Is PCP (Personal Contract Purchase) a good idea?

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Johnny S

Johnny S

Күн бұрын

Пікірлер: 417
@hedydd2
@hedydd2 4 жыл бұрын
The real problem with a PCP is that it is likely that the first time it is done there will be a wholly owned part exchange as a great big deposit, as explained in the first minutes of the video. However when the PCP term comes to an end there is no more owner equity. The next car will therefore have to be financed in total. In my case, in 2017 I took a PCP on a Volvo XC90 and I was very glad indeed when it came to an end in March this year with lockdown starting. The car was almost certainly surplus to requirements so I could just hand it back with no more to pay and ho hassle. Not sure I'll do it again though. Probably not. It just happened to work out very well for me in the circumstances.
@chrishall734
@chrishall734 4 жыл бұрын
It’s all relative! Quite simple really. You’re paying the depreciation. Plain and simple. You don’t get your deposit back, so small deposit and larger monthly or vice versa, large deposit smaller monthly. Best thing is to find a car with low depreciation.
@richardstamper5630
@richardstamper5630 4 жыл бұрын
My dad used to say - A fool and his money are soon parted. I paid cash for a wonderful Porsche 997, we ran it for 5 years and lost £500.00 The key to success is, don't get carried away with things you can't afford but more importantly, if you buy right, then you can sell right.
@carguyuk7525
@carguyuk7525 4 жыл бұрын
I managed to get £10k off the retail price, I paid £8k deposit (I should have paid £1k with hindsight) and £278/month for 3 years. The final payment was about 3k lower than the value of a 3 year old car that was the same spec as mine. The interest rate was 2.5%. I am happy that I had a car from new and now I plan to keep it for another 7-10years. Good video.
@ElvisPresley68
@ElvisPresley68 4 жыл бұрын
I was lucky mate I got my Brabus on 0% PCP and had all intentions of buying it after 3 years so I was more than happy
@ivorbigone1231
@ivorbigone1231 4 жыл бұрын
I've always been told what goes up in value invest your own money , if your purchase depreciats then lend the money.
@unclejezza
@unclejezza 4 жыл бұрын
EXACTLY - nothing depreciates faster than a car. Get the cheapest PCP you can, save the extra you would have spent on HP and invest it. Keep doing that, stay in a new car with no repair costs. Keep rolling the extra money into investment that grows money. Lather-rinse-repeat.
@ivorbigone1231
@ivorbigone1231 4 жыл бұрын
@@unclejezza great minds think alike
@punkoid76
@punkoid76 4 жыл бұрын
You’re spot on, if you can budget an amount every month to pay PCP then you’ll always be driving around in new cars without forking out the huge amount to buy a car then having to run it into the ground to make it worthwhile. If you’re in a good job that’s secure it’s a no brainier.
@unclejezza
@unclejezza 4 жыл бұрын
@@punkoid76 finally some intelligent reasoning on this thread 👍
@alanhillyard1639
@alanhillyard1639 4 жыл бұрын
Or... buy a 4 or 5 year old car and run it for 2 or 3 years and sell it for only a couple of grand less - that’s 55 quid a month in depreciation. If you get the right one, you could get away with no depreciation at all. Or buy a something worth 2k and Itll still be worth 2k in 5 years
@maxmiller64
@maxmiller64 4 жыл бұрын
In the BMW example when you factor in the Dealer contribution of £3,250 it is cheaper to buy using PCP rather than cash. The bottom line is you are charged for borrowing the money so you need to look at the APR and Dealer contribution closely to see whether the PCP is worthwhile
@MrAvant123
@MrAvant123 4 жыл бұрын
How can this possibly be true, you could negotiate the so called dealer contribution against buying a new car anyway, this is a financial impossibility !
@jtk1ify
@jtk1ify 4 жыл бұрын
the point you made at the beginning is also so important, the advent of PCP is allowing manufacturers and dealers to raise the on the road cash price. that means we are all paying more than what we should for our cars, it also makes cash buyers less powerful because the dealers have a bigger market for their cars by using PCP to enable those who do not have the cash to purchase a car to do so in reality they should not be even looking at the car let alone buying it a similar thing is happening in the housing market with help to buy another crash is coming
@eXclusive1
@eXclusive1 4 жыл бұрын
jtk1ify Spot on nice!
@GJS-live
@GJS-live 4 жыл бұрын
Bingo!
@garymwilliams1
@garymwilliams1 4 жыл бұрын
I'm a petrol head, but I'm also cautious with money. Whilst I like the thought of driving a new car, I don't want the stress of having to make PCP repayments when the economy is uncertain knowing that I wll still not own the car at the end of it without a big balloon payment. So I save up and buy used cars outright. When I was furloughed at the start of Covid I knew my car was paid for, one less thing to stress about it. I know that for many the attraction of new cars is the perceived reliability and certainty of having faults fixed for nothing on warranty. Its the fear of unknown bills which drive many to PCP.
@paulnjoo
@paulnjoo 4 жыл бұрын
I'm not sure people rent cars on PCP contracts because of their fear of unknown bills, it's all to do with creating the illusion of perceived wealth and badge snobbery. Like you I have always saved money to buy a car outright and have never had a loan or PCP contract and in these uncertain times our attitude to money/debt will hold us in good stead. It's a shame that so many people are living beyond their financial means for a metal box on wheels.
@garymwilliams1
@garymwilliams1 4 жыл бұрын
Shinjuku Red You’re right that some people see cars as a status symbol. There’s a guy sat next to me at work who changes car every one to two years, always trading up a model or trim level, and always on PCP. I wonder how he felt when we went onto furlough! But there are people who like the certainty of knowing what their bills are each month, and PCP deals with insurance and maintenance included appeal to those people. And there are others (including my partner) who wants a car they can rely on and perceive new cars to be more reliable and therefore don’t drive cars over a few years old.
@jakbad7268
@jakbad7268 4 жыл бұрын
What you have got to think thought is that every car is a depreciating asset, yes new cars depreciate more than used, but they all go down in money. You can save up 15-20k over a few years and then you have a choice. Use that bulk sum of money to buy a car where you will never see that 20k again as next year the car will be worth 15k. After a few years you can sell it and then get 10k back and use that 10k plus the next 10k you have saved to buy another 20k car that will lose money. Or you can just get a car on pcp/finance and pay for the car monthly with your wages and you can use the 20k you have saved to invest it where it will make more money rather than lose it.
@paulnjoo
@paulnjoo 4 жыл бұрын
@@garymwilliams1 How people live their lives/spend their money is all down to priorities. Some have to have the latest phones, designer clothes, big house and rented German cars. I have spent most of my adult life reducing debt and not increasing it, I paid off my mortgage at the age of 47, have not taken out a loan for at least 15 years, have never used credit cards and never for a moment wanted to rent a car. I have 2 close friends who both rent German cars one has a Merc the other a BMW. Both paid a £5K deposit (which you never get back and so is a gift to the dealer) and pay £400 per month for 3 years. That's nearly £20K for a car you never own. To me that's absolute madness but is indicative of how many (mainly younger) people see that being debt ridden at a young age is now a normal part of life. I have a 13 year old Toyota Yaris 1.8 SR that has 140K miles on it and has never had a problem. The only thing I've ever had to change was one battery and and an end piece to the exhaust system. If you buy a Japanese car you don't have to worry about it going wrong ever and so there is no need to rent expensive cars on PCP contracts. I have been saving for a few years now for another car (I won't get rid of the Toyota as it's not worth anything now and yet just keeps on going and passing MOT's etc) I have enough money to buy a 2 year old Lexus CT200h maybe a Premier spec model but am going to wait until next spring before I do as I think when the furlough scheme ends in October their will be a lot of company cars given back to dealers as people start losing their jobs. I do think the pandemic may finally make people understand that being in debt to "stuff" is a ridiculous way to live and the stress it must cause cannot be worth it. I expect your PCP friendly work colleague is really stressed out atm. You should get your partner to buy a second hand Toyota, Lexus or Honda and save thousands of pounds.
@paulnjoo
@paulnjoo 4 жыл бұрын
@@jakbad7268 Or you could just buy the car outright and run it for the next 12-15 years as I have. Problem is a lot of people want the latest thing, can't save/won't save, want to keep up with their friends/neighbours and are badge snobs. I paid £7,800 for my Yaris 1.8 SR in 2009 and it's still not had 1 single fault, I've not even had the air con re-gassed yet. It just never goes wrong. Obviously the car is getting old and I have been putting money aside over the last couple of years for a replacement. But I won't be renting a car. I have a couple of mates who are badge snob German car PCP renters and are both paying £20K over 3 years for a car that will never be theirs. Crazy. I will have a about £20K to spend and I'll probably buy a 2-3 year old Lexus outright and run it for the next 12-15 years. that way I'll still have zero outgoings per month and will have a car that will never break down unlike my friends who's cars are always going back to the dealers (German cars are absolute rubbish) Still, each to their own right?
@Shadow-jo5yf
@Shadow-jo5yf 6 жыл бұрын
Your on the button dude. Cars scross the board have gone up by 10grand in past 10 years.
@johnny-S
@johnny-S 5 жыл бұрын
Thanks for your comment. If you look at the situation with Porsche GT3's - people are being stung really badly lately - as their values have fallen way more than they said they would.
@stephenfreestone8859
@stephenfreestone8859 4 жыл бұрын
The balloon payment is on paper for all to see
@h489agf
@h489agf 4 жыл бұрын
Great video and great advice. (I'm a former car salesman) My only criticism would be that you never mentioned that the car could be part exchanged at any other dealership. People on PCP deals mistakenly believe that they are tied to that brand/dealership and that's how dealerships retain customers.
@mattc8619
@mattc8619 5 жыл бұрын
Set the PCP up over 48 months, lowest possible mileage , minimal deposit, trade in after 2 years. This is the sweet spot!
@johnny-S
@johnny-S 5 жыл бұрын
Hi, yes I have done a similar thing with my latest daily - I've put a good deposit down (as I owned the trade in), and then put minimal mileage on the PCP over a 48 month period. This gives me a great cash-flow (based on very low monthlys) and allows me to save enough to clear the PCP after 2 years, and start again. I really should make a video about it.
@philipporter4433
@philipporter4433 4 жыл бұрын
@@johnny-S a loan for the value from the bank could likely work out better still at maybe 3% interest or even less.
@johnny-S
@johnny-S 4 жыл бұрын
@@philipporter4433 Agreed - in fact many banks are now offering PCP deals! Thanks for watching.
@petelongrs
@petelongrs 4 жыл бұрын
Thanks Johnny, very insightful.
@Mick_On_The_Moor
@Mick_On_The_Moor 3 жыл бұрын
With a PCP, you have keep the car in showroom condition otherwise when you hand it back, they'll charge you extra. Its negotiable if you're buying g another car from them and starting the PCP deal again. Its difficult to avoid getting a scratch on it somewhere. You might be ultra careful but there is always someone who damages it whether it be on purpose or not.
@sirchristopher2000
@sirchristopher2000 2 жыл бұрын
Normal wear and tare is included including minor scrathes, dents, chips and scuffs to each alloy.
@TrainDriverRob
@TrainDriverRob 4 жыл бұрын
I’ve just been comparing PCP offerings between banks and dealers. The additional cost using a dealer is staggering.
@banpowel9784
@banpowel9784 6 жыл бұрын
£60 per month for a Porsche on pcp? I have searched high and low and can’t find any car for that price on pcp..........
@australiamak2488
@australiamak2488 6 жыл бұрын
He traded in his car too.
@johnny-S
@johnny-S 6 жыл бұрын
@@australiamak2488 Correct - I traded in my car (a Lotus Exige) which was worth over 50% of the price of the Posche - so I also ended up getting a refund too! That said, the point of video is to show how much more a PCP can cost you in the end, regardless of the monthly payment.
@robplant5576
@robplant5576 6 жыл бұрын
Ban Powel yeh that's a lie
@robplant5576
@robplant5576 6 жыл бұрын
SodenCine Video those maths don't work out lol i gave over 50% of my car which isn't worth as much as yours and I pay 145 per month lol
@robplant5576
@robplant5576 6 жыл бұрын
was the term 15 years?
@davemarsh5478
@davemarsh5478 4 жыл бұрын
It’s the same with motorcycles, £11k for a z900rs, £20k + for some adventure bikes, pcp and the I want it now culture, it’s crazy, £10-£20k will get you a top quality second hand car.
@johnny-S
@johnny-S 4 жыл бұрын
Agreed, I've been pretty shocked by some of the prices that bikes (both motorcycles and pedal cycles!) are now reaching.
@Ray.842
@Ray.842 4 жыл бұрын
Cash or HP is the only way to buy a car. PCP is a mugs game! Only buy what you can afford!
@unclejezza
@unclejezza 4 жыл бұрын
Ray Crouzieres I would have agreed with that 15 years ago. Cars are bad now - full of plastic engine parts that degrade quickly and result in cars than depreciate even quicker than in the past. Modern cars cost so much to repair as they are all plastic moulded parts and compacted into the engine cavity so even basic repairs takes multiple hours to dismantle and reassemble. The old model of buy a car and hang onto it for 16 years is dead as fried fucking chicken because the cars themselves negate the process. Work out your own ‘cost of ownership’ (which is different for everyone) get the cheapest PCP you can, save the difference and invest over the PCP term; use your earnings as a trade in deposit and upgrade to a new car - stay in a new car every 4 years. Lather, rinse, repeat.
@Ray.842
@Ray.842 4 жыл бұрын
unclejezza lmao no way you get nothing back if you hand it back, or nearly nothing back. All but one of my cars have lasted with 0 - £500 in repairs over their lifetime and the one that never, I still got a good trade-in. PCP is the most expensive way to rent a car, and it is rent because they rely on people not having the money or credit facility to pay at the end. Leading you into a never ending rental! As I stated pcp is a mugs game, buy new on hp/cash or used with hp/cash but within your budget. My Daughter has an 8 year old car it’s only needed £150 in repairs and it’s perfect, my Wife’s car is 12 years old and has only had £80 spent on it again perfect condition. I’m certain in 10-15 years my car won’t need much spent on it if anything! Good cars made now still last!
@unclejezza
@unclejezza 4 жыл бұрын
@@Ray.842 I don’t think you understand what I’m saying. Yes, you can get lucky with a new car and have few if any repairs over the first 5 Or so years. My experience has been the opposite with my average monthly spend ending up being over £500 p/month across the last 4 cars. Now I spend £250 on 4 year PCP, I am in a brand new vehicle, I have a dedicated £150 p/m that I pay into an investment fund which I’ll use to finance the deposit on the next brand new vehicle (should be around £9k after 48 months) Car is under warranty for 36 months so the likelihood of any expenditure on repair is very low. My ‘cost of motoring’ is lower than ever, I don’t have a car I need to worry about and repair constantly, I have the priveledge of being in a new car every day, I have money making money instead of going into a vehicle. This works for me - the numbers don’t lie. If your system of owning a car for years and years without having to spend money on it works for you, then def keep doing that, but that is not the experience of the majority of people in modern cars!
@Ray.842
@Ray.842 4 жыл бұрын
unclejezza yes I do understand. You save £9k over 4 years for a deposit on your new next rental. Then repeat, to me that’s money down the drain. I just paid £36k for a new car, over the next 6 years it will pay for itself due to the ulez so after 6 years the car is at £0 so if I get another 4-9 years out of it it’s putting money in the bank! Any repairs needed if any come out of what it’s saving me. Tbh it’s the 1st car that should keep saving me money. But I’m not having to give it back for another even if I’ve saved up an extra £9k we only have 1 new car in the family, I wouldn’t have bought it if it wasn’t for ulez! The car I changed I had for 5 years, still had 2 years on warranty and it had 0 problems in 5 years. Whoever gets that car has a fantastic car just hope they live outside the ulez . If your happy doing pcp, it’s your choice but I stand by my comment “it’s a mugs game” dealers love you.
@unclejezza
@unclejezza 4 жыл бұрын
@@Ray.842 oh I understand, my approach is outside your pay grade. Understood! And for clarity - £2k is for the deposit on the next pcp, the other £7k gets rolled back into investment. For even more clarity, people who buy and OWN depreciating assets are the mugs. Anyone with any financial sense will tell you that. Pay the MINIMUM you can for a depreciating asset, Don’t own ANYTHING, invest the money you would have spent buying the thing - grow wealth. See you in 20yrs pal when you’re still working a dead end job for someone else and still driving the same car for 2 decades. I’ll be in the latest Audi with £200k liquidity 😂🤣😂
@johnbower7452
@johnbower7452 4 жыл бұрын
With PCP you must make sure you know you can save that final lump during the other 4 years. I worked it out I can on my new one; and still keep a bit back for other emergencies and work I need to get done. Don't be fooled by the cheap monthly rates; though the up side of them is they can make it affordable even with the lump sum at the end.
@banpowel9784
@banpowel9784 6 жыл бұрын
Certain car brands in 3 years time will not be worth anywhere near the final optional payment.......the only way to view any form of Car finance is that it buys you a lifestyle, so whatever you lose in interest etc, you can use as a value towards the personal happiness that you would never have had if you couldn’t obtain finance.
@johnny-S
@johnny-S 5 жыл бұрын
Very good point, and an interesting way to look at it.
@chewbster
@chewbster 5 жыл бұрын
Maybe joy but not happiness
@Harmus96
@Harmus96 4 жыл бұрын
I understood it as the final car payment is what the market value is at the time. Correct me if I am wrong :)
@Chillednfunked
@Chillednfunked 4 жыл бұрын
Some people can be extremely naive they just blindly think about the monthly payment but it’s the balloon payment (and even the term balloon payment is scary). In the UK people are so obsessed about having a new car they will happily get stung - I on the other hand only pay cash.
@MegaDboy7
@MegaDboy7 4 жыл бұрын
You don't have to pay it...
@andrewfield8562
@andrewfield8562 4 жыл бұрын
It's all about the monthly cost with pcp if your happy with what your paying per month it's not a problem you keep the car 3 years on a 4 year deal while under warranty then trade it in for a new deal and repeat over and over again aslong as your comfortable with your monthly payments then its a good way to have a new reliable car every 3 years
@MrSunnyBhoy
@MrSunnyBhoy 3 жыл бұрын
brilliant video, thanks a lot, very helpful, I always buy cars chase, regardless of how long I keep them and this shows I'm justified. I don't like the idea of always having a monthly payment for a car.
@dmcg6074
@dmcg6074 4 жыл бұрын
Excellent work and thank you. It seems just a very expensive way to borrow money that offsets the reality of the true cost until the end of the term. Whether you decide to stay in the cycle of trading in or not eventually you will have to pay. Also the dealer has the final say on the trade in value of the car...😬 Oh yeah, and then theres the mileage limit.. You can't have a cow and get the milk for free
@yodomcat
@yodomcat 4 жыл бұрын
I view PCP as renting a car I can't afford by paying off the depreciation. An example would be if I bought a new car and sold it I would of lost £12K in depreciation. So PCP'ing the same car over 2/3 years I pay £12k total (with deposit) then I'm no worse off than if I bought the car outright (as still losing). But I have a better car than I can afford outright and I have all that new car main dealer warranty goodness.
@grantm8106
@grantm8106 6 жыл бұрын
One thing to note, although you pay slightly more for the car over the term, you have only paid £5000 of your money to acquire the car, giving you the freedom to do as you please with the rest of the cash you had, using your first example, that would be over £14000 cash that you still have in the bank which you could invest or spend in a different manner, which if you did invest could potentially make you more than £599 you spent in interest for the PCP. However good video none the less :)
@GeneralAtrox1
@GeneralAtrox1 6 жыл бұрын
Would you agree that paying as little deposit (even £0) as possible is a great idea? From my calculations... unless it was specified in the offer to pay X deposit for X% APR (mostly on 0% Finance), putting up a deposit only lowers the monthly payment and doesn't change the total final payment. So from this, paying a £0 deposit and having a high monthly rate.. just pay that high monthly rate with your deposit and have the finance "for free" for the few few months and that'll let you save up more money to keep those payments flowing? Please let me know what you think :)
@grantm8106
@grantm8106 6 жыл бұрын
Samuel Joyce I would agree to an extent yes, if when buying the car and having £0 deposit you can afford the monthly payments then why not. The only way the final payment will change is through changing your annual mileage or length of the term. So if you know how much miles and how long you want to keep the car for certain, then personally I would put as low deposit as possible so that I could keep cash in my bank to invest in other things, but still have an affordable monthly payment - so yeah, if £0 works for you then go for it. Keep in mind manufacturers often offer a deposit contribution too in new cars so deposits are not always required on your part :)
@dominicrusho
@dominicrusho 4 жыл бұрын
The answer is simple: it depends on the car, depends on the deal. Sometimes PCP works out the best value, sometimes leasing does. Everything has its pros and cons - including buying outright.
@aktar38
@aktar38 4 жыл бұрын
There’s more to it than that. Some finances offer deposit allowance when going on finance, some offer 0% too. Some offer both. Ultimately it depends on whether you want to have the option to buy the car outright at the end. You have to remember that your car can potentially also be worth more than the balloon payment. If you plan on changing then leasing is your way to go. If you’re planning on potentially buying outright then pcp is you’re way to go as it gives you better options than a hp term. It also depends on if you go for new or used. Most used cars have a high interest rate and new cars have a low interest rate so going to a bank for a loan may work out better on a used car.
@thatginettaguy1714
@thatginettaguy1714 4 жыл бұрын
Really interesting video. Think I will still keep paying cash for my cars!
@nickbrown6457
@nickbrown6457 4 жыл бұрын
Me too! PCP with it's mileage restriction and balloon payment just scares me. It would make me feel a little bit out of control.
@dj_efk
@dj_efk 4 жыл бұрын
Yep, if you can’t afford something without getting yourself into debt then unless it’s a house, it means you can’t afford it, look for a cheaper option. I ended up buying a 4 1/2 year old version of the car I was looking for (VW Touran) earlier this year for cash through a specialist sourcer / buyer for just under half the RRP in my favourite colour and with all the options I wanted (and more). It’s still a current model, has been cherished from new and is in near-perfect condition. If I was bothered then I could put a cheap private plate on it and it’d look brand new. I will continue to look after it and run it until it dies in say 10 - 12 years. Winner.
@Ilkleyscot
@Ilkleyscot 4 жыл бұрын
David Foster-Key Absolutely the way to go
@YH-yh8pr
@YH-yh8pr 4 жыл бұрын
Excellent video made a lot of sense explained well too.
@johnny-S
@johnny-S 4 жыл бұрын
Glad it was helpful! Thanks for watching.
@mitch0404
@mitch0404 4 жыл бұрын
Brilliant video, helped me make my mind up that cash is king for me. Thanks again. Very well explained.
@gw7624
@gw7624 7 жыл бұрын
I can't believe anyone in their right mind with enough cash for a £25k deposit would put that down on a Boxter.
@johnny-S
@johnny-S 5 жыл бұрын
Hi - it was actually a Cayman with a number of upgrades (I have made videos with it). But the deposit gave me the low payments and ultimately the cash-flow to run it. That said I did get most of the amount back when I sold it due to it's spec (it had a GT3 Steering wheel and yellow rev counter! - sometimes wish I still had it!). Thanks for watching.
@adamdowney3819
@adamdowney3819 5 жыл бұрын
@@johnny-S And if you know about cars, Caymens are in fact a very good affordable spots car, top gear rate them highly!
@steunited1969
@steunited1969 4 жыл бұрын
@@johnny-S they were talking about the Boxter which you showed in the showroom for £68k
@Happy-Me.
@Happy-Me. 6 жыл бұрын
When it's too easy to get finance it's too easy to end up in a lot of debt. Cars are and will always be a depreciating asset. The world has gone mad!
@johnny-S
@johnny-S 6 жыл бұрын
Agreed, however I think this situation will take a turn when interest rates start to rise again. Thanks for watching.
@johnny-S
@johnny-S 5 жыл бұрын
Absolutely agree. It's the simplicity with which these companies dish out loans that propel the problem. The manager of a local car dealer told me in confidence that if all of their customers defaulted on the payments - they wouldn't know what to do with the cars!
@punkoid76
@punkoid76 4 жыл бұрын
Johnny S you’re misinforming people. The top and bottom of it is that they make millions of cars and new cars are way too expensive for the vast majority of people to buy outright, without these deals they wouldn’t be able to sell most of the cars they make. If you’ve got a decent, steady job PCP isn’t a problem, plus you avoid expensive repair bills with a new car and interest rates on most deals are fixed as far as I know.
@alanhillyard1639
@alanhillyard1639 4 жыл бұрын
Pcp just cost me 13500 grand over 2.5 years with absolutely nothing to show for it. So no, it’s not worth it. If I had bought outright, yes it wouldn’t have been new, but I would have at least had some residual value. THE BALLOON PAYMENT ISNT ALWAYS LESS THAN THE TRADE IN VALUE. This is the bull that the dealer suckered us with, and locked us into a more expensive deal than lease with all the same restrictions
@johntreanor812
@johntreanor812 4 жыл бұрын
Save up a decent deposit of trade in your car, work with the dealer to understand your budget, and get the car over 3 years to run concurrent with the warranty. After 3 years car is paid off and then you have collateral on your drive, ready to put down on your next car... or simply keep. HP everytime .
@rufdymond
@rufdymond 4 жыл бұрын
PCP will be the biggest reason future generations get close to retirement age and then suddenly realise they are broke. There are many people who will have perpetual car payment but will never actually own a car. As someone who has always invested my money PCP has always seemed like madness to me.
@punkoid76
@punkoid76 4 жыл бұрын
rufdymond nonsense, I will retire in five to ten years and having had many PCP deals I’ll be far from broke. I’ll own the last car when I retire, and because I don’t buy crap I’ll be able to sell it if I find I’m not in need of it anymore.
@johnny-S
@johnny-S 4 жыл бұрын
That is indeed my main concern and why I made this video. Thanks for watching.
@TheGreatestBeyonder
@TheGreatestBeyonder 4 жыл бұрын
Appreciate this is 2 years old. BUT please don't get yourself into debt now (pandemic or no pandemic)... SAVE your money to support your family! The only reason anyone needs to be flash is pure ego! Let go of your ego, don't keep up with the Jones' (and you'll be far happier)! Material objects do not bring true happiness, they are a quick temporary fix! But then you knew that.... (it's breaking the cycle that's hard)! This video is insightful and can be helpful (if you can control yourself) and if you really do need a super duper bang up to date car, but I can't see what a new(ish) car can do that a 5 to 10 year old car can't?
@DaBurgeo
@DaBurgeo 5 жыл бұрын
If you are paying cash, where does the £19500 come from? Savings? Or personal loan. With PCP you are not using your money. Keep the deposit low enough and all you are paying is the depreciation of the car while you own it. Don’t forget that the finance company will give you the final valuation at the time of purchase. If your car is worth less at the end of the deal they will still give you the higher amount. I recently finished a PCP on a Range Rover and it was worth £8k less than the agreed final payment. However the finance company covers this amount as the value was agreed at the start of the agreement . If you used your own money you would be liable for this drop
@38dragoon38
@38dragoon38 6 жыл бұрын
Where I work the car park is full of new cars "owned" by 20-to-30 year olds, most of whom seem to be living with mum and dad. Some of them have even splashed out on "wanker plates" (personal number plates) too!
@stevewilson6390
@stevewilson6390 6 жыл бұрын
And your point is ?
@johnny-S
@johnny-S 6 жыл бұрын
It is indeed worrying how much people are spending on these cars at the expense of having nothing left to pay towards getting a house....
@david1731048
@david1731048 4 жыл бұрын
Some of the best monthly payments are due to large deposits too. If you're paying a £5000 deposit every 3 years when you get a new car, that's another £140 onto your monthly cost
@CaiSpidox
@CaiSpidox 4 жыл бұрын
In the end PCP is like a phone contract - If you intend on outright buying and keeping a car PCP is not for you. Your better off getting a bank loan or HP /CP loan giving as much deposit as you can. PcP is to try and give as little deposit as you can (as long and as much as you can afford the monthly payments) then halfway through the PCP contract trade in the car for a better one youd like, by then the interest would of been paid and the car will be worth more as the next deposit or give it back outright at the end. It's better to get a second hand car on PCP in my oppinion as you dont get that hard loss at the start also. As someone who gets bored of cars quickly and has had bad luck PCP will hopefully work for me until I get the car I really want.
@mrg-ghx8052
@mrg-ghx8052 4 жыл бұрын
Try changing the word sell to rent on PCP cars and the developing problem becomes more clear.
@paullewis1637
@paullewis1637 4 жыл бұрын
Sadly you are comparing PCP with a cash purchase here, but the issue really is, can you finance the car through a loan as most people don’t have 70k in cash sloshing about. If you compare a straightforward loan with PCP it gets a bit closer to the truth. Effectively it means do you want to stump up a big deposit with no balloon payment, or would you rather pay a bit more, but not have to find the upfront deposit and settle that question at the end of the lease. The real aim I think, is to handcuff you to the dealer so you are a perpetual customer because when the music stops you can’t afford to get off.
@David-bl1bt
@David-bl1bt 4 жыл бұрын
As my parents drilled into me as a young lad, "a fool and his money are soon parted". It is ALWAYS considerably more expensive to buy on pcp than cash. The dealer has you by the b@lls with a pcb and they are laughing all the way to the bank....WITH YOUR MONEY. far better to buy a pre-owned car less than 12 months old with low mileage for cash when someone else has payed the depreciation for you. If you need a pcp it means that you can't afford it and you will pay dearly for living beyond your means.
@greendegenerationx
@greendegenerationx 4 жыл бұрын
Do you shouldn’t buy a house with a mortgage?
@samlawts1193
@samlawts1193 4 жыл бұрын
Right well, lots of automakers offer 0% fixed rate PCP. How is that ‘considerably’ more expensive? It’s actually better for you considering the money you’d make out of interest keeping it in the bank.
@nickbrown6457
@nickbrown6457 4 жыл бұрын
@@greendegenerationx You'll still have to pay rent to live somewhere, if you don't buy a house on a mortgage. Depending on where you live, the cost of rent is roughly the same per month as the cost of a mortgage. At the end of a 25 year mortgage, you own a house. At the end of a 25 year rental, you own nothing. Virtually no-one can buy a house outright when they start out, so a mortgage is the only option. Cars are different because they're so much cheaper than housing. A lot of people can and should save up and buy cars with cash. Also, a car is a depreciating asset (in most cases), whereas a house is an appreciating asset. So using credit to buy a house is sensible, but using credit to buy a car isn't (in most cases).
@nickrac8194
@nickrac8194 4 жыл бұрын
If you cant afford it twice, dont buy it at all. We would all love to drive lovely cars, but doing so is financially the most stupid thing to do. Save up, and buy it for cash when its 3-5 years old with low mileage. I have traded up from £1500 to a car worth over £15k in 2 years. Take your time and you can drive them all. But paying interest is not smart.
@ColGadarby
@ColGadarby 4 жыл бұрын
You can do PCP with £500 deposit. Best to pay as little deposit as possible and keep the period as short as possible (min 2 years I believe). The minimum future value is the kicker - since it is rare that the car when surrendered (if not kept) has actually got the value expected and hoped for. At the end of the day - it depends on your financial situation. The financial sage would say never invest capital in a depreciating asset. If you can get 7% yield on £20K tax free through an ISA - it might make you think again.
@johnny-S
@johnny-S 4 жыл бұрын
Far point if indeed you can get a 7% yield on anything these days! Thanks for watching.
@richfixescars
@richfixescars 4 жыл бұрын
PCP can sometimes be good, if the value of the car is a lot less than the final payment, just hand it back. A lot of volume cars can have this negative equity problem. As long as you go into it eyes open, you can see exactly how much it will cost you.
@Lotus.F
@Lotus.F 4 жыл бұрын
I think a lot of car buyers knows this but not everyone has that amount of free cash sitting in the bank. So like you said buying on PCP can gets. you a much nicer car than you would if buying with cash.
@jeffreygreen7686
@jeffreygreen7686 4 жыл бұрын
but you’ve got to borrow the £19500 if you pay “cash” - at 5% interest that’s nearly £1000!
@johnny-S
@johnny-S 4 жыл бұрын
I was taking the £19,500 from cash savings in the bank, not borrowed money. Thanks for watching.
@waynemitchinson3072
@waynemitchinson3072 4 жыл бұрын
I've just taken out a PCP deal on a new car that I could have bought outright. Got 0% interest, so only pay the window price. The balance is in my bank account offsetting my mortgage payments, effectively saving me a few grand over the PCP period compared to if I'd handed the whole lot over, and the balloon payment has already been put to one side ready for when its needed. If I didn't have the cash I wouldn't have done it. Looking at the numbers, large deposits will only reduce the monthly payment, the final payment seems to be largely fixed.
@lulututu2981
@lulututu2981 2 жыл бұрын
Where did you find a 0% interest finance deal?
@GSimon850
@GSimon850 6 жыл бұрын
I think we all know if you have to have something on the knock, you will have to pay more in the long run like buying my house, I cry when I see the interest I have paid, but most of us don't have the extra capital to replace the family car to get to work, I am looking at PCP/PCH whatever it's called to get me through the next 3 years because my car which i have had for 17 years is now costing too much and is unreliable. Wouldn't it be nice to just go out and buy a new car, not for me unfortunately so we/I am again are a victim of the fat cats once again bending us over and opening our wallets, just to get to work so we have work harder as usual. Thanks for the advise but 60.000+ for a car I would not entertain that I am looking at upgrading from my MK1 Ford Focus 2.0. for new focus. The way i am looking at it train tickets cost nealy 200 quid a month and at the end of the day you dont own the train, lol Take care Simon
@johnny-S
@johnny-S 6 жыл бұрын
Hi Simon, clearly you can see what the situation is here. The key thing with your house is that it is going up in value, but a car isn't. It makes sense to have a car that is reasonably new and covered under a decent warranty. So my suggestion is that you look for the lowest APR % possible - ideally zero! It can be done, currently our local Vauxhall dealer is offering 0% APR (but I wouldn't buy a Vauxhall even at that rate!). My local BMW dealer was offering just 2.9% recently - as shown in this video at 14:39 minutes in). You can also barter with the dealer for a better rate - I did, and got over 2% knocked off the APR. Finally - try the bank. The Halifax bank offers PCP deals on cars bought from main dealers, and often undercuts their rate (every time I show a car dealer their website they break into a sweat). Good luck, and thanks for watching.
@GSimon850
@GSimon850 6 жыл бұрын
Cheers buddy a lot of food for thought. Take care.
@francoandjimtherotties2592
@francoandjimtherotties2592 4 жыл бұрын
Both my pcp deals have been top notch,knew what I was getting into and knew what I was paying,ive had an Audi A5 and now an A6 on it and as long as your happy with the payments then stuff it,go for it🤣🤣🤣
@Chillednfunked
@Chillednfunked 4 жыл бұрын
Sounding a little naive - it’s the balloon payment that is the issue not the monthly payments..
@francoandjimtherotties2592
@francoandjimtherotties2592 4 жыл бұрын
@@Chillednfunked hand car back
@francoandjimtherotties2592
@francoandjimtherotties2592 4 жыл бұрын
@John Small you know nothing mate
@francoandjimtherotties2592
@francoandjimtherotties2592 4 жыл бұрын
So you class anything under 100k a low salary
@francoandjimtherotties2592
@francoandjimtherotties2592 4 жыл бұрын
Twat
@justChilLLZz
@justChilLLZz 4 жыл бұрын
This is such a great video
@SuperKoreanzombie
@SuperKoreanzombie 4 жыл бұрын
I work in motor trade and also qualified motor finance specialist- my advice is simple. Look at the APR for whatever deal you are interested in. As for pcp, again it’s pretty simple. If you’re looking to pay off the balloon at the end meaning you’ve liked the car so much to the point you want to keep the car, you would have been better off getting a hire purchase from the start vs pcp. Although with HP you’d probably be looking at a bigger initial deposit plus your monthly payments will be higher than pcp but if you look at the final figure between the two (that’s assuming you want to keep the car) HP will work out much cheaper. Pcp is designed for those who want a relatively small deposit to begin with, slightly lower monthly repayments and at the end, you have a multiple of choices ie usually pcp customers like to change their cars every 2-3 yrs/ hence they part x it and repeat the process again.
@johnny-S
@johnny-S 4 жыл бұрын
Thanks for your input on this, and I entirely agree. My concern is that the sheer volume of people taking PCP's on cars they normally wouldn't be able to afford is going to cause a financial meltdown for the car industry (I'm not in that industry by the way). As I write the UK is now entering a serious recession - and I can't help but think that all those cars on PCP deals are about to be put to the test. And what will car dealers do with all those unwanted returned cars?
@SuperKoreanzombie
@SuperKoreanzombie 4 жыл бұрын
Johnny S It’s interesting you say that because I was just dealing with a customer earlier who owns a cake business but is out of business due to covid (cancelled weddings, parties etc) They wanted to return the car- can’t afford repayments. But yes, it’ll depend on the finance agreement one initially takes out Let’s use HP as an example, providing they have paid up to 50% of the repayment figure, they can simply ‘voluntary terminate’ the agreement. If they haven’t then technically they’ll have to pay up to 50%
@SuperKoreanzombie
@SuperKoreanzombie 4 жыл бұрын
Now on something like a contract hire that’s going to be a lot trickier to get out of since it’s leased
@philipporter4433
@philipporter4433 4 жыл бұрын
@@johnny-S completely agree.... There will certainly be an abundance of cheap used cars. Music to my ears as im looking for a new car soon. Unfortunately im unlikely to buy new due to the reasons of PCP dominance now, which has helped to artificially hike true sticker prices, so ill plump for a nearly new car instead, or pre reg. PCP was a fabulous invention for the motor trader, giving them a guarantee of each customer returning after 2-3yrs, very similar to the way people buy a mobile phone contract, then return for a new handset. If people had to buy outright sales would be lower.
@lildoc
@lildoc 4 жыл бұрын
HI good video! But what about charges for wear and tear and breaking mileage restrictions during ownership? Could you please talk a bit about that too?
@johnny-S
@johnny-S 4 жыл бұрын
Great suggestion, I'll look into it, but as I said at the start: I'm not a car finance expert. Thanks for watching.
@sen5908
@sen5908 4 жыл бұрын
Trying to find out the best option can you help:. So if say a person has £23000 cash in there bank ( there own money). And can use all this money to purchase a new car, what is best using that cash and completely owning the car or leave that money in the bank and do a pcp deal, what would cost you more over a 3 year period , obviously the car that is bought outright will deprecated, so what is best cash outright or pcp over 3 years Also what happens if you have say pcp with ford and your next car was a Honda can you swap manufacturers
@MadMarchTaffy
@MadMarchTaffy 4 жыл бұрын
If it sounds too good to be true, then it probably is....
@ash7jar
@ash7jar 4 жыл бұрын
yer OK very interesting video, but you have not factored in dealer contributions. Bought a BMW on finance 48k was the cost with options but the dealer got me a 8k contribution
@edLambshanks
@edLambshanks 4 жыл бұрын
Phenylcyclohexyl piperidine is rarely, if ever, a good idea.
@pythongrun
@pythongrun 4 жыл бұрын
I prefer PCH. My car depreciates more per month than I pay. I only do 8K mpa so that helps although I’ve not found as many good deals this year so I’ve extended my 3 year contract by 12 months
@niptodstan
@niptodstan 4 жыл бұрын
You can buy a year old Bentley Mulsanne for half of the new price now with around 2000 miles on it. Madness. Imagine if you’d bought a new one.
@nickhenderson6246
@nickhenderson6246 4 жыл бұрын
It’s a big eye-opener
@johnny-S
@johnny-S 4 жыл бұрын
What's worrying is that too many people aren't opening their eyes to it! Thanks for watching.
@bigshort9296
@bigshort9296 4 жыл бұрын
Well it all depends on the trade in value and the residual value at the end of the lease, reality is you will be paying 5%+ interest and will never own an asset. Your point about the pricing of cars is very true, the cash value is unaffordable to the majority of people but just paying the interest costs through PCP is the only way people can access cars of that value. The good thing with a very high depreciation vehicle is that the end of lease value is guaranteed and so the risk lies with the leasing company, if you are only interested in the cash flow father than the true cost of ownership PCP works well but it is not a cheap option.
@robertasmedu
@robertasmedu 4 жыл бұрын
If you do the maths correctly, numbers come out as ~15% interest ;)
@rammohan4056
@rammohan4056 3 жыл бұрын
Knowledge sharing is caring Thinking of ones own needs /profit is normal. Thinking for others/society is maturity kudos.!!!👍👍👍👌👌👌
@batmanatvbl
@batmanatvbl 4 жыл бұрын
The consumer needs to wake up here ! I recently purchased a 20k van for cash , it took me two hours and far too many "no thank you"s to actually escape from the dealer ! They didn't want my money because guess what guys , there's more profit in talking me into spending someone else's money ! No finance company kick back (that little commission payment dealers get ) and certainly no sales bonus from the sales manager ! The absolute last thing the dealer wants is someone wandering in with money ! All they get then is the price in the window. It was truly painful watching this guy try his best to talk me out of paying the full price there and then. If you think PCP was invented to help you then you probably also think mortgages that were offered at seven times your annual income were also a neat idea a few years ago !
@TrainDriverRob
@TrainDriverRob 4 жыл бұрын
Spot on, they’re reliant on PCP and servicing to stay in business.
@markyheth
@markyheth 4 жыл бұрын
These 'cash buyers' need to learn to learn to buy on PCP, get the discounts then pay it of within 14 days. It does run the risk of annoying the dealer however.
@MrAvant123
@MrAvant123 4 жыл бұрын
Yes - cash isnt king any more with these guys...
@escormillos
@escormillos 7 жыл бұрын
Brilliant :-)
@BULLSHARKGAMING
@BULLSHARKGAMING 5 жыл бұрын
Hi can you make a video on best cars young drivers can get on a PCP deal, what to look for etc.
@johnny-S
@johnny-S 4 жыл бұрын
Hi, sorry its taken so long to reply. I can try and look into this - but I'm not an expert in these things. The key message I have to young drivers (or any drivers) is: 1) Don't buy a car on PCP that you can't afford to buy for cash. The only reason to use PCP , in my mind, is if the deal is better than taking the money out of the bank. 2) If going for a PCP - always aim for the lowest APR - ideally Zero %. Some dealers do actually offer that. 3) Cars lose you money (goodness knows how much I've lost over the years on them)... 4) ...and finance deals increase that loss even more. 5) Try not to be disillusioned by KZbinrs such as Schmee 150 and Supercars Of London - although I too love watching them, keep in mind they make a business (via KZbin) on their cars, and thus they can write off the loss. Most normal people cannot do this. 6) One last one - don't buy that car unless you can afford to buy two of them - for cash. That way you know you can afford it for sure. Thanks for watching.
@robplant5576
@robplant5576 6 жыл бұрын
the Balloon payment is nothing ..give the car back get another deal...easy
@markrhoden68
@markrhoden68 5 жыл бұрын
When many people buy these cars on pcp they never go in with the idea that in say in four years you'll pay the balloon payment and own the car. Nobody does that they simply trade in before the end of the contract and start a new contract with the knowledge that its reliable, under warranty and up to date.
@johnny-S
@johnny-S 5 жыл бұрын
The problem with that is that you can end up in negative equity - where the you have to pay them to take the car back! I know a number of people in that situation. Thanks for watching.
@JosephAbe1
@JosephAbe1 4 жыл бұрын
John Soden Is this just with certain places as I’ve heard some places don’t charge to hand back?
@stephenpeacock2627
@stephenpeacock2627 4 жыл бұрын
Mark Rhoden that’s simply not true, depends on the car. Paid off and kept my s3 and gave it ti the wife as she needed a newer car. Plus I’ll likely keep my rs3 saloon when my contract ends next year.
@gordonmccartney5648
@gordonmccartney5648 4 жыл бұрын
@@johnny-S if the car is worth less than the GFV then that's the lenders problem not the customer. You don't owe a penny when you hand back
@leeandrews1896
@leeandrews1896 4 жыл бұрын
You are missing a few point here one of them being that the dealers often add incentives to take out the PCP with them by way of a 'dealer contribution' also it's actually best to pay as small a deposit as possible on a PCP deal for 2 reasons 1. you are protected from a fall in car value and 2. if you go to full term in order to change the car to exactly the same model etc. you will have to make the same initial deposit, all things being equal, e.g. car price remains constant. Let me expand on point 1. With most PCP deals you do not need to keep making payments and you can once you have paid enough just hand the car back, I think it's about 50% of the loan needs to be paid back but this will be in the small print. How does this help? In an actual example I had a BMW where the GFV was around £6000 higher than the value of the car. I had a 4 year PCP deal. What this means is if I wanted to buy the car outright the settlement figure was £6000 more than the car was worth. Obviously BMW got the figures wrong when financing the car but that can happen due to a sudden market devaluation of your car if say a new model were released. SO I still had one year of payments to make and wanted to change cars. I now had 2 real options. Part exchange where I effectively lose £6000 in the trade or call BMW finance and tell them I no longer want the car and pay nothing more! Guess which option I selected? Now to point 2 if you make a large deposit at the start of a PCP the monthly payments go down. But now you are taking the risk that the car market value drops and when you get to term unless you have saved a deposit up of equal size to the one you just made you may not be able to afford the monthly payments on a new one in 3 / 4 years time. Ijust thought of one other thing worth mentioning, you suggested that you should not go over the allowed mileage. This is actually only a problem if you want to hand the car back you always have the option to buy outright and avoid these costs, then you can sell it, in fact I imagine the only real impact as long as you are trading in is that the trade in price will be lower due to the extra miles but that's just how it is. SO if you go over the miles allowed just buy the car, no need to pay the excess mileage fees, these only apply if you walk away and don't buy another car. A last option that can present itself is that as long as you can clear the PCP without any restrictions then you can take the PCP and accept the 'dealer contribution' then in a month or two refinance with a cheaper bank loan. The ford website use to allow side by comparison of PCP and their purchase option price which is where after 3/4 years you actually own the car and no 'balloon' payment is required ( GFV of the car is just a balloon payment really. If you compared the two deals in the purchase option you payed more per month but you owned the car, but interestingly you paid exactly the same amount for the PCP deal it's just that you needed to pay the baloon payment at the end, i.e. PCP payments + balloon = HP payments ( more or less too small a difference to be concerned ).
@johnny-S
@johnny-S 4 жыл бұрын
Hi, thanks for taking the time for your detailed feedback on this. I don't think its correct to say that you are "protected from a fall in value of the car" - as my wife had a BMW Mini on a PCP - and the car fell in value more than they predicted, which meant she had not got the amount in retained value that they had promised - (even though she did 4,000 miles less than the agreed mileage!). Thanks for watching, and thanks for you detailed reply.
@leeandrews1896
@leeandrews1896 4 жыл бұрын
@@johnny-S That's my point - you are protected because that is the only time it's better to actually give the keys back rather than buy the car or PX ( which is buying and selling in the same transaction really ). In this case the finance company takes the hit as the 16K GFV is greater than the current value of the car ( 10K in my case ). In my scenrio if I PX'd the car they would only give me 10K but I'd need to clear any existing finance which would include paying the 16K GFV to make the car mine. By handing it back I stopped paying the monthly payments and was debt free, but with no car obviously. I was told at the start of the contract that the car would probably be worth more than the GFV and that difference would pay a deposit on my next car. If the dealer can inflate the GFV of the car then the monthly payments go down and they will do this to get the sale as after all most of us using PCP are more interested in lower monthly payments and it's this amount the dealer concentrates on during the sale and will hope you ignore the actual cost of the car if you wanted to buy it at the end of the term, like you £60 a month example for a porche. You don't really pay less though if the GFV is inflated, just the monthly payments are lower but the balloon payment is bigger at the end of the term and you are at more risk of a shortfall rather than a winfall. Given the strategy of handing it back if that happens then it's probably a good thing if they over inflate the GFV of the car unless you were hoping to use the additional value as a deposit on your next car, but that's why I'd recommend putting in as small a deposit as you can.
@leeandrews1896
@leeandrews1896 4 жыл бұрын
@@johnny-S at 13:31 in your video you state it's the worst thing you can do but that's only if the car is worth the GFV or more. When you are in negative equity and the GFV is higher than the value of the car then hand the keys back as long as your intention is to buy a new car. I re did your calculations and the rates have changed a little but if we borrowed £19500 with a £5000 deposit and bought the car by paying the GFV of £13328.50 in a years time then we would have paid £20548.62 in total. Lets say that the market devalued the car to just 10K ( in your real example the trade in price was £15700 so a big drop would need to happen but it could ) if you sold the car for 10K, it's real market value no the GFV of 13K then the total cost would be £20548.62 - £10000 = £10548.62. If we no do the same figures with a £0 deposit - interestingly the rate actually dropped by 1% as I was borrowing more money. Now we have to pay a massive $646.75 a month but the GFV stayed the same. This evaluates to paying a total of £7761 so not much different to the £7220.12 in the previous example where you paid £5000 deposit. You could leave that 5K in the bank earning some minimal interest. At the end of the term though because the car is only worth 10K you walk away. In this case you just lost £7761 but in the other scenario you lost £10584.62. if the GMV is reasonable, as it was in your example then you would be £40 worse off having paid £7761 instead of £7220. So you took less risk and if the £645 per month payments put you off you could always put the £5000 deposit in a savings account and pay 461.74 from it each month and add £185.01 from your current account, i.e. the payments would feel exactly the same as long as you didn't dip into the £5000 deposit you held onto. £60 sounds like a bargain to hedge against losing much more, about £3000 in this example.
@neilgaydon5430
@neilgaydon5430 4 жыл бұрын
My two cents of advice from bitter experience. Only buy a car for cash (bank loan at a low APR or whatever legitimate means) rarely brand new (unless very rare where car will hold value or appreciate), 3-years old where it will have taken its biggest loss, typically 30%-50%, low miles, in a colour most people like for when you sell it and if it’s an exotic a renewable bumper to bumper manufacturer warranty. For example my wife’s 7-year old Audi Q5 3.0 diesel gear box went with only 35,000 miles on it, it would have cost £10,000 to replace it but was covered under extended warranty.
@ShaneQ17
@ShaneQ17 6 жыл бұрын
You do realise they are making you pay the depreciation of the car in your payments you don’t mention that
@TheHesK9
@TheHesK9 4 жыл бұрын
If you have the cash, pay it outright. If you don't, and you're prepared to lose a bit over a few years, use PCP
@2377shortie
@2377shortie 4 жыл бұрын
With Lexus the balloon payment is also the value of the car in three years
@tom4626
@tom4626 4 жыл бұрын
That's the idea with all PCP deals....... No dealer wants to over estimate and few will underestimate as it means the monthlies go up
@twistedl2009
@twistedl2009 4 жыл бұрын
Nicely explained!
@SouthDerbyshireDashCams
@SouthDerbyshireDashCams 4 жыл бұрын
What if you get zero percent interest?, great video by the way
@danfresca8033
@danfresca8033 2 жыл бұрын
What happens if you or somebody else crashes into the car and it’s then a cat write off but repairable.. so you’re left with a car worth way less? Is thrrr some sort of insurance or something for this?
@issiewizzie
@issiewizzie 4 жыл бұрын
I paid a large deposit for my Lexus under pcp remaining I guess I'll keeping it for a long long while. I checked how much the car is worth online I could easily sell privately for £10,000
@johnny-S
@johnny-S 4 жыл бұрын
It's best to keep it for as long as you can, that way the depreciation is spread over a longer time frame and has less impact when you do come to sell it. Thanks for watching.
@johnbradshaw5900
@johnbradshaw5900 4 жыл бұрын
Many years ago the joke was that General Electric (GE) was a consumer credit company with a subsidiary global power and engineering conglomerate as a sideline. I think you could make the same comment about car companies, it's all about the finance. PCP can make sense if you have little intention of owning the car outright and change cars every 3 or 4 years, if the interest rate is low and if you will keep the car for the term. However, remember you are paying interest on the full loan amount, at 5 - 6% APR that will be a lot of interest. Dealers offering PCP on pre-registered and used cars often charge 10-15%, meaning that it can end up costing more than new and hideously more expensive than a simple bank loan (3% APR at the moment). And it can be very expensive to get out of a PCP early unless you have paid 50% (this is not the same as being halfway through the term, it's more like 3/4. And don't let a salesman tell you all that matters is the monthly payment, if you take £40k credit then you have a £40k regardless of how cheap the monthly payment is. That can be very important if things go wrong. And these days few cars will have much (if any) equity at the end of the term. Check out the difference in cost to just buy outright. Often if you add a year to the term it doesn't cost much more to just get a bank loan to buy outright.
@johnny-S
@johnny-S 4 жыл бұрын
Very true. Too many people focus only on the monthly payments and forget that ultimately its the whole loan amount that matters! Thanks for watching.
@vistron888
@vistron888 4 жыл бұрын
PCP, loans or any kind of finance deal - it's all about showing the end user a small monthly payment. Most times they don't want to know the total cost even it was given to them. Such people just live for now and if someone is offering them something they believe they're being responsible in taking it. When they're struggling in debt it's then everyone else's fault.
@pauldoyle4602
@pauldoyle4602 4 жыл бұрын
Always remember PCP finance and the value of that new car goes on your credit file as it’s in your name. Lots of people, especially those trying for their first time mortgage are getting caught out being in PCP finance, as mortgage lenders don’t like an individual having a depreciating risk when assessing them for a mortgage. The answer for a new car is to lease every 2-3 years, it will work out cheaper monthly in most cases and as the car isn’t in your name, the value of the asset can’t be on your credit file ! It just shows as a monthly outgoing bill. I’ve advised dozens of 20-35 year olds on this over the years, who have struggled with getting a mortgage. As soon as they have ditched the PCP and leased. They then go on to get a mortgage a lot easier
@morrisnickrdg
@morrisnickrdg 5 жыл бұрын
The point of PCP is you pay for the depreciation of the car + interest. So the thing to really focus on is cars with lower depreciation... the point is, of course, it's always cheaper to buy the car for cash. However, if you really want a brand new car and want one you can't really afford, then you may be able to get a more expensive car which depreciates less vs a slightly cheaper one that depreciates more, so effectively a better car for lower total outlay. Also, the video assumes you pay sticker price. If you look at something like CarWow (there are others now), you can get much larger discounts as well as potentially large 'deposit contributions' (basically just another discount) when you take out PCP. You'll still be poorer for the interest, but again you may be able to drive a nicer car for the same total outlay. Just to illustrate those facts... I specced-out a new 7 series on CarWow. RRP £88k Best deal was £71k cash, or £61k for the PCP... that £10k dif. won't cover all my interest over the period, but it may help some. Real question is.. what will the car depreciate by in that time...???!!!
@samsara3694
@samsara3694 4 жыл бұрын
The cash buyer simply takes the PCP, cancels after the first day, keeps the PCP sweetener.
@robjackson1319
@robjackson1319 5 жыл бұрын
But how much was your car you traded in?
@callumprescott898
@callumprescott898 4 жыл бұрын
Look for a low priced car with a good future value so you pay little depreciation. Then make sure the APR is under 5%. If you can find the right deal then it’s a good idea, they are rare but they exist.
@35geordielad
@35geordielad 4 жыл бұрын
What was your trade-in to pay only 60 quid a month? You must have paid a sizeable deposit for a credit length of only 12 months and 60 quid pm.. Anyway most PCPs are over 3 or 4 years. It's a very good way to buy a new or used car and either hand it back at the end of the term contract or use the balloon / guaranteed final value as a trade-in for an alternative car, obvs minus the charge if you have over run the mileage. Anyway Who buys a car over 12 months ???
@johnny-S
@johnny-S 4 жыл бұрын
The trade in was a Lotus Exige that I owned outright, which covered over 50% of the prince of the Cayman. Thanks for watching.
@officerponcherrello1182
@officerponcherrello1182 4 жыл бұрын
Obviously though - PCP works for many people. Works for us as a family as we keep a lot of our own cash in the bank as a safety net. Yes we have to pay a bit over the top for the car and over a number of years but when all is said and done, we don’t want to own them at the end, we go trade in and get another
@beastieboy3926
@beastieboy3926 4 жыл бұрын
Good video, but I could have told you p c p is more expensive in the time it takes to say it.If you give it back ,you have in effect just rented it.
@johnny-S
@johnny-S 4 жыл бұрын
fair point. But not everyone realizes it, and many think they're getting a bargain. Thanks for watching.
@ukgroucho
@ukgroucho 4 жыл бұрын
I don't really see what the point is here - what the gripe is. With PCP you are borrowing money to fund a car. When you borrow money there is an interest rate and it's down to you to ensure that you are happy with that. The 'evil' balloon payment is nothing more than paying off the balance of the loan at the end of the agreed term. Bottom line if you borrow money (however it is described - loan, PCP, finance whatever) you will pay more than if you buy for cash. BUT you also de-risk it a bit. If the car turns out to be a money black hole that you could never sell at a reasonable price then you can just walk away (albeit with a financial hit) - if you own it then you have to deal with it.
@johnny-S
@johnny-S 4 жыл бұрын
The 'gripe' in my view is that people need to realize what they are getting themselves into when a dealer tells them they can "just sign here it's so simple". I know too many young people who are in serious debt due to PCP roll-overs. Thanks for watching.
@teacup8362
@teacup8362 4 жыл бұрын
Never ever buy a brand new car ! ! Unfortunately so many people try to impress people who they don't even know.
@poruatokin
@poruatokin 4 жыл бұрын
True, always remember the old adage... Spending money that you don't have, On stuff that you don't need, To impress people that you don't know. Mug's game
@david1731048
@david1731048 4 жыл бұрын
@@poruatokin flash car on't drive, fuck all in't fridge!
@thundercata2961
@thundercata2961 4 жыл бұрын
This is a great con job and will eventually be regulated against. There is a place for PCP but most people should avoid unless for instance you have the cash but it is tied up in investments and they will make you more than the interest they are charging you. This is the kind of thing the great crash of 2008 was caused by. Giving large loans to sub-prime borrowers, but at least then it was property whereby oftentimes it was an appreciating asset. 99% of cars are depreciating assets so it's only a matter of time before this kind of thing blows up.
@Vass881234
@Vass881234 4 жыл бұрын
My balloon £10k, but been offered £13k for trade in
@johnny-S
@johnny-S 4 жыл бұрын
Sounds like you got a good deal. But the real calculation is how much you put in as a deposit + how many monthly payments you have made and of what amount each month. Once you have that number - then you know how much you have paid for it, whether the trade-in is good or not. Thanks for watching.
@martincox7354
@martincox7354 4 жыл бұрын
I’ve read some of the comments and think that their tone is inappropriate. I have no reason to believe that Johnny S is being disingenuous. I do think that more clarity is required to fully understand the financial argument. The cost of PCP with a balloon option relies on these factors: - balance of purchase price less and p/x. For instance, the new car is £40,000 but my existing car is sold to the dealer for £15,000. Of course, the price paid for the new car may well be lower if I didn’t p/x but that is the same for PCP or outright purchase or whatever. - the size of the optional balloon payment. The finance house might say that the new car will be worth £10,000 in 3 years time. The value of second hand cars fluctuates very regularly and so I am sure that most finance houses would put in a margin to protect them against severe falls in value - the rate of interest on the amount being borrowed. Clearly the BoE rate is known but the finance house rate will be much higher than that - so, if my rudimentary maths are correct and use those examples above, I am borrowing £15,000 for 3 years but the finance house gets £10,000 back at the end of the term. I appreciate the effect of compound interest and depreciation of money but, for the sake of simplicity, am I not correct in saying that the net effect is that I am borrowing £5,000? Again, I stress that is too simplistic calculation and I’m sure the finance houses use complicated formula to work out the cost of borrowing £15,000 and then getting a potential £10,000 back. In the case of Johnny S, we don’t know the net sum borrowed. It could be that the new car less p/x left a net loan of £2,000; or £20,000; or £50,000. We don’t know the size of the balloon payment agreed; there is a huge difference in a final payment of £5,000 or £20,000. We don’t know the interest rate although this is likely to be a prevailing commercial rate. Therefore, for us to understand the value of the argument being put forward (a Porsche Cayman for £60 per month), we certainly need to know the answers to the first two points. I’m sure the man will provide those in order to allow us to understand his view
@SiProdz
@SiProdz 5 жыл бұрын
Is this applicable for 0 apr? Would it still be a loss?
@johnny-S
@johnny-S 5 жыл бұрын
Hi, the crux of a PCP, or any loan for that matter, is the %APR that you are being charged on the loan. The higher the APR the more you pay over the amount you borrow especially over long terms. But if the APR is zero then this is not a problem because you are effectively borrowing the money for free, while your savings continue to work for you. Hope this helps. Thanks for watching.
@MrDucatiPenigaleV4s
@MrDucatiPenigaleV4s 4 жыл бұрын
Isn't pcp called angel dust?
@johnny-S
@johnny-S 4 жыл бұрын
No....Personal Contract Purchase - in this case! Thanks for watching.
@vwukben
@vwukben 4 жыл бұрын
Car dealers have over inflated prices because the majority of people now purchase via pcp. Cars are not worth the price they are advertised as they know 99% of the time no one will ever pay the balloon payment and own the car, keeping the customer on the monthly payment loop for years.
@dontpanicblink
@dontpanicblink 4 жыл бұрын
i had my car 2014 corsa limited edition( bought feb 2019 ) cost £5995 i put in £250 deposit( old civic ) £111.00 mth , on pcp i had it for 18 months it got shunted in the rear no gap insurance ( another con ) , it was a right off did not look it my gf was worried about the final payment after 4 tears that was going to be £1710. luckily for me the insurance valued the car more than what was the early settlement fee was, so that got sorted and got a few extra hundred £ in my pocket, i payed just over £2000 in the 18 months i had the car including the deposit, so payed that money for the pleasure have having a newish car for less than 2 years, never get pcp again, thats why so many young people are driving £20k cars they are on pcp, so i was out of pocket and iam still looking to get another car 7 weeks down the line, not sure to get a car for £2500 or get a bank loan , its a piss about
@meladath5181
@meladath5181 4 жыл бұрын
Thats what you get for paying monthly for something you dont own. Fuck the banks. Fuck the dealers. Buy a used car.
@byrnedes
@byrnedes 4 жыл бұрын
Interesting vid 👍
@juniorbennett8219
@juniorbennett8219 4 жыл бұрын
I just don’t get it why on earth anybody would buy a car on pcp of course sat in a dealership your hooked !
@hedydd2
@hedydd2 4 жыл бұрын
£599 interest cost is very competitive for a £19500 loan of this sort. What's the problem? Yes of course there's a balloon payment but that is optional depending on whether you wish to keep the car or not. It may well be 16% more than the cash price but you didn't pay in cash and if you had the cash you might have other uses for it or if you didn't you might have to borrow a very high proportion at a higher interest rates with capital repayment included in the monthly payment. Yes, paying cash is cheaper if you save up the cash rather than borrow it. Also it is way cheaper to buy and run a car for ten years or longer before changing it. Buy a three year old car and run it for another ten and you will be quids in. Handing it back only costs the depreciation over the years plus interest, so if buying new it should cost no more than buying it and reselling. Buying cars is expensive.
@gm2543
@gm2543 4 жыл бұрын
Thing you not said witch happens all the time if you curb bang dint any marks anywere they take off lots its a con and try for your self curb a wheel and scrach and small.dint watch your buy back drop badly.
@johnny-S
@johnny-S 4 жыл бұрын
Very true - they actually tried to rip me off for the cost of replacing the tyres - until I pointed out that the tyres where well within their wear limits! Thanks for watching.
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