Caporegime
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- 11 Mar 2005
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Downside being you are left driving a Corsa.
Leasing vrs buying
- Thread starter bowey
- Start date
its a smashing deal But its not £155 unless you are a partner.
Its actually £170. Which is still a decent deal.
to the people saying PCP is better, i ask how is it?
take the VXR for example. Its what... £17k new.
A basic PCP on that amount would be say 3.5k deposit and £260 per month with a 8-9k balance to pay after 3 years.
If you cant afford the balance at the end you have to hand it back and start a new PCP.
Leasing is much the same... You pay monthly and then hand it back and start again with a new car.....
But with the VXR there is No 3.5k Deposit and only £170 to pay per month.
The cost of using that car is far cheaper than buying it on PCP
People seem to forget, Its NOT a waste of money as you get to use a BRAND NEW car.
On a PCP you can sell the car back provided it's worth more than the balance. On a lease you have to pay the whole term (minus a small discount) if you want to get rid of it
You can also keep it beyond the term with a PCP by paying the baloon payment, on a lease you have to hand it back at the end
Financially with that example it's no better but there are advantages over PCH
Associate
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- 13 Aug 2006
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[TW]Fox;28280248 said:
No money tied up in a car is a good thing imo. It's not like you can use it easily and it is a unknown quantity at the end until a dealer makes you an offer.
Someone wanting a new trouble free car, will not be considering a old used car. Maybe there could be an argument for a 1 year old car and keep for 2 years but it is still not the same hassle free experience.
![[TW]Fox](/data/man-of-honor/2009.png){kind=avatar}
No idea what relevance that is. Not sure anyone is comparing old cars with new ones in this thread, just different ways of funding/obtaining brand new or nearly new.
There are various ways of obtaining a brand new car.
a) You can buy it with cash
b) You can buy it with a bank loan
c) You can lease it
d) You can finance it on Hire Purchase
e) You can finance it with a PCP
None of these options is a standout magic bullet. There are pros and cons of each and you don't get anything for nothing, so the convenience of not being 'ripped off' by the dealer when you trade in because you are leasing is already built into the price - the price reflects the fact that once you've finished with the car it's disposed of at auction, for example... so your rock bottom tradein *is* still an issue, as it dictates the price of the lease.
It is a fact of cars that they:
a) Cost quite a bit of money to buy
b) Lose quite a bit of money whilst you drive it
c) Somebody has to pay for the money used to achieve a)
All these various options do is spread a, b and c around a bit. Whatever option you pick somebody has to buy the car and somebody has to lose it's value. Whether it's best to have this depreciation packaged into a monthly payment or realised at the end when you dispose of the vehicle yourself depends entirely on the individual deal on offer.
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Depends how you look at it – if you own a car and suddenly need money for whatever reason (lost your job, need money for a house deposit etc) you can sell it to release the equity. However if you’re leasing in this situation you’re tied into the monthly payments and have to continue to pay for the car.
It's all swings and roundabouts really, each way of financing/buying a car have their pros and cons.
[TW]Fox;28281743 said:
Thats what I said above, and is why I think in some circumstances PCP can be a good option - as it's a balance between lower monthly costs with more flexibility.
This does rely on actually thinking about the whole picture rather than the headline monthly payment though - to understand where you'll be in negative equity and by how much. With the right nearly-new car and a low rate it's possible to stay in positive equity through the term which does make things flexible
The most flexible way to finance a car (excluding a bank loan) would be HP with a sensible deposit - this keeps you out of negative equity and reduces the amount loaned, which:
a) Reduces the overall cost of the agreement
b) Provides ultimate flexibility to terminate at any point you wish - as the financed asset is worth more than the remaining finance owed.
It does, however, require a larger deposit in the first place and increases the monthly payments because there is no huge amount offset to the end. It also gives you ownership of the asset (or significant equity for your next deal) at the end of the term.
a) Reduces the overall cost of the agreement
b) Provides ultimate flexibility to terminate at any point you wish - as the financed asset is worth more than the remaining finance owed.
It does, however, require a larger deposit in the first place and increases the monthly payments because there is no huge amount offset to the end. It also gives you ownership of the asset (or significant equity for your next deal) at the end of the term.
I very much hate paying for something but end up not owning it and not being able to add or alter things to said item. For me, i would rather 'purchase' an item than 'hire' it or lease it as what is being discussed here.
Each to their own i know.
Each to their own i know.
Associate
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- 1 Mar 2004
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It would be nice if car dealerships primarily sold cars rather than financial instruments 
So am I right in thinking if I went the ppc route I could trade my car in after say the 3 years of payments and they would give me money for car that would get put down as a deposit for the next one ? I'm debating just to get a lease then I know £300 odd comes out every month and then I Hand it back after the time length.
IF you plan it properly then yes, however watch out as a lot of big headline PCP deals aren't realistic with the final value so a lot of people find they have no equity left
PCP is basically a loan for the difference between the value of the car now and the projected value at the end of the term. The higher the projected value (known as the guaranteed minimum future value), the lower your payments will be but the less equity you'll have.
So let's say you buy a car for 20k with a GMFV of 10k and a trade in of 2k, you're basically taking out a 3 year loan of 8k. At the end, if the car is worth 11k then you have a grand towards a new car - or you can pay the 10k to own the car.
Now, if you do the same sums but with a GMFV of 8k instead, you're taking out a 10k loan so the payments will be higher. But you'll have 3k equity instead. When you apply for a PCP you can ask for the GMFV to be reduced for this reason - for it to work you have to understand the likely value and not let a low monthly repayment sway you into making a deal without adding it all up yourself first.
For 300 a month you could get a nearly new car on PCP - you can hand it back at the end of you chose, but you can also get out of it mid term if you need to or own it at the end if you want to. Remember with a lease you need to find another deposit from somewhere at the end of the term too, a well planned PCP will have that covered
Thanking you for making it clear appreciate it.
Why would you want to give a finance company an extra £2000 of your money and therefore pay more interest to get extra equity in a few years when you could just save the same money and not pay interest?
In my eyes its still you handing over money that will be lost from the depreciation of said car. Same as a lease.
Only difference is that you don't own it. and if that means saving £100 a month over a PCP then fair enough. (oh and some leases there is NO massive deposit to pay)
Only difference is that you don't own it. and if that means saving £100 a month over a PCP then fair enough. (oh and some leases there is NO massive deposit to pay)
Because the majority of people taking out a PCP wouldn't be disciplined enough to do that?
I never said it's the cheapest way to do it. There are plenty of people who get into a PCP because the salesman tells them they'll have a deposit for the next one - they give over a trade in or a deposit and find in 3 years that the GFV is equal to the cars actual value. This wouldn't be a problem if you had put the extra in a savings account, but I don't know anyone who'd actually do that
Not quite. You are taking a loan out for the entire amount borrowed, including the balloon at the end. The difference is, you are not paying off the entire loan by the end of the term but you are still paying interest on that amount still owed.
If you're doing PCP (which is the closest equivalent to a lease) there's a high chance of being in negative equity, depending on how much you put in up front and how close to the end of the deal you are. You'll also still need money to get another car. But I agree, it is swings and roundabouts, but I'm really not a fan of PCP.
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