PCP's

[TW]Fox · 6 Apr 2006 at 13:10

wesley said:
fox, its no difference if u get a bank loan of £15k for a car, you dont actually 100% own the car, its bank money

It's totally different, becuase if the loan is not secured on the car, which most are not, you OWN the car. It is 100% yours. It does not belong to the bank.

u dont 100% own a house if u got a mortgage on the house

Becuase the mortgage is secured on the property.

wesley · 6 Apr 2006 at 13:11

The bonus is that with the PCP you have spent less on interest on the loan as the amount borrowed was less in the first place.

EXACTLY!

Firestar_3x · 6 Apr 2006 at 13:14

You can't compare a house loan to a car loan, homes usually appreciate in value, if you buy a new car its just going to depreciate.

I agree with Fox on this one, to me a car is an asset, every car I have bought I have paid cash for, I've worked for the money saved up, saying car ownership is overrated it total BS, when you 100% own a nice shiny car its a great feeling cause its yours regardless of what happens.

When interest rates start going out and people have taken out all these loans on fancy cars they can't really afford your going to see lots of people in a position that they can no longer afford to pay for the car, so it will be taken away from them, they will have paid and own nothing and will be liable for the cost and outstanding money.

Rilot · 6 Apr 2006 at 13:15

I have a mate who is at the other end of the spectrum with car finance.
He thinks that anyone who borrows money to buy a car is a complete fool. His opinion is that if you can't buy it with money out of your bank account (petty cash), then you can't afford it and therefore should't have it.

I have pointed out to him that not everyone makes £250k a year with £1.5M in share options like him.

[TW]Fox · 6 Apr 2006 at 13:15

I guess it depends on how you view a car.

If its merely a tool to get you from A to B, something to make the neighbours think you've made it, something you require, then maybe PCP is a good idea.

But, if like most people here, cars are your passion, then car ownership is never over-rated. There is a great feeling about owning your own car - a car thats totally yours, that you are not hiring, that you can do whatever you want to. An asset.

Rilot · 6 Apr 2006 at 13:16

Firestar_3x said:
When interest rates start going out and people have taken out all these loans on fancy cars they can't really afford your going to see lots of people in a position that they can no longer afford to pay for the car, so it will be taken away from them, they will have paid and own nothing and will be liable for the cost and outstanding money.

Only if the interest rates are variable. When was the last time you saw car finance that was on a variable interest rate?

Dolph · 6 Apr 2006 at 13:17

Firestar_3x said:
You can't compare a house loan to a car loan, homes usually appreciate in value, if you buy a new car its just going to depreciate.

I agree with Fox on this one, to me a car is an asset, every car I have bought I have paid cash for, I've worked for the money saved up, saying car ownership is overrated it total BS, when you 100% own a nice shiny car its a great feeling cause its your regardless of what happens.

That's your choice. Doesn't mean others have to share your opinion though.

When interest rates start going out and people have taken out all these loans on fancy cars they can't really afford your going to see lots of people in a position that they can no longer afford to pay for the car, so it will be taken away from them, they will have paid and own nothing and will be liable for the cost and outstanding money.

Most loans of this nature (whatever the source) are fixed rate, so changes in the base rate are irrelevant. There is also no evidence that the base rate is going to be raised at the moment, prevailing economic conditions point to it being static or perhaps dropped very slightly, rather than raising it.

Rilot · 6 Apr 2006 at 13:19

[TW]Fox said:
There is a great feeling about owning your own car - a car thats totally yours, that you are not hiring, that you can do whatever you want to. An asset.

Meh, I disagree. Been there, done it.

I love cars, and I love driving but I see no point in busting a gut to buy one just so I can have that total ownership experience. I still do what I want to the car (as you can see with the PC project) because I have no intention of handing it back after 3 years.

Firestar_3x · 6 Apr 2006 at 13:20

Rilot said:
Only if the interest rates are variable. When was the last time you saw car finance that was on a variable interest rate?

Fair enough then, if you take a bank loan out, or even on PCP when you mortgage payments go up and the cost of living increase once this political disaster of a goverment has departed power, its going to happen its just a question of time, people can't keep taking out more and more finance it has to stop at some point and when it does lots of people are going to hit the ground rather hard from that point on its repercussions will effect everyone to a lesser degree, finance or not.

Firestar_3x · 6 Apr 2006 at 13:21

Dolph said:
That's your choice. Doesn't mean others have to share your opinion though.

Thats fair enough and i'm not preaching it to anyone, totally my view but its interesting to see people who do take things out on finance cause they couldn't afford them otherwise defending them to the hilt.

Rilot · 6 Apr 2006 at 13:23

Firestar_3x said:
Fair enough then, if you take a bank loan out, or even on PCP when you mortgage payments go up and the cost of living increase once this political disaster of a goverment has departed power, its going to happen its just a question of time, people can't keep taking out more and more finance it has to stop at some point and when it does lots of people are going to hit the ground rather hard from that point on its repercussions will effect everyone to a lesser degree, finance or not.

This is a risk everyone takes with a mortgage. I try to minimise that risk by fixing my interest rate for as long as possible.

Desmo · 6 Apr 2006 at 13:24

I'd avoid things like PCP for one simple reason. Your financial situation can change very quickly. Say you're coming to the end of your 3 year car loan and your finances change due to house repairs, baby on the way, etc. You see out your loan and your'e left wit ha car that's all yours.

With PCP, you see out the term, give your car back and you're left with diddly squat. Now you have to pay for your house or baby and go out and buy another car.

You never know what the future holds with regards to your finances.

Rilot · 6 Apr 2006 at 13:27

Desmo said:
I'd avoid things like PCP for one simple reason. Your financial situation can change very quickly. Say you're coming to the end of your 3 year car loan and your finances change due to house repairs, baby on the way, etc. You see out your loan and your'e left wit ha car that's all yours.

With PCP, you see out the term, give your car back and you're left with diddly squat. Now you have to pay for your house or baby and go out and buy another car.

You never know what the future holds with regards to your finances.

These are good points.

wesley · 6 Apr 2006 at 13:31

if i never heard of PCP and got £500 spare every month

Tesco Loan:
borrow £14500
36 X £500.73 @ 5.9% APR

so i buy brand new Ford Focus 2.0L

if a mate come to me and telling me "hey wes, got new car, brand new Subaru Impreza STI, £1,000 deposit then 36 X £400"

i know i'll be gutted

Maz · 6 Apr 2006 at 13:32

[TW]Fox said:
I've not once said you get into negative equity becuase you don't - I'm saying that you will sometimes find the GFV is higher than the value of the car. This is NOT negative equity - its not your car - but it does mean you are then forced to make a choice between:

a) Giving up and handing the car back. You now have nothing to show for 3 years of paying every month.

b) Buy the car for the GFV. Problem is, car isn't worth as much as the GFV so you are now buying a very expensive 3 year old used car.

c) Use the value of the car to string yourself up for another PCP - pretty much the only sensible option in this sort of situation.

I don't think I will ever understand this. An MOT costs what, 25 quid a year tops? It's such a small amount it's not even worth considering. Servicing costs don't really 'go up' - if anything they go down as you no longer need to use main dealers.

Just strikes me as a way to say 'Look ive got a posh brand new car' when you couldn't have afforded to buy it..

Paying to maintain a 3+ year old car is more expensive to maintain a car less than 3 years old.

And Mots are now £43 under new Government legislation.

Where I work we give all our customers MOTs for free, for as long as the car exists.

wesley · 6 Apr 2006 at 13:33

Desmo said:
I'd avoid things like PCP for one simple reason. Your financial situation can change very quickly. Say you're coming to the end of your 3 year car loan and your finances change due to house repairs, baby on the way, etc. You see out your loan and your'e left wit ha car that's all yours.

With PCP, you see out the term, give your car back and you're left with diddly squat. Now you have to pay for your house or baby and go out and buy another car.

You never know what the future holds with regards to your finances.

a good friend of mine is a Nissan dealer, told me we can to return the car after 18 months without any reasons. as long the car is in good condition.

[TW]Fox · 6 Apr 2006 at 13:34

Maz said:
Paying to maintain a 3+ year old car is more expensive to maintain a car less than 3 years old.

I disagree. Provided you've got a well maintained, reliable car, servicing outside the main dealer network is considerably cheaper. I do not pay anywhere near as much to service my 6 year old Mondeo as I would if I had a 1 year old Mondeo.

And Mots are now £43 under new Government legislation.

They've always been £43 under government legislation, does not stop garages setting their own rate.

Where I work we give all our customers MOTs for free, for as long as the car exists.

So there we go, if they bought a car from you with cash and kept it for years they'd not incur all these MOT costs you say happen as soon as the car reaches 3 years

[TW]Fox · 6 Apr 2006 at 13:35

wesley said:
a good friend of mine is a Nissan dealer, told me we can to return the car after 18 months without any reasons. as long the car is in good condition.

Exactly, so you've paid 18x£400 or whatever and are left with... nothing to show for it. Thats Desmos point.

wesley · 6 Apr 2006 at 13:42

and if in first few months of loan, my financial situation changed quickly due baby on the way

what should i do?

sell the car privately and pay off the loan

no difference to me

Firestar_3x · 6 Apr 2006 at 13:45

You can't sell a car on finance you have to pay it off in full first.