Pcp, how many have one and why the hate?

[Markyg]

Was reading a thread in general motoring and there seems to be a lot of hate for pcp's.

I don't understand this hate as if you change your car regularly and aren't absolutely minted then IMHO its the best way to finance a car. Where people go wrong with a pcp is putting down a large deposit. To me for a pcp to work then you need to put the smallest deposit down and look to change the car at the end.

To illustrate how pcp's can work I was talking to a work colleague who is fairly well off and who was looking to change his three year old car. I suggested he try a pcp but he came out with the old "you never own the car" comment. I asked him how he financed his last car and he put 10k down, p/x'd his old car and financed the rest paying £300 pm. So technically he'd never owned his car until the last payment was made and then was looking to change. I showed him the pcp figures and if he'd leased his car he could have used his px and a small sum for his deposit and kept the same monthly payment and also kept his 10k in the bank.

How many citigo owners have their car on a pcp? And why the hate?

[Auric Goldfinger]

A PCP can put you into a car you can't really afford 

[Damo]

I have mine on PCP

I cant really understand why people hate this kind of finance, for all the same reasons you mentioned

People who know me, know I do like to swap and change cars quite often, so this kind of deal works for me.

I initially looked into leasing, but this worked better for me.

I got a new car, for low monthly payments with a low deposit and the option to swap after 2 years, with the payments staying the same, or keep it for 3 and a half with a balloon payment at the end.

I can then buy it outright, and keep it or let a family member/friend buy it (for cheaper and they know the history)

Works out great for me

The dealers love it as well, as it ties you in to their brand and often people stay with them for the best deals (which is fine with me as I love Skoda anyway)

I found it worked better for me than leasing, so I cant fault PCP whatsoever.

It brings the world of new cars a step closer to those who dont have the finances to buy in more traditional ways

[Markyg]

A PCP can put you into a car you can't really afford

On a citigo though? I could have paid cash for my car but why? I use my car to get to work so work can pay for it! £120 per month isn't a large amount and if I use 10k of my own money when I come to change the car in 3 years time I've lost 5.5k of my savings or I can use my disposable income to fund that 5.5k and keep the money in the bank.

Granted if you put down a large deposit you can afford an expensive car but like I've said if you put a big deposit down on a pcp its the wrong way to do it as you'll never get that money back unless the pcp is structured right.

[Markyg]

Also nowadays I don't think cars are as reliable at high mileages then in the past, so a pcp keeps you in a new car with a warranty.

I wouldn't at the moment have a citigo or up out of warranty with the clutch / gearbox issues and the fact that they haven't been resolved yet.

[sharkrider]

Ash's is on pcp.. think she put down £300 deposit! lol.. its perfect for people with low mileages.... she may well "buy" the car at the end of the period... and of course there is the option just to get another new one!

[Taylor93]

My position is i am an Electronics Apprentice for an international engineering company, during my first year of the apprenticeship i was driving 20miles+ per day to a training centre. My first car was a Mk1 Skoda fabia 1.4 16V. Running it on 97/98 Octane combined with the £3500 Insurance for the First year it was very expensive. I Sold it after 8 Months and bought a rough Mk1 Fabia which had the 8V (OHV) engine instead. This was very cheap to run as it could take the 95 Octane and not complain, but its reliability wasnt great. Oil pressure sensor failed a mere 3 weeks after getting it on the road (had been SORN for 18 months) and dropped all of its new oil on the road. the Window regulator also failed dropping the window on a very rainy day.

 

Thats when i Looked at the Citigo. 2 months after getting my 2nd Fabia. I found that at the time it was Cheaper to run in many aspects, the calculated fuel consumption as well as the considerably cheaper car insurance, also the Warranty, 3 years free servicing (Skoda deal at the time) and the added fact it was a new car it got me looking into ways i could get one. Which was very short sighted of me.

 

I Put my £700 savings and the £800 i got for selling my 2nd fabia into the deposit for the Citigo. I had no car for two weeks in between selling it and taking delivery of my new Car. But then my place of work changed. I finished at the training centre and it now meant i had a 5 mile trip per day (just over 2 miles each way). 

 

Eventually after being measured for a suit, i decided it was time to start walking in to work. So now the car is only used for my trip to college, but even then due to a lack of parking spaces, me and another apprentice car share and alternate weeks. So I only truly need it once a fortnight. I also moved out before Christmas so I also need it for the weekly shop but that isnt too far either.

 

Dont get me wrong It has come in handy, for a short while i was doing trips to London (I live in the Medway towns) practically every weekend and it saved me a considerable amount of money on petrol, and is very good on long journeys for its fuel consumption. However I feel now that I do not need a car like this. I could go to dirt cheap motoring and have a banger for driving to college once a fortnight and the weekly trip to the shops but as I consider myself bit of a petrol head I want to go for a more interesting and exciting car which costs me just as much. But i cant because of the PCP.

 

I am trapped as the amount of finance left to pay is greater than the cars value. So if i sold the car I would still need to trump up about an extra £1000 or so to clear the balance. by all means the Citigo has enabled me to save up this amount of money. However if i did clear the balance I would not be able to get the car i want and to be able to get it insured on the road.

 

So its a matter of waiting for the Cars value to be closer matched to the outstanding balance, while also saving up money to the sell the Citigo, clear the balance and get another car.

 

I dislike it because its a pig to get out of, and all I am paying out for each month is the cars depreciation.

[BossFox]

As Taylor is saying, if you do a low deposit PCP and want to change in the short term the garage may well offer you less than the total outstanding.

So you are trapped in the car as you are driving around in negative equity.

On a 0% basis they make sense, but the issue I have with a PCP is that you pay interest on the balloon payment for the whole term, meaning they are more costly in terms of finance charges.

 

 

Lets also bare in mind the lunacy of buying new cars (unless you have fleet discount) and then selling and changing too regularly.

 

If you buy a Citigo new with a snazzy showroom shine, a top one will cost you around £11,000.

If you change to another car at 3 or 4 months old you'll get £8,000 back against the next car, allowing for the dealer to make a bit, sell it for £9,000 and leave a bit of haggle room.

 

So the car will have cost you about £1,000 per month to drive a Citigo.

More than if you bought a far nicer car and kept it longer.

 

So PCP (unless 0%) for higher finance charges and changing regularly ensuring you go through the worst depreciation period of the car are both ways to ensure you pay the most possible to drive a new car, even if it's only a small/cheap one.

 

 

 

It's often pointed out what a good deal a PCP can be, because of the low payments.

But if you bought just one car the resulting lump of capital you take from one car to the next would actually mean lower payments for car after car after car... as the interest is less.

 

Or you could just buy something a year or two old, have the same payments and actually own it at the end, meaning you get a better deal on the next one as you have more cash to use as a deposit.

But it doesn't have the "kerb appeal" of a new car.

 

Above written by someone has bought one or two new cars... ... changed regularly and generally seen amazing depreciation and costs.

If I'd gone down the PCP route my costs would have been even higher.

[Taylor93]

One more point

 

Ill admit that Short Term the Citigo PCP + Insurance was cheaper than the insurance alone on my first years insurance but since then it has been more expensive even if you included service charges, Road tax and other expenditures to keep an Older used car on the road.

 

Plus After 8 months and putting an extra 11000 miles on the clock of my first car I sold it for £1400 when i bought it for £1450. so £50 depreciation over 8 months is pretty good IMO

 

edit::

 

Compared to my Citigo which after 1 year and almost 9000 miles, I had lost about £4000 (off the top of my head)

[Didescharlie]

With all due respect to Richard, his car-buying habits are hardly those of the average punter as he himself points out, but he illustrates the point that PCP isn't for everyone, and there is a downside to those low-monthly payments come the end of the term.

 

This is my second Skoda on PCP and I've been very happy with what I'm getting. I counter those "but you don't own the car" arguments by reasoning that I'd rather have a new car than an old one that I own. It's a heap of metal and plastic that loses money at a frightening rate however you look at it.

 

My car on PCP at 0% APR with full servicing and assistance for 3 years for £150 a month with effectively no deposit going in (the dealer paid it from a £250 come-and-see-us incentive voucher) means I can't really see a downside. At the end of the term there's no way I'd keep the car anyway, I'll be too busy chomping at the bit picking options for my next car and dreaming of my next hit of new-car smell.

 

As a quick comment on something Damo said earlier - A PCP deal doesn't tie you to a particular brand of car, even though the dealer doesn't make much of this fact. You can walk into any dealer with whatever PCP you currently have and their finance people will arrange whatever's necessary to switch cars, as far as I'm aware.

[Taylor93]

As a quick comment on something Damo said earlier - A PCP deal doesn't tie you to a particular brand of car, even though the dealer doesn't make much of this fact. You can walk into any dealer with whatever PCP you currently have and their finance people will arrange whatever's necessary to switch cars, as far as I'm aware.

 

IMO While it doesnt tie you to a brand/make/model, it does tie you to that exact car until the PCP is up.

[Auric Goldfinger]

 it does tie you to that exact car until the PCP is up.

Don't think it does, you can change midway through a PCP and start another.  With any dealer/ Manafacturer

[BossFox]

My car on PCP at 0% APR with full servicing and assistance for 3 years for £150 a month with effectively no deposit going in (the dealer paid it from a £250 come-and-see-us incentive voucher) means I can't really see a downside. At the end of the term there's no way I'd keep the car anyway, I'll be too busy chomping at the bit picking options for my next car and dreaming of my next hit of new-car smell.

The 0% APR deal does render most of the anti PCP deal arguments irrelevant.

Because the PCP issue is all the balance outstanding over the term you are financing, leading to higher costs.

With no interest, there is no costs.

So any 0% deal typically makes a lot of sense.

Any car I've ever bought, I've always put down the smallest amount and financed the rest if 0% APR is available.

It's a no brainer IMO.

[sharkrider]

all good points, but what about us? we dont want to change the car withing the pcp period, and knew this before we went into it, we knew we would be doing about 7k a year in it, even though we are allowed 10k, and ash owned her last car, and this is cheaper EVEN with the pcp deal, because the drop in insurance and fuel and tax over the year, covered the monthly payment! (yes her insurance dropped THAT much!), so to us, it was like getting a new car for free financially speaking!

 

works brilliant for some people, like us

[Damo]

Its all down to circumstances and preference.

I was going to lease as I wanted a new car with a warranty after my last cars turbo popped, and cost me nigh on a grand that I didnt have spare.

The PCP suited me better, as it was a lower deposit and lower payments than the lease company offered.

By all means carry on the debate, but at the end of the day, PCP suits some people and not others

[BossFox]

Personally I feel there is no point in talking about monthly payments without also mentioning the deposit... if figures get discussed.

As it's easy to reduce one with the other.

You can put down a big deposit, so your payments are small and then at the end of the PCP have less than your deposit left, meaning your payments were small because they were not even keeping up with the depreciation.

Just a thought.

[learnwithmike]

I hate my current PCP because my current car is a lemon.

It will cost me £1500 to get rid of my current car for a citigo, I'm having a contract hire this time.

Yes, a PCP does give lower payments. But it's a scam to prevent you from changing your car before the end of the agreement.

[Auric Goldfinger]

 

Yes, a PCP does give lower payments. But it's a scam to prevent you from changing your car before the end of the agreement.

 

Think you can change your car anytime you want, PCP or no PCP

[jpmurray]

Mine is on pcp and is also saving me a fortune.

My insurance on the mondeo was £950 and the citigo is £350.

Count in no service or mot for 3 years and im quids in. Also road tax was aprox £150 now £20 and my injectors kept going so saving lots of money at the min

Sent from my SM-N9005 using Tapatalk

[bouff34]

Mine is on pcp and is also saving me a fortune.

My insurance on the mondeo was £950 and the citigo is £350.

Count in no service or mot for 3 years and im quids in. Also road tax was aprox £150 now £20 and my injectors kept going so saving lots of money at the min

Sent from my SM-N9005 using Tapatalk

But with respect the insurance and road tax costs have nothing to do with whether you choose to opt for PCP or any other form of financing?

[bilun777]

Think you can change your car anytime you want, PCP or no PCP

Agreed .I'm picking up my new 1.8 TSI L&K Yeti in about 8 weeks time on PCP.

My previous Greenline is also on PCP and about 20 months old.

One reason I'm changing ,is the additional monthly cost in the PCP ,is only £ 20 more per month.

My wife picks up her new Citigo about the same time.

Her reduction in costs, from running a 10 year old Mazda mx5, covers the cost of the PCP.

[BossFox]

Agreed .I'm picking up my new 1.8 TSI L&K Yeti in about 8 weeks time on PCP.

My previous Greenline is also on PCP and about 20 months old.

One reason I'm changing ,is the additional monthly cost in the PCP ,is only £ 20 more per month.

 

Is that because the new car is on 0% and the old car wasn't ?

[bilun777]

Is that because the new car is on 0% and the old car wasn't ?

No, both on 0% .

There was a slightly higher deposit  input when I bought the Greenline ( can't remember exactly.)

My first Yeti was a 170 TDI Elegance from DTD and higher %VAG finance package.

My current Dealer worked hard (and successfully) to get my custom..

[BossFox]

No, both on 0% .

There was a slightly higher deposit  input when I bought the Greenline ( can't remember exactly.)

My first Yeti was a 170 TDI Elegance from DTD and higher %VAG finance package.

My current Dealer worked hard (and successfully) to get my custom..

 

I didn't realise there was a Skoda 0% APR deal on Yeti PCPs 20 months ago, that's why I wondered.

[lfc958]

Can someone with some PCP experience see if i have some correct logic here.

This is only the 2nd car i have actually owned from new, given i have traded in after finishing finance payments on it & used as a trade in for my next car.

So given this scenario logically i never owned the car anyway, so I am thinking that maybe if i sell my current car for cash & use part as the deposit for a PCP. I can move the balance around to get what interest i can on it, While having a low monthly payment on a PCP.

Once the term is up, if i like the brand i can use the current vehicle to switch to another car, while keeping the cash floating around different savings accounts to get the interest.( not much at present, but it will not stay at this low level forever specially with the likely increase late this year if the news is to be believed).

However if not i could move brands using another portion of the cash + interest as deposit.

Now being of a certain age my driving licence runs out in around 15 years then it will be a medical to get it renewed & looking at how traffic is clogging up the roads, even the bus pass probably wont be any quicker to get around, so i am of the opinion that once it expires that will be it ( Someone else will have to orgainse the Brisky Meets ).

So having a 3 yr PCP with changing cars that is 5 cars ( 6 max). By then they just might have the electric motobility scooters on PCP  .

 

Does this thought add up ?