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How do most owners buy their cars - Outright or PCP


trooperj3

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I see a lot of threads on here with people buying their cars through a PCP. What is the most common option for buying your car and how long do you normally keep them for. 

 

For myself I have always bought my cars outright, serviced them myself and kept them a long time. I've never been too concerned about having a service book stamped, especially after the warranty has expired.

I also get the long term benefit from looking after my car and knowing it has been well serviced and touch wood, I have never had any major problems.

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Last 3 cars have been bought when 1 year old and have been kept for between 3 and 7 years. Current car now 3-3/4 years old and owned for 2-1/2 years. May change some time next year as my mileage has dropped and I no longer need a large boot; so may change from diesel back to petrol and a smaller car.

Next car may be new simply because I fancy for once being able to select the exact spec and options that I want. Will buy an extended warranty with the car and aim to keep it for 5 years or so. Will investigate PCP but will probably pay cash.

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If you get a 0% pcp, you are in effect buying it outright ( if you pay the final payment) but leaving the cash in your account instead of VAG 

Unless of course you can get a bit knocked off the list price for buying cash .

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In the past ive used cash to buy cars outright or taken out short term bank loans. In the case of the citigo I used a pcp. At 0% plus the servicing thrown in it was a no brainer. Especially as the car will depreciate by a load more than what we are paying!

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I've always bought a few years old for the main car, and had an old banger for me, a few years ago we tried a pcp, it worked for us so had another. The Citigo is my old banger, on a pcp, monthly with tax/fuel/mots etc it is cheaper to have a brand new Citigo than my last car, and that's ignoring any repairs on the old car, but allowing £120/year for mots.  As has been said, a no brainer.

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I think the vast majority of people finance their car in someway. Many people love the new car every 3 years, the appeal of £XXX per month, minimal servicing/consumables cost etc.

 

Some of the best deals are available if taking the dealer offered finance options, and sometimes the manufacturer will heavily subsidise / discount the deal too, as well as incentivising the dealer for PCP deals.

 

Even when shopping at brokers, quite often the best discounts require you to take out the finance, even if it is repaid soon after purchase.

 

Personally I like to own my cars outright, but its a bit irrational really. 

 

Dealers love to have people in the cycle of replacing cars every 3 years or so, its keeps a nice bit of reliable repeat custom.

Edited by Tom_vRS
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I recently bought via PCP to get 3 years servicing and a deposit contribution, plus some added safety net for any early warranty issues due to a previous experience of buying outright and having no backup when warranty issues were not being fixed :)

Just about to pay it off in full after a few months before the monthly repayments equal the deposit contribution and service plan value, if you know what I mean.

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Thanks for all the replies which make for interesting reading.

For me the bottom line is what you pay for the car initially. the cost to run it and how long you intend to keep it for.

It would be interesting and helpful to potential purchasers what people had actually paid for their cars and what deals had been agreed, finance or otherwise.

As virtually everyone on here is anonymous then people should be ok with divulging that info.

Personally I've always been wary of finance plans mainly because of getting stitched up with early settlement charges or the cost of any excess miles so I have always bought my cars outright and sold my old cars privately.

Not too concerned who I buy it from so I'll travel the country to pick up a car if it makes financial sense to do so.

I recently bought a pre-registered 4 door 60ps SEL G/tech with 40 miles on the clock, metallic paint, spare wheel and car mats car for £8300 which I was happy with.  

So far really pleased with the car and will probably keep it for 10 years or so if it proves to be reliable.

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Probably going to pick up a Citigo Black Edition (in white) this afternoon with no deposit from me, £1100 from the dealer and 113 a month over 42 months.

 

In my eyes it's like I'm going to be renting a brand new car for 3/3 and a half years, for which my missus will be carting my 19 month old around in during the day (use the Octy for longer/motorway trips), and then we'll decide whether to keep it or not. If 3 year old private cars are more than the baloon payment then I'm quids in, if not I could still pay it and have car I know the history of and how it's been driven since it began it's life.

 

If you don't want to be spending/finding a big lump some for a car and can afford little bits each month, PCP is good way to go in my eyes.

 

Edit - And although the PCP is 6,000 miles PY, as I plan to keep the car I can quite happily put 20,000 miles a year on it as the dealership only cares about the mileage if you hand the car back and walk away at the end of the term.

Edited by randomeclipse
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If I was looking at cash vs. 0% PCP I'd do a little a bit of maths first. I'm assuming I'd get a slightly better price paying cash, but it'd have to be better by at least what's thrown in with the PCP (servicing, I also got breakdown -- stuff I'd want to buy anyway) plus an estimate of the interest I'd expect to earn by not handing over a lump of money all at once.

 

At the end of the day, the dealers get their money either way.

Edited by ettlz
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I dont finance anything.

Im self employed, so if i have to take some time off work for whatever reason, i dont get paid. So the least outgoings the better. Everything else is paid upfront too, tax, insurance, etc etc

Ive been rised in a family that frowns on borrowing anything too, so thats probably come down to me too tbh. 'If you cant afford it, you dont have it' etc.

Obviously a mortgage is different lol.

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I don't think that ethos is plausible nowadays, to an extent.

 

But the concept still being applied. You can afford it, but you aren't paying for it up front.

 

Option 2 is to buy a car for £150... good luck in running that daily for 22,000 miles per year.

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I don't think that ethos is plausible nowadays, to an extent.

Save up.

Its how it always used to be done, and i prefer the idea now too.

I dont get why everybody is obsessed with monthly payments tbh. It just seems impatient and it would never feel as though its 'mine'.

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So you save up hard and have £15k to buy a new Fabia, well done. The Fabia you want is RRP £17k, you haggle £15k 'for cash' and think you've got a great deal. The dealer has probably made nothing, and this may well reflect in the aftersales you receive, and possibly also any 'goodwill' discounts for out of warranty repairs.

 

With most of the finance options, the manufacturer will be offering the dealer some support, e.g. For quarter 3 2015 we will offer your customers 0% APR and give the customer £500 deposit contribution AND the dealer is offered an extra 1% margin on the car. These discounts wouldn't be available if you were paying cash, its money coming from the manufacturer in addition to the dealers normal margins. So you may well be able to get the car for under £15k 'for cash' price, the dealer makes more money and as such is more inclined to look after you. You can keep your £15k in the bank and use it for other things, and should you have problems with the car the dealer can't resolve then you also have the finance company to fall back onto.

 

Cash isn't king anymore.

 

A lot of people paying 'cash' are really borrowing money from the bank anyway (even if its just £15k they could have paid off the mortgage at 2.9%), and giving it large in the dealers 'but I'm paying cash'.

 

Just to add, I paid 'cash' for mine too, but I was under no illusion that it must be the financially best way to buy the car.

Edited by Tom_vRS
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Save up.

Its how it always used to be done, and i prefer the idea now too.

I dont get why everybody is obsessed with monthly payments tbh. It just seems impatient and it would never feel as though its 'mine'.

I am with you on this. Save up. Negotiate the best deal. Buy it. Own it. Enjoy it.

If you can't afford it, go without until you can.

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I'm still not sure I get this whole you must pay cash attitude. Firstly it will be way cheaper running a car like a citigo on a pcp v cash and secondly I'd never want to waste, yes waste my savings on a car. I'd rather pay 15k off my mortgage which would in effect be a 25k mortgage reduction. Far more sensible use of my money IMHO.

At the end if the day I pay 120quid a month for my car, I can easily afford this

So its no worries for me. I could go out and pay 2k for a banger but I'd probably spend the same again over a few years on repairs. As it is I've bought a citigo using cash I don't miss, whilst still having ny savings that are at least staying the same in value whilst the car you have bought using savings has lost 60 - 70% of its value.

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And that's where things have changed. I now have 2 new cars that cost me x per month and provide me with pretty much complete problem free motoring and safety for my 19 month old, instead of saving up £28k and buying them with cash.

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And that's another way us buying cars on pcps have scored. If I'd paid cash for my citigo (10k) after 42 months it would be worth about 3k so I'd have lost 7k of my savings as it is the mgfv for mine is 3.8k so I'm 800 better off. Than if I'd paid cash, plus I got a 750 discount for buying on finance plus 3 years free servicing.

Yes, pcps suit the manufacturer by boosting new car sales but they help us by ultimately paying less for cars.

At the end of the day the majority of new cars are sold this way nowadays.

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I'm still not sure I get this whole you must pay cash attitude. Firstly it will be way cheaper running a car like a citigo on a pcp v cash and secondly I'd never want to waste, yes waste my savings on a car. I'd rather pay 15k off my mortgage which would in effect be a 25k mortgage reduction. Far more sensible use of my money IMHO.

At the end if the day I pay 120quid a month for my car, I can easily afford this

So its no worries for me. I could go out and pay 2k for a banger but I'd probably spend the same again over a few years on repairs. As it is I've bought a citigo using cash I don't miss, whilst still having ny savings that are at least staying the same in value whilst the car you have bought using savings has lost 60 - 70% of its value.

Which is why it does make much more sense to buy a car 6 months old as appose to brand new really. Its lost a big chunk already.

The thing is, people seem to get obsessed with paying monthly, and what do people actually own at the end of the day? Nout.. The bank owns everything.

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