PCP or loan

Casdawer · 25 Jun 2018 at 17:22

Hello,

I have a Citroën C1 and my current PCP is only allowed to do 6k miles a year and with my new job I'm now doing 15k per year.

The garage is offering me a new car with a personal loan over 5 years and I'm tempted.

It's a brand new DS3 performance line and they're offering it for £280pm and this covers my negative equity too.

The main reason I'm tempted is that it gives me an asset at the end instead of handing it back whereas the C1 I will have nothing at the end.

The other option is to just increase my allowance and still with the C1 on the motorway everyday *shudders*

The other potential offer is my own loan and I sell the C1, pay off the C1 and get something else.

Thoughts?

Firestar_3x · 25 Jun 2018 at 17:39

How much is a DS3 performance line per month without covering your negative equity?

Casdawer · 25 Jun 2018 at 17:56

Price and details - https://www.richmondmotorgroup.com/used-car-details/used-ds-ds-3/id-1099221809/

£214 is what it says but that's with a £1500 deposit and based on 10k miles.

I'll be putting nothing in.

smilertoo · 25 Jun 2018 at 18:11

6k miles seems VERY low.

Mr Krugga · 25 Jun 2018 at 18:18

Nobody asked the question yet, how much negative equity do you have in the C1?

[TW]Fox · 25 Jun 2018 at 18:21

And this is why dealers love PCP :eek:

BUDFORCE · 25 Jun 2018 at 18:27

[TW]Fox said:
And this is why dealers love PCP

Yea they seem good value but the dealer effectively just sells the car twice both times making money.

Jamauk · 25 Jun 2018 at 18:27

Is the dealer giving a discount on the car with PCP? If so get both, cancel PCP within 14 days and pay it off with a bank loan - although obviously work out which works out cheapest in the long run.

rodenal · 25 Jun 2018 at 19:20

You need to know how much you would need to pay to release yourself from the current agreement.

A broker will do you the DS3 for c£15k (plus interest obviously) - looks like you're paying £17k in total over the term with the above.

You can also buy a year old car for £12.7k (assuming you get zero discount) - do you really want to swallow another £4.5k+ of a loss in year one of a new deal (even this is optimistic, trade would be more like £10k so nearly £7k to get you neutral after a year......)? If you really wanted one get the current car cleared and buy a year old example

Edit - I've only just realised you linked a specific car and that it wasn't new. This sounds a horrid "deal". How can you have several thousand of negative equity on a C1? They hardly lose a fortune. Sounds like you need to break the cycle in all honesty....unless there's something I'm totally missing about the real (i.e full term) costs involved

BUDFORCE · 25 Jun 2018 at 19:21

Jamauk said:
Is the dealer giving a discount on the car with PCP? If so get both, cancel PCP within 14 days and pay it off with a bank loan - although obviously work out which works out cheapest in the long run.

That is cheeky, but actually isn't the worst advice

Mr Krugga · 25 Jun 2018 at 19:33

A quick check on that car linked shows the price of £13,295 (assuming no discounts). A 5 year personal loan for that amount at 3% APR works out at £238.65. In this scenario, the negative equity on the remaining vehicle would need to equal to £2,500 for this deal to be "worth it". Then again, do you really want to dump £14k+ into a DS3 and keep it for 5+ years...

Casdawer · 25 Jun 2018 at 20:00

Thanks for the feedback guys, it truly is appreciated.

I've only had the C1 for 15 months, thus why I'm in about £2500 in negative equity.

I'm happy to keep the C1 but it means I'll have to either a) increase the monthly payments b) save for the excess mileage (it's 3p per mile so not much really).

When I last checked, my current 'loan' was around £7000ish.

Scania · 25 Jun 2018 at 20:17

smilertoo said:
6k miles seems VERY low.

I have a 7.5k mile restriction on my policy which is something of a limitation and that’s bearing in mind I don’t do many miles per week and a few nights of the week my car is parked in the yard at work not being used at all....

rodenal · 25 Jun 2018 at 20:27

Casdawer said:
Thanks for the feedback guys, it truly is appreciated.

I've only had the C1 for 15 months, thus why I'm in about £2500 in negative equity.

I'm happy to keep the C1 but it means I'll have to either a) increase the monthly payments b) save for the excess mileage (it's 3p per mile so not much really).

When I last checked, my current 'loan' was around £7000ish.

What is your settlement figure though? Depending on the level of interest you're paying it could be significantly lower. How does this compare to a private sale value for your car?

Peerzy · 25 Jun 2018 at 22:39

Didn't we do this thread about 3 months ago? Dealer offered the OP a newer / different car on finance and they were considering it before being talked out due to never ending cycle of negative equity and owning even less of what you drive.

Isn't this just the dealer having another go?

EDIT: Ah I was wrong. It was 5 months ago.

This also highlights how god awful PCP / car finance can be. You are going to get seriously screwed due to the low milage allowance and being tied in for many years to come. Why do you think signing up to another deal is going to be any better in the long run? What happens in 18 months time when your job changes and you don't need a car for work - how will you feel paying £280 for something to sit on your driveway?

Casdawer · 26 Jun 2018 at 08:51

Peerzy said:
Didn't we do this thread about 3 months ago? Dealer offered the OP a newer / different car on finance and they were considering it before being talked out due to never ending cycle of negative equity and owning even less of what you drive.

Isn't this just the dealer having another go?

EDIT: Ah I was wrong. It was 5 months ago.

This also highlights how god awful PCP / car finance can be. You are going to get seriously screwed due to the low milage allowance and being tied in for many years to come. Why do you think signing up to another deal is going to be any better in the long run? What happens in 18 months time when your job changes and you don't need a car for work - how will you feel paying £280 for something to sit on your driveway?

Indeed I did.

The DS3 would have no mileage limits as it's not a PCP deal, it's effectively a personal loan which swallows the negative equity and the cost of the new car.

In regards to change in job situation, my crystal ball stopped working so I'm unable to tell you what I'll be doing in 18 months or even in 5 years when I'll be done with the car.

Peerzy · 26 Jun 2018 at 09:07

Casdawer said:
The DS3 would have no mileage limits as it's not a PCP deal, it's effectively a personal loan which swallows the negative equity and the cost of the new car.

You are in a bad situation as any loan will incur interest on the negative equity you already have plus the depreciation of a brand new car. If you want to consider finance why not get a small bank loan and buy a decent second hand car, something that is a few years old? You'll escape the negative equity and owing money cycle much quicker. This will make changing cars in the future much easier.

Casdawer said:
In regards to change in job situation, my crystal ball stopped working so I'm unable to tell you what I'll be doing in 18 months or even in 5 years when I'll be done with the car.

Brilliant - you've identified you will have no idea what you'll need from a car in 18 months time, so why is signing up to a 5 year finance deal a good idea?

Kenai · 26 Jun 2018 at 09:12

Casdawer said:
Thanks for the feedback guys, it truly is appreciated.

I've only had the C1 for 15 months, thus why I'm in about £2500 in negative equity.

I'm happy to keep the C1 but it means I'll have to either a) increase the monthly payments b) save for the excess mileage (it's 3p per mile so not much really).

When I last checked, my current 'loan' was around £7000ish.

The excess mileage will be a few hundred quid at 3p a mile, probably about the same as one of the monthly payments on the new deal you're looking at. Just ride the C1 out a bit longer.

Casdawer · 26 Jun 2018 at 09:20

Peerzy said:
You are in a bad situation as any loan will incur interest on the negative equity you already have plus the depreciation of a brand new car. If you want to consider finance why not get a small bank loan and buy a decent second hand car, something that is a few years old? You'll escape the negative equity and owing money cycle much quicker. This will make changing cars in the future much easier.

Brilliant - you've identified you will have no idea what you'll need from a car in 18 months time, so why is signing up to a 5 year finance deal a good idea?

The same reason why people sign up to any loan/mortgage over a long period? No one knows that will happen during the period of any loan, that's life.

Kenai said:
The excess mileage will be a few hundred quid at 3p a mile, probably about the same as one of the monthly payments on the new deal you're looking at. Just ride the C1 out a bit longer.

This is where my mind is at currently. The C1 isn't the greatest car on the motorway but it gets me from A to B and it's cheap to run and insure etc.

I think I'll keep this to the end and stow away money for the next 2 years and then hopefully have enough to buy a decent second hand car afterwards and be done with PCP etc.