PCH...... the 'new' PCP?

[skovirg]

Several issues I see with PCH are that

 

1) You are tied into the deal for its full length, if you want to get out there will be massive early redemption penalties and you lose everything including your deposit.

 

2) After 2/3 years etc. is up, you give the car back and have absolutely nothing to show for it, even the deposit is lost. So you pay your 8-9K over 3 years and your deposit, so its 10K gone and you have gained nothing.

 

At least with PCP and HP the longer you have the agreement the more equity you build up, so at the end of 2/3 years you either have some capital with the PCP or if on HP you have a 6-7K plus asset to show for your money which you can use for an even larger deposit on your next car.

 

1. Are there not redemption policies on PCP? I think there are.

 

2. Do you get your deposit back with PCP? I don't think you do.  Most people on PCP seem to pay around £250 a month or £9000 over 3 years plus a deposit so more or less the same.

 

As for building equity, this is certainly not guaranteed on PCP and it never can be. I'd be amazed if my car has a single penny of equity at the end. Given that I'm less than halfway through my PCP plan and my car is now worth about £3000 more than the GMFV, any equity will depend upon my car not losing £3000 value in the next 18 months. Given atrocious residuals this is just not going to happen. At the end of this agreement, I'd be better off paying market value for another car rather than paying the GMFV so I'll hand mine back and have nothing to show for it either.

[mannyo]

I suspect there will be redemption policies on PCP, but at least you'll get some money back if your not in negative equity, also remember with PCP if you are in negative equity you have to pay the difference between what you get for the car and what you still owe.

 

No deposit back on PCP, correct but there is at least an asset when the PCP scheme ends that should in theory cover the full deposit on the next car, with PCH there is nothing at all.

[Steve vRS]

No, but if the monthly payments are low enough, then you can save up for your next deposit!

 

In my case, the PCH was well over £100 cheaper per month than a PCP with the same initial payment (not a deposit as you don't get it back on either PCP or PCH) for the same mileage.

 

Steve

[Dr Zoidberg]

I suspect there will be redemption policies on PCP, but at least you'll get some money back if your not in negative equity, also remember with PCP if you are in negative equity you have to pay the difference between what you get for the car and what you still owe.

 

As long as you've not gone over your mileage limit you'll never get unexpected charges. The worst that can happen is that your car is worth less than the GFV, in which case you walk away with nothing owed.

[gadgetman]

Lease agreements are covered by financial regulations the same as credit agreements.

Both my Octavia's were personal leases, with maintenance included based on 20,000 miles a year and was cheaper than HP for the same vehicle.

I could spec it exactly the same way as buying myself.

There are typically several stipulations, but then if you read your VWFS agreement they're pretty much in there already.

You'll have to use the dealer network for all services, and they must be on time. Although irrelevant for me on my lease as it was included, it said tyres must be like for like replacement (same brand etc etc) or it's superceded version if a tyre is discontinued. All changes to the car must be approved in writing, so remaps and lowering are likely to be out. But again if you read your PCP agreement you'll need to tell VWFS if you modify anyway.

Insurance must have lease Co as the owner, and you must send proof to the lease company. Obviously taking it abroad needs approval as well. The cheap insurance companies won't insure leased vehicles as they can't screw them over in event of a total loss the same way they would you or I.

For people who will definitely change vehicles every 2/3 years, and won't be looking to modify, it can make more financial sense as repayments can be below any credit package.

[Exeterj]

We just did the scout deal which all up gives us a pretty well top spec new car for 3 years for £9k.

This is at just over £200 per month, the same pcp was quoted as over £400 per month ( same deposit and term) - over 35 months this is £6000 more, just to have the option to own the car or upgrade early.

The pcp deal was calculated on a residual of £11.5k with a final payment of £12k to own the car. I'm not bothered to the degree of £6000 to keep the current car, is I can go and then buy a second hand one for around the same price as the final ballon payment on pcp. Even if we had to pay say £15k for a 3 year old second hand one, we'd be £3k up on the pcp.

In this instance pcp just doesn't stack up - I'm sure the huge difference is because of the great rates on the scout but it does show you need to compare figures carefully.

Obviously if you don't want a new new car then neither stacks up.

Edited 18 March, 2015 by Exeterj

[gadgetman]

Finance companies and manufacturers must make a huge loss on vehicles handed back mid agreement.

I guess by pricing leasing more competitively, they can avoid people handing back without penalty. The mileage rates are also lower than the average 12k,so again another way to recoup money.

Low mileage and fleet will be competitively priced, with those between possibly paying more?

[greenfabiavrs]

I recently rang skoda to see if I could hand my car back early. (Circumstances have changed) and I was told that I wasn't allowed to do this as I have to have paid half the value of the vehicle before I was eligible. This meant me paying around a £2000 short fall. This had nothing to do with mileage as I'm under my pcp target. Not impressed that even tho I'm on pcp I can't hand my car back until my term is up??

[gadgetman]

When you say under mileage, is that total or pro-rata at this point in time?

Finance company will be working on pro rata mileage if you hand back.

[Brianpilman]

Just been through PCs details with dealer. It's deposit of 3 months payment up front and then payments for how ever long a term you want. So on a vrs estate it was 294 a month inc car over mileage cost was 6p +vat a mile. You do not have to pay road tax just service costs so over 2 years as long as you kept the car tidy and under mileage the cost was 7655 ish in total.

The dealer did say when you hand it back an assessor comes out to rate the condition of the vehicle. Also if for any reason you have to end early there is quite a fee in one hit

[LeeHarrison]

On the deposit the system automatically puts the advance as 3 months this can be changed to 6 months OR a figure to suit; which, if adding a bit more will bring down the monthlys

[pipsyp]

I recently rang skoda to see if I could hand my car back early. (Circumstances have changed) and I was told that I wasn't allowed to do this as I have to have paid half the value of the vehicle before I was eligible. This meant me paying around a £2000 short fall. This had nothing to do with mileage as I'm under my pcp target. Not impressed that even tho I'm on pcp I can't hand my car back until my term is up??

You could sell it to a dealer but you'd still be liable to cover the shortfall on the finance...the issues are that the car is worth less than you owe which isnt unusual with PCP deals early on in the contract. Once 50% of the finance is paid its your consumer right to be able to give it back and walk away...its called Voluntary Termination or VT but you might again still be liable to pay for any wear and tear they think is unreasonable (mileage included though not in your case).

VT'S can show up on your credit score and cause a potential blot on a good credit record though so not entirely plain sailing....VWFS might also be less willing to provide finance to you also if you decided in future to purchase another VAG vehicle via them.

[Iang27]

I am picking up my Octavia Vrs diesel early next week from Simpson Skoda in Colne who were great to deal with in choosing a pch deal.

Some people have enough cash to place a decent deposit on a pcp, I have done so myself in the past, but I have found that the majority of the time you end up losing most of what you have paid up front with most pcp deals being set up to return around £1000 or so towards your new car when taking out a new deal.

On normal Hp after you have made your much higher payments whatever the car is worth goes towards your next car but the payments are ridiculous without a huge deposit.

I couldn't afford the high normal Hp payments so looked at pcp but with only having around £1000 deposit it made my payments near £400 which was far too high.

I ended up looking into pch and with my £1000 deposit ( part exchanging my car and getting a great price ) the payment came down to £240, much more affordable so I have gone down this route. This was for a car with extras, 8000 miles a year including road tax.

I couldn't have afforded to buy the car without the pch so it does the job for me. Total cost around £9500 for three years. The car would lose about 50% or more in value if it was bought outright so it works out much cheaper overall to do it this way.

Edited 27 March, 2015 by Iang27

[Exeterj]

Exact same thinking as us Iang27 - it makes sense when rates are so low and if you want a new new car. Plus the higher spec the car doesn't necessarily mean the higher the payments, it's all down to the depreciation difference - a mk3 Fabia was going to cost us £30 more a month than a mk3 scout (about £10k difference in models!)

Enjoy the vrs when you get it btw :-)

[Iang27]

Cheers, looking forward to getting it.

The Yeti Montle Carlo was the same price, the 4 x 4 elegance only £199 , cheap for a top spec car but I have wanted a Vrs for ages especially since a friend got one last year so jumped in.

Seemed lucky to find one as they are hard to get without a factory order.

[rossdook]

Here's my tuppence worth...

 

In 2008 I PCP'd a nice new vRS Estate petrol with options. I stuck down around £7.5k of my cash for deposit and did £200 approx. per month. After 3 years I had around £9k left of balloon payment but didn't get much more than £10k when it eventually sold, despite being mint with 15k miles. Not much left to show for my 7.5k deposit and three years payments I thought.

 

Two kids later, I'm seriously looking at a £1k deposit and £168 pm (both including vat) 2 year lease on a Scout, which even as standard has a decent enough spec. Around £5k for two years with a brand new car which has no servicing needs, MOT, tyres and has a warranty and breakdown cover - I'll probably only need the year 2 road tax tbh.

 

A big difference for us & also a cheap way to drive a decent motor without outlaying or losing significant money. If it depreciates, lease it. If it appreciates, buy it

[pipsyp]

Here's my tuppence worth...

In 2008 I PCP'd a nice new vRS Estate petrol with options. I stuck down around £7.5k of my cash for deposit and did £200 approx. per month. After 3 years I had around £9k left of balloon payment but didn't get much more than £10k when it eventually sold, despite being mint with 15k miles. Not much left to show for my 7.5k deposit and three years payments I thought.

Two kids later, I'm seriously looking at a £1k deposit and £168 pm (both including vat) 2 year lease on a Scout, which even as standard has a decent enough spec. Around £5k for two years with a brand new car which has no servicing needs, MOT, tyres and has a warranty and breakdown cover - I'll probably only need the year 2 road tax tbh.

A big difference for us & also a cheap way to drive a decent motor without outlaying or losing significant money. If it depreciates, lease it. If it appreciates, buy it

Rossdook, that sounds like a horrific PCP deal. On my 23k Mk3 Octavia, £500ish down and £297/month over 42 months. Even my Mk2 vRS wasnt bad, £1kish down and similar monthly payment over 36 months with something like 4.2% APR.

With PCP's I have to say I would never personally put down more than 10% of the cars value as a deposit (5% is about my max)....in fairness you would have almost burnt that 7.5k the minute you drove off the forecourt.

Leasing is a very compelling option but like PCP it does have its pitfalls...so long as you understand what they are it can be a very convenient and cost effective means to get into a nice new car...particularly something you'd either wouldnt care to/couldnt justify financing traditionally.

Leasing really is geared up for business users...just in our case we get stiffed for VAT too. My concern with it is the lack of flexibility....you take the lease you only have the options to see it through to the end or buy yourself out of the lease which could result in the parting of thousands of pounds and a transaction you'll get no value from. I also have my suspicions you dont get quite the same consumer protection with a lease as you would with a PCP...like you can VT a PCP after 50% of the outstanding balance is paid.

Id possibly consider taking a 2 year lease on something next time providing I have the financial means to buy out of it should the worst happens....if not Ill probably just pay the premium to PCP and afford myself a bit more flexibility.

[rossdook]

TBH it was a decent deal for what was available at the time & I got around £5k off the list and did it through Drivethedeal. I certainly wouldn't go with a large deposit again, but the disappointing part was how little interest there was on a completely mint car with a stack of options and less than 15k miles at 3yo - I noted it didn't stick around on the dealer's website for many days after it was listed! Still the only car I've ever had that I wished I'd kept, looking back on it :'(

[e301988325i]

Leasing really is geared up for business users...just in our case we get stiffed for VAT too. My concern with it is the lack of flexibility....you take the lease you only have the options to see it through to the end or buy yourself out of the lease which could result in the parting of thousands of pounds and a transaction you'll get no value from. I also have my suspicions you dont get quite the same consumer protection with a lease as you would with a PCP...like you can VT a PCP after 50% of the outstanding balance is paid.

Id possibly consider taking a 2 year lease on something next time providing I have the financial means to buy out of it should the worst happens....if not Ill probably just pay the premium to PCP and afford myself a bit more flexibility.

 

We've just signed up for a 4yr PCH. Whilst calculating our outgoings to ensure it's worthwhile paying nursery bills, the true cost of running our ten year old 135k BMW 525d estate became apparent. For us, there's simply a matter of overall yearly cost, over the next 4 years the PCH will cost us £2k more than the BMW, but it's impossible to budget for unexpected repairs so it wouldn't take too many unexpected bills to break even and they are bound to happen.

 

Regards getting out, it is an issue, and a major one if you're leasing a Porsche for £hundreds a month, but for a sensible family car I can't see a time in the next four years where I'm not going to want or need a family estate car that does 50mpg for £250 month (10K inc VAT service & tyres)?

 

Rossdook has spent £14k? over three years, admittedly probably almost no maintenance costs in the 15000 miles, whereas our deal works out at £13.5k for 4 years, why would I do PCH am I missing something? I may not be entitled to buy the car at the end (I wouldn't want to) but I have no doubt that if I said I wanted it my money would not be turned away.

[LeeHarrison]

Interesting reading and very much appreciated to everyone so far for their stories and thoughts.

I can already see a slight sway of customers looking closer at the PCH deals as well over the last couple of weeks.

e301988325i (can we just call you BMW?) any particular reason for going in to a 4 year rather than the general 3 year and did/have you extended the warranty in to year 4? Just intrigued...... and nosey :yes:

[e301988325i]

Interesting reading and very much appreciated to everyone so far for their stories and thoughts.

I can already see a slight sway of customers looking closer at the PCH deals as well over the last couple of weeks.

e301988325i (can we just call you BMW?) any particular reason for going in to a 4 year rather than the general 3 year and did/have you extended the warranty in to year 4? Just intrigued...... and nosey :yes:

 

Above I said "Why would I do PCH am I missing something", I meant PCP.

 

I keep the same forum name from when I first joined one, it's an unwritten rule across the beemer forums.

 

Why 4 years? Several reasons:

2 & 4 year deals shared approximate overall annual costs, 3 years was notably more expensive, I don't know why.

Our requirements are very unlikely to change, at worst more miles will be required.

I haven't looked much before but these Skoda deals seem too cheap. A base 2.0D Avensis estate was around £315 month on similar terms!

I like the car and I think Skoda has become the 'intelligent choice' brand. 

The cost of options (although I've only paid for heated front seats & canton now *) are spread out over a longer term,

I will extend the warranty (not factory option) as I've heard of people replacing aircon condensers (£850) at just over three years old, cars are not built to last now.

 

* I had paid for front parking sensors but they're included now, I was tempted by the SE but the cost of variable boot floor as an option made the difference in monthly payments negligible between the SE & Elegance. In fact now not paying for the front sensors the Elegance would be almost precisely the same price as the SE.

[LeeHarrison]

I will extend the warranty (not factory option) as I've heard of people replacing aircon condensers (£850) at just over three years old, cars are not built to last now.

 

 

 

Much appreciated - I've not looked at figures on a 48 month PCH, just assumed that due to mileage, no warranty etc that the payments would be higher  :think:  obviously not 

 

The A/C unit/condenser - would it be covered under the 3 year warranty? I would assume so, (barring a stone going through it obviously) but if so, why not extend the manufacturer warranty? The Octavia, £300 (ish) for the extra for the 4th year, that's your unit covered, and then some    

[e301988325i]

Much appreciated - I've not looked at figures on a 48 month PCH, just assumed that due to mileage, no warranty etc that the payments would be higher  :think:  obviously not 

 

The A/C unit/condenser - would it be covered under the 3 year warranty? I would assume so, (barring a stone going through it obviously) but if so, why not extend the manufacturer warranty? The Octavia, £300 (ish) for the extra for the 4th year, that's your unit covered, and then some    

 

? I'm going to extend the warranty through the 4th year. I meant compressor not condenser, double facepalm required.

[gadgetman]

We were never contacted by Skoda about extended warranty. Assume as technically I was the 2nd owner (bout out lease)

How should it work, as with our Touran we're the 2nd owner, and want the extended warranty for peace of mind on the dsg

[andyvee]

There are 2 extended warranties - the factory warranty which has to be specified at order the same as any other option on the car, and is underwritten by Skoda. This extends the factory warranty by 1 or 2 years.

 

There is also a Skoda UK warranty that can be purchased at any time, but is less comprehensive than the factory warranty.