PCP help please

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Thursday_next
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Joined: Wed Nov 01, 2017 7:53 pm

PCP help please

Post by Thursday_next » Fri Jul 24, 2020 2:34 pm

Hello

I posted earlier about tips regarding buying a new Disco sport (to replace MY17).

Phoning main dealers now (as opposed to Car Wow and other online offers) and all are pushing for PCP route.

Can anyone explain the PCP route to me - as my understanding of it (unless I am wrong) doesn't appeal.

Currently I own my car outright which means I have a sizeable deposit. I worry if I take out PCP I will never be in a position to offer a large deposit again and then I will have very little investment in the car.

I am not worried about changing my car every 2 - 3 years (although I am having to do so with current disco because of diesel particle problems). I have always kept my cars for around 6 years - hence, owning outright (even with a loan) seemed a better option?

I do around 12,000 miles a year and have two children (11 and 16 - so normal wear and tear in the back) and also own a dog who I transport in the boot regularly. I worry with PCP that even though my car is generally prestine there could be a problem in the future.

I would be really grateful for thoughts - Am I missing something? and should I look at PCP? or am I right to stick to trying to own the car outright (albeit this time with a loan).

Thank you
2017 TD4 Pure, (2.0 150 Ingenium), Fuji White, Black half-leather

DiscoSportDave
Posts: 231
Joined: Mon May 13, 2019 7:12 pm

Re: PCP help please

Post by DiscoSportDave » Fri Jul 24, 2020 3:10 pm

Dealers are not interested in cash sales, they get bonuses based on finance deals etc more than they do sales volume bonuses

If you are in a position to buy outright then there's nothing wrong with that, but you may struggle to get a sizeable discount.

There are often discounts available when taking PCP deals, either dealer contribution or JLR contribution.

Ultimately whether not owning, but financing, a vehicle is for you only you can answer.

Dependent upon your financial position it can be beneficial to go PCP..

1, discount contribution from dealer / jlr - this can vary from model to model, trim level, engine/gearbox combo;s
2. sometimes over - inflated GFV figure so you're financing less = lower monthlies = easy sale = volume for factory
3. the interest rate may be low enough that you earn more on your lump sum, that you'd have used to buy new for cash , that youre paying in finance fees

Your trade in will have value, you do not have to use all of this as the deposit - if the car is £15k trade in and you only want a £5k deposit then they'll put the £10k extra back in your bank/cheque etc

The monthly figures will depend on..

1. final price of the vehicle
2. the amount of your deposit (therefore the size of the balance thats financed
3. the future guaranteed value (the minimum you'd be given when trading in next time around) - this can vary just on trim level , engine type , gearbox type
4. interest rate
5. annual mileage (which obviously affects the future value)
6. period of PCP

When you are getting close to proceeding its sometimes worth checking the monthly figures for a lower annual mileage and then paying the excess mileage fee. For example, let's say the difference between 11k miles pa and 12k miles pa is £20/month, over 36 months. Excess mileage fee is 8p/mile

If after 3 years you have a car with 35k miles on the clock..
- if your pcp was based on 11k miles you'd have saved 36 x £20 = £720 in monthly payments
- but you'd be liable for 2k extra miles (35k versus 3 x 11k) at 8p/mile = £160 charge >>> saving £560


Every PCP deal has a fair wear n tear policy in it, but some are a lot more stringent than others - JLR will allow for minor kerb damage to wheels for instance, other brands may not. At the end of the PCP if you choose to move on and just hand the car back, then its pot luck whether the inspection on collection is a thorough one or not, some are very particular and others just check its got the wheels and seats !
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Thursday_next
Posts: 42
Joined: Wed Nov 01, 2017 7:53 pm

Re: PCP help please

Post by Thursday_next » Fri Jul 24, 2020 4:47 pm

Thank you DiscosportDave - that is really helpful :-) lots to think about. I will see the difference in what is being offered and see what they say.

Thanks again.
2017 TD4 Pure, (2.0 150 Ingenium), Fuji White, Black half-leather

MK9
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Joined: Sat Jun 23, 2018 3:43 pm

Re: PCP help please

Post by MK9 » Fri Jul 24, 2020 4:50 pm

It sounds like you may not need to go down the PCP route, but as per the post above, there can be some benefits of doing so. As I posted in the other thread, it’s worthwhile taking out PCP finance even if that wasn’t your intended means of financing the car - you can always pay it off very soon afterwards and incur minimal interest charge penalties, and it can mean a sizeable additional discount on top of what you would otherwise have negotiated, this being the manufacturer’s deposit contribution.

I currently own a BMW which I bought from new, and which I intended to finance through a bank loan. I was positively encouraged by the dealer to take out PCP finance, allowing them to give me an additional £4K discount, and then to pay this off immediately afterwards. I did this, paying off the finance agreement with a month, incurring very little cost for doing so - it was a no brainer.

Thursday_next
Posts: 42
Joined: Wed Nov 01, 2017 7:53 pm

Re: PCP help please

Post by Thursday_next » Fri Jul 24, 2020 5:08 pm

Thanks MK9 - that is useful advice :-) Elouise
2017 TD4 Pure, (2.0 150 Ingenium), Fuji White, Black half-leather

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PaulCP
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Re: PCP help please

Post by PaulCP » Fri Jul 24, 2020 6:36 pm

@MK9 is spot on in his post.
We’ve bought our last 2 cars taking out a PCP deal in order to gaining the extra discounts and then settled them after making 1 monthly payment.
If you are a cash buyer it is now the sensible thing to do
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Thursday_next
Posts: 42
Joined: Wed Nov 01, 2017 7:53 pm

Re: PCP help please

Post by Thursday_next » Fri Jul 24, 2020 6:46 pm

Thanks Paul CP - lots of good advice. It wouldn't have occurred to me if I hadn't posted on here :-) Thank you
2017 TD4 Pure, (2.0 150 Ingenium), Fuji White, Black half-leather

SteveT
Posts: 53
Joined: Wed Mar 14, 2018 8:43 pm

Re: PCP help please

Post by SteveT » Sat Jul 25, 2020 10:34 am

If you pay your PCP loan off early, do you just pay the remainder of the loan value (plus any settlement charges) or do you have to pay off the "final lump sum" on the vehicle as well at the same time - or can you just pay of the rest of the loan bit and then still return the vehicle at the end of the PCP period for the FMV?
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RPR
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Re: PCP help please

Post by RPR » Sat Jul 25, 2020 11:43 am

I took out the PCP deal to gtet the JLR deposit contribution them paid it off in full a month later.
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SteveT
Posts: 53
Joined: Wed Mar 14, 2018 8:43 pm

Re: PCP help please

Post by SteveT » Sat Jul 25, 2020 12:07 pm

So did you paid off the full remainder value of the vehicle so it was 100% yours? i.e. the rest of the loan AND the final value?
DS MY18 HSE Luxury TD4 Auto 180
Santorini Black, Roof Rails, Flaps, Entertainment Pack (with InControl Touch Pro Nav), Privacy Glass, 19" Black Wheels

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