy to give some thoughts if you start a separate car thread!
I'll ignore this
Yes I think what Leo did was the smart move, he bought the car after 3 years for less then it was worth and then traded it in for more two years later
What he didn't do was roll onto another PCP contract after 3 years and that is the bit of my point that you are failing to see or answer
I'll phrase it another way, is a PCP contract still good value for the buyer if they keep rolling it on??
Totally agree with this and everything you've said after except the "deprecation" bit
and that's just because I personally don't factor it in when I'm buying a car for reasons stated earlier but it doesn't mean you point is incorrect
Blackrock you have clarified it a lot for me, thanks.
We re not wedded to a car. We want an EV SUV thats 1 or at a push 2 yrs old with less than 20,000 kms. Have a car to trade in thats worth 12k and overall budget is about 45k (i.e 12k trade in + 33k cash or financed).
Want range of a minimum of approx 400kms.
We like peugeot 2008 or 3008 as an example. Kia may also be a decent option.
At this stage having read this thread we re leaning towards paying cash + trade in. However, 0% pcp does appeal when i think about mitigating depreciation.
We re not wedded to a car. We want an EV SUV thats 1 or at a push 2 yrs old with less than 20,000 kms. Have a car to trade in thats worth 12k and overall budget is about 45k (i.e 12k trade in + 33k cash or financed).
Want range of a minimum of approx 400kms.
We like peugeot 2008 or 3008 as an example. Kia may also be a decent option.
At this stage having read this thread we re leaning towards paying cash + trade in. However, 0% pcp does appeal when i think about mitigating depreciation.
Setforlife
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I think this is the main point of difference in the arguments, which is more about the financial wisdom of changing cars often rather than actual about pcp.
‘Rolling on pcp’ is totally independent of the value proposition of each pcp deal. I.e if you are buying a new car anyway, is 0% pcp a better deal than buying with your own principal is the actual decision. Whether it’s financially sensible or not, plenty of people treat cars as a monthly expense that should be 100% reliable and under warranty and change every 3 years. Plenty of businesses do the same, it’s a basic cost offset the opportunity cost of time/worry/maintenance etc
We recently didn’t roll on ourselves on an EV but at 0% we had taken the pcp/hp deal and it happened that after 3 years that deprecation was so bad (due to massive reduction in new car prices) the car was barely worth the gmfv, so there was no real decision to be made on rolling on. The only one to make was on whether to keep the car and pay off finance or hand it back and buy something different. At least we had a decision to make though and then easy option to hand back the car. If we had bought outright and needed/wanted to change then we would have been looking at very limited options. It’s similar to say handing back a car under the ‘half rule’ on HP, it’s a great option to have as an informed consumer.
However if we had planned to ‘roll on’ we likely would have taken the 0% PCP, it’s basically ‘free’ money if you treat each decision as independent. As for people getting a better deal for ‘cash’ as outlined above, there is nothing stopping people getting pretty much same deal on finance offers now, although at 0% not often as good.
Blackrock1
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indeed but there are a few factors there, if you get 0 or 0.9% from Tesla for example there isnt any discount on the sticker price anyway so its a good incentive, also looking at a discount for cash v 0% finance is a little more nuanced than saying i saved 1k or whatever, if you have the money to hand it could be put in a deposit account earning interest offsetting the cash discount for example, and as you mentioned you have the protection on the depreciation.
In my own scenario i am pretty happy i went with pcp even though i could have bought the car outright, i am handing it back on friday as its worth well south of its GMFV, if i had bought it straight id be well down if i wanted to change.
Blackrock1
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for those requirements and that budget have you considered:
VW ID4
Cupra Tavascan
Tesla Model Y
Xpeng G6
All (maybe not the xpeng im not sure) should be available with 0-1.9% financing, and all are now very good evs.
Blackrock1
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But thats not a PCP question, the question is is trading in your car after 3 years a good idea, for some people it is, for some it isnt.
Say for example you are a one car family and the car you bought has a 3 year warranty, maybe you want your sole form of transport covered by manufacturer warranty and you are happy to refresh it every 3 years.
In Leos case, he had options, he could buy it out, if he had traded it he would have got the excess in value over the GMFV as his deposit for a new financing, or if the car was worth less he could hand it back. In his case he didnt want or need a new car so he kept it, that doesnt mean changing it after 3 years would necessarily have been a bad decision either though.
So your question cant be answered it depends on the facts in each specific case and its not really PCP related either.
Now were getting into what I've been asking
Here's the scenario I've been thinking about, forget about EV vs ICE values and lets say the depreciation is 50% after 3 years and that will be the OMV after 3 years and the dealers trade in value will be 50% of the excess over GMFV and the car your buying is €45k with 0% interest
The depreciation after 5 years will be 60% and we'll leave the dealers margin the same at €3750
So you've €15k down, €15k over 3 years and final is balloon is €15k
The car after 3 years is worth €22.5K but the dealers trade in value is half of the €7.5k so only €3750 excess
So you start a new PCP with a new €45k car
€3750+€11250 down, €15k over 3 years and then €15k final payment
and again the car is worth €22.5k
So my question which IMO is related to PCP, is it better to take a break of two years after and then start a new PCP??
Trade in value €14250+€750, €15k for 3 years and then the final €15k balloon payment
After typing this and running the above numbers I think I've answered my own question,
In that it would be cheaper by €4.5K to run the two PCP's back to back then take a break of 2 years in between
Obviously this is a hypothetical example, in the real world there would be a lot more factors to consider
Thanks @Blackrock1 and @Setforlife for taking the time to answer me, it might not make sense to you or others reading but it does to me