Should I get a Mk7 GTI?

[Kregiel]

If you buy cars with your heart then go for it!

If with your head then this PCP is devil's invention! Why would anybody would actually pay only for car's depreciation at all? Isn't it the thing all used cars buyers want actually to avoid by buying 3 or 4 year old after the car depreciated most??
For the PCP actual initial deposit alone you can get a nice used car (e46 m3 anybody??) and then you face 36-48 monthly installments and the worst bit is you own nothing in the end?? It gives you an illusion of affordability.

Horses for courses

Paul

[Scottymon]

Taking the M135i as an example (simply because I've been looking into them recently), you can get into a brand new £30k 320bhp hothatch for £1700 down and £250 a month for 24 months...  which equates over 24 months to £320 per month to be totally worry free about things going wrong... and every 2/3 years your back into a brand new motor again... I'm seriously considering it; think I've had my fill of repairing cars.

[tony_danza]

First. Ignore the dealer quoting monthly figures. Hammer out a deal based on list price -discount, then look to finance that amount... they'll shaft loads of people with headline monthlies with little or nothing off the car.

Ignore everything you think about PCPs, and purely think of it as renting a car.

You get a brand new car, to your spec, with a full warranty and 12 months tax. All you do is drive it, adding insurance, fuel and consumables, which every car uses.

At the end of those 3 years, the worst case senario is you hand it back. It may be worth an extra 1-2k selling private, the dealer may offer an incentive to trade it back if it's clean... who doesn't want a nice 1 owner used car to make a load of profit on?

It's a fixed price gamble. Sure it's 'cheaper' paying cash, but when interest rates on PCPs are less than 5%, if you're prepared to do some calculated risk taking, you can use your capital to make you more money.

For example. my car was £29300 (after discount). I happen to have a similar amount of money in my shares pot, and last year I made 14% on it.

Should I have bought my car cash, risked the market bombing and its used value in 3 years being nothing. Or, should I rent the car, have a GFV of £16500 no matter what and use my capital to offset the cost of the PCP?

I know which one my head told me to use....

Oh, and for those playing the 'I prefer to own my car'... you don't have mortgages or car loans then I assume?? You may think you own then, but try defaulting for a few months and then see who really owns them.

Tips:

Ensure deposit is as small as possible, it exposed you to less risk should you have to bail early.
Ensure GFV is realistic.
Ensure you stay light on the options, it's pretty much dead money in a PCP
Keep mileage limit as low as possible, why pay upfront for mileage with interest on top? Sell privately if you go significantly over.
Never, ever skint yourself to own a car. They're not worth it.

[MAT ED30]

I own my cars paid cash for em I know it's mine simple but it's made it harder for me to sell it as it's mine it only belongs to me and it's not got any money owed on it so changing for something newer and having monthly outgoing on a car I just can't be arsed with that these days. I have paid finance and done pcp deals and loads of other credit on cars but with the mk5 I paid cash as I knew I wanted to mod it so buying the car outright was my best option and like I said I wanted the car to be mine and not a finance companies car. I am all for swapping it's just you make the choice that best suits you and your needs.

[GTI5]

Oh, and for those playing the 'I prefer to own my car'... you don't have mortgages or car loans then I assume?? You may think you own then, but try defaulting for a few months and then see who really owns them.

Tips:

Ensure deposit is as small as possible, it exposed you to less risk should you have to bail early.
Ensure GFV is realistic.
Ensure you stay light on the options, it's pretty much dead money in a PCP
Keep mileage limit as low as possible, why pay upfront for mileage with interest on top? Sell privately if you go significantly over.
Never, ever skint yourself to own a car. They're not worth it.

I think people are referring more to having an extra £3-400 + pcm coming out on top of a mortgage every month which makes the situation seem more uncomfortable?

If you must be in the latest car then leasing makes sense, the deals for this vehicle are clearly attractive. When I looked at leasing (Briefly) I picked some options I would like, I then put a suitable mileage and very quickly a good deal rapidly did go into 'mortgage territory'. I do take your point regarding the mileage limits to begin with though. Options don't add much onto the resale value of a car but having had a mostly poverty spec MK5 before the MK6 I wanted something that was well specced on this occasion.

But then the youngest car I have bought was 4 years old and it may stay that way. I don't think they are worth what they want for them new, so I don't buy/rent them new.

[Saintsteve]

I own my cars paid cash for em I know it's mine simple but it's made it harder for me to sell it as it's mine it only belongs to me and it's not got any money owed on it so changing for something newer and having monthly outgoing on a car I just can't be arsed with that these days. I have paid finance and done pcp deals and loads of other credit on cars but with the mk5 I paid cash as I knew I wanted to mod it so buying the car outright was my best option and like I said I wanted the car to be mine and not a finance companies car. I am all for swapping it's just you make the choice that best suits you and your needs.

 

Ditto. I would never lease a new car, you pay stack loads a month, and at the end of the term, and have nothing to show for it except and emptier bank account and no car on the driveway.
The only way if like I currently do, is have the finance that nothing owes at the end of the term and the car is mine to choose to reuse it on a deposit for another new one.

I have a mortgage and a family to support aswell.

Paying 300-500 notes a month on a Rentacar ,is a need and not an essential ,and is bonkers imo

[tony_danza]

Not really, more the concept of people thinking they own something, when in fact they don't. An 80% mortgage on a house doesn't mean you own your own home, yet people always bang on that they do. If you default, the bank quickly will instead. Why is a loan/PCP on a car that different a concept?

I've always bought used cars with cash, and probably still will - I don't for one second think there's anything wrong or old fashioned about it, but with new £30k+ cars, then if you've got that kind of cash, you need to be making it work for you instead. Stocks and shares ISAs are lowish risk and have been performing brilliantly, for example, if you haven't got the time/inclination to buy and sell shares yourself.

PCPs on new cars so cheap because they know in 2/3 years time they'll have a 1 owner car on the forecourt with £3k+ profit, adding however much they rob you for with the trade-in and the ability to stiff you with a huge APR loan/PCP to pay for it.
Case in point being the OP who is running around in a 5 year old car costing £50 a month less and worth 1/3 of a brand new one. My apologies if that sounds rude BTW.

[tony_danza]

I own my cars paid cash for em I know it's mine simple but it's made it harder for me to sell it as it's mine it only belongs to me and it's not got any money owed on it so changing for something newer and having monthly outgoing on a car I just can't be arsed with that these days. I have paid finance and done pcp deals and loads of other credit on cars but with the mk5 I paid cash as I knew I wanted to mod it so buying the car outright was my best option and like I said I wanted the car to be mine and not a finance companies car. I am all for swapping it's just you make the choice that best suits you and your needs.

 

Ditto. I would never lease a new car, you pay stack loads a month, and at the end of the term, and have nothing to show for it except and emptier bank account and no car on the driveway.
The only way if like I currently do, is have the finance that nothing owes at the end of the term and the car is mine to choose to reuse it on a deposit for another new one.

I have a mortgage and a family to support aswell.

Paying 300-500 notes a month on a Rentacar ,is a need and not an essential ,and is bonkers imo

I don't understand your example, the monthly cost of finance for the full amount is much higher than a PCP's. Unless of course you're taking it over a much longer period, and in which case you still have to settle the loan if you want to move on mid way through.

[rich83]

Depreciation wise my GTI has cost me probably about 8K over 40 months.

40 months at £250PM.... + deposit (2k? .. at a guess) would stand me at 12k....


If I had a consistent income, I wouldn't think twice about PCP and swapping my car every 3 years.

[Saintsteve]

I own my cars paid cash for em I know it's mine simple but it's made it harder for me to sell it as it's mine it only belongs to me and it's not got any money owed on it so changing for something newer and having monthly outgoing on a car I just can't be arsed with that these days. I have paid finance and done pcp deals and loads of other credit on cars but with the mk5 I paid cash as I knew I wanted to mod it so buying the car outright was my best option and like I said I wanted the car to be mine and not a finance companies car. I am all for swapping it's just you make the choice that best suits you and your needs.

 

Ditto. I would never lease a new car, you pay stack loads a month, and at the end of the term, and have nothing to show for it except and emptier bank account and no car on the driveway.
The only way if like I currently do, is have the finance that nothing owes at the end of the term and the car is mine to choose to reuse it on a deposit for another new one.

I have a mortgage and a family to support aswell.

Paying 300-500 notes a month on a Rentacar ,is a need and not an essential ,and is bonkers imo

I don't understand your example, the monthly cost of finance for the full amount is much higher than a PCP's. Unless of course you're taking it over a much longer period, and in which case you still have to settle the loan if you want to move on mid way through.

I payed 2k deposit, financed for 4 years , and the car is mine at the end of the term, with nothing to pay. MY 2011 Hyundai is my example.

[tony_danza]

Using this http://www.pcpcal.co.uk and a loan calculator

30k car.

3 year PCP @ 5%: No deposit, 50% GFV after 3 years.

£512/month. After 3 years you'll have spent £18,432

5 year Loan @ 7%:

£591/month total borrowed £35,460. After 3 years you'll have paid off £21,276.

Most people change at 3 years so we'll see what happens. Let's say no matter what, the car is worth £15k.

PCP you walk away.
Loan, you settle the remaining £14,184 (-early settlement, so call it £12,500) - you've paid £2844 more than the PCP - so in total it's cost you £344 more to own a car for 3 years.

I dare say VW's finance rate is higher than 7% too....


-----

I know that's a terribly crude example, the same car is cheaper on a PCP until year 3+.

Sure afterwards you start coming into equity, but you're also dealing with the additional cost of extended warranty, MOTs, wear and tear etc.

It's admirable to own your car, but you still don't until that final payment is made, and you'll have paid a lot more in the long run.

[Saintsteve]

Using this http://www.pcpcal.co.uk and a loan calculator

30k car.

3 year PCP @ 5%: No deposit, 50% GFV after 3 years.

£512/month. After 3 years you'll have spent £18,432

5 year Loan @ 7%:

£591/month total borrowed £35,460. After 3 years you'll have paid off £21,276.

Most people change at 3 years so we'll see what happens. Let's say no matter what, the car is worth £15k.

PCP you walk away.
Loan, you settle the remaining £14,184 (-early settlement, so call it £12,500) - you've paid £2844 more than the PCP - so in total it's cost you £344 more to own a car for 3 years.

I dare say VW's finance rate is higher than 7% too....


-----

I know that's a terribly crude example, the same car is cheaper on a PCP until year 3+.

Sure afterwards you start coming into equity, but you're also dealing with the additional cost of extended warranty, MOTs, wear and tear etc.

It's admirable to own your car, but you still don't until that final payment is made, and you'll have paid a lot more in the long run.

So you pay 18k and still don't own the car!!! You've payed all that money ,basically to use it, then either have to pay another 12k minimum to keep your car, or walk away paying out the above amount, just to line the dealers pockets while their car depreciates!!!!.. Or walk away, they keep your car you've borrowed, they sell it again, and earn a massive win!

I couldn't sleep at night if I had that amount of debt on my head just to drive around in a new car!

Yes mortgages are classed as a debt, but I spose it's the same as paying Rent a month,instead of being a home owner, your handing money over and have nothing to show for it or pass down to your family when your times up..but having a roof over your head is life's priority, not a car in my thoughts!!


I'd love to splash 30k but I'd rather spend it on other things for me and my family!. But my priorities are different to others so each person will think of it differently .

[Snoopy]

I would rather pay an extra 300 a month off the mortgage and have it over a shorter term then rentacar but thats just me.
When i see new cars on the road all I see now is rentacars or company cars..

[tony_danza]

Using this http://www.pcpcal.co.uk and a loan calculator

30k car.

3 year PCP @ 5%: No deposit, 50% GFV after 3 years.

£512/month. After 3 years you'll have spent £18,432

5 year Loan @ 7%:

£591/month total borrowed £35,460. After 3 years you'll have paid off £21,276.

Most people change at 3 years so we'll see what happens. Let's say no matter what, the car is worth £15k.

PCP you walk away.
Loan, you settle the remaining £14,184 (-early settlement, so call it £12,500) - you've paid £2844 more than the PCP - so in total it's cost you £344 more to own a car for 3 years.

I dare say VW's finance rate is higher than 7% too....


-----

I know that's a terribly crude example, the same car is cheaper on a PCP until year 3+.

Sure afterwards you start coming into equity, but you're also dealing with the additional cost of extended warranty, MOTs, wear and tear etc.

It's admirable to own your car, but you still don't until that final payment is made, and you'll have paid a lot more in the long run.

So you pay 18k and still don't own the car!!! You've payed all that money ,basically to use it, then either have to pay another 12k minimum to keep your car, or walk away paying out the above amount, just to line the dealers pockets while their car depreciates!!!!.. Or walk away, they keep your car you've borrowed, they sell it again, and earn a massive win!

I couldn't sleep at night if I had that amount of debt on my head just to drive around in a new car!

Yes mortgages are classed as a debt, but I spose it's the same as paying Rent a month,instead of being a home owner, your handing money over and have nothing to show for it or pass down to your family when your times up..but having a roof over your head is life's priority, not a car in my thoughts!!


I'd love to splash 30k but I'd rather spend it on other things for me and my family!. But my priorities are different to others so each person will think of it differently .

Ignore the whole £30k thing, it's exactly the same on a £10k supermini. I'm just demonstrating how borrowing money either way costs.

You can own the PCP car at the end if you want to, you just borrow the £Xk and you're in exactly the same position as the finance example.

£18k just to use it? At year 3 the finance user has paid £21k just to use it!!! Don't forget the end of 3 years the finance user doesn't own the car either, and still owes 90% of its current value - only it cost them more to get there. So have you really got that much to show for it??

The PCP user has a guaranteed value at the end of 3 years, and £? in his pocket due to the lower payments. This is your next deposit.

The finance user has no guarantees, so if the arse falls out of the market at 3 years and your car is suddenly worth £10k - you're in negative equity and you've no way out. Your whole gamble hangs on you hoping the car is worth more than you owe right until the last year when it starts to change in your favour.

Look, if someone's happy to finance a car and convince themselves they 'own' it, then that's fine. But you don't. You still have debt, you're paying more to borrow the money and you're committing yourself to higher monthlies over a longer terms, someone WILL come and take it away if you stop paying.... surely counter productive if you're watching your pennies???

New cars depreciate like a rotting peach. If you can't handle that, buy used. Borrowing money costs money, the challenge is to make it cost you as little as possible and finance on new cars really doesn't make sense unless it's 0%ish I'm afraid.

[Greeners]

Anyone hear think multi millionaires buy their cars outright??

Why sink wads of cash into one of the fastest depreciating purchases you will ever make?

Mike you can bang on about it all night but some people just won't listen..........