Car Leasing or PCP

Corsa, safe to say low value
It did have very low milage for its age mind you and likely will still be low when I'm "done" with it.


More I'm thinking of it, the more I'm not gonna go PCP again, seems to be a nice way to get a fair car (Corsa I know ) initially, but they are structured to keep you tied in to a PCP setup. 2-4 years down the line you see a lump sum value, the cheao option in that moment will be just to transfer/trade it and get caught in to the pattern again.



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Can see both your points of view @PaulM1888 @Onefootwonder, people should be able to to enter into agreements and saddle themselves with debt if they wish but I do think there is an exploitative side of the business that preys on people's vulnerability or naivety.

My pal bought a Meriva a few years back from a car dealership and while the monthly fee was sustainable, the inclusive interest was pretty mind-boggling. As a 20-year old guy that wasn't particularly clued up, he signed the contract and then had the paperwork lying around the house which a relative then seen and asked him to immediately cancel it. From memory I think he was effectively paying around £8.5k for a £5k car over 4 years.

The libertarian argument is obviously that he wanted the car and entered into the contract on his own free will so sod's law but I think there's a wider societal issue of debt & consumerism. In high school/college education there seems to be a dearth in the teaching of real life subjects like debt & credit. Some might say that's the parent/guardian's responsibility but some of those may have no real world experience of that either.

When you start Uni, banks are chucking overdrafts and credit cards at you to sign up with them and if you're a wee bit wet behind the ears like I was then it doesn't end well.

Don't want to take the thread off tangent but I thought you both had good but conflicting perspectives.

 

One other thing I would say is I believe if you get a Hire Purchase deal you can hand the car back after half the debt is paid off, so it’s a good option if the car looks likely to depreciate and you want a new one.

I’ve known family to do it although I’ve not done it myself.

 

Have enquired with some of the leasing companies and they are doing factory orders on the car I’m looking for (ideally new 2 Series Gran Coupe). The issue now for me is that due to COVID the car ain’t gonna be ready until the start of next year.

I see a car as a necessity that isn’t an asset. The opportunity cost of not having a car is to fritter money on public transport, taxis etc. In that way, I can justify a monthly payment that is much less than making a purchase outright. But I get that it’s personal choice.

 

I'm starting to look into a PCP for my next car, do fancy a Evoque, some can come up decent prices.

Just need to see the pitfalls that may lay in front of me.

I had in my head big deposit/trade in up front, up my mileage a little and just use it for the duration of the contract, don't intend to keep the car tbh.

Then probably walk away at end and downgrade.

 

I've not defensive or sensitive. I simply asked what you were on about introducing something completely irrelevant into the conversation.

I have posted about PCP, finance and cars on this forum countless times over the years. The topics are raised many times by people seeking advice, misunderstanding or wrongful advice. I've tried to be helpful.

Patronising? I posted politely to you on this thread and all the other threads. Yet again it becomes all personal. You're going out of your way to be offended.

Please don't ruin another thread if you're just going to reduce it to this.

 

This is true, but there’s a bigger picture at play.


Obviously in a purely objective sense, it’s the individuals own decision and they can spend their money how they like. However, car finance deals do lead people to purchase cars that they simply shouldn’t be buying, from a financial perspective.


In most cases a car is the second biggest purchase someone will make in their lives, after a home. The issue is, it’s a constantly depreciating asset that usually requires a high level of maintenance cost, relative to the purchase price. If you factor in interest causes as well, you can quickly find yourself paying out a very significant amount of your monthly wage on an asset you will never own.

It isn’t really anyone’s place to say what anyone else can do with their money, but I would advice people to take a conservative view of what’s affordable when it comes to cars.

 

They don't understand. It has been proven time and time again that the majority of people have little understanding about car finance and especially PCP. There has been surveys that found 60+% of people with a PCP didn't even know what PCP stood for. Even if you read an advert or skimmed the finance agreement it's all over it, yet they don't know the first thing. They can't answer the most basic question other than how much the car monthly repayment is.

The UK banks have just had to refund £40bn PPI by 64 million claims. An extremely easy financial document that people failed to understand, or in some cases like PCP, were completely mislead. A lot of people, including experts in the field of finance, have predicted or requested, that PCP deals should be the same.

You can't tell half the internet that face masks aren't for your protection no matter how often they are corrected. It has been headline news for months.

The big red bus with the £350m on the side won Brexit. After the vote surveys found 42% of people still thought it was true. It had been headline news for months in was a lie.

Yet you think people have no issues understanding their responsibilities and actual cost of a PCP deal?

The jealously line is just a weak attempt at deflection. There is absolutely nothing to be jealous about when someone hires a car using a PCP. BMW and Audi are accessible to nearly everyone these days. I even know apprentices below minimum wage who get approved credit for them. My jaw dropped when one of the apprentices got an Audi RS5 on finance a year after his time was out. That lasted months.

You don't even need to argue with my opinion. Just start searching the internet. You'll soon realise just how deep the problem is.

With interest rates so low people could be eating into their mortgage. Yet when interest rates are low people just use the extra money to put towards the car repayment.

 

What kind of car is it?

I'd be highly surprised that you're in positive equity after two years on a four year PCP. Once people get an itch to change early they end up rolling negative equity into their next deal.

When you PCP a car you're paying interest on the total amount borrowed. To then loan more money to pay off the GFV means you're paying interest yet again. A lot of people miss that the interest you're paying on a PCP is for the total amount borrowed including the balloon payment and not just the part you're repaying.

Don't assume you'll have equity in the car to allow you to trade up. Lots have nothing and often dealers only create a deposit if they are overcharging for the car you're buying.

I see more dealers pushing their customers to voluntary terminate their contracts. The issue is with a PCP the VT point is usually near the end of the PCP. The cars aren't worth what is owed on it and the dealer can't afford to buy it.

Voluntary termination was designed to help people who got into financial difficulties a get out clause. PCP deals work in a way that people can't really get out until late in their deal. It's now a very common way to get rid of a car as soon as possible. The legal right to help those in difficulty is now being abused. The issue is when you sting a lender your future chances of funding will lessen.

 

Cars are for normies. Get yourself a pair of roller blades.

 

You're thinking of walking class people. * peasants, I spit on them as I glide past them on my roller blades.

 

It all depends on what kind of car you want, if you don’t mind what you’re getting then go for a lease deal, there’s plenty good deals about and at same price as PCP deals without the need for huge deposit.

If you want a specific model with added extras then PCP or buying outright via a loan is your best options unless you get lucky with a lease deal at the right time.

My PCP deal is up and the car needs alloys and * done so just going to buy it outright then sell in a years time to pay off the loan and get a lease deal. Car companies want the continual returning customers so there’s always good deals to be had.

 

Does it not stand for Pretty Car Please? Or am I wrong?

 

Aye I done plenty research, got a good deal for it and planned to just hand it back but Covid * all my plans for this year.

 

What happened to saving up then buying what you can afford?

I drove & owned some *, but it was my *. I think it’s dear enough fuelling insuring etc. A car, Without paying to buy it as well.

@PaulM1888 i’m genuinely not jealous of the BMW & Merc drivers, they are too common now. Plus why would people be jealous of something they could easily do themselves?
The thing is if you buy the car at least you have an asset. The other way all you have is a debt, which unfortunately seems to be the accepted way now.

 

You have a point up to a certain price point in the market. If buying new once you hit the mercs etc it's actually cheaper to lease it and hand back after 3 years. New its £45k Say in 3 years it costs 15k in payments. The car may be worth 22k though. So buying it would have cost you an extra £8k over leasing. So if you want new it's probably the cheapest way to do it.

I actually always buy mine aswel, I hate anything that's a payment, but I always buy around 4 year old mark.

I seen an advert on the tv last night about 12 months job loss protection on buying a car, feel like theres a catch but not looked into it yet.