Advice please have read much about PCP. My daughter is considering the scheme to buy a BMW Z4 to keep for about 2/3 years. Does anbody have any experience of the PCP I would wecome views.
Richard Price
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Looked at PCP's for the purchase of the wifes new clio.
Good
dont need to put much of deposit down, fixed cost per month, change car every three years
Bad
you never build up any capital to put down on another car,
you need to know how many miles you will do up front or you get caned at the end
you need to keep the car utterly pristine or you get caned at the end
you need to have serviced on the button by the main dealer or you get caned at the end
Its just glorified car hire.
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TourVanMan TM < Ex RF >
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Depending on the deal, you can get a good rate of interest though.
It is indeed glorified car hire, but can be good value for money if you do high miles.
Beware they are very very hard to escape if your needs or circumstances change.
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Multipled recycled post alert;
This is cobbled together from a couple of old posts, but with regard to PCPs, car companies love them because
a. it focuses the customer's mind away from the total credit price and on the monthly payment
b. the 50% threshold at which, under the Consumer Credit Act, the car can be handed back with nothing more to pay, even in negative equity, is reached much later on
c. it ties you into buying a new car more often than you otherwise might
d. they receive more interest as less of the loan is paid off each month and the interest is calculated on the remaining
balance
e. if the car is handed back over the agreed mileage/with any cosmetic or other faults, they can impose charges (though they may not be draconian about this if they're after a repeat sale!)
The big disadvantage of course is that you're tied to the manufacturer's scheme, so you end up paying 9.9% APR instead of 5.9%.
One thing I would say about BMWs though is that very often they can do a superb rate on the car that you couldn't get elsewhere, in lieu of a discount. In those circumstances, you can sometimes literally only be funding the depreciation on the car and not the capital value or any interest on it, at which point it becomes a very convenient way of funding the purchase. Often these can be best done through a broker and a good search (although be careful to check out any company you order through) is via www.contracthireandleasing.com
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The big disadvantage of course is that you're tied to the manufacturer's scheme, so you end up paying 9.9% APR instead of 5.9%.
Lots of financial service providers, supermarkets, and online car suppiers, etc etc offer PCP's. *Usually*, but not always, with the manufacturers own scheme there would be soe kind of incentive, deposit contribution, low interest rate etc.
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They work best if you get a car which holds its vakue well. At the end of the contract, if the car is worth more than the 'balloon payment' it provides the deposit for anothwer new car.
After 2 years of a 3-year contract you just about break even: keeping a car for 2.5 or the full 3 years works best.
We get all ours on PCP: there are usually ways of financing a new car which are more economical, but the lower monthly payments (compared with straight HP) are a way of affording a better car than you would otherwise - and, hey, I've only got one life and I like new cars.
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Worked example:
Broker option
Discounted price of Z4 2.0 SE - £20,850 via www.drivethedeal.com
Deposit - £1150.00
To finance - £19,700
Monthly payment on a personal loan = £595.36 (gasp!) x 36
Total amount payable = £22,583
Less retained value at three years and 30k = £13k
(Based on Glass's trade price for a 53 plate 2.2 less an amount similar to the difference in value betwen a 55 plate 2.0 and 2.2, when both engines were available)
Net monthly cost = £266
BMW personal finance option
Deposit = £1136
Monthly payment = £330 x 35
Net monthly cost = £352
Extending the loan period to five years (longer than she is keeping the car, so she will need to sell and be confident that she has equity in it) would mean that she owed £8,500 after three years, so hopefully she'd have £4,500 in equity for an extra £45 on her monthly payments.
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avant has it right pay today dont worry about tomorrow,,,,,,,,,,,,
reality check....tomorrow comes......consider this scheme in my opinion if you are a small limited company and dont know what the future holds.........
comments welcome.........
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If you get the figures right,ie don't just accept the dealers first offer i cannot think of a better way of driving a new car and changing it on a regular basis without any of the usual trade in aggro.Slowly in the UK people are coming around to the idea of leasing/pcp and realising the benefits.
I must stress though that it is very important to get a very good deal,low deposit,and low payments and to get this you may need to go to a specialist rather than your local dealer.
Think about when you by a car on the strap,how much do you own,often its a neg number.
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