Explain PCP to me! Got a V4S quote today.

[Domo]

Popped along to Ducati to enquire about a Panigale V4S today.

Financial details
£10K trade in for my '67 959 Panigale which has 1,400 miles on the clock + underslung Akra exhausts. I bought it outright for £15K 13 months ago.

Cash price: £23K (said he's knock of £1K as I said the part-ex seemed low).
Deposit: £9.2K (maximum permitted / 40%)
Credit: £13.8K
Hire Purchase charges: £2.8K
Total Payable: £25.7K
FINAL REPAYMENT: £13.2K

So after all that my question! In 3 years time, given I will be doing < 2,000 miles per year I assume a V4S Panigale will be worth more than £13.2K (even the dealer said that). But what would that mean to me? Do I get anything back? Sorry - total noob to this. I suppose it can transfer as a deposit on a new bike and just keep the repayments going?

I'm battling with the idea but I love the V4. To give up an expensive bike for a PCP deal seems nuts. But i guess that's how things work if you don't have the $$$ up front!

 

[BUDFORCE]

I'm out at a wedding and somewhat ***** so I'd have to check the numbers in the morning.

Generally those PCP deals are ******** Vs a cheaper personal loan.

But read paragraph 1.

 

[The_Abyss]

So... you give up a 2017 959 Panigale worth £10k (trade in), get a Panigale V4S for which you pay £2.8k over the next three years at which point you have nothing other than hope that depreciation has left you with something.

I guess that works for some, but not for me.

 

[Domo]

To be honest I've been sat here thinking about it this evening and I'd have to be mad to go for this. Not just the financials, but as I said in my OP it's giving up a bike I own outright for something I might have to give back in three years and end up with nothing. So as tempting as the V4 is, I think I'm done considering it. If things change in a few years time and I've built up the funds, maybe then. But for now the 959 and my trusted YBR125 will do for now.

 

[The_Abyss]

I don't think there's anything wrong with upgrading / buying something if you understand the cost of doing so. PCP will work for a minority of people, but the main purpose of this and a number of other financial instruments is to complete an important part of the jigsaw - that you can afford something. The other part of the jigsaw is to create an appetite for a product so great that lots of people believe that they cannot afford to NOT own / buy / have / be seen to own have buy it.

You've got a bike that many would love to own. Enjoy it.

 

[BUDFORCE]

PCP's are generally in the short term a cheaper way to get a more valuable vehicle. So, say if you are only going to live for 2-5 years, perfect.

But in the long run it ends up more expensive because you'll get stuck in a loop of them, and without any injection of capital, you'll end up paying them forever.

The other way to look at it, is that the dealer effectively sells the vehicle twice. First time on PCP - but the balloon or buyback payment will always be higher then the depreciation (or do I mean lower? - anyway), and dont forget, the finance agreement is also charging you interest on top of that, so the dealer really can have his cake and also eat it.

That being said, if you are into things like Range Rover Evoques (and the likes), generally just big ugly status symbols and have a TERRIBLE reliability track record, in the long run you will probably loose less on a PCP vs just owning it, that would be the ONLY time when it may be a consideration.


In the above example, you would be better selling your bike privately, but if you can't be bothered with the aggro (I get it, its a PITA to sell a bike privately although I have done once with no problems) may be worth to see if there are any bike dealers that will sell it for you on commission. So for example, the local bike place near me, will sell the bike for you, advertise it, sort everything out, also they got all the insurance whatever else if people wana test ride, and then they take whatever, 10% or something, not much.

Only down side of that is that you cant ride your bike whilst it's being advertised.

Or say even if you part ex at that price above if you dont want the aggro.

Anyway, so you get worst case 10k for it, the cash price is 22k? You need to finance 12k, personal loans are damn cheap atm, you can borrow 12k from John Lewis at 2.8% apr, which means you will only pay back in total £12,858 (yes, 850 quid finance cost, vs the above 2.8k!!!!), monthly payments work out at £214 a month over 5 years.

Plus at the end of the 5 years, you own that bike outright (technically on a personal loan, you would own the bike outright from day one, but, you get what I am saying).

Or, just keep your current bike

 

[chaparral]

Edit: made a mistake

But that 2.8k HP charge looks very high
The HP charge for my own 12k loan for my car was £1,160