discussion PCP's

[colin m]

Daughter No. 1 is looking at a PCP for her next car (which we need in a bit of a hurry as the last one won't be coming back from the body shop !) I prefer to pay for the thing and own it. So I'm new to this PCP thing, but am aware of a lot of youngsters at work do this, so I'm guessing it must be ok ? My question is, can you haggle ? That monthly cost, is it negotionable ?

 

[Guest]

PCP's are becoming a huge thing and I can't see it being long before it's the norm for new car purchases. It's good for the industry as it keeps cars turning over at a regular rate and results in a steady supply of high quality trade-ins for the used car market.

A bit like a hire car you need to keep it in good condition or you'll get charged for repairs when you hand it back, but other than that it's a no brainer if you're happy never to actually own the thing.

Not sure how negotiable the rates are though, I think it would depend on the dealer or car in question. A popular model would probably have less room to manoeuvre as they know they'll shift them anyway, but they may be happy to haggle on a more niche car.

 

[boatman]

Exscuse me guys bein an old fuddy duddy but whats this PCP ? whats it a car hire or summit ? an colin ive always wondered what that aircraft is in your avartar is it an early mark shackelton ?
chris

 

[Guest]

The only kind of PCP I’ve ever heard of is the drug, but I somehow think that’s not what’s meant here

Looking at Wikipedia’s disambiguation page for PCP, I suspect we’re talking about personal contract purchase.

 

[Guest]

Personal Contract Plan / Purchase.

A bit of a cross between hiring and buying. You put a deposit down on the car, then have monthly payments. These would be lower than if you were buying it outright as you only end up paying part of what the car was worth. A GFV (Guaranteed Future Value) is set at the start of the contract, what the car will be worth at the end of the term.

At the end of the plan term you can either:

1. Hand the car back and just walk away (providing it's in good condition)
2. Pay the rest of what is owed on the car if you want to keep it
3. Use the car as a deposit on your next PCP

 

[boatman]

THANKS guys well I know a bit more now
chris

 

[Tim Marlow]

I have never quite got PCP, despite having one in the past.....how are options one and two compatible with option three? One and two indicate that you only pay off depreciation, but three indicates there is some value owned by you?

 

[Guest]

I don't understand it fully Tim as I'm not in the sales department, but as far as I'm aware, the GFV is set conservatively. If at the end of the term the market deems the car to be worth more than the GFV that equity is yours to use as a deposit. If you hand it back and walk away the dealer gains that.

Not sure how you go on if you've bought a niche car that the market ends up hating and it's actually worth less than it's GFV. I'm guessing you'd have to walk away and start afresh?

 

[SimonT]

Hi Andy - my last two cars were bought on PCP from Toyota
I decided how much I needed the monthly repayment to be then we haggled until they got the price to match.
On the first one I used the car as deposit for the second at the end of the three years
When the three years were up again I decided to pay off the outstanding amount as I had hardly done any miles and car is like new, so it is now mine - they tell you upfront how much the final purchase price will be
As with any higher purchase type plan you pay more overall but it allows you to pay small amounts over a period of time rather than having to find a huge lump sum upfront
My sister has had five cars using this method - the garage usually come up with a good deal at the end of the three years as they like to get new sales

 

[colin m]

colin ive always wondered what that aircraft is in your avartar is it an early mark shackelton

It's an AEW Shackleton, so despite being a tail dragger, it's one of the later versions of Shackleton. I saw one fly when I was a kid. Not something you forget.

Thank you all for the PCP responses. I think she will go this route. Drive around in a new/nearly new car for quite a low price, compared to buying.

 

[stillp]

If at the end of the term the market deems the car to be worth more than the GFV that equity is yours to use as a deposit.

I've never actually known that happen Andy - the GFV is set so that the dealer/finance company is on a guaranteed profit on the car, as well as the interest charged on the PCP payments. Insurance can be tricky as well - what you're borrowing is the difference between the retail price of the car and the GFV, not the total price, so if it's written off you need gap insurance. It can also be tricky to change dealers - some PCP contracts will only allow you to use the car as a deposit on another car from the same dealer
My company had a large fleet of company vehicles, and moved away from PCP after a couple of years.
Pete

 

[boatman]

It's an AEW Shackleton, so despite being a tail dragger, it's one of the later versions of Shackleton. I saw one fly when I was a kid. Not something you forget.
View attachment 365069
Thank you all for the PCP responses. I think she will go this route. Drive around in a new/nearly new car for quite a low price, compared to buying.

Colin did you build this model as I think its fantastic an what scale an is it big plastic kit ? as I built a big shackelton but one with tricycle undercart with about a 8ft wing span as the shac was one of my fav planes an have you got an can you show any more pics of it ?
chris

 

[minitnkr]

Sounds similar to what we colonists call a lease purchase. Bought a couple dealer lease turn-ins. Very satisfied. I'm told, once on the lease track, it's expensive to get back to purchase outright due to less equity in trade in. PaulE

 

[stillp]

One of my company cars was a 2003 ex-demonstrator Vauxhall Vectra, factory converted to run on LPG or petrol (LPG about half the price), on a PCP. Because of the scarcity of second-hand pricing for the dual-fuel version the lease company set the GFV very low, at £1500.61 IIRC. At the end of 4 years I bought the car, and sold it the next morning to a specialist dealer for £4000 cash. I felt good about that, until I realised I was only getting back some of the money I'd been charged over the 4 year lease.
Pete

 

[adt70hk]

Daughter No. 1 is looking at a PCP for her next car (which we need in a bit of a hurry as the last one won't be coming back from the body shop !) I prefer to pay for the thing and own it. So I'm new to this PCP thing, but am aware of a lot of youngsters at work do this, so I'm guessing it must be ok ? My question is, can you haggle ? That monthly cost, is it negotionable ?

Hi Colin

I work in the compliance team for an automotive financial services company and so know a thing or to about this topic. If you want to know more and want to have a person to person chat send me a PM and I'm more than happy to give you a call.

ATB

Andrew

 

[Ian M]

PCP or leasing as its called over here is hugely popular as people can get a far better car than they otherwise could afford. (Cars are stupid expensive here).
One thing we have that might not be an issue for you is kilometres driven. You start the lease with an agreement on the number of kilometres you will drive . Many get a big shock when they get a bill for the extra kilometres. On the other side, you could get services, tyres and roadside help in the deal.
My wife looked into it but with a 300 km commute it worked out way to expensive.

 

[adt70hk]

Colin

Just to say in the UK leasing/hire agreements are NOT the same as PCP. PCP is actually IMHO quite a misleading name.

As I think Andy said earlier PCP in the UK is actually a form of hire purchase agreement with a large chunk of the capital deferred to the end in the form of the minimum guaranteed future value (again a potentially misleading term for the average person as that is what the company will guarantee its value at on return not what the market thinks it's worth), it is often commonly called a balloon too.

PCP deals in the UK also do not normally cover things such as tyres etc. Also, As Ian said make sure you build enough of a mileage allowance into the contract. Excess mileage charges typically start at 6p PER mile and so can quickly rack up. I saw one the other day where the excess mileage charge at the end of the contract was £1,800......

I hope it works out for your daughter.

ATB

Andrew

 

[colin m]

Colin did you build this model as I think its fantastic an what scale an is it big plastic kit ? as I built a big shackelton but one with tricycle undercart with about a 8ft wing span as the shac was one of my fav planes an have you got an can you show any more pics of it ?
chris

Hi Chris, there's a few more pictures here. It's the Revell 1:72 AEW. It's not too big, about 12 / 13 inches wing span.

 

[colin m]

Hi Colin

I work in the compliance team for an automotive financial services company and so know a thing or to about this topic. If you want to know more and want to have a person to person chat send me a PM and I'm more than happy to give you a call.

ATB

Andrew

Thanks for the offer Andrew, very kind. It turns out a number of our friends who have a new car every 3 years are doing so on PCP's ! So it is a lot more common than I thought. Dau No 1 has settled and signed a deal with Hyundai, so I didn't get a chance to respond to your offer earlier. But thanks anyway.

 

[adt70hk]

Thanks for the offer Andrew, very kind. It turns out a number of our friends who have a new car every 3 years are doing so on PCP's ! So it is a lot more common than I thought. Dau No 1 has settled and signed a deal with Hyundai, so I didn't get a chance to respond to your offer earlier. But thanks anyway.

Colin

No problem at all. The vast majority of new car sales in the UK are now actually PCP. I know from my employers perspective that pure HP is a very small set of our portfolio now

Also, another thing to bear in mind is that due to the nature of agreements secured on the car, as this will be, the finance house is as equally responsible for the mechanical reliability of the vehicle as the motor manufacturer.

So if she is unlucky enough to run into 'vehicle quality issues' and is getting nowhere with the garage or manufacturer, she can complain to the finance company. As they will be regulated by the Financial Conduct Authority, they have to be seen to be "treating customers fairly" and so you may find that they are more willing to listen to your issues.

I hope she enjoys the new car.

ATB

Andrew