Pcp's

[Frodo-anni]

My personal take on the 3 PCP deals i have had since 2007....

Between 2001 and 2006 i spent £50,000 cash on buying 4 cars... despite owning them outright i still got bored with them, spent money modding them and watched the capital cash outlay in all of them depreciate before my very eyes, after some thought i decided to try and avoid ever blowing that much cash on a depreciating asset that i'm destined to change after 2-3 years anyway...

So i decided on a PCP and to treat cars as a rental proposition from then on, i never put more than £1500 deposit into any deal and keep the mileage allowance low as it matters not when trading in which i will always do as i simply cant be without a car for any length of time, PCPs  allow me to factor out the depreciation cost and also to keep some emotional and financial detachment from the car, means i dont blow a load of cash on huge mods and dont get hung up on its falling value...

I set myself a self imposed limit of £300 a month for my car fund and buy accordingly, usually means i get to drive the car i really want rather than compromising, yeah i could save up for 3 years, live on beans etc but would i really want an ED30 by then?, probably not lol!

I'm open minded enough to realise it's not for everyone and for instance my uncle thinks i'm insane!, he's extremely proud of the fact he owns his car outright 'all paid for etc etc' and i'm sure it gives him great comfort telling everyone down the pub how ace he is for completely owning every single part of his 2000 Passat complete with paddling pool footwells  

Guess i've just never really got the whole kudos thing about paying for a car with cash, really who cares if you do or not? The bank own my house but i'm still classed as a home owner...

 

Your giving me ideas after our chat last night 

[tony_danza]

I must say, I've saved for and owned outright every car before the clutter - this is the first loan/PCP I've done, but in this instance it made so much more sense.

I rent the car for buttons, I don't particularly care about it because it's a "rental' car - I just enjoy it and in 18 months time I'll either trade it or sell it depending on what I want next. No way on earth would I hand it back for nothing, the same cars at 2 years old now are fetching £2-3k more than my GFV.

PCPs these days give worst case senario, they used to offer sky high Balloons and people really got stung with negative equity. Now, if the arse falls out of the market you've got the very last option of handing it back, typically there's a few grands equity in every deal because they want you to use that as a deposit on the next car.

All the money I took out of the Golf has gone into the house, an appreciating asset and my savings are doing very well elsewhere. The "play money" in shares I don't really count on, as I could blow it tomorrow - but in general as Frodo pointed out, the high street is a mugs and pensioners game, you want return you have to accept risk.

A PCP for the next car? Who knows, some of them are still a rip off, like the deal TC mentioned on the Tiguan, but you can't dismiss the good ones. You've just got to get it into your head it's just a fixed cost to rent a car for X years and ignore what it's "worth".

[vRStu]

I've had several VWFS PCP's and I tend to treat them as Hire Purchase arrangements but with a lower monthly payment.  The price you pay for having the lower monthly payment is that you have to pay interest on the GFV and the balance of the loan.  A bit like an interest only mortgage combined with a traditional repayment mortgage.  Lower payments means that I have a more comfortable buffer on monthly spending should there be an unforeseen circumstance.

I always set the annual mileage at 10k miles as I rarely see out the term. You aren't restricted to selling the car to a dealer you simply settle the loan as if it were HP.

Interesting to read people's thoughts on levels of deposit with PCP's, I have quite a substantial deposit to put down on the next car but I'm not sure whether that's the right thing to do.  The dealer has been able to manipulate the figures to offer varying monthly payments vs varying GFV's.

When I decide on what I'm spending/paying I always look at the total amount to pay over the term. If that looks affordable then I'm happy.

Some PCP's also carry additional offers, in the case of Audi A4 there was a £3000 deposit contribution offer which is a significant chunk of the interest. A3 is currently £650, £2500/£3175 on A5, £4000 on Q7 etc, etc.

Also interesting reading about investments.  I have some money that I'd like to do more with but don't really know where to start with investments. 

 

[mattyw]

My stockmarket investment of £1000 4 years ago is now worth £24,940 at close of play Friday. Risky, but you can't just make a blanket statement that anything above high street savings rates is impossible.

Thought u were in IT....quite good in playing the markets too I see. That is a stonking return I have to say.   

To be fair my profits were quite modest and I ringfenced the grand and started to play, was steady until the arse fell out of Barclays and gambled a chunk around 60p.

any investment tips mate ?

[Eddie-NL]

My stockmarket investment of £1000 4 years ago is now worth £24,940 at close of play Friday. Risky, but you can't just make a blanket statement that anything above high street savings rates is impossible.

Thought u were in IT....quite good in playing the markets too I see. That is a stonking return I have to say.   

To be fair my profits were quite modest and I ringfenced the grand and started to play, was steady until the arse fell out of Barclays and gambled a chunk around 60p.

any investment tips mate ?

Give your money to Tony

[mattyw]

My stockmarket investment of £1000 4 years ago is now worth £24,940 at close of play Friday. Risky, but you can't just make a blanket statement that anything above high street savings rates is impossible.

Thought u were in IT....quite good in playing the markets too I see. That is a stonking return I have to say.   

To be fair my profits were quite modest and I ringfenced the grand and started to play, was steady until the arse fell out of Barclays and gambled a chunk around 60p.

any investment tips mate ?

Give your money to Tony

i would if he got me £24.000 back off £1000

[tony_danza]

Yeah, never take advice off people on the Internet!!

It's a lot easier with online trading, as you set auto markers for buy and sell prices, so it manages itself on your day to day investments. These are modest gains though, taking risks for big requires research.

I wouldn't say it's simple, but long gone are the days of shouting "buy pork bellies and sell frozen orange juice" down a phone.

Only invest what you're prepared to lose, because you can lose it all very easily, although auto sell/buy can limit this.

Oh, and remember trading costs, so factor that into it too.

[no golf clubs at all]

Kind of ironic that in a thread talking about buying cars we are also talking about making money (I guess it offsets the loss that we all encounter when buying a vehicle), much the same way a bookie will cover their losses by hedging bets   

.....So with every car you buy there should be an equivalent investment to cover the dealer and the finance company ripping you off.

Great theory.

back on the PCP deal though, if I pay £400 per month for 42 months, thats £16,800 and with £8k for my trade in thats £24,800....sounds ok when you think id be getting a nearly new gtd with 3k on the clock....then you factor in the fact that I'd still owe them £8700.  I have gone full circle now lol....

I am thinking I will just keep the gti for now (again), I have 2 parking sensors to fit, may off my milly quads now and put on an oem zorst/ milly twin with an ed30 rear valance and just be greatful for what I have got.

This will no doubt change shortly 

...oh...that 135i I drove was sschhhweeet 

[vRStu]

back on the PCP deal though, if I pay £400 per month for 42 months, thats £16,800 and with £8k for my trade in thats £24,800....sounds ok when you think id be getting a nearly new gtd with 3k on the clock....then you factor in the fact that I'd still owe them £8700.  I have gone full circle now lol....

What was the purchase price of the GTD?

[no golf clubs at all]

£21998, but it was a july 2009 with only 3k on the clock.

A new GTD DSG 5 door would come in at over £26k (not sure exactly). Anyway I am not going there for now.

[andrewparker]

Sounds like you are best to avoid

http://www.topgear.com/uk/volkswagen/golf-6/road-test/gtd-3dr

[vRStu]

£21998, but it was a july 2009 with only 3k on the clock.

A new GTD DSG 5 door would come in at over £26k (not sure exactly). Anyway I am not going there for now.

I'm not saying you're wrong but to me those figures don't stack up mate.  Assuming you were going for a 42 month term then it would normally be 41 x the monthly (£400) which is £16400 plus your deposit which I'm guessing is your PX (£8000) so that's £24400 plus the 42nd payment which is the balloon (£8700) plus an option to purchase fee (usually £60) and an acceptance fee with the first payment (usually £125) making a total cost of £33285 for a £22k car.  £11k interest???

I think they've over cooked it by the £8k deposit which means you paying back £3k which IMHO is a bit more like it.

As an example I have a quotation here for a PCP on a A4 based on 10k per annum over 48 months -

OTR Cash Price - £38710.00

Deposit £18980.00
1 x £350 (including £125 acceptance fee)
46 x £350
1 x £6765.96 (Including the £60 option to purchase fee)

Total cost including charges £42195.96

So the cost of financing £19730 which is not a million miles from the £22k you're considering is £3485.96.  Quite a bit different to the £11k you've been quoted.

[vRS Carl]

I've was briefly looking at these to fund a Golf R. The monthly payments aren't too bad at a little over £500 a month, but the final lump sum is something like 13 grand. If I were blowing 500 squid a month on payments I'd never be able to save that sort of money to keep the car at the end as well. That means you hand it back or use it as a trade-in against another car, meaning another 3 years payments or no car!

Stupid idea, if you ask me. As stated above, they're just for people with champagne tastes and lemonade pockets who want a car they'd never normally be able to afford as a new purchase.

Golf R - £4000 deposit + 36 payments of £530 + £13000 final payment = £36K (or in all reality - a layout of £23000 and no car at the end of it!)

36 payments on a personal loan of £530 = a £16000 loan. Add that to your 4 grand deposit and suddenly you can only actually afford a £20K motor, but it will be yours to keep from the moment you've got the old debit card out of your pocket.

I am getting my new Octavia vRS on a PCP. Does that mean i have Champagne Taste but Lemonade Pockets Or am i just sensible because rather than lose the money in a car i keep it in a savings account or use it to make my house better (well the wife makes me do that ) Thus keeping money readily available for any unforseen circumstance.

Something you need to bear in mind and i'm just using your example.

You don't want to pay out for a Golf R as you would need to use a PCP. Yet you say you can afford a £20k car because you have £4k cash and can get a £16k bank loan. What is to stop you refinancing the £13k remaining on the Golf R over say 30 months? That way after 5.5 years you have paid off the car and own it outright (So have something to show for your £39k). It's only the same as buying the £20k car with the bank loan. You don't own it until you have paid off that Bank loan. The bank owns it. So in reality you can afford a £4k car that you would own the minute you get your debit card out.

Or to put it simpler.

Own a £20k car after 3 years

Own a £40k car after 5.5 years

You can't take your money with you when you die and you get one life................. so live it & enjoy it.

[vRStu]

£21998, but it was a july 2009 with only 3k on the clock.

A new GTD DSG 5 door would come in at over £26k (not sure exactly). Anyway I am not going there for now.

I've just had a quick check on the Nationwide website and the sort of figures you quote seem to indicate straight HP. 

Assuming it was £22k less your £8k you need to finance £14k.

NW have £14k over 42 months at £376.63 @ 7.2% APR which is likely much less than VW were initially quoting so it would probably creep up to the £400 you suggest.  Cost to borrow on that is £1818.

[tony_danza]

LOL, I'm glad you explained that - I looked at the deal earlier and though "Christ! he's either getting shafted or got it very wrong".