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Old 6 Sep 20, 02:28 PM  
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myaquarium
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Buying a new car on pcp con or not.

Wife has ordered a new car on pcp.
Car was £26000 made up of 48 months of payments totalling £14500 and a final balloon payment of £11500 at which time she can hand the car back or finance the £11500 to keep the car.
I was amazed that her apr part of payments also included the interest costs of the £11500 over the 4 years even tho that figure isn’t included in the repayment.
It meant her apr of 3.9% had he paying an additional £21 per month or roughly £1000 over The 4 years with no financial benefits only loss.
I asked if she refinanced the £11500 after 4 years will it be interest free as she has already paid the interest. Obviously they said no she would have to pay the interest again. I think it’s a con aimed at people unable to get a loan for the full amount and this is not explained by the car dealerships.
We have decide to take a loan which immediately saves us £1000 plus.

Edited at 02:30 PM.
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Old 6 Sep 20, 02:39 PM  
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parisdisneyfan
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Depending on the car it may well not be worth £11500 at the end of your loan period as well! We discovered this a couple of months ago and sent the car back! Slightly better scenario than you as the pcp was 0% but even so, effectively just paid rent for the car over the last 3 1/2 years! We did ask them to calculate an early repayment but that was basically just the 6 monthly payments still owing plus the balloon payment so we didn't bother. If we want that type of car again we can go and buy one second hand for less than we would have paid for ours. Won't do that again!
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Old 6 Sep 20, 02:45 PM  
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mason1
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I’m on my 3rd pcp. The 1st one, I handed the car back after the half way point of the agreement, as our circumstances changed and I didn’t need the car. The 2nd one I bought 2nd hand on pcp through the bank. Traded in with 8 months left on the pcp for my 3rd one (brand new Tucson). I just see it as a way to have a nice car every couple of years, without incurring the depreciation. The one I’ve got at the moment has 3.5 years left on it - I’ll go back to the garage in 3 years to see what offers they’ve got.
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Old 6 Sep 20, 02:48 PM  
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megaflyer
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I am thinking of buying a new car - always paid cash up front and was going down same route but several dealers I have been in touch with have suggested leasing - all very new to me and as I dont like the idea of loan per se this may be a good compromise to change my car every year. Looking into options ...
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Old 6 Sep 20, 02:55 PM  
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YorkshireT
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I started leasing after spending big money buying cars- waste of money to buy if you get new cars every 2,3 years like I do.
My Tesla I have on a PCP though as I got a deal £320 cheaper than the cheapest lease.
I may buy it if cheaper than balloon otherwise will trade it in for another or give it back.
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Old 6 Sep 20, 03:03 PM  
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skalexander
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I’ve got my Mercedes GLC on PCP, and although I love the car I’m at a point where I’d like to change, as it is our only car and if we buy the house we’ve offered on (big if at the moment, but that’s another story) we will need a second car, so we want 2 smaller, cheaper cars. However, I’m in negative equity (which surprised me as I got a great deal on the car and paid a reasonable deposit).

I can see why people do PCPs but I don’t think I would bother in the future. I’d rather go for HP, bank loan or use savings, as at least then I have more flexibility if I want to change cars.
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Old 6 Sep 20, 03:10 PM  
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DiszeeBelle
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Ive just changed my car on pcp, due to end shortly on current and was contacted a fortnight ago to pop in for a chat. I collect my new car in wednesday again on pcp. I was going to get a loan to pay it off and keep it but needed to find a decent loan which wasnt really saving me anything in what i currently pay now so i went ahead and i get to change every 4 years or so and happy with that now.

Edited at 03:20 PM.
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Old 6 Sep 20, 03:20 PM  
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PoohBears#1fan
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Originally Posted by skalexander View Post
I’ve got my Mercedes GLC on PCP, and although I love the car I’m at a point where I’d like to change, as it is our only car and if we buy the house we’ve offered on (big if at the moment, but that’s another story) we will need a second car, so we want 2 smaller, cheaper cars. However, I’m in negative equity (which surprised me as I got a great deal on the car and paid a reasonable deposit).

I can see why people do PCPs but I don’t think I would bother in the future. I’d rather go for HP, bank loan or use savings, as at least then I have more flexibility if I want to change cars.
Mercedes APR % is so high in comparison to other manufacturers and I really don't think that helps when it comes to equity in PCP schemes.

I bought my SLC in 2017 on a great deal (bought in the winter when no-one wants covertibles) when I part ex'd for my E Pace this year Merc weren't even in the running as they just didn't compare to any of their competitors with their APR, they'll try and blind you with residual value figures, but at the end of the day they're over changing hence the risk of negative equity.

I've always been happy with PCP but I'll put the minimum into it as it's not an investment, imo it's a form of hiring a car and securing that stress free motoring, I've been lucky that I find there's always equity after 2 years, but I do ensure i'm getting the right deal up front and not being blinded by wanting the car.

I was ready to walk away from my SLC the day before collection as they tried changing the figures, the amount of nonsense they fed me for the rationale was ridiculous - I'm sure they think they're dealing with idiots.

Stand your ground, understand the figures and the risks and make sure the deal is right for you and will still be right when you want to change the car, if the residual value doesn't sound realistic, then it's probably not.
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Old 6 Sep 20, 04:24 PM  
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Loulou127
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We’re thinking of getting our next car on a PCP, does anyone know of an idiots guide to understanding it before we get to the garage and get hit with their sales talk? for instance what pushes you into negative equity?
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Old 6 Sep 20, 04:30 PM  
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skalexander
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Originally Posted by Loulou127 View Post
We’re thinking of getting our next car on a PCP, does anyone know of an idiots guide to understanding it before we get to the garage and get hit with their sales talk? for instance what pushes you into negative equity?
My negative equity is a combination of 3 things - the level of APR, the market for my vehicle/second hand cars generally and the fact I’m only 2 years into a 4 year deal. Negative equity is common in PCPs, because a car depreciates quickest in the early months and years of its life, and that depreciation will generally happen by more than is being paid off.

That’s my understanding. I’m sure someone else can give a better explanation.
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