PCP Car Finance is DESTROYING your wealth

[@DodgeViperAS]

I think it’s pretty simple. If you haven’t got much in savings, don’t get a juicy PCP because then you won’t be able to save much and you’ll be in a perpetual cycle as described in the video. If you do have decent savings then go for it. Cars are meant to be enjoyed and at the end of the day they are a depreciating asset so whether you get PCP, HP or a loan, you’re losing money. Life is too short to worry about how much money you’re gonna lose on a PCP. If you can manage your savings such that you either already own a house or are able to as well as saving extra above the PCP monthly payment then who cares.

[@Kewickviper]

Getting a PCP or HP is usually a significantly worse deal than with a bank loan. There isn't really any reason to choose a pcp or hp over a bank loan unless for some reason you manage to find a great deal (I haven't found one yet).

[@donjohn2239]

Even with a loan you are loosing money. I think the op got his viper on a pcp😂. You will suffer after a decade.

[@Mugtree]

I bought my Mini Cooper S in 2003. I saved up for it and bought it for cash. 18 years on it is still running like a dream it has 250k miles and i go to Norway and France every year. And now I’ve been told it may become a modern classic so who knows it may end up being worth what i paid for it 🤞

[@djyems1021]

@FBI LMFAOOOO TRUEE WHAT A DREAMER

[@joshuacerendu2522]

250k miles on the clock mate, you’ll need to make sure it’s mechanically sound to get anything from it

[@ST.DEWYIV]

You’ll have to have an original mini, like a 1978 1275 GT like I’ve got for it to be a proper classic 😉

[@MrGts92]

Bought a NSX on finance, and it hasn't let me down yet, it's cost little.to nothing on a super car and now worth more than I financed for it....

[@JAKENMK]

@@MrGts92 lmao and then you woke up 🤣

[@user-xl7yf7pc7k]

It all depends on the PCP rate versus the Bank finance rate and type of car. PCP definitely works in some circumstances. Did for me anyway. Also if you’re in a position to buy the car outright at the end of PCP term and sell privately, that also really helps, garage will never give market price

[@jasonwilloughby5028]

The cars have been overpriced so that you havt to take a p.c.p by design, as financing the whole amount would be unaffordable.

[@jpshawn9144]

Great video.The golden rules is “If you can’t afford it..don’t get it”.

[@happyhero1093]

House/mortgage?

[@TheRoad2Scratch]

So many people do not understand this. I did exactly what you said, got a loan instead of going into other finance routes as I feel you get stuck in a cycle of constantly having to finance. I also suggested the same to my wife so hopefully in 3/4 years time we'll be in a better financial position for the future. More people need to watch this!

[@fullyplantd]

nice one!

[@anthonyhull1274]

I’ve got a Range Rover velar on pcp. £58k brand new . I put £425 down and £425 a month for 48 months . 3.9% apr . The final GFV payment is £33k ... the car is 30 months old and the value is £35k . It’s just not viable to buy these cars outright . It’s lost nearly half’s its value after 2 years

[@robertoonesti5216]

Those figures don’t stack up, either you put in a bigger deposit or the monthlies are bigger?

[@anthonyhull1274]

That’s the deal , without getting the paperwork out , think there was a dealer deposit contribution of a few grand . Got the car from stratstone . Look at swapping it the other week but got a deficit of £6k

[@MobilediscowirralCoUk]

Did you have any issues with it? As it be the second owner that gets the real bill 🤣, was it the 2.0d engine is it jag engine, guessing you get rid at 30months did the tyres last till you owned it

[@anthonyhull1274]

@@MobilediscowirralCoUk just one issue was a dodgy emissions sensor . Landrover assist sorted it as under warranty , lovely car however you are right and I will be binning it off coming up to 3 years old. . Must be crazy to own one out of warranty . Tyres still full of tread and good mpg . It’s the 2 litre 180 break Diesel engine.

[@MobilediscowirralCoUk]

@@anthonyhull1274 its very nice looking car! Or even better then PCP find a job that pays towards a lease car or a pcp 😂👌🏻 EV be so strange soon and the charging be odd time we live through this to come ha! Sensor thats all really not bad what miles is it on? I notice its that owner after 60,000 miles gets headaches if that make sense. BMW are worse for throwing pcp out everywhere mercedes next!

[@jonscoupe]

Very good advice. Never used PCP myself. Always managed to buy decent used cars with cash topped up with a bank loan now and again, but I'm sure there are times when people need PCP to get transport. Cheers, Jon.

[@leemason666]

Nice video. I have a PCP finance agreement with Peugeot over 4 years and have a year left on it. If I wish to keep my car I have to pay a balloon of 10K. I’ve had enough of paying out every month now for vehicles as this is the second vehicle that I’ve done this with and feels like it is never ending.

[@JKLFC966]

Thanks for posting this, the video is as relevant today as the day you posted it. I have always been one to only purchase what I can afford. I have an allergy to monthly payments, primarily since I grew up with the mentality of "dont buy what you cant afford". At the moment I am driving around in a very cheap car that I bought in cash. I have never done PCP or HP and will explore more avenues to attain a slightly better car without parting with cash.

[@monsieurbakare2498]

Arguably the smartest video I’ve seen on KZbin. You explained this so well and made it so easy. Thank you.

[@5amzzaa]

Excellent video with and excellent explanation, I was planning to get hire purchase in the first place but a day before I started to tilt toward pcp, you saved me man!! Subscribed !!

[@fullyplantd]

I'm the same, I look at the PCP numbers and think they seem cheap, until you do the HP numbers and realise for not much more per month you can own the car at the end of the term.

[@billtuckwell1399]

Great explanation. I was at my servicing dealer and while having a coffee, waiting for my car, their rep wanted to sell a new car to me. His opener was we can do it on PCP and save you money. I have always been a cash buyer, and always look for the best deal with a high trade in plus a good discount. After 3 minutes listening to this clown, I told him to stop wasting his time with PCP, and, I would be finding a dealer who did business the way I wanted. I recognised very early on they were at it. Avoid PCP at all costs and hold the dealers to ransom. When you walk in a showroom for a car, you hold ALL the cards. If you do not like what they are offering, move on the the next car on your list. I always have a list of 6 cars if possible. Amazing how many dealers then phone you back with a dramatically increased offer to buy from them the next morning. Always remember you are doing them the favour buying from them, and you owe them nothing.

[@billtuckwell1399]

Forgot to add. If you do need finance to cover any shortfall, speak to your local bank and ask about their cheapest interest rates. Check their website. It varies how much you borrow, but sometimes if you borrow an extra thousand the interest rate is cheaper.

[@ProfessorPesca]

Exactly right - if PCP worked for the customer they wouldn’t be so keen to force it on everyone.

[@jameshennessey443]

I’ve leased my last few cars cause I like having new cars. I just got a brand new a3 over 3 years it’s going to cost me £12,000 in to total. Audi for a 3 year pcp in total for the same car quoted £23,000

[@slincoln2k7]

I just currently went through this with a st200, in my last year they kept calling me to upgrade and to give the car back. I luckily had a change of circumstances and was able to get the money to pay it off and keep the car. I will not ever ever do pcp again.

[@rsfan9296]

Great video, you have a similar approach to me. I bought a very similar Spec m4 comp last year from BMW. Owned it for 9 months did 5k miles then sold it to a dealer for a profit. I always just make sure I buy the right car at the right price and never take finance. Big deposits and low interest bank loans are the way to go!

[@jask00]

Interesting. I see a lot of car KZbinrs do that but the cars always seem out of my league. What are you driving now or looking to get next using this same purchasing strategy out of interest?

[@rsfan9296]

@@jask00 I bought a Honda Civic Type R at the minute as I wasn’t sure what I wanted next. Car prices are still inflated due to the shortage of second hand cars on the market during COVID. Possibly a MK3 Focus RS if I can find the right deal or a previous gen AUDI TTRS.

[@LewF20]

Couldn’t agree more, over the past few years I started out doing bank loans and have steadily built up more and more equity, and now I have just been able to afford a dream BMW M135i which is nearly new! Never though it would be affordable, but because I have never done PCP I’m not in the position of constantly loosing money 😃

[@zentzu4003]

you purchased a nearly new car… literally the dumbest thing 😅

[@rufdymond]

I’m 58 and never had a car loan, PCP or any other nonsense, I’ve always paid cash for every car I’ve owned. I honestly know quite a few people my age who drive nice cars and don’t even have 10 grand savings in the bank.....never made any sense to me. Car finance is a major reason why some people are forever broke.

[@mac3490]

Spot on comment, bravo 👏

[@MrAvant123]

Totally mirror this !

[@stubeedoo8259]

Totally agree. I'm slightly older than 58, 63 actually. Never bought a car on any kind of finance, cash every time. My brother had an '08 Focus ST3 he bought new for cash. While it was in for an MOT he got a call saying "It needs work, do you want to trade it in? We can do you a good deal and even get you some cashback." He fell for it and ended-up with a car on PCP and now he's trapped. A guy down the road from him bought the '08 car, there was nothing major wrong with it and even now it still looks and drives spot-on.

[@matthewk9131]

It depends how well you can manage your finances. Unfortunately you have those that fall into that PCP trap. At least with HP you know you're guaranteed to own it at the end.

[@CJMVector321190]

Well with Covid I have not worked since March 2020. But have savings no car finance. Relaxed and plot my return with my business, stressful but managing. My friend similar business setup, pcp cars for wife him and son £ 1200 pcm on cars alone. Lost everything as the cars sunk the house. This is why the government gave out free money because there are millions of people renting themselves poor. The are penniless really. Now if you spend hours driving to work then yes you can justify a nice car.

[@jamsxr]

Don’t go PCP if you’re buying used. You don’t get the manufacturers discount and the interests rates are much higher. Personally I always buy 2-3 years old with a mix of cash and bank loan. People need to work this stuff out though, I wasted a ton of cash in my younger years 😬

[@fullyplantd]

Yep, sometimes they never do work it out...

[@jamsxr]

Fully Planted that’s good though, more stock for us 😉

[@darrenmetcalfe1]

PCP isn't always more expensive in terms of APR's charged. Major changes have happened on the industry since 28th Jan.

[@AlexBell1991]

That's my plan on buying the next one, got 4k saved up and going to look into purchasing a next when I saved up to 8k to 10k

[@jamsxr]

@@darrenmetcalfe1 pretty sure with APR you’re always going to pay significantly more when financing a used car. I’ll happily be proven otherwise.

[@user-gz6tx6yp3v]

The key is to get a good price on the car and buy something that holds value pretty well. If you can get hold of an audi s4 b9 that is one of the best cars holding value especially in the UK pre diesel version.

[@no-oneman.4140]

I like to change my cars often, it's an expensive hobby. I cannot get my head around depreciation, as in who says what a car is worth , yes a car is only worth what someone is prepared to pay but the whole trade relies on what the 'book' says. It's like a cartel and mugs like me keep falling for it. My better half drives a Suzuki Swift that has never missed a beat and has had it for years, I need my head read.

[@dataenthusiast6721]

5:20 What if you just want to give the car back and not interested in any further deal with the dealer ? I'm looking forward to get my first car, and approved used one seems alright. Just doing research here and there

[@equinox95]

You loose all the money.

[@xadasol8692]

Most dealerships/salesman are disliking this video as this video is gonna get them jobless sooner or later! Absolutely useful..

[@shanecorbett5788]

I am currently on pcp and won't ever do it again. I knew all the bad points but did it because I had to borrow a much greater value to the car because of a change in circumstances that resulted in me having to swap cars multiple times quite quickly screwing me over with deficits. The pros with my pcp is at the end I hand the car back...thanks to covid I have driven 6k in 1 year and a half and have a 25k per year limit. So should also hopefully have a little deposit to start again deficit free on a normal HP. Then I will never do it again. The anxiety of the limit to miles would be too much for me.

[@larrycluness5438]

I've always paid cash for my cars, always bought between 1 and 2 years old, and had a good few Fiestas. Time came to get a replacement and we looked around. Our local Ford dealer offered 0% finance on a 3 year PCP, plus a free service at 2 years. So we decided to give it a try. We traded in our old Fiesta and put a good whack of it as a deposit and put a few thousand in our pocket. Now after 2 years we're looking to try something new. Unfortunately there's no 0% finance deals anymore. So we're going to have to handover extra money every month. Plus obviously the car has depreciated and therefore the deposit, or equity, we invested has also depreciated. We have to top up that equity, as you would do if you pay cash for a new car. Also if you want to come ahead and get a bigger, flashier or nicer car then you will have to put in even more cash to pay that bigger difference. Finance, any kind of finance, is fine if it's 0% or as near to that as possible. However if the object you're buying depreciates, and some times at an alarming rate, then it doubles the pain! The only good thing with a PCP deal is in theory I think you're only paying off the amount of depreciation the car generates in the time you have it. You don't own it and with these high tech cars nowadays you never want to own it and certainly not when the warranty runs out. Personally I'm going to look at leasing our next car, then hand it back at the end of the agreed period, I never want to own it! Or I could just use the 12 year old Ford Fusion I've just bought for £995 cash and run it until it can't pass another mot then get another!

[@charliepinnell440]

If you have 1000s in the bank and can afford to take a hit for maintenance bills now and again, then buy a car outright. However if you don’t have 1000s, then PCP makes a lot of sense if you have a reliable income and can happily budget monthly payments and also if you don’t plan on buying the car at the end of the 3/4 year deal. You get to drive a nice new car. Most come will come with warranty. And you have to do is drive it and put in fuel it. Hassle free motoring almost.

[@tyler.greene]

German brands for you. Mazda, where I have been working for 2 years, people move up all the time. We always have equity in our cars. If PCP is sold (advised) correctly and the companies don't lie about their GFV's then it's good! :)

[@CRD90]

Absolutely smashed it bro, I get asked this question all the time but you've explained it super clear and demonstrated the hidden cost that people miss

[@johnboyle8661]

A great principle in life to follow is if you can't buy anything cash don't buy it. You may think its great having a lovely car on the drive but the ongoing costs etc and how much you lose out takes away the pleasure. This recent pandemic has taught us better to save for a rainy day

[@MrGayle_]

Good luck buying a house with that logic

[@nathanbutler5605]

You're own logic says save for a rainy day but then also spend all your money on a depreciating asset. If you get a 0% loan then you may as well use it and put your cash somewhere that generates income.

[@vinlondon8904]

How about riding bicycles and avoid depreciation:)

[@SoFrolushes]

When it comes to cars depends. I used to spend £200 a month on transport buses and taxis. When I got my first car I paid out roughly the same with insurance. I owned my car at the end too. Needs must

[@ssbN77]

I was thinking of getting a new car on finance, but then i bought a car cash within budget and took a mortgage on a 2nd property instead of paying monthly for car.

[@jason147h6]

Some pcp deals have 0% apr. Can take advantage of that period then take out a loan for the guaranteed future value amount🤷‍♂️

[@xadasol8692]

True, but the 0% PCPs aren't for high end cars like M4

[@danhall5761]

0% apr isn’t ever free. More often than not it’s a worse deal than what you could get. The price is built in, it’s never ‘free’

[@stefanliversidge6091]

@@xadasol8692 so why have I been on 0% Apr for my m3 for the past 3 years? Oh and I got £10.5k off list :)

[@magburner]

@@stefanliversidge6091 Nothing is free when it comes to money. If you think that free money exists, then you have been fooled by whomever you dealt with.

[@stefanliversidge6091]

@@magburner nope, I took out an agreement on a brand new m3. I had the car for 3 years which cost me net £340/m. Whilst that is not free, I’m more than happy to spend that money,

[@925vincent]

This is good advice, But I have to say it only works for people who don't make long-term financial plans and determine their monthly spending ONLY based on how much disposable income they have in that particular month. Using the example given in the video, if you go with HP or get a loan from the bank, the monthly payment would be over £650. If you go with PCP, the monthly payment would be reduced to £480. Hence the owner of the video has made the following point: Although PCP is a few hundred pounds cheaper every month, you don't get to invest in the equity of the car so at the end of the contract, you wouldn't have any capital to go towards the deposit for the next car. This is a valid point, but it is based on the assumption that the people would use all the money they saved on PCP on CONSUMPTION alone, which to be fair is what most people do. However, if you use the saved money on INVESTMENT - buying any thing that could potentially appreciate in value, it would be a complete different story. So it's not the PCP which destroys people's wealth - it's just a financial instrument like any other - It is some people's spending habit that put themselves in a difficult situation.

[@ak33mc]

Don’t put big deposits on PCPs the whole point is keeping your cash liquid, so you can use your money to make money - if you’re barely making ends meet, that’s your own problem Nobody in their right might is gonna part with a quarter mil in savings, when they can get a Bentley for £2000 a month. That’s smart business

[@user-gz6tx6yp3v]

This.

[@ozzyo99]

Doesn't have to be a Bentley as an example to be relevant either. The same is true of a £30k car... Any mass capital thrown as a depreciating asset is doing exactly that, depreciating. Much better than buying outright and spending that capital on property or smart investments. I always lease, suits me.

[@lara400notout]

I am in this mess - got 9 months to go on 2 pcp cars and I want out - which means I have to find nearly 15k in 9 months to own the cars outright on top of the existing monthly payments. Luckily I have a well paid job so probably will get near the 15k however for me going forward it's either save up and buy or HP.

[@teaforthree1]

Why do you want out?

[@norfolknchance657]

Same for cash transfer from a credit card over 18 moths/two years - small upfront charge and more to pay but it's interest-free and the car is yours.

[@edsullivan5836]

With any financial agreement, you can do a 'voluntary termination'. This can be activated once you've paid 50% of the total amount borrowed off. This cannot be done with a lease however. For a lease, you are liable for the entire amount. A voluntary termination doesn't effect your credit score. Some people may be in a situation now because of the pandemic where this information may help.

[@TheSgtsMess]

PCP has worked for me, just sold a car with £5500 more than the balloon payment

[@henryv3943]

Really an enlightening reality check. You are 100% correct. However having said that I've just ordered a new Toyota Rav4 hybrid. Fortunately I'm in a position to pay cash but Toyota at the moment are offering 24months interest free loan. My PCP is £107 a month then I pay the balance and don't incur a penny of interest. Fortunately I got nearly £3000 off dealer price so I'm pleased. I've heard horror stories of PCP's and people returning cars etc. You summed it up brilliantly.

[@lukasgadzijevas7163]

The pcp balloon payment is included in the total vehicle cost. You can take a pcp car for 25k euro and pay 29k euro with around 9% APR and 9% static charge. And the same done with a bank loan comes out at 30k euro. Like i appreciate u trying to inform people, but that's bogus info by someone who doesn't understand how finance works. If anything bank loans are worse, because their interest rates are much higher than that of a pcp lender. The only upside to a bank loan bought car is that it's yours right off the bat and you can do what ever you want with it.

[@Ansmo87]

Some good points raised for sure, but realistically the unsecured loan option works best for loans up to £25k for the most part. Picking on new BMW M cars or Merc AMGs as examples of expensive new cars that typically bomb in value... how many people are going to easily get unsecured loans of £55k-£80k to pay for them up front? Not many would be my guess but BMW Finance or Mercedes Finance will sort them out no problem!

[@JayAOnline]

So in that instance surely HP would be the best alternative option.

[@and1111000]

Very good advice. Also, don't risk falling into a debt trap.

[@garys7828]

I tend to spend 2500 cash on a car and if I get two to three years out of it, with maintenance of course, I’m happy😎

[@cosminmoflic8319]

I'm in the same boat here, I'm looking at 2.5k total cost in 2 years and 12k miles. And probably I'll be bellow 3.5 at the 3 years mark as a lot of preventive work has already been done.

[@barnie8282]

I do 4k then sell after a few years and just top up to 4k ish. My C30 still runs well and holding value so may keep for another 2 years 😁.

[@gordonhamilton727]

When I was a kid if you drove a Mercedes, you'd arrived, you were successful.....now you dont need any of that, just a propensity to put yourself in debt do you can impress the neighbours. Truth is no-one gives a toss because everyones got one.

[@olir.8817]

Very useful video. I PCP my city car daily driver as it costs peanuts and spend real money on classic cars as they do that rarest of things, they appreciate!

[@carlandrews7348]

Done exactly this over the last 15 years. Typically 5 year loan at 2.8 to 3%. Change after 3-4 years. Sell old car privately. Now have over £20k equity in my current car and gone from 320d through 335D to an x3 M40i currently.... yes I like my BMWs. 😃 I still struggle at the amount of people that actually take out these PCPs ...... look at the total cost!

[@joshfairweather08]

Hi Carl, can you describe for me please how you “build equity” in a car? I’m currently wondering whether to HP a 16/17 plate car or PCP a 20/21 plate car. Thanks, hope you see this.

[@joshfairweather08]

Any help would be much appreciated please mate :-)

[@carlandrews7348]

@@joshfairweather08 hiya. When I have bought cars I have bought particular 2nd hand certain spec cars. Leather colour, sound system head up display etc. 1 year to 18months old. These have all helped significantly when I have come to sell privately when upgrading. i have had personal loans normally from Sainsbury’s bank at 2.8 to 3% apr. And take them over 5 years. Typically with pcp you will have nothing in the car at the end of the pcp. My last 335d m sport 65 plate I bought 1 year old then sold earlier this year after balance of personal loan had £14k towards next car. Several cars ago seat Leon I sold and had £4K in in. Yes it takes time and this is realistically over the last 10-12 years. All adds up in the end. I always look at total cost of pcp which I think is ridiculous. Lots of people do pcp but just not for me

[@Kewickviper]

As someone that works in finance and deals with present value of financial instruments all day its mind boggling to me that people accept these pcp or hp finance deals on cars. It's such an obviously bad deal from a financal perspective that you're always better just getting a bank loan and financing the car that way if you can't afford it right now.

[@Tamcameron]

I have watched a few videos on this, and I have to say. You make it seem very clear... nice video well done .. I'm subscribing

[@fullyplantd]

Thanks man, more videos to come soon

[@joshattwood8711]

Can’t u just get a bank loan at the end of the agreement for example the final balloon payment is 10k but the cars value is 12k and then just sell it on, pay the loan back and have 2k for yourself?

[@mattcowler4184]

Yes second time round you pay more a month, but you are also not putting 7K extra out your own money down to start with. PCPs are great when you put down as small of a deposit as possible and you don't want to keep the car after.

[@Stringwar]

Absolutely correct. Looking for the right deal is the key.

[@mowuvz3672]

Most people can't afford to pay the final balloon payment to own the car. In fact because they don't have enough meningeal in the first place, prompted them to go via PCP route. So if you don't purchase the car at the end, you just said for hiring the car ask these years. Dealers want you to hire cars forever because you will pay them forever. If you own the car, you can keep it for very long time after you paid it for entirely. This means no further income for dealers. Buy a car that you can afford.

[@clewis5220]

Yes and For PCP I hadn’t realised if you go over the mileage (for the term you signed up for ) then they reduce the GMFV which could be thousands even if your excess mileage charge was only a couple of Hundred pounds. Got you both ways!

[@adriangreaves4610]

This is wrong. It's not keeping you from jumping up a level. It's encouraging you to buy at a level you can't afford.

[@petermatthews2831]

Yeah true but he's saying that in the alternative method you can build equity in a vehicle properly and then jump up providing you can still make the payments

[@Whizzy-jx3qe]

I am of the impression that car dealers are pushing customers away from HP and into PCP. I’ve noticed that HP figures are inflated compared to PCP. I might be wrong.

[@Extreme_Gardening145]

Cars are not a good financial asset anyway, friend. They depreciate.

[@andrestrindade]

Here in Ireland some dealers, like Suzuki have a 0% PCP. It could be a good strategy to finance a car paying veryyyyy low interest, in the end of the contract you can buy the car with a regular loan...

[@miscusername]

When I got my Civic Type R they tried to talk me out of putting a larger deposit down. I'll be buying out of the finance loop at the end of it. This video just confirmed what I suspected. Crafty folk!

[@dellsouth5678]

thank you so much i was about to pull the trigger on 17k pcp deal you saved me a fortune in the long run i got a bank loan off my phone app at hugely cheaper rate and for only just over a 100 pm more

[@A_S996]

Why do you keep saying “where are you going to find the money to pay the balloon payment at the end of the PCP deal” can’t you just get a car loan to pay the rest of it off?

[@aaroncull6122]

When the PCP agreement comes to an end and you are left with the GFV, could you not try getting a loan for that amount. I know it may not work for many people, if any. But if someone's credit is not the best, I think they could be more likely to be accepted for a much smaller sum compared to its entire value at the start. I know you would definitely still lose out on a hell of a lot of money.

[@simodthebod4256]

By far the best video on this subject I’ve seen. Great video bud 👍🏽

[@fullyplantd]

Thanks man!

[@JHSJMJ]

Thanks for this video, stumbled across your video. I got hooked on this content and hit both the subscribe and thumbs up button. 👍🏾

[@andrewstones2921]

You forgot the obvious great choice, get your existing 10k car valeted and keep it for another 3 years! Seriously, that great feeling you will get from picking up an new car will wear off quickly and be replaced by depression the first time you get a ding in a car park or a scratch. You know your existing car is fine right ?

[@Adrian-bt4nf]

I’ve just pcp a new vw golf , shouldn’t depreciate in 3 years 👍

[@equinox95]

I'm being forced to take that option soon for a BMW 1 series M Sport.

[@bodrulm1]

Whichever you cut it - buying, PCP or whatever else - cars are shitty investments. £483 per month? Imagine how much you can make in the stock market with all that cash. Buy a good 3-5 year old car in cash and keep it 10+ years. Put your money in assets (stocks, property, bitcoin etc). Live BELOW your means for a happy life, and always pay yourself first before expenses.

[@matthewk9131]

Stocks and Property maybe. Bitcoin is risky. The way the market crashed last week. Loads of people lost their money so that one you need to know what you're doing.

[@bodrulm1]

@@matthewk9131 well it depends when you invested. If you invested as late as September last year, you are still 3x your investment in bitcoin. That's insane. The crash lost a lot of short term buyers money. I invested more in three altcoins over the weekend.

[@matthewk9131]

@@bodrulm1 Nice one. What about Ripple and Litecoin. You put anything on that?

[@bodrulm1]

@@matthewk9131 both good, I don't have money for everything so these are my altcoins: ETH THETA PHA VET. Also holding MARA (miner stock) which is super cheap right now and will fly win bitcoin reclaims it's top spot.

[@stevewalsh-balshaw1727]

PCP can work for some it depends on the car some cars increase in value especially Ltd edition models focus rs being a good example, so buying on pcp can make it affordable and you just get a loan to pay ballon payment at end it's never as simple as suggested it depends on the car and your particular circumstances

[@auwz66]

Hi, you are wrong where you say you are loaning the bit in the middle on the BMW M4 at 3:46. You are loaning everything except the deposit - you say "loan the bit in between and that reduces your monthly payment". If you look on your example "amount of credit" is £28990. The 15700 HAS interest paid over the 4 years term. My advice always look at the "total amount payable" which in the case of the BMW is £48430. So the "cost" to have the car is around £10k in borrowing costs. Add on your deposit of £10k and you can hand the keys back after 4 years for a rough cost to the customer of £20k.

[@lisaj7011]

Here's an old fashioned idea, save money, buy car, the end...

[@VEVODeVon]

Really useful video. Question - 9:08 - 'and then you just get another car'. If you get a reduced value on the car then won't you need another loan to upgrade to a new car?

[@stu4181]

Agree fully with the sentiment of the video, the difference in cost PCP to bank loan is purely in the difference in interest rate. PCPs usually sky high circa 10% Bank loans much cheaper - if you have a good credit rating otherwise the bank is going to slap more on as well. Quite simply the monthly payment is about what the car loses per month on average over the 4 years (scary when you think you are just paying the cars loss of value each month) The other trap of PCP is the car loses more per month at the start and then it levels off, ie if your payment is 500 a month the car is probably losing 600 a month for the first 2 years and 400 (very rough figures) for the last two years. So if you want to get out of it after a shorter amount of time, you are usually in a position of negative equity ie- you have a car worth 25k and a loan of 30k still so are basically -5k at that point. (Also bad in an accident and insurance low ball pay out) so you need GAP insurance to cover you. Quite simply PCP allows people to have cars they can’t really afford, it’s really down to simple personal money management, how much you earn to how much you spend your car monthly payment shouldn’t be much more than 10% of you top line monthly wage. They should teach this stuff in school alongside other money life skills, mortgages/insurance and tax things. Great work on the informative video hope I have added at least something of use to people 🤣

[@stanisd6640]

Fantastic video, has helped make up my mind on PCP.

[@ogriboy]

Also depends on your tax circumstances or if you are in business. For the private buyer I would say HP is probably the best as there is an end point and ownership. For most ownership is not a requirement and so PCP becomes a lease if the ballon is not paid off and car returned and so maybe a lease is better in these circumstances.

[@kano0303]

Another thing, the dealers pretend that with PCP you have 3 options, buy, walk away, part ex. No you only have 2 options, buy or walk away. There's rarely positive equity in the car (with the exception of this post pandemic environment),even if you do have positive equity, they won't give it to you in cash, you have to use it as a deposit on another car. If you're going to walk away in 4 years, then go for a lease.

[@pradeepjoseph]

it’s 8.9 % for hire purchase & 3.9% for PCP plan in ireland

[@SkateFoster]

I really needed this information, can’t thank you enough. Funny how you used an M4 as an example

[@n3lgg318]

PCP only works if you get a car which will hold it’s value. I had a BMW M135i valued at 19k on PCP. I had it 3 years and then when I traded it in it’s value was 18k. This was mainly due to the car holding it’s value and I did very few miles in it compared with the 10k I stated on the finance. I then got 5k back from the garage towards another car after I put a 2k deposit in originally.

[@joaoceccato4608]

When last payment arrives ( the ballon payment) you don’t need to have the 15k at hand , you can also finance it , so another cheap monthly term

[@iaing9028]

PCP finance on 2nd hand cars is sold with much higher interest rates, the thing I don’t like with PCP or leasing is you are forced to make a decision about your car at a certain time in the future, when you buy a car & it is fully yours, the time to sell or keep that car is yours to control.

[@tiagocarvalho983]

The problem now is more related with hybrid s plug in. I was in to buy a Bmw 330e and i have made the same calcul. The personal loan is way better, but in 5 years a bmw 330e for example is gona be outdated with a little battery.

[@chandranair8641]

Almost all correct. But with pcp, the deal is with finance company.(not the dealer) So you can sell at any stage private and just pay finance company

[@ayaanbretmitchell9830]

Lol you can't sell something that's not yours...

[@chandranair8641]

Well you can in this instance. I have done this for my last 3 cars. You pay the finance company what you owe, any left is yours. This pcp I am taking about, not lease

[@DrTrollFacee]

Yes you can.

[@mbal4052]

Just PCP’d a brand new Toyota Hilux with 0% interest and I’m well happy. 5 year warranty, 5 year service package, all the toys InvincibleX model for £350 a month with only £2500 deposit..final payment is £15k which I can easily afford to buy outright or trade it in for another vehicle with a decent amount of equity as Hilux’s hold their money well. I know how it works and I’m happy to spend my money my way.

[@EihabFitness]

Thanks for the video mate very helpful

[@suhail1200]

Excellent information however it depends how u look at it. If u know u won't be able to pay the balloon payment and the monthly payments are reasonably high for u nevertheless u take the deal then that is an issue. However if u already have money saved up and give a high deposit, knowing u want to keep the car after X years and have the funds for the balloon payment which will be low due to a higher deposit, if the car goes up in price as well then their is no issue and u are winning. If u are buying a car which is leagues above u and u don't have the financial backing then it's simply your fault.

[@joe3nips]

It’s just as simple as no matter what, you pay the depreciation. At the end of the day when you sell the car that’s the cost, no matter how you have paid (+finance cost). He is comparing a 9.9% loan to a 4.5%, and with PCP you always owe more which is why there was the extra cost. Just do what you can afford, shop around, and don’t just take the dealers finance. Simple.

[@robertmackenzie5850]

Good video , I always pay cash for my cars . I always get a discount , best discount I ever had was 8k off a BMW 3 series five years ago . Dealer need the quota to get his bonus in from the manufacturers

[@mattrussell250]

Dealers get commission for selling cars on finance - you'll always get a better deal when using a finance product

[@robertmackenzie5850]

@@mattrussell250 never bought a car in finance averaged 12 to 15% on discounts Got 20% off a car about 5 years ago

[@antWales1]

Fully agree with the advice. The most misunderstood aspect of PCPs is that people think that they are only borrowing the amount between their deposit and the GFV. Not the case. They are only repaying capital on that amount but they are borrowing the cost of the car minus the deposit. Interest (usually a higher rate than a personal loan but some manufacturers do 0%) is charged on that amount - in this example on £28,990! That’s where the dealer is making the big money and that’s why you should in most cases, go the P/L route. PCP works for some to get on the new car ladder, but always ask where you are going to find the GFV from. A P/L in 4 years time possibly? That means you need to keep the car for perhaps 6,7 or 8 years, not the 4 years of the PCP deal!

[@cityslickerbass]

Spot on video. Its convenience that people like about PCP (including myself) but a little more effort can save a lot of money. As a basic alternative you can find more competitive PCP providers out there who are independent of the dealership and give much more attractive rates.

[@Peter-Oxley-Modelling-Lab]

Car dealers are not interested in selling cars anymore, they are focussed on selling FINANCE, as that is where they make there money. Several local car dealers near me have nearly new cars on the lot and none of them have any data about the actual cars in the windscreens, just details,on the finance packages...

[@srlfc90]

Loan is on your name pcp is more on the car then yours when applying for mortgage less effective

[@Auto_Funk]

Great video! Thanks for posting this, more people need to be aware of how much of a waste of money PCP is....

[@davidcottle7346]

I don’t find £485 for any vehicle I can only drive ten thousand miles in ,what keen driver will only do forty thousand miles in a car like that over 48 months ?

[@dontuno]

I have never bought any car on PCP, HP or any form of credit. I have a simple rule, if I can't buy it for cash I don't buy it. Trust me this makes you wealthier in the long run.

[@MrBeboopman]

Absolutely correct... working for a car. 🙄

[@elliothand6639]

Do you rent until you can buy a house for cash too?

[@dontuno]

@@elliothand6639 Can't quite stretch to that but I over paid on my mortgage each and every month and paid it in entirety in 15 years as opposed the term which was 25 years.

[@njames6002]

@@elliothand6639 a house is an appreciating asset that makes you money, the exact opposite of a car.

[@xerikl]

@@elliothand6639 that's just a stupid comment, the house will likely appreciate in value meaning you get back what you put in. Cars depreciate, meaning you can't even sell them to pay off the loan

[@A-Name-101]

I got my last car the old fashioned way, by saving up for it. No bank loan, no dodgy car dealer pcp deal, plus it’s an electric and I’ve paid zero for the electricity, yes you read correctly- zero in “fuel”. I’ve saved money switching to electric than running my old crappy car which was getting costly with maintenance fees, besides having nearly zero percent interest rate on my savings account it was a no brainier. Plus it’s a fun car to drive!

[@TriviaChallenge]

Agree electric is the way to go. Almost zero running fees and worry.

[@emibrito7899]

How do you get out of a PCP then @fullyplanted? If you dont meet the balloon payment at the end you just return the car and you end up empty handed, you basically just rented a car por 48months but at a much lower monthly cost compared to any typical rental company , right?

[@CanariesExplorer]

Buying expensive highly depreciating cars on PCP, particularly brand new ones, are a great way of destroying wealth per se. Not only are you funding its depreciation but also paying interest of c.10% on the outstanding capital, when base rates are close to zero! As rule of thumb, over the typical 3 yr ownership period a car will halve in value. Thus for a £50k car it will cost £25k in depreciation plus c. £10k in interest, making a cost of £35k. No wonder some people can't afford a deposit on a house when they're wasting money on new cars. Since the financial crash in 2009, interest rates have been low and manufacturers have taken advantage by offering PCPs at high interest margins to sell more new cars, bring in guaranteed used stock to dealers to sell more PCPs etc. The naive consumer just looks at monthly payments but fails to appreciate the overall detriment to wealth. Best to buy at 3 year old and with cash or a loan at a low rate.

[@stephentoby8750]

Great info, very useful . Never brought a car using pcp ! Always bank loan guy. Never thought about 30k bank loan though. 😍 Looking forward to the next video

[@fullyplantd]

Thanks, to be honest PCP almost fooled me about 3 years ago, had I taken those low monthlies I'd be sitting here having to give the car back soon and no deposit for my next car

[@fizmo100]

I took a gamble on a TVR Tuscan sight-unseen for just over £15,000. It had under 30,000 miles on it, and the engine had been rebuilt by a well known and respected company, then the previous owner had driven it home and left it in his garage for 3 years. I got it cheap as it was a bit of an unknown quantity, it could have been a dog, but I got lucky and it has turned out to be a gem of a car with just a few rough edges to tidy up. I took out a personal loan from the bank for the car. I suspect that by the time that 5 year term on the loan comes to an end the car will be worth far more than what I paid for it, including the interest on the loan. People often say if you are buying something with a loan it is because you can't afford it. I think if you are careful (and a bit lucky) it can be a way to seize an opportunity that would otherwise have passed you by. Really interesting video - it's always nice to see the numbers worked through and explained so clearly - thank you!

[@francoisona]

Just signed up a pcp deal for 360, 3 yrs , toyota c hr. Have I messed up?😢

[@Zz-tz3vz]

Other pvp channels didnt explain it as good as him,thanks

[@cool_riding]

Depends on the deposit and car, I bought a Audi A4 S line that was a couple years old with a £250 deposit and pay £280 a month over 36 months on a PCP. Cars are a depreciating asset so I never want to put large amounts of money down when I could invest that somewhere else.

[@tdc_2021]

Then you should be leasing, not doing PCP.

[@cool_riding]

@@tdc_2021 you can't realistically lease a audi A4 avant s line for £280 with no deposit and 10,000 miles a year.

[@paolo7688]

You can also get PCP at your own bank at a much lower rate than dealers. This may work for some people.

[@trustinflames1022]

Wish more people sat down and looked at PCP deals like you have. I done this years ago and came to the conclusion that PCP deals are nothing but a debt cycle that can be difficult to get out of. I see my friends complain about this more and more now. There are good deals out there at 0%, but I still wouldn’t entertain the idea myself. Same as any finance deal, it all comes down to the persons attitude to risk, but most won’t see it that way.

[@happyhero1093]

You can get out at the end of the deal except you are in negative equity! With loans its the same, if you dont pay back, thats automatic debt! With older cars, you loose money on repairs, maintaince and stress. Best to just no buy anything and dont enjoy life. Just sit at home

[@colinharvey1049]

I had good outputs with PCP’s with Toyota and Peugeot where I ended up with better resale than they expected, however have had bad experience of mini PCP massively over valued cars resale so got no equity at end. Now moved to buying with load from bank.

[@nathanbutler5605]

You have a few points. But you're not right overall. PCP is usually the lowest APR because manufacturers want you to play the PCP game their way, which is the way you are describing it. HP is usually at a higher APR to encourage buyers into PCP. The best way to play the game if you have time, is to take the 0% or low % APR that PCP usually provides, drive your car until the end of the term and then see what your car is worth VS the OFP. If it is not in equity, hand it back, if it is in equity, take a loan out to cover the OFP, sell the car privately and then buy your new car the same way with the equity you have cashed out as a deposit.

[@gerryking4346]

I’ve been using PCP for years and I’m now starting to see the problems with it. I’ve bought a car in the last couple of months on PCP over 4 years and wonder if I should cut my losses and try to get out of it sooner rather than later. I’m prepared to trade in for a lower value car not on PCP if it’s going to avoid the balloon payment catch at the end the current agreement. I’d appreciate any tips on this.