Personal Contract Hire

viper_2003 · 8 Jul 2007 at 21:55

[TW]Fox said:
It's still cheaper to get a loan. What about, say, financing it over 5-10 years yet knowing you'll sell the car and pay off the balance after 3?

That way you are only paying 3 years depreciation + interest on the loan. Not as much as contract hiring.

Contract hiring is just that - its hiring. It's no more your car than the Focus 1.6 you may have had from Enterprise last time you rented. It's the same thing just over a longer term. You don't own the car, it isn't yours, it isnt your car, you are simply renting it.

Not for me, thanks.

Not a bad plan but what you will find is the figure to settle a loan of that term after about 2 years will be horribly similar to the original loan taken out because of the way interest is calculated on fixed rate loans - it isnt a fixed amount each month it is squewed at the begining of the loan so more of the payment is interest and banks will charge upwards of a months interest to pay off a loan early.

See http://money.guardian.co.uk/calculator/form/0,,603119,00.html

wassap · 8 Jul 2007 at 21:58

Some of these plans have real stiff penalties if you exceed the PA mileage too.

Not really worth it tbh, money is still reasonably cheap from banks, thats the way to go.

With PCP's and the like, you have no real option to haggle either, so you generally pay full list.

tonyyeb · 9 Jul 2007 at 13:59

WJA96 said:
I also think you're basing too much of your decision on the one website suggested and that hasn't been updated in quite some time by the looks of the fact that none of the cars on there are newer than the '06 model year.

You might be right. I just got a quote for a VW Golf 1.4S which works out at £208inc VAT over 24 months (£4992 total cost over two years)

12k @ 6.9% over 24 months is £535pm. Sell it at 2 years old for 8.5k (looking at autotrader for rough guide) means a cost of £4670 (with two years road tax). Thats if the car sells for £8,500 in two years, plus the cost of selling and the hassel. Plus I don't have £535 a month to spend!

To get the monthlies together. 12k over 60 months is £236pm (£14160 over the term of the loan). I'm not sure what will be outstanding on the loan after 2 years but it will obviously be more expensive as more interest will be paid.

Unlight · 9 Jul 2007 at 17:46

wohoo said:
With PCP's and the like, you have no real option to haggle either, so you generally pay full list.

This is wrong - there is often more flexibility when buying on Credit, as the dealer is making more money from this option.

Buying in cash is sometimes the most expensive way these days im afraid..

Morba · 9 Jul 2007 at 18:26

tonyyeb said:
You might be right. I just got a quote for a VW Golf 1.4S which works out at £208inc VAT over 24 months (£4992 total cost over two years)

12k @ 6.9% over 24 months is £535pm. Sell it at 2 years old for 8.5k (looking at autotrader for rough guide) means a cost of £4670 (with two years road tax). Thats if the car sells for £8,500 in two years, plus the cost of selling and the hassel. Plus I don't have £535 a month to spend!

To get the monthlies together. 12k over 60 months is £236pm (£14160 over the term of the loan). I'm not sure what will be outstanding on the loan after 2 years but it will obviously be more expensive as more interest will be paid.

no offence, but why would you want to PCH a 1.4 golf?
i can almost see the point with a worthwhile car, but what does a 1.4 golf give you that a 2nd hand car and a loan would not be a better option?

The_Dark_Side · 9 Jul 2007 at 18:29

Unlight said:
Buying in cash is sometimes the most expensive way these days im afraid..

very true.
a cash sale means no kickback for the dealer from a finance company, so there's less scope to manoevure around the initial purchase price.

tonyyeb · 9 Jul 2007 at 18:35

Morba said:
no offence, but why would you want to PCH a 1.4 golf?
i can almost see the point with a worthwhile car, but what does a 1.4 golf give you that a 2nd hand car and a loan would not be a better option?

Nope not interested in 2nd hand cars. I know that most are fine etc etc etc blah blah blah but i've had one too many problems with cars and lack of warranty, hassel getting it fixed, amount time spent at the dealer etc etc... I'm just put off completly. And I know new cars can have problems too.

I was looking at an Astra Sport Hatch, Golf, Focus etc... The Golf is so far the best value out of those i've been quoted for. I only need a smallish Hatchback - not a Porsche or BMW etc.. My weekend car that I plan to get next year will be enough fun for me i hope - and it i expect will have its problems. I dont want two cars with issues!

I don't want a loan either - i'd have to get a big loan over a long period (and have the hassel of selling the car on) - just to get lower monthly payments - similar to what i would be paying for the Golf would get me the same kind of car im getting rid of - 2002 Focus Zetec 1.6.