Detailing World  

Go Back   Detailing World > Lifestyle > The Money And Business Zone
DW Home Forum Home Merchandise Store Register FAQ Members List Calendar Search Today's Posts Mark Forums Read

The Money And Business Zone All things money related, Savings, Finance, Pensions ,Insurance, Mortgages and more,

Reply
 
Thread Tools Display Modes
Old 08-09-2021, 07:50 AM   #1
RandomlySet
Distinguished Detailer
 
RandomlySet's Avatar
 
Join Date: Jul 2007
Location: 40°47'6.3276''N | 73°58'5.8260''W
Posts: 10,914
Thanks: 5,407
Thanked 3,744 Times in 2,551 Posts
Garage
PCP vs Loan

Talk to me guys.

A bit late, considering we just took delivery of a new car on Saturday just gone!

We've had a PCH in the past, and the last car (Pulsar) was on PCP. We actually made money on that by selling it to Arnold Clark!

So, we have just taken a new PCP deal on the Swace for 4 years. SWMBO has now said that for a few quid a month less, we could clear the finance on it with a personal loan, but would mean keeping the car for 7 years! I think in her mind, when it comes to finding a new car in 3.5-4 years, we'll struggle to find what we want, and no doubt, prices for new cars will have shot up (like they have done since we got the Pulsar). After just a few days, she loves this car and says she's happy to keep it.

I guess with the PCP we have, we can just walk away after 4 years, or maybe make a little cash like we did on the Pulsar. Whereas with a loan, if we kept it until the end of the term (7 years), then anything we sell it for is all ours.

Am I missing anything else?

All I'd say is, the whole reason she was open to the idea of new cars originally, was because of her "family curse with second hand cars" She found her family were always saving away "just in case" something broke, and MOT failures etc. So in 2015, she agreed to having a new car to remove any stress and anxiety (thinking that any potential issues would be covered by warranty in the first few years).

PS, obviously with PCP, we could just hand it back after about 3.5 years if we suspected any potential mechanical issues. But that said, we do about 5,000 miles a year, so hardly getting a beating TBH
RandomlySet is offline   Reply With Quote
Old 08-09-2021, 07:55 AM   #2
SteveTDCi
Distinguished Detailer
 
Join Date: Feb 2006
Location: Stamford Lincs
Posts: 7,036
Thanks: 3,925
Thanked 3,348 Times in 2,778 Posts
For me it’s all about spending the least amount of money in terms of interest payments.

What interest rate do you have on the Suzuki ?

I’ve never understood why people buy brand new to save money, it’s usually driven by saving money on fuel. If you maintain them correctly and for me that means servicing every year then they don’t usually cost a lot to run, unless it’s something ac related then a warranty won’t cover that - seems to happen to golfs and q5’s at the minute,
SteveTDCi is online now   Reply With Quote
The Following User Says Thank You to SteveTDCi For This Useful Post:
RandomlySet (08-09-2021)
Old 08-09-2021, 08:00 AM   #3
RandomlySet
Distinguished Detailer
 
RandomlySet's Avatar
 
Join Date: Jul 2007
Location: 40°47'6.3276''N | 73°58'5.8260''W
Posts: 10,914
Thanks: 5,407
Thanked 3,744 Times in 2,551 Posts
Garage
TBH, we got the last 3 cars (well 4 if you include this) more as "peace of mind" for her more than anything else.

The other option when looking at replacing the Pulsar was to take a personal loan, and buy a 2 year old car or similar. But then comes the stress and anxiety for the Mrs again once any warranty etc has ran out (she has terrible anxiety and worries about everything).

So, TBH, the new car thing is more about convenience I guess...

It does work out we'd pay a lot less if we cleared the finance and had a personal loan. It also means sticking with the car for 7 years rather than 4....

That said, it's an estate and we've just had our first kid, so I guess it'll be practical for that whole time, and when kiddo is 6-7, we can then look at going back down to a regular hatch.
RandomlySet is offline   Reply With Quote
Old 08-09-2021, 09:19 AM   #4
Taxboy
OCD Sufferer (Obsessive Car Detailer)
 
Join Date: Aug 2006
Posts: 896
Thanks: 515
Thanked 259 Times in 193 Posts
Don't forget with a loan you can still have the flexibility of selling the car at any time. You don't necessarily have to keep it until the loan is paid off. However as I'm sure you are aware the depreciation curve flattens the longer into ownership

Sent from my moto g(7) plus using Tapatalk
Taxboy is offline   Reply With Quote
The Following User Says Thank You to Taxboy For This Useful Post:
RandomlySet (08-09-2021)
Old 08-09-2021, 09:54 AM   #5
Andy from Sandy
OCD Sufferer (Obsessive Car Detailer)
 
Andy from Sandy's Avatar
 
Join Date: May 2011
Posts: 2,389
Thanks: 284
Thanked 1,273 Times in 946 Posts
So long as the loan company don't insist the car is used as security. i.e. they take it away to repay the loan if you forfeit.
Andy from Sandy is offline   Reply With Quote
Old 08-09-2021, 11:36 AM   #6
Andyblue
Distinguished Detailer
 
Andyblue's Avatar
 
Join Date: Jun 2017
Location: Not where I should be :)
Posts: 10,819
Thanks: 5,124
Thanked 6,561 Times in 5,157 Posts
It’s sounds like you’re comparing a 4 year PCP against a 7 year loan to buy the car ?

Few questions that may (or may not ) help…

Can you cash in that early and actually buy the car like your thinking ?
Do you have the option to purchase the car at the end of the 4 years ?
Have they given you a figure for what it would cost to purchase the car at that point (presuming you can) ?

Does taking a short term loan at that point work out more expensive / cheaper than a 7 year loan now - taking into what you e already paid over 4 years ?

Do you really want to be taking a loan out for 7 years on the car ?

Hope it’s of some help…
Andyblue is offline   Reply With Quote
Old 08-09-2021, 12:31 PM   #7
macca666
OCD Sufferer (Obsessive Car Detailer)
 
macca666's Avatar
 
Join Date: Mar 2010
Location: Ayrshire
Posts: 3,169
Thanks: 2,993
Thanked 2,641 Times in 1,500 Posts
Garage
Too many variables I reckon to give a ********** answer similar to Andyblue comment above.

I've done both and my last 2 cars were PCP which I paid off at the end of the term. First one was 4 year and the last one 2 year you'll find the length of the PCP can make a difference to your APR.

Each time I buy I look at all optionss and tend to price pcp over 2, 3 and 4 years working out how much I pay overall to see what suits me best.

I've found their are dealer incentives for taking their finance meaning additional contribution or lower rates which is why its worked out better for me recently.

Again though with PCP depends how much deposit, miles pa, final payment, length of agreement etc IMO its not just a case of one over the other is down to personal circumstances and choice.

With your PCP you should have a final payment figure so you could take a loan at that point fir the 3 year and ultimately own the car paid back over the same period as your 7 year personal.
macca666 is offline   Reply With Quote
The Following User Says Thank You to macca666 For This Useful Post:
RandomlySet (08-09-2021)
Old 08-09-2021, 01:01 PM   #8
MDC250
Distinguished Detailer
 
MDC250's Avatar
 
Join Date: Jan 2014
Posts: 6,590
Thanks: 3,065
Thanked 3,948 Times in 3,042 Posts
Only time a loan would make sense to me is is when you slap a large deposit down to keep the monthly spend low. This is kind of counter intuitive as generally the whole reason to finance a car is to keep as much of your money to yourself as possible. Tying up large amounts into a depreciating asset doesn’t generally make sense.
MDC250 is offline   Reply With Quote
The Following User Says Thank You to MDC250 For This Useful Post:
RandomlySet (08-09-2021)
Old 08-09-2021, 01:54 PM   #9
Richf
OCD Sufferer (Obsessive Car Detailer)
 
Join Date: Apr 2008
Posts: 968
Thanks: 74
Thanked 315 Times in 238 Posts
Yep you need to do the maths and work it out

Its not easy to compare the two as one is for 7 years and the other 4 and you will only be paying for about 50% of the car on the pcp deal

Work out what the GFV of balloon payment would cost to finance via a loan for 3 years which should give you a better comparison.

PCP is sometimes cheaper but always easier you need to work out if the convenience is worth the price you pay
Richf is offline   Reply With Quote
The Following User Says Thank You to Richf For This Useful Post:
RandomlySet (08-09-2021)
Old 08-09-2021, 02:44 PM   #10
percymon
OCD Sufferer (Obsessive Car Detailer)
 
Join Date: Jun 2007
Posts: 2,294
Thanks: 349
Thanked 1,420 Times in 1,112 Posts
Garage
Dependent upon how savvy the PCP provider is they may have set a high GFV to keep payments low, or as reflection of how used car prices are progressing currently. This can work to your advantage if after 4 years you want a change and just walk away.

They may also have used old numbers in which case buying outright at the end of the PCP and then reselling can work in your favour (I'm at this point now, i was originally going to just hand back, but in the end paying the balloon and subsequently reselling within a few months will net me £7k profit).

Either way i would imagine your PCP interest rate is higher than a bank loan (typically under 3% currently), but 4 years PCP interest vs 7 years bank loan interest might ultimately be much the same overall outlay.
percymon is offline   Reply With Quote
The Following User Says Thank You to percymon For This Useful Post:
RandomlySet (08-09-2021)
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT +1. The time now is 01:24 PM.


Powered by vBulletin® Version 3.8.2
Copyright ©2000 - 2021, Jelsoft Enterprises Ltd.
DTO Garage vBulletin Plugins by Drive Thru Online, Inc.

vB.Sponsors
Powered by vBulletin® Version 3.8.2
Copyright ©2000 - 2021, Jelsoft Enterprises Ltd.
DTO Garage vBulletin Plugins by Drive Thru Online, Inc.

vB.Sponsors