It makes more sense now but I do think the term depreciation is misleading as is ownership of the car (yes I know its registered to you) if you have no intention of paying the final balloon payment and retaining the final vehicle but that is semantics, its the numbers that matter.

 

From what I can deduce you put in a PX worth X (please confirm the value) and effectively rented (my wording) a new vehicle thereafter starting at £150/ month a decade ago rising to £300 or so nowadays, you only ever (directly) pay road tax if you keep a vehicle more than 12 months (but you are still paying it) and when you decide you want another new vehicle you have to put in between £500 and £750 additional deposit.

 

At the end of this journey you are left with no vehicle.

 

Is that a reasonable summary?

 

I definitely understand your logic and its quite convincing, I would just like to crunch some numbers and to do so would need the original PX value. There is no question that someone buying a new vehicle and PXing it for another new one every 12-18 months would pay out way more than you have.

 

It could well be that someone keeping their PCP vehicles for the full 48 months then taking out another would pay a lot more as well. I can't get my head around whether that person (the 48 monther) would actually have anything to PX, surely they would have to give the vehicle back and have no equity hence my questioning it being their/your vehicle, by the same token how can you have any equity after 12 months?

 

I think I can answer my own question there, its the motor trade VAT scam, they claim back all the VAT on the initial sale, the equity they purchase from you is VAT free and they have a low mileage 12 month old vehicle to sell as an ex demonstrator or sales manager car to a mug punter for more than the VAT net price of a new vehicle giving them more profit than a new vehicle sale plus they get another kickback for your new finance agreement.

 

Their only other source of a low mileage 12 month old vehicle of their marque is to buy it at a closed to main dealer auction from the manufacturer of the vehicles they register and push out for 12 months to family members and fleet operators.

 

It has been a very interesting and revealing discussion, I'm sure most PCP purchasers would not realise its costing them more to go the whole term, maybe even a lot more than having a new vehicle every year.

 

Edited 7 November, 20232 yr by J.R.

I made the mistake of getting off the merry go round - it cost me 10k of my inheritance - and now I will have to start from scratch if I want another car.

So, my car goes to dealership as p/x, I don't want to pay any cash at all if I can help it - negotiating skill required.

they are keen to sell (make up their quota) and PCP is available on promotion.

take new car and keep it as long as you want - I always try to get rid before having to pay next year's road fund tax, certainly before any new tyres, and before any servicing required, and definitely before MOT.

The car is YOURS not anybody else, finance company or anything. Yours.

when you get too close to having to pay for e.g. service, tyres, battery or whatever, go back to dealer and say "I want a new one, and I don't want to put any more cash into it than I absolutely have to".

If you have kept on the merry go round, then this continues until you've gone all the way through your final PCP agreement you used to buy your very final car. That is the one where you will pay the 10 ukp option to buy along with the 10000 ukp balloon payment. There's your depreciation.

 

Perhaps it's getting away from the fixation on p/x value mindset that's difficult. I don't care what value they put on it, it is immaterial until the very final car I buy.