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PCP vs HP...

I've just had a 6-series GC on BMW PCP... purchase price £55k, 3yrs residual at 60k miles £25k, £19k finance @ 0% at £530/m, £11k deposit. £30k Depreciation so total cost £10k per annum.

For the 911, £90k car, £15k deposit, £75k finance @ 6% £1,200/m 4yrs residual £35k so round figures are £55k depreciation + £15k interest. Depreciation/finance cost £17k per annum. (I've got a better deal a bit less than that, but it keeps the numbers round for example purposes)

The way i see it, car is £35k more to buy + £15k interest so £50k higher than the 6, but actual cost to me in my man-maths is that its costing me £7k a year (or £600/ month) for a 911 instead of a 6 series.

No-Brainer bargain as far as i'm concerned. ;)
 
cheshire911 said:
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?????

Stealer actually quoted me 9.5% interest in his calculations. Naturally I made a swift exit...
 
I just bought a Golf on PCP.

Negotiated a discount on the ticket price then looked at finance with the dealer.

Took all the dealer incentives to take PCP (sizeable discount dressed up as "deposit contribution" and 2x free services).

Called up VW FS the next day and paid it off in full under the 14 day withdrawal period. Keep the incentives.

Screw paying 10.9% APR on a PCP deal!

I had the cash but could have financed it somewhere else (bank loan, 0% card balance transfer) much cheaper than that.

So I would look at borrowing elsewhere - mortgages are very cheap money at the moment - just remortgage take the PCP incentives and pay it off.
 
I've gotta fess up.

I was going to take Pcp route on my new boxster s.
I haggled the 12 percent discount gave my car as px, still needed 30k to make shortfall, so I scrabbled for 10 k outta funds here and there I still needed 20k so i remortgaged one of my buy to let's at 4 % interest and put the tenants rent up.
Even with depreciation and a bigger mortgage at least I'll feel like I own it and have something to trade up in a few years.
I'd hate to feel I would be giving the car back in 3 years.

Feel a bit guilty but I do like the car :dont know:
 
Option C, buy a £5k car now, put the payments into an account every month, then in the few years buy it out right without giving a single penny to any finance company or lender. By which time the car you want now will hopefully be a lot less. You'll be a winner in every way :thumb:
 
cheshire911 said:
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?????

It's the interest calculation that's off here I think! The interest is calculated on the full value of the car so Purchase price less deposit. Not just on the difference between that and the GFV! That should help get it to the quoted figures
 
ragpicker said:
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.

I just took a company car out for the wife on PCP! Cheap deals costing around £250inc vat a month. Costing around £3k a year and works well for us. New car, warranty, all costs and fuel go through company, no tax or NI to
Pay, corp tax relief, low BIK amount. Always depends on what car your after I guess though.... Calculations on the low CO2 panamera/cayenne hybrids would be interesting....
 
I wonder how many people drop 100k+ cash for a new 911 or the new Panamera.
 
I bet that's less than 1% of buyers... Even if you had the cash, you probably wouldn't.... "Ownership" is a bit of an urban fallacy. Sure, for my bike and classic car it's nice to own them... But for a new/modern car, it's much less relevant.
 
If you are planning to move it on in 18 months, why not take a bank loan out, plenty out there on 3.9% APR rates. If you need more when you trade up, you can top it up or keep it running and pay cash for the difference. Only use dealer finance if it is sub 4.9% APR. If you aren't taking it to the end of the loan term, it makes little difference between PCP and HP, if the interest rates are the same, but often there is a difference between dealer HP and PCP rates. PCP's are likely to be lower as this is the finance product the Manufacturer Finance house wants the dealers to promote. I've been in motor finance for 25 years, so feel free to PM me any questions you have.
 
ragpicker said:
6appeal said:
But for a new/modern car, it's much less relevant.

Why's that?

Surely its just a personal preference?

It is indeed, but with three main changes in society over the last 10 - 20 years in particular for the primary cars in day to day use:
1) Disposable incomes have increased and greater proportion of people are in the market for "premium" cars. When i bought my first car 20 years ago, it was another world in the work car park.
2) Borrowing has become more prevalent with it being cheaper and easier to obtain.
3) From the recession 8 years ago, people have tended to hold onto cash for a rainy day and to pay the small cost to finance such a purchase and effectively hire the things.
 
6appeal said:
I bet that's less than 1% of buyers... Even if you had the cash, you probably wouldn't.... "Ownership" is a bit of an urban fallacy. Sure, for my bike and classic car it's nice to own them... But for a new/modern car, it's much less relevant.

I have always paid cash when buying my cars. It is not ownership that important. Rather it is not paying more money (by way of interest) than is required. Besides, money in the bank instead is not going to give me more interest than what anyone charges. What do you guys think?

But then i have not bought a 100k car before and forking out 100k cash is still quite hard to swallow.
 
It seems that there are so many variables in this discussion, HP, PCP, part cash part finance.
I'm impressed how many people give it so much consideration and work out all of the options available, then make rational decisions.

Even at my age, I tend to see what I want, commit to buying it, realise I couldn't really comfortably afford it and then somehow pull together the funds so I can pay for it.
It's called impulse buying and it's usually led by the heart and not the head.

All this Pcp, HP, oap and all the rest of it just goes out of the window as I drive around the lanes in my impulse purchase.

Not a good example really am I
:nooo:
 
Pcp

Anyone that's good with a calculator here's one for you!

So let's assume same deposit, same monthly payments...

Keeping the car for 2 years, which would give you more equity left in the car HP or PCP???

HP will of course be on a longer term length than PCP to achieve the same monthly payments but even doing that I'm curious which one 'pays off' more of the car value rather than interest so effectively gives you more cash if you sell the car ....
 

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