Porsche 911UK Forum

Welcome to the @Porsche911UK website. Register a free account today to become a member! Sign up is quick and easy, then you can view, participate in topics and posts across the site that covers all things Porsche.

Already registered and looking to recovery your account, select 'login in' and then the 'forget your password' option.

PCP vs HP...

AA3751

Active member
Joined
17 Jul 2016
Messages
38
Hi guys ... Newbie to the 911 forum !

So after plenty of thought I have decided I am going to buy a 911! Exciting times....

Ideally I think a Carerra S around 3-4 years old with some spec, ideal options being sports chrono and sports exhaust

Would appreciate some advice on how best to fund the car in order to lose as little money as possible as I plan to keep it around 18 months then upgrade to maybe a GTS/something else but don't want to be restricted to Porsche. Monthly payment amount isn't a factor so what I'm asking is am I better with a PCP deal or just a straight HP and where am I likely to lose the least?

Thanks in advance !
 
HP. PCP is basically an interest only repayment. Your monthly payments will be less but you'll never actually own the car. That said, there are robust debates for PCP. I've just secured a build slot on a Macan GTS and gone down the HP route.
 
In general, whichever has the lowest monthly repayments (assuming the same interest rate) will cost you the most.

By that I mean the longer you hold a capital balance (or the bigger that balance), the more interest you will pay.

But it is unlikely the comparison will be on the same (daily) interest rate.

So you will need to ask for a projection for each method assuming repayment in a year etc.

They may even have different termination fees (which will constitute part of the overall cost of taking that method of payment)
 
^ what he said

Always look at the APR which includes all the rates/fees applicable and is to be used as the baseline for comparing deals
 
If you plan to buy outright at the end of the PCP (by paying off the baloon payment) it is usually more expensive than a loan or HP from the outset.

The PCP is effectively financing the depreciation with interest.
The loan or HP is financing the initial purchase price with interest whilst your asset is depreciating.
 
I'm no financial expert but my simplistic take on it is:
Put as much deposit that you can afford from Unborrowed funds.
Finance the difference with money borrowed at the best rate you can get it, I.e. Personal bank loan.
This way, you will feel like the car is at least partly yours from the outset and as you make the payments you will own a little bit more all the time.

And come resale time, you ought to have a decent deposit for your next car as you will have some equity in the car as px or private sale.
 
Wilpert that's just about my take on car finance from the perspective of a private buyer but I am sure other methods my well be more tax efficient for VAT registered business :thumb:
 
If you go for PCP, go for the lowest level of deposit the vendor permits.

The equity at the end of the contract period is driven more by the Min Guaranteed Future Value (MGFV) which will also be the balloon payment to buy the car outright. You are financing the depreciation between purchase price and MGFV less deposit + interest.

Think carefully if putting the car through a VAT registered business as the tax treatment of a company car is complex and attracts taxman's interest if you are a small business. If in doubt speak to an accountant who can also advise you impartially on purchase options and their pros and cons.
 
Pcp vs HP

Car through your own business is Benefit in Kind suicide. Only works well when the Co2 values are low enough so something like a 918 spyder would work well.....

Question for you guys on PCP. If you decide to sell the car say after 18 months, how do you work out what the balance is left on the car? Or do Porsche finance give you a figure on request? If the car was let's say £100k and you pay £1k a month, after 18 months you have paid £18k. I assume the balance left to pay would be no where near £82k as a huge amount of that £1k would be interest? This is where I think HP wins for me as you pay more off towards owning the car and when selling have paid a lot less interest and that balance figure would be closer to £82k than a PCP!
 
In a corporate life I was on the 'senior director and managers car scheme' which was a PCP. The deposit paid by the company, a contribution into salary and a car in my name paid by direct debit out of my salary. I could and did have a greater costing more than the contribution to salary from employer.

In the event of early termination, the liability was on the company to pay up the remaining monthly contributions from termination date to end of contract term.if you take out a PCP without a company backing, I'd guess its the same but you'd have to pay the remainder of monthly payments to end of term.

With a company scheme underwriting the PCP they met any excess mileage payments over the contracted mileage and the early termination clause wad a liability of the company in case they had to cancel due to resignation, dismissal or redundancy of the employee.

Charging a car through the company for a small business needs to be considered very carefully if its difficult to prove you need a car for business.
 
Just met with the stealer and been quoted for a £106k pana for down £25k with £1.2k per month for 4 years on pcp. After that, i would just hand the car back if i cannot pay the 47k balloon. That works out £82.6k for 4 years if i hand the car back. Based on 5k miles allowance a year, that is £4.13/mile before i servicing and fuel :eek: :eek:
 
And how about depreciation after capital and interest repayment?

You are spending £83k ti hand the car back and have no asset at the end of the term.

Compare if you took out finance what you'd pay and estimate the value of the asset at the of the term because you would own the car at that point and that has a value that you can trade against for another asset.
 
jazzy2000 said:
Just met with the stealer and been quoted for a £106k pana for down £25k with £1.2k per month for 4 years on pcp. After that, i would just hand the car back if i cannot pay the 47k balloon. That works out £82.6k for 4 years if i hand the car back. Based on 5k miles allowance a year, that is £4.13/mile before i servicing and fuel :eek: :eek:

And this is precisely why I have never financed a car, and equally why I'll never own a GT3 now!

I just cannot stand the fact that I would be throwing money away on something I will never really own, or even that something depreciates so quickly because of the way the market is set up. There is no way a car is worth £10k less the moment it leaves the forecourt, its just that we are forced into paying £10k more for it than its worth to fund the salesmen's bonuses.

A few months back I was looking at getting a low BIK car for the wife and financing it through my limited company as a way of actually getting money out of the company efficiently. In the end I binned the idea and bought her a Range Rover Sport for £15-20k (an awful lot of car for the money - but thats another topic). Even if it depreciates, it won't be at a dizzying rate and at least we own it outright.
 
You need to double check those figures.
Car costs £106k

MGFV at end of term (48 months) = £47,000

Depreciation = £106,000 - £47,000 = £59,000

Less Deposit £25,000 = £34,000

PCP is financing the depreciation plus interest.

Lets say Interest is 6.5%

Depreciation + Interest = £34,000 x 1.065 = £36,210

Over 48 months = £754 per month

Excludes fuel, servicing, maintenance, VED, MOT.

Assumes 5k miles per annum (otherwise costs increase due to excess mileage penalty - usually applied by reducing the MGFV

IF I've not over-simplified it and if I've not overlooked something of significance, then those figures quoted do not make sense to me and I'd be back asking them to clarify and break them down much as I have done.

If there are any professionally qualified accountants on the forum, perhaps they can add their view and correct me on anything (I am NOT an accountant).

Maybe I've got it completely wrong? £1200 per month versus above £754.
Lifetime cost £86,400 versus £61,210?????
 
Still, £60k to drive something you'll never own?


giphy.gif
 

New Threads

Forum statistics

Threads
124,350
Messages
1,439,412
Members
48,705
Latest member
Scratch
Back
Top