Opinions and help please.

[Pugglt Auld Jock]

Justifying new cars is always a difficult one, unknown cost of future repairs vs high outlay for new car.

Much as I dont like the idea, the PCP does make sense for many. We've been caught in that trap too, my wife's new juke is on PCP, and the garage phone up to say do you want to try the new hybrid range. Turns out they can do a new car for near enough the same monthly payment, and 3 years servicing.

Mrs J has mentioned this, PCP that is. My gut reaction is not to. I've always bought cars cash to avoid interest and I'm suspicious that PCP will cost more in the long run? It seems to lock you into a regular renewal cycle? I just don't know enough about it. probably should look into it though as it seems very common. Mind you, now well into my 70s, how many more cars am I going to be buying?

 

[AndyRKett]

Justifying new cars is always a difficult one, unknown cost of future repairs vs high outlay for new car.

Much as I dont like the idea, the PCP does make sense for many. We've been caught in that trap too, my wife's new juke is on PCP, and the garage phone up to say do you want to try the new hybrid range. Turns out they can do a new car for near enough the same monthly payment, and 3 years servicing.

When I bought my golf I had the option of a second hand one (at that time a 2012/13 reg car for around £23k with an 7.4% interest rate.... or I could buy a brand new car worth £32k with options added. And a 4.6% interest rate, Then on top of which they were doing a deal where the dealership "paid the VAT" on all new cars, but this offer wasn't applicable on used cars.

They also included two services on any new car and a full warranty for 3 years, no MOTs to worry about. The used car again only had 1 or 2 years of warranty but I could pay to extend it. They had no servicing deals so I would have to pay for a service plan etc etc. All in the new car worked out a considerably cheaper and better deal than the used car

I paid it off at the end there is nothing owed and so its mine as long as I keep it which is much better than getting into the PCP trap of having to either lay out thousands or face giving it back with nothing to show or trading it in and getting another car for another 3-4 years and keep paying that monthly fee. The PCP plan is a way to get people trapped in buying new cars which is why the make the deals on new cars so much more attractive.


This was 2015 and I don't think with the demand for cars having gone up, the interest rates having increased and the general cost of living (cost of running the dealerships and making the cars) all having gone up, I don't suspect we'll see any car deals like that now.

 

[vexorg]

I had planned to just pay the selttlement figure at the end of the current PCP, it was reasonable since we have a high annual mileage allowance (18k a year).
The 'but' for me is the 1.0 turbo engine, I'm not sure how that will be longer term on an older/higher mileage car. Whereas the new hybrid uses the older 1.6 non-turbo 4-cyl engine. Less power from the engine, and the electric part gives a bit more power overall than the old one. I'd be happier keeping that engine long term, the mpg is meant to be better, plus auto-ish gearbox should help my wife with hip joint problems.

In short, I'm using the PCP as a cheapish loan with options.

 

[StevenRB45]

I had planned to just pay the selttlement figure at the end of the current PCP, it was reasonable since we have a high annual mileage allowance (18k a year).
The 'but' for me is the 1.0 turbo engine, I'm not sure how that will be longer term on an older/higher mileage car. Whereas the new hybrid uses the older 1.6 non-turbo 4-cyl engine. Less power from the engine, and the electric part gives a bit more power overall than the old one. I'd be happier keeping that engine long term, the mpg is meant to be better, plus auto-ish gearbox should help my wife with hip joint problems.

In short, I'm using the PCP as a cheapish loan with options.

Not to throw spanners but it's a relatively new low mileage car extended warranty would be buttons and GFV would probably been set pre-the current supply madness and be significantly below what it's currently worth.

So yes, you can re-finance something else but the option we took was pay for the warranty extension which cost less than one monthly on the PCP, buy the car at significantly less than market rate and run it.

We paid ours off in 2020 it's still worth more than the GFV was at 3 years old and we've spent about 450 re warrantying it since.

Yes I've paid maintenance but if I put it for sale tomorrow it would only owe me about 400 quid for 3 years use.

Obviously in older cars these calculations are different..but with current market conditions worth exploring.

Also looking at advertising I'm seeing I'd not be surprised if we're due a downward correction and there's an opportunity for some negative equity there. Supply has gone up, demand is down with costs and prices up.

 

[Pugglt Auld Jock]

When I bought my golf I had the option of a second hand one (at that time a 2012/13 reg car for around £23k with an 7.4% interest rate.... or I could buy a brand new car worth £32k with options added. And a 4.6% interest rate, Then on top of which they were doing a deal where the dealership "paid the VAT" on all new cars, but this offer wasn't applicable on used cars.

They also included two services on any new car and a full warranty for 3 years, no MOTs to worry about. The used car again only had 1 or 2 years of warranty but I could pay to extend it. They had no servicing deals so I would have to pay for a service plan etc etc. All in the new car worked out a considerably cheaper and better deal than the used car

I paid it off at the end there is nothing owed and so its mine as long as I keep it which is much better than getting into the PCP trap of having to either lay out thousands or face giving it back with nothing to show or trading it in and getting another car for another 3-4 years and keep paying that monthly fee. The PCP plan is a way to get people trapped in buying new cars which is why the make the deals on new cars so much more attractive.


This was 2015 and I don't think with the demand for cars having gone up, the interest rates having increased and the general cost of living (cost of running the dealerships and making the cars) all having gone up, I don't suspect we'll see any car deals like that now.

Thanks Andy, that was very useful. Back in 2016 when we bought the Ibiza, the dealers were very keen to push us onto PCP but then the wee dealer down the road found a deal for me that was just far to good to pass by so we bought cash. I've just found a quite lengthy article by Auto Express which describes the pros and cons in great detail - don't think it's for me.

I had planned to just pay the selttlement figure at the end of the current PCP, it was reasonable since we have a high annual mileage allowance (18k a year).
The 'but' for me is the 1.0 turbo engine, I'm not sure how that will be longer term on an older/higher mileage car. Whereas the new hybrid uses the older 1.6 non-turbo 4-cyl engine. Less power from the engine, and the electric part gives a bit more power overall than the old one. I'd be happier keeping that engine long term, the mpg is meant to be better, plus auto-ish gearbox should help my wife with hip joint problems.

In short, I'm using the PCP as a cheapish loan with options.

I think you have a very valid point regarding the longevity of these engines in general. but not just the basic engine unit itself, there's so much "add on" stuff like for instance, electric secondary water pump, electric vacuum pump, two thermostats, coolant stabilized intercooler, and so on. Just so much to potentially go wrong with age. I'm not planning on keeping the Ibiza more than perhaps another 3 years.

Also looking at advertising I'm seeing I'd not be surprised if we're due a downward correction and there's an opportunity for some negative equity there. Supply has gone up, demand is down with costs and prices up.

I think that may be a possibility. The price of low mileage under 2 year old used cars is absolutely mental just now - is it sustainable? I'm not so sure.

 

[vexorg]

Not to throw spanners but it's a relatively new low mileage car extended warranty would be buttons and GFV would probably been set pre-the current supply madness and be significantly below what it's currently worth.

My trust in warranties is pretty low, been stung a few times over the years, worst being the vauxhall's "lifetime warranty", after 1 year it was a case of pay up front for any issue then we'll see if it is a warranty claim. Not what you want to hear when the car is gets just over a year old.

At 5 to 6 years old the car may be getting on to 100k miles, the last few cars we've had were similar mileage. That's what I view as higher mileage, it's at 40k for 3 and a bit years, and that included lockdown.

 

[StevenRB45]

My trust in warranties is pretty low, been stung a few times over the years, worst being the vauxhall's "lifetime warranty", after 1 year it was a case of pay up front for any issue then we'll see if it is a warranty claim. Not what you want to hear when the car is gets just over a year old.

At 5 to 6 years old the car may be getting on to 100k miles, the last few cars we've had were similar mileage. That's what I view as higher mileage, it's at 40k for 3 and a bit years, and that included lockdown.

I've absolutely rinsed ours . Needed a strut top bearing...got 2x new front MacPhersons for example.

I see what you're getting at but I'm starting to see pre-registered cars with 2-3k off so even if you wait a year then sell it there's a good chance rates etc will actually a bit more competitive and prices lower.

Yes, it will have dropped in value but it won't drop anywhere as hard as a new car.

 

[porta]

My trust in warranties is pretty low, been stung a few times over the years, worst being the vauxhall's "lifetime warranty", after 1 year it was a case of pay up front for any issue then we'll see if it is a warranty claim. Not what you want to hear when the car is gets just over a year old.

At 5 to 6 years old the car may be getting on to 100k miles, the last few cars we've had were similar mileage. That's what I view as higher mileage, it's at 40k for 3 and a bit years, and that included lockdown.

The US think my 4.0l straight six is ‘just run in’ at 150K miles

 

[vexorg]

I see what you're getting at but I'm starting to see pre-registered cars with 2-3k off so even if you wait a year then sell it there's a good chance rates etc will actually a bit more competitive and prices lower.

It was agreed back in october for the new car, still waiting due to usual delivery issues. Means we have everything fixed at the new car cost, and our car valuation back then. Even though it's over 3 years old now, it's still being traded in at 70% of the cost new. And the hybrid version is about £7k more, so seemed to make sense a small increase in monthly payment gets a more expensive new car.

 

[StevenRB45]

It was agreed back in october for the new car, still waiting due to usual delivery issues. Means we have everything fixed at the new car cost, and our car valuation back then. Even though it's over 3 years old now, it's still being traded in at 70% of the cost new. And the hybrid version is about £7k more, so seemed to make sense a small increase in monthly payment gets a more expensive new car.

As it's done deal makes no odds really. In terms of ours it's a case of we've had 2.5 years payment free at this point, the value of the car hasn't dropped below what I paid to clear it so if it annoyed me I could drop it as a deposit on a new deal whenever but even taking into account it being a modern car I don't see anything massively scary occuring before it hits an age where we'd be getting shot anyway. It's mainly here until a viable electric alternative arrives which shouldn't be more than 3 or 4 years at the current rate of progress/cost reduction.

My concern at the moment if setting up a new deal would be baking in all the interest rate increases that have occurred of late..and also the post COVID price hikes into it and then the market correcting and putting the GFV above what it's worth. At that point if you terminate early then it's likely you'll have negative equity.