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Discussion Starter #1
Hi everyone.

I've been giving some serious thought to getting an EV as my next car, sometime in early 2019.

My daily commute to work is only a few miles, so it seems an obvious choice.
Occasionally I'd do longer journeys, but they would be rare.

In the past I've always bought second hand, but this time around I'm thinking of getting a car through a PCP. The idea of getting a new car - ideally with a service plan included - and then trading it in at the end of the PCP and getting a new one does appeal to me.

I've read however that EVs don't hold their value, so would it mean at the end of the PCP the car I'm handing back would give me a lower deposit to put towards a new one and mean I either have to give over a sizeable chunk of cash to boost the deposit, so put up with markedly higher monthly payments?

Perhaps the community feels that PCP is not the best way of getting an EV?

All help and advice is gratefully recieved.

All the best,
Tony.
 

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Hi everyone.

I've been giving some serious thought to getting an EV as my next car, sometime in early 2019.

My daily commute to work is only a few miles, so it seems an obvious choice.
Occasionally I'd do longer journeys, but they would be rare.

In the past I've always bought second hand, but this time around I'm thinking of getting a car through a PCP. The idea of getting a new car - ideally with a service plan included - and then trading it in at the end of the PCP and getting a new one does appeal to me.

I've read however that EVs don't hold their value, so would it mean at the end of the PCP the car I'm handing back would give me a lower deposit to put towards a new one and mean I either have to give over a sizeable chunk of cash to boost the deposit, so put up with markedly higher monthly payments?

Perhaps the community feels that PCP is not the best way of getting an EV?

All help and advice is gratefully recieved.

All the best,
Tony.
In the past it has definately been the way to go. Artificially high GFV kept monthlies down but as you say nothing to carry forward at the end. Now GFV are more realistic and monthlies higher. With the advance in technology going on and the high cost of repairs do you want to own an EV out of warranty?

Many people had EVs as their first ever new car but now the prices are much higher maybe not. Why not consider a seconhand LEAF? It depends on your journey profile, If you do lots of long runs then not the right car.
 

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With quickly developing technology in EV’s PCP is a good way to go. At the end of the term you can change to a more “advanced” EV (whatever tech advances suit your needs) or keep the EV you’ve got or just hand it back for no financial loss if depreciation was higher than predicted by the finance company. I would say PCP is ideally suited to a switch from ICE to EV.
 

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PCPs are a good way to get any car. But only you can compare the alternatives to what you want, deals you find, etc..

It may be cheaper to get a personal loan and buy, it may be cheaper to take a hire car.

To amend what you put, you do not need to 'trade' your car in at the end of a PCP, you either pay off the GFV or you hand it back.

In some cases you might want to pay the GFV and then sell/trade it immediately, in the case that the car's market value is significantly more than the GFV. Again that is all detail.

In your situation I would actually recommend something else;- EVs are better when they are used daily and consistently, in that case battery degradation is down to calendar age. In other words, a higher mileage EV is actually likely to be better than a low mileage one. You could take a personal loan, buy a car (of choice) still in warranty, extend that warranty to cover for how long you want it for, and then sell on. Your small mileage added to an initially large mileage (thus cheaper) car will result in a very saleable thing at the end of it. I would not recommend this to someone planning to do lots of more miles on a car, but if you are adding mere 1,000s a year, then it is a bit of a no-brainer TBH.

So you could pick up an ion/Leaf/Zoe for £5 to £10k, use it for a few years, lose a few £k on it, and you'll be laughing at the cheapness of it all.

TBH, new EVs probably don't make so much sense for really low mileages. Of course, you can also get PCPs on 2nd hand cars ... this may well suit you to the ground.
 

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The best way to view PCP IMO is that it is a (generally) a high interest loan (not necessarily in terms of APR, but in the actual amount of interest you are charged), with the agreement of selling the car in the future back to the dealer at market value.

That's it. No more or no less.

So, putting monthly cost aside for a minute, if you wouldn't take out a loan at higher than current average APR rates and use it to buy a brand new car, then trade it in at the market value in 2/3/4 years, then don't do PCP....

Personally, I look to reduce the two main costs involved with buying a car on finance, and that is depreciation and the cost to borrow money (interest). I can reduce the depreciation by buying a slightly used model for cheaper than high discounted new models (need to check what the best discount is on your model, and make sure not to overpay on a nearly new. Some dealers will try to offer these at more than a discounted new model), and I can greatly reduce the cost of interest by either saving money and not borrowing it, or borrow the least amount possible, at the lowest possible APR, and pay it off as quickly as possible.

If you are smart, a used car will always depreciate less than new (it's just a function of a typical cars depreciation curve), and generally a personal loan will be a cheaper way to borrow money than PCP.

Of course, you need to look at each case individually and do the sums, as on rare occasions it can be different.
 

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Discussion Starter #6
Wow, thanks guys for all that useful info. A lot of food for thought there. I'll go away and digest that lot!

Thanks again.
Tony.
 

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I would like to ask after all the positive stuff, where you've read that EV's don't hold their value - because I would disagree; take a 2011 Nissan Leaf - a 7 year old car that can still sell at over £6K - what sort of high spec, high prestige ICE car holds on to value that much, based on what it sold for originally of course ?
 

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I would like to ask after all the positive stuff, where you've read that EV's don't hold their value - because I would disagree; take a 2011 Nissan Leaf - a 7 year old car that can still sell at over £6K - what sort of high spec, high prestige ICE car holds on to value that much, based on what it sold for originally of course ?
Newspaper articles a few years ago claimed BEVs highest depreciation. Looking at thia it was due to not accounting for the plug in grant. Prices have hardened considerably since then. The value of the parts underpins the value of older cars.

Will those same papers now run a story on how BEVs hold their value, will they heck.
 

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I've only ever fully paid for a car (from new) once. All the others I have part exchanged at around the 2 year point (Ex RAF with over 15 years service abroad (20 in total) buying tax free cars) and not completing all the payments. I know, not the way most of you would buy cars, but I could afford to do and I love that new car smell. SWMBO was never happy with it and grumbled mightily when I went for the next one. As you can see I never fully paid for one and it was as if I was renting. I was really pleased when PCP came about as it suited my buying style and it allows me to 'rent' a car and then have another in a couple of years time, as long as I can afford the payments it's fine.
 

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PCP is a loan from manufacturer's preferred finance institute. There is often deposit contributions, and goodies thrown in. It's something to keep in mind when considering.

For a car you plan to keep, there's really not too much difference between PCP or straight cash purchase. You may have to pay more slightly due to interest, but often the deposit contribution tips the balance.

For your situation, a second hand Leaf is the best option. I bought my second hand Leaf on PCP, the car had a sticker price of £11000. But using "switch scheme" £2000 deposit contribution and a bit of haggling, I would pay a total of £9100 to own the car outright. This includes free home charger install, 2 free servicing and 1 yr warranty. At 36th month, I will have the option to hand the car back like a rental or pay the final £4000 to own the car outright.

This ability to hand the car back may seem slightly more attractive on an EV. But personally I don't value this, especially with the way public opinion is going. In 2-3 years time, you may find due to nature of supply and demand, the EV you have somehow worth more than your PCP final payment. So you'd pay off your PCP contract to own the car outright and sell it yourself, at that point there's no difference to cash purchase.
 

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PCP is a loan from manufacturer's preferred finance institute. There is often deposit contributions, and goodies thrown in. It's something to keep in mind when considering.

For a car you plan to keep, there's really not too much difference between PCP or straight cash purchase. You may have to pay more slightly due to interest, but often the deposit contribution tips the balance.

For your situation, a second hand Leaf is the best option. I bought my second hand Leaf on PCP, the car had a sticker price of £11000. But using "switch scheme" £2000 deposit contribution and a bit of haggling, I would pay a total of £9100 to own the car outright. This includes free home charger install, 2 free servicing and 1 yr warranty. At 36th month, I will have the option to hand the car back like a rental or pay the final £4000 to own the car outright.

This ability to hand the car back may seem slightly more attractive on an EV. But personally I don't value this, especially with the way public opinion is going. In 2-3 years time, you may find due to nature of supply and demand, the EV you have somehow worth more than your PCP final payment. So you'd pay off your PCP contract to own the car outright and sell it yourself, at that point there's no difference to cash purchase.
What's the APR on the PCP loan?

If it's £11,000, with £2,000 deposit contribution, £1,000 deposit from yourself and £4,000 GFV, then an APR of 9% (typical of used PCPs) would cost you around £1,600 over 36months in interest....! So it's not just a slightly more...(a £8,000 personal loan at the same 9% over 36m will cost you just £1,111 in interest..).

Bare in mind you can always agree the PCP deal, get the deposit contributions and settle the finance within 14days, effectively meaning that cash is ~£1,600 cheaper.

As said, PCP is just a loan. If you chop and change cars often, using cash will still be cheaper, because the purchase price and the sale price will be identical. The only difference is you are paying a relatively high amount of interest on the PCP, and none on cash.
 

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What's the APR on the PCP loan?

If it's £11,000, with £2,000 deposit contribution and £4,000 GFV, then an APR of 9% (typical of used PCPs) would cost you around £1,600 over 36months in interest....! So it's not just a slightly more...

Bare in mind you can always agree the PCP deal, get the deposit contributions and settle the finance within 14days, effectively meaning that cash is ~£1,600 cheaper.
3.9% IIRC. It was before BoE did the rate rise, base rate was at all time low. (I also managed to lock in my mortgage rate for 5 years during that time :D )

I negotiated £600 off the sticker price and had £1000 of trade in value. Looking on the finance paperwork, the PCP is £672 more than the negotiated price.

Yes, you can take the PCP deal and goodies, then settle the finance. This is probably the best way to own the car outright.

But as I said, owning it outright is cheaper based on the assumption public perception will change and demand for cheap second hand EV is high. It could go the other way (I find it unlikely) and the car is worth less than the final payment, that is when you should handing back the keys and use the cash meant for final payment to buy a similar car second hand.
 

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3.9% IIRC. It was before BoE did the rate rise, base rate was at all time low. (I also managed to lock in my mortgage rate for 5 years during that time :D )

I negotiated £600 off the sticker price and had £1000 of trade in value. Looking on the finance paperwork, the PCP is £672 more than the negotiated price.

Yes, you can take the PCP deal and goodies, then settle the finance. This is probably the best way to own the car outright.

But as I said, owning it outright is cheaper based on the assumption public perception will change and demand for cheap second hand EV is high. It could go the other way (I find it unlikely) and the car is worth less than the final payment, that is when you should handing back the keys and use the cash meant for final payment to buy a similar car second hand.
Ah OK.

Yes I agree with the last point, but obviously if the PCP was £672 more than the cash purchase, then the car would have to be worth more than £672 less than the GFV for the PCP to have any advantage. In this case, trade in would have to be <£3,328 if the GFV was £4,000.

Also worth remembering that the GFV is only valid at the 36month mark, and any additional mileage is payable.

I personally think there are many ways to get a better price than rock bottom trade in...if we imagine a catastrophic scenario where the trade in value on your car in 36m is only £2k, then arguable doing PCP was economically better as you've saved (£2,000-£672) £1,328 in depreciation. However selling privately typically gives you a good £1/2k more than trade in price, so that would avoid this situation....There are many ways to get a better price for your car, that I rarely see P/X as a good option. My last Audi on PCP (first and last PCP personally!) was getting P/X values of £27k when I still had £28k outstanding (so £1k negative equity apparently). Used a site called Tootle and a dealer came to my house, paid me £28,500 for it (suddenly £500 positive equity) and drove it away....more money and more convenient than P/X!

But in your case, I would agree that PCP is perfectly fine, as the APR is so low and the amount borrowed is so low, that the difference between it and a personal loan is within £200, so hardly worth worrying about!
 
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