Pcp's

[Greeners]

^^ well your a lucky guy, not many people can afford to outlay such a massive amount of hard earned on a motor that will depreciate like a tarts knickers! Any sums that are done need to take into account the money you would lose every month while it's just sat out on the drive.

[ub7rm]

With regards to penalties I learned this when I looked into it.  VW and Audi (and presumably Seat and Skoda) use VW Financial Services.  If you want to change car at any point in the contract to another car you can providing you stay within the group / use VWFS without penalty.  I guess it would be a different story if you wanted to change to say a BMW / another finance provider.

Also in the small print of the VWFS HP agreement I've got at the moment it says as long as I'm half way though the term I can just hand the keys back if things were to get sticky and had no other option - I think this is pretty standard on any finance 'secured' on a car.

Personally I prefer to use car finance rather than a personal loan for buying a car as it is secured on the vehicle so worst comes to the worst you can always just give it back and apart from a black mark on your credit record if you do it in the first half of the agreement and probably some admin fee thats it.  If things ever got that bad I doubt the credit mark would be the worst of my worries.  With a personal loan there is the risk that you sell the car and it doesn't cover the settlement for the loan so I'd be without car and still have to pay off the loan.  Worst case scenario obviously but it avoids that risk.

I also found (when I bought the golf) that the dealer finance rates were easily as good as what the banks were offering and there was room to negotiate on that too.

[andrewparker]

^^ well your a lucky guy, not many people can afford to outlay such a massive amount of hard earned on a motor that will depreciate like a tarts knickers! Any sums that are done need to take into account the money you would lose every month while it's just sat out on the drive.

Indeed, I don't actually think that I'd consider not funding a car with finance. If I had £25,000 in cash the last thing I'd do is sink it into a depreciating asset. You're far better to use low cost finance and make your cash work much harder for you in other investments.

[simonp]

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.

[garrardrj]

Andrewparker... Tell me where you can invest cash that gives a better rate of return than you can from the borrowing rate? I'll put my money there immediately. How do you think the financial institutions make such vast profits?

[no golf clubs at all]

How many of us really at the end of a 3 or 4 or 5 year finance deal go on and keep the car for any meaningful period?

Most of us want a change, upgrade or just a newer car before it all goes Pete Tong.

Most normal salaried folk go from one finance deal to another.

In 2003 I bought a new mini with £15k cash. I watched that money fly out the sunroof by about £160 per month over 3 years.

So if monthlies are a given then you get to the point where a pcp makes some kind of sense.
 

[tony_danza]

Andrewparker... Tell me where you can invest cash that gives a better rate of return than you can from the borrowing rate? I'll put my money there immediately. How do you think the financial institutions make such vast profits?

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.

Likewise, some of you have failed to view PCP for what it is - car rental. You find me any car rental company that'll give you a GTI for say £300/month. The difference between good and bad PCP is the deposit, you need it to be little or nothing. The final figure doesn't matter, if they lowball it, then you go trade it in somewhere else or sell it private and keep the difference... only a chump would hand back a car worth eg £10k to pay off a balloon of £7k.

If you have this in your mind, then they can make sense. PCP's have in "good times" been used to shaft people royally, now they're desperate to shift cars, it can be the cheapest way to fund them... just use your brain.

[Beddie]

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.

Ooooh i love a good t'internet sweeping generalisation.... 

Serious question time... I have an ED30 on a PCP so i assume you would feel i fit the above statement? Genuinely curious as to how you would come to that conclusion knowing nothing about myself or my financial situation? 

[chungster]

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.   

[Beddie]

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...

[tony_danza]

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.

[chungster]

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.

i had a chance to buy something that had dropped to 30p....it's now back up to £2 (but it did float at £3!!!!) 

still if i bought some (even just on a spread bet)  could have made a nice packet on that in just 12 months. Ah well. 

[andrewparker]

Andrewparker... Tell me where you can invest cash that gives a better rate of return than you can from the borrowing rate? I'll put my money there immediately. How do you think the financial institutions make such vast profits?

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.

[tony_danza]

Another point.

Do you think anyone walking into Porsche/Aston/Ferrari does so with £100k of bank loan or their own savings in their pocket?? No, because anyone with that kind of money has the intelligence to realise the £70k it'll be worth when they swap in 2 years time will be getting a return elsewhere, instead of being dead money sat in a car.

[Frodo-anni]

Andrewparker... Tell me where you can invest cash that gives a better rate of return than you can from the borrowing rate? I'll put my money there immediately. How do you think the financial institutions make such vast profits?

Realistic steady returns, looking at pooled collective investments - AXA distribution fund, average return pa of 10.72% over the last 31 years! If your a bit adventureous, then AXA Rosenberg Asia pacific ex japan fund, made close to 100% return over the last 5 years.

The retruns are out there, you just have to be prepared to leave your money for a period of time and take a degree of risk.

As mike has done, investing directly in shares of a particular company is a higher risk, but it does pay off. When the markets bottomed out not so long ago, people were making 50-60% easy within a few months.

If your not getting a rate equivalnet to inflation then you may as well not bother, as your money is eroding anyhow through inflation. No matter what people say interst rates are not going back up to 5% over night, its going to tak efew years before its anywhere near!