Nowadays best way to buy any new car is via PCP and then make an early settlement (as long as T&C is clear about this).
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>>best way to buy any new car is via PCP
A bold statement. Are you sure?
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I'm assuming movilogo means it's a good way of getting extra discount. Other wise I would be equally sceptical.
Some of the Drive the Deal prices are contingent on buying via PCP or HP.
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Mrs RP's Mazda was funded through 0% Finance - it was discounted to the quick - Large Mazda dealer in Chester couldn't get anywhere near it.
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>> >>best way to buy any new car is via PCP
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>> A bold statement. Are you sure?
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I am not at all sure.
There was a documentary on a few days ago saying PCP is being pushed but there are much cheaper ways that are not offered, MCP ??
Secret filming of car salesmen living up to their old reputation :>-(
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I have some industry knowledge. PCP can be the best way or the worst way to pay for a car.
Once people get on to the merry go round they have voluntarily saddled themselves with a long term debt of something between the cash price and the final payment, on which they will be paying interest.
Why do they do it? Because they get used to the monthly payment, and it doesn't feel as if a new car every 3 years or so is costing them anything.
What they miss is that at that point, they have got the debt down to the final payment, which they could refinance if necessary and keep the car for a while. But instead of financing say £8000, they effectively get a new £20,000 loan every time they do this, and extend the repayment term by another three (plus however long it would take them to pay off the final amount) years.
Very profitable for finance company, manufacturer and dealer over the "customer lifetime". Hence you can get some incentives (extra discount) for signing up to them.
The smart thing to do is grab the discount, and settle off the month after.
There are exceptions - for some people, the car is an investment and they need to borrow to make it. For most, it's just spending money they haven't earned yet, and being charged for it.
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>> The smart thing to do is grab the discount, and settle off the month after.
That's what I wanted to mean in my first post.
If you are buying a new car and able to pay full amount upfront, more often than not you can get better deal by via PCP and then settle the amount immediately thereafter. Note the word "settle" and not "cancel".
>> the car is an investment
It is a depreciating asset.
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Do I need to point out that a depreciating asset can be an investment?
My son can't get to work without a car. He has a PCH on a small car that costs him £126 per month. If you want to be pernickety, as it's on hire it is a necessary expense, but one on which he effectively gets a return.
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>> >> The smart thing to do is grab the discount, and settle off the month
>> after.
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>> That's what I wanted to mean in my first post.
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Actually if you Withdraw within 14 days of signing the agreement you only pay a tiny amount of interest and no fees.
If you wait until after that and Settle then you're likely to have to pay a couple of hundred in interest and fees.
Recently did this myself on a VW. I assume there's some legal reason they can't claw back the £3K deposit contribution, but VWFS were amazingly delightful to deal with.
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>>There was a documentary on a few days ago saying PCP is being pushed but there are much cheaper ways that are not offered, MCP ??
My mistake it should read PCH.
>>Secret filming of car salesmen living up to their old reputation :>-(
The programme was on Monday.
Secrets of Your New Car (2017) - Channel 4 Dispatches. 27 mins
Details of PCP then 11 mins into the prog PCP vs leasing with PCH. Seems to save a lot.
www.youtube.com/watch?v=Lz6D0lqfQDA
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Shocking, but not surprising.
The sales pitch that PCP enables you only to pay for the value of the car that you will use up, over the period that you use it, and not have to pay for the whole thing, sounds very clever to some people. The monthly payment on a 3 yr PCP will be lower than a 3 year standard HP deal for the same deposit.
But in fact the charges will be higher (the average outstanding debt is higher, because you have borrowed the full value). Your capital repayments will be lower, but of course a big lump of that capital will still be outstanding when you come to the end of the period.
It really needs to be much more tightly regulated, for the protection of the majority of people who don't understand it, and for the protection of the economy. Millions of feckless, clueless, criminally irresponsible idiots are not only failing to save, but are spending next year's wages before they earn them, and will presumably throw themselves on the state when they can no longer work.
Schools should be teaching this stuff.
40 years ago, the longest allowable HP term on a new car was 3 years, and on a used car 2 years IIRC. The implied term on PCPs is nearer 5 years.
It was no surprise to hear sales staff lying and pleading ignorance. Many are genuinely ignorant and poorly educated. They are so accustomed to making things up that it is completely natural for them. It's 30 years since I worked directly with them, and things are far riskier for customers now despite the mountain of regulation.
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>> >>best way to buy any new car is via PCP
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>> A bold statement. Are you sure?
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I'm not.
Leasing for my current motor beats the PHP cost by about £3.5k over 3 years - almost £100 less than PHP per month because of the 25,000 miles a year that I do. That includes the initial 3 months payment.
I could have purchased the car outright and that might be the cheapest overall option but I didn't want to tie up £24k and there was no guarantee as to future residuals and reliability and therefore the true cost is unknown until the three years is up and that is not a risk I was willing to take.
I may well get a nearly new car next time, definitely smaller anyway as I find the current car just a bit too big. If there is a significant saving the initial capital will not be as high and an outright purchase may be an option.
Last edited by: zippy on Fri 1 Sep 17 at 22:47
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