PCP to buy a new car?
 

I am looking at replacing my Astra VXR with a 5 door car. Keen on new shape Golf, and especially keen on an A3 (Beemer 1 series also an option).

I would be able to get around £11k together to buy my next car via a loan I have that I used when buying the Astra, apporx £270 a month with three years to run, so a year or so old Golf 1.6, TDi or similar, or I could go PCP.

I understand the concept of PCP,and like the idea of getting a car I would generally consider out of my price range, and have heard that if you buy a car that will hold its value well A3 TDi with some nice options for instance) then it can be a good way of running a car for reasonable payments.

I am not too concerned about owning a car outright, and would change every three years anyway, so would a three year PCP be a good idea? and is there anything to watch out for?

Don't want to get ripped off obviously, so if anyone has done this and can give their opinion it would be a big help, and also, how does it work when you give it back? they tell you a minimum value of the car in three years time, you agree thats fine, then when you come to give it back if it's worth more than this, do you have to sell it and use the extra as a deposit on your next PCP car, or do they give you a price above minimum and you use that?

Really hate selling cars, so sounds ideal (and if anyone wants a lovely Red VXR with 19's, 9000 miles, Leather interior, heated Recaros, climate control, and MP3, let me know!! :) )

If you use finance and change your car every 3 years to something new, you're going to get ripped off any way you cut it.

I have had my last 3 cars (BMW's) through pcp. I was a little concerned to begin with about all the differant aspects to the deal.
Main reasons why I did it this way was I was sick of putting all my money into a car which then loses shed louds when sale time comes. And also you can use the spaire cash for other things and you know exactly how much your paying out each month.
Also as you pointed out you can put yourself into a car which normally would be out of your price range.
I found that I was not tied into the full term of the deal (2 years in my case) and if I wanted to change the car after 6months I could, SO LONG I TOOK ANOTHER BMW.
BMW finance runs in a way that the interest you pay is only charged on the duration of the "hire". So there are no end of term payments to worry about if you end it short.
If you run the full term then you have 4 options,
Hand the car back and walk away,
Pay the end of term balloon payment and the cars yours,
Sell the car privatley, pay the finance off and any extra money made is yours,
Or px the vehicle for a new one.

Downsides you pay more interest, you are more locked into one brand if you take there finance out. To change to another brand in my case could be expensive.

Thanks, does sound good, so looking at repayments you basically offset the pruchase price against the balloon payment and deposit.

So an Audi A3 spec'd up to £27k would only actually cost the 27k minus the balloon payment? So if Audi say it'll be worth £14k in three years time, then I put down £1k deposit, then I basically pay the amount outstanding for three years, so £12k. APR is higher, im guessing 8% is the norm? so about £350 a month or so.

Not too bad for what you get.

At 27k on a PCP I think you will be talking more like £470 ish.

Make : BMW
Model : 1 SERIES 5DR
Derivative : 120d Sport
Miles: 10k / annum

On the road price (£) £18,256.40
Deposit: £1825.64
Amount to finance (£) £16,430.76
36 Monthly Payments Of £291.76
Optional Final Payment (GFV)£8,936.42
Total Payable £21,265.42

Remember that if you were to keep the car, you would need to either get a loan or put cash away each month [an extra £248.00] to have the ability to buy it back at the end. The best bet with a PCP is stick to it once you are in.

Or an Alpina D3:

Deposit £2735.17
On the road price (£) £27,351.74
36 Monthly Payments Of £451.18
Optional Final Payment (GFV) £12,694.85 [£352.63 to save]
Amount to finance (£) £24,616.57
Total Payable £31,672.50

We way I do it is, decide on how much you want to pay each month, say £350.00 then put a deposit down which will alow you to do that. You can put as much as 40% of the value of the car, which will drop your monthly payments alot.
You do need to look at the overall deal though. Like a car costing £27k the finance could be another £2.5k on top. And it depends on how long you want to keep the car for.
I also looked at a personal loan (Lombard Direct) but the payments where going to be way higher. The only advantage of that is that YOU actually own the car, and the car has no finance on it so you can sell it at any time with out the stigma of finance.
But offseting that against how much the car will lose in value was dauting.
It really depends on what car you want and the residules in 2 or 3 years time.

Monthly payments are higher than I was expecting, I overinflated the final payment somewhat, may need to downscale car choice. Thanks for that info thou, very useful.

Bear in mind that the TAP quoted on PCP deals assumes that the car is only worth the GFV at the end of the term - in theory it should be higher.

The next grade up from me at work gets an 8k car allowance option and the people/friends I know that have done this are well in pocket!

Instead of paying tax on a company Vectra V6 they are driving round in new Golf GTis or Volvo Sc90 etc but only have to pay the petrol to and from work which in most cases is the tax on the car they would have had!

As long as you agree the value after 3 years then you can drive it worry free, give it back and drive away with another one!! Its all about rapport according to my best mate whose been doing it for years!!

no offence to anyone, but car finance is a mugs choice.

low apr bank loan every single time!

Ever thought about personal contract hire? My wife is getting an Alfa Romeo 159 V6 Q4 (260bhp, 4WD - should be fun) next week. The deal, direct with Alfa, is excellent -

Personal Contract Hire at £359 including VAT per month over 36 months
Deposit of £2872
Full maintenance contract
12,000 miles per annum
Alfa Romeo Incluso

Alfa Romeo Incluso allows the private individual, for example those opting out of company car schemes, to fix the cost of their motoring over 2 to 5 years. One monthly payment covers the Road Fund Licence for the period of the lease, maintenance and servicing, tyres, exhausts and batteries. At the end of the contract subject to condition and contractual mileage, you simply hand back the car and start anew.
Low initial outlay – usually 3 months advance rental.
Competitive rentals due to our buying power
Fixed monthly rentals for the full contract period based on a set annual mileage
Contract periods of 2 to 5 years
Road Fund Licence included throughout lease period
Assistance and accident management provided by the AA (including European cover) for the duration of the contract
No disposal worries or depreciation risk
No unexpected service or maintenance costs (subject to fair wear and tear)
Unlimited tyre, battery and exhaust replacement when required – subject to fair wear and tear

No, mugs choice is buying a new car in the first place.

Go 2 year old and save £1000's