PCP confusion!

[SpokeyDokey]

Spent ages a couple of days back trying to explain how a PCP works to a friend who is convinced that his 4 year £480 pm payment is the true cost of the deal.

No way could I get him to understand that he also needs to amortise his £17000 deposit across the 4 years as well and that adding the two amounts together will give him the true monthly cost.

 

[Drago]

Not to mention the cost of servicing, repairing and tyres for a car that belongs to someone else.

A loan is one thing if the interest is reasonable, but PCP is a schmucks game.

 

[CXRAndy]

Yet

95% of all new car sales are PCP or lease.

 

[Drago]

Because too many people want to spend money they haven't got on cars they cannot afford.

 

[Bonefish Blues]

I used to do something similar bitd via Lease Purchase deals through a friendly car sourcing lady, but I used to not have a GFV with all the nonsense underpins/cost. All I wanted to do was track the depreciation of a used car with the repayments so I could get out clean when I chose. Needs a bit of nous to diy, but I never came a cropper, and used to run some mild exotica for sensible money

 

[SpokeyDokey]

We have a PCP on our current car which we could have bought for cash.

The interest rate was lower than our savings were earning and the deposit was covered by our old car.

Doesn't save us masses but every little helps.

We may stick with PCP's indefinitely especially if interest rate deals remain favourable.

 

[Bonefish Blues]

As long as it's an eyes-open decision all good, but as you say, most people haven't the foggiest about how things are working.

 

[ebikeerwidnes]

Lease deals can be good
My wife's son has a lease car via the NHS scheme - don;t know the numbers but he says saves him lots over buying a decent reliable second hand car
My Dad always bought new cars - he was disabled (war time thingy) and was paranoid about having a reliable car in case he broke down and wasn;t able to walk to get help - hence always insisted on buying his own car
Last car he had was on the Motability scheme - loike a subsidised lease.
He told me one day that he wished he had worked out the number properly many years before because the lease saved hima fortune over buying new cars every 3-4 years.

So - I guess you have to work out the requirements and number of your own circumstances

Oh - and BTW - if you get a lease through a salary sacrifice scheme at work - remember that doing so means the money is taken off your salary BEFORE they calculate your pension
Hence you pay less into your pension
BUT ALSO - your employer pays less into your pension as well
funny how so many organisations push these salary sacrifise schemes isn't it!!!!

Just something to be aware of

 

[Bonefish Blues]

Lease deals can be good
My wife's son has a lease car via the NHS scheme - don;t know the numbers but he says saves him lots over buying a decent reliable second hand car
My Dad always bought new cars - he was disabled (war time thingy) and was paranoid about having a reliable car in case he broke down and wasn;t able to walk to get help - hence always insisted on buying his own car
Last car he had was on the Motability scheme - loike a subsidised lease.
He told me one day that he wished he had worked out the number properly many years before because the lease saved hima fortune over buying new cars every 3-4 years.

So - I guess you have to work out the requirements and number of your own circumstances

Oh - and BTW - if you get a lease through a salary sacrifice scheme at work - remember that doing so means the money is taken off your salary BEFORE they calculate your pension
Hence you pay less into your pension
BUT ALSO - your employer pays less into your pension as well
funny how so many organisations push these salary sacrifise schemes isn't it!!!!

Just something to be aware of

Money taken off pre tax too, for completeness.

HMRC rules & compliance regime end-to-end.

Cake, eat, and so on.

They are good deals, both of them, for most employees.

 

[Ming the Merciless]

I have a solar powered car

 

[Electric_Andy]

My mate got his first car through NHS salary sacrifice. It worked for him because he knew nothing about cars, or servicing, and also the insurance was much cheaper than outside quotes. He then paid off the rest of the car so he owned it, then sold it. It can work for some, but yes a very pricey way to do it if you're not comfortable money wise

 

[Bonefish Blues]

My mate got his first car through NHS salary sacrifice. It worked for him because he knew nothing about cars, or servicing, and also the insurance was much cheaper than outside quotes. He then paid off the rest of the car so he owned it, then sold it. It can work for some, but yes a very pricey way to do it if you're not comfortable money wise

Good for those who wouldn't otherwise be able to obtain credit, of which there are a surprising number of people - because group agreement, underwritten by the employer, rather than via a credit check.

 

[midlife]

Spent ages a couple of days back trying to explain how a PCP works to a friend who is convinced that his 4 year £480 pm payment is the true cost of the deal.

No way could I get him to understand that he also needs to amortise his £17000 deposit across the 4 years as well and that adding the two amounts together will give him the true monthly cost.

£17000 deposit..... Blimey!!

 

[biggs682]

Paying cash for what you can afford has to be the best way

 

[Slick]

I was buying company cars for years, and my mates were always trying to convince me that PCP or whatever was the fashion for separating us from our money was being foisted on the unwary at the time. I looked at it upside down and inside out, but could never make it work for me. Cash is still very much king for me.