Speak EV - Electric Car Forums banner
1 - 20 of 21 Posts

·
Registered
Joined
·
297 Posts
Discussion Starter · #1 ·
Hi All,
just been looking how I am going to finance my P45, normally I have traded in a car and paid off the remainder in cash so the car is fully paid off, however there is a chance that I will have sold my current car, so will not have a trade in, so now do I...

(1) Pay Cash
(2) PCP - Personal Contract Purchase
(3) Personal Motor Loan

I did think that maybe get a PCP with a deposit contribution then pay it off straight away - however looking at every option it appears at this moment there is NO deposit Contributions at all from Hyundai or my Local Dealer on the Ioniq 5.

How are you guys doing it and am I missing something......thanks

regards

Phil
 

·
Registered
Joined
·
2,606 Posts
You can take out HP and you have a right to pay it off at any time without penalty. It is possible to take the manufacturer's HP offering, with additional discounts through 'deposit contributions' and then pay it off immediately, with cash or even with a cheap HP loan from someone like Sainsburys. Members of my family have done that several times - with no issues.
 

·
Registered
Joined
·
1,304 Posts
Avoid PCP like the plague and if you haven’t got the cash, use HP so you have the option to pay it off when it suits you.
Why avoid PCP like the plague?

You can pay off a PCP in exactly the same way as HP - PCP is a Hire Purchase agreement with a balloon - they are the same product.

HP gives higher payments with a quicker depreciating balance which suits some, PCP a slower depreciating balance and thus higher payments which suit some others.

Neither are better or worse....

However you are unlikely to see deposit allowances on a car there is a waiting list for that has only just been released. Wait 2 years and I am sure there will be some.
 

·
Registered
Joined
·
2,992 Posts
“Avoid PCP” is no longer really relevant to today’s market - it’s advice from the bad old days.

It’s a thousand times better than leasing if circumstances change and you need/want to get rid early.

The negative equity is usually insignificant (£1-2k), so effective cost still tends to work out cheaper than an equivalent subscription, and a LOT cheaper than chucking in a lease early.
 

·
Registered
Joined
·
25 Posts
Why avoid PCP like the plague?

You can pay off a PCP in exactly the same way as HP - PCP is a Hire Purchase agreement with a balloon - they are the same product.

HP gives higher payments with a quicker depreciating balance which suits some, PCP a slower depreciating balance and thus higher payments which suit some others.

Neither are better or worse....

However you are unlikely to see deposit allowances on a car there is a waiting list for that has only just been released. Wait 2 years and I am sure there will be some.
My thing with PCP - and it's only my opinion - is that people tend to opt for what's affordable monthly. If they can afford £500pm then that's what they'll spend and they'll buy the best car they can get for that monthly amount, which is sound in principal, but when the three or four year lease period is up they're left with a car that they still owe a (very often) massive payment on and nothing left to get them a deposit to upgrade to a better car. Even if you can afford the balloon payment - which, let's face it, no-one saves up to pay - I think you'd be better off using that money as the deposit on your next car; either an upgrade on what you've had or buying a bigger chunk of something similar.

You're right, of course, they are essentially the same product, but I'd rather end the payment period with a car I own outright, that's still worth a decent chunk of money, and that I can carry on driving for a couple more years or use as the deposit on my next car with no additional cash for me to add, rather than having a massive bill that I either have to pay, re-finance, or use as part-payment for another similar car as long as stump up more cash for the balance on another deposit. YMMV of course, it's only my two-penn'th.

That said, my personal opinion is that a bank loan is the better option. You're free to buy the car outright, can often get a better deal, and if you want to change cars every 6 months you can, the bank doesn't care, they just want the monthly payment.
 

·
Registered
Joined
·
621 Posts
The answer to the question is use the method that works out cheapest for the period of time you intend to use/own the vehicle for. Predicting future values is pretty hard, so getting some PCP quotes can help see what the value might be after 2/3/4 years with xxxxx number of miles on it, obviously they could be way out so you also need to remember that as well.

My thing with PCP - and it's only my opinion - is that people tend to opt for what's affordable monthly.
Yes, that does happen and is a culture developed by dealerships by asking the question "How much do you want to spend monthly?" as the first thing they ask you when you sit down. So they tell people they can afford B, when in reality they could really only afford A if they want to keep it at the end. However people who listen to a sales person should also know better, and take some fiscal responsibility for a change, the instrument that is PCP isn't to blame, that is education/knowledge and will power.
 

·
Registered
Joined
·
25 Posts
The answer to the question is use the method that works out cheapest for the period of time you intend to use/own the vehicle for. Predicting future values is pretty hard, so getting some PCP quotes can help see what the value might be after 2/3/4 years with xxxxx number of miles on it, obviously they could be way out so you also need to remember that as well.



Yes, that does happen and is a culture developed by dealerships by asking the question "How much do you want to spend monthly?" as the first thing they ask you when you sit down. So they tell people they can afford B, when in reality they could really only afford A if they want to keep it at the end. However people who listen to a sales person should also know better, and take some fiscal responsibility for a change, the instrument that is PCP isn't to blame, that is education/knowledge and will power.
I agree with everything you say, trouble is a car, for may people, is a highly emotive/aspirational purchase, and PCP makes it so damned easy to get into a "nice" car. I don't know about where you live, but where I am this why you see so many £50k+ cars parked outside £200k houses, and having polled some of the young people I work with, it's nuts how many are paying the same every month for their car as they're paying for their mortgage. Priorities all out of whack if you ask me, but then I'm old...
 

·
Registered
Joined
·
2,743 Posts
PCP is probably better than PCH for those who change cars every few years and don't want to lease. The balloon is a hedge against the value of the car - if the balloon is too high you can hand it back at the end of the term, too low and you sell and get some money back.
 

·
Registered
Joined
·
2,606 Posts
I agree that PCH is a good option, but with PCP they've always taken back my previous car as deposit for the next one, so i just keep on paying monthly.

The great thing is that you only have to decide what you can afford per month.

I remember being on a car forum run by Which magazine, and there were constant comments from a retired guy who had been a bus driver and complained that he couldn't afford a new car and was hacked-off by us discussing them. He then announced that he has got a new Merc. What asked how this was possible he said that he'd seen the signs for monthly payments (PCP as it happened) and had signed up. He's now on his 4th Merc.

The thing you need to keep in mind with PCP is that your liability is always for the full value of the car. I keep seeing stories of young people losing their jobs and asking the dealers to take the car back and not understanding that they just can't do that. It strikes me that those who need leasing are those who can't really afford it.
 

·
Registered
Joined
·
1,304 Posts
PCP isn’t the problem - people not understanding PCP is the problem.

There are plenty of companies out there offering 2.9 apr pcp with a £3000 deposit allowance (not on electric cars mind) - so how is that worse than a bank loan?

Also, the point about “changing cars every six months” is actually a good reason to go pcp.

I know of one person who changes their car every year, won’t PCP and just adds it to his mortgage “it’s only 1.8% apr.....”

His mortgage has gone up by £100,000 in 10 years... crazy... yes he owns the car but has got himself deeper and deeper in debt...

And comments like “with a bank loan you can pay it off anytime” spreads these myths. You can pay any up (including pcp) off any time as well - and neither is cheaper or dearer, settlements are all calculated the same!

Fact is, PCP is great if you use it well, and bad if you are mis-sold it or don’t use it properly
 

·
Registered
Joined
·
1,304 Posts
I agree that PCH is a good option, but with PCP they've always taken back my previous car as deposit for the next one, so i just keep on paying monthly.

The great thing is that you only have to decide what you can afford per month.

I remember being on a car forum run by Which magazine, and there were constant comments from a retired guy who had been a bus driver and complained that he couldn't afford a new car and was hacked-off by us discussing them. He then announced that he has got a new Merc. What asked how this was possible he said that he'd seen the signs for monthly payments (PCP as it happened) and had signed up. He's now on his 4th Merc.

The thing you need to keep in mind with PCP is that your liability is always for the full value of the car. I keep seeing stories of young people losing their jobs and asking the dealers to take the car back and not understanding that they just can't do that. It strikes me that those who need leasing are those who can't really afford it.
PCH is far worse than PCP if you need to early terminate.

If you need to bail on a PCP early you have to pay the difference between the balance and the value of the car - usually a couple of thousand, but maybe less.

On a PCH you are liable for ALL the rentals. Some companies will do a “deal” but legally they don’t have to. There was one case where a guy had a pch, had an awful accident and lost both his legs, he had a manual. He had to keep paying for 2 years despite not being able to drive the car as the insurance took 5 years to pay.....

With PCP he would have been out of it for a few hundred pounds....
 

·
Registered
Joined
·
9 Posts
For me I would PCP unless it is a lot more. It is flexible with known total cost (or less - if, at the end of the term, the value is more than the optional final payment)
Self funding is most flexible but leaves you open to the value crashing, therefore the total cost is unknown.
Lease - least flexible, but you know the total cost from the beginning. Also you can normally hand back the lease early but you have to pay 55% of all remaining payments.

But from my illustration below I would lease this car.
Also, I think in 4 years time there could easily be more cars with 300 miles+ range for c.£20k which could affect the future value.

Hyundai Ioniq 5 Hatch Ioniq 5 Hatch 125kw Premium 58 Kwh Auto
On The Road Price: £39,295.00
Term: 4 Years
Mileage: 8,000 per annum
Optional Final Payment / Value after 4 years £16,823.16

Self fundingPCPLease
payments
£ 21,638.40
£ 24,067.68 £ 17,743.20
deposit £ 3,500.00 £ 3,500.00 £ 3,566.85
total
£ 25,138.40
£ 27,567.68 £ 21,310.05

Self funding is me borrowing £35,795 from my mortgage / savings @ 2.5%, paying myself back @ £450.80 per month for 48 months then theoretically selling the car after 4 years for the Hyundai OFP value
PCP is from Hyundai - 48 monthly payments of £501.41
Lease is Initial rental £3,326.85 + £340 fee and 48 payments of £369.65pm
147216


E&OE
 

·
Registered
Joined
·
40 Posts
For me I would PCP unless it is a lot more. It is flexible with known total cost (or less - if, at the end of the term, the value is more than the optional final payment)
Self funding is most flexible but leaves you open to the value crashing, therefore the total cost is unknown.
Lease - least flexible, but you know the total cost from the beginning. Also you can normally hand back the lease early but you have to pay 55% of all remaining payments.

But from my illustration below I would lease this car.
Also, I think in 4 years time there could easily be more cars with 300 miles+ range for c.£20k which could affect the future value.

Hyundai Ioniq 5 Hatch Ioniq 5 Hatch 125kw Premium 58 Kwh Auto
On The Road Price: £39,295.00
Term: 4 Years
Mileage: 8,000 per annum
Optional Final Payment / Value after 4 years £16,823.16

Self fundingPCPLease
payments
£ 21,638.40
£ 24,067.68£ 17,743.20
deposit£ 3,500.00£ 3,500.00£ 3,566.85
total
£ 25,138.40
£ 27,567.68£ 21,310.05

Self funding is me borrowing £35,795 from my mortgage / savings @ 2.5%, paying myself back @ £450.80 per month for 48 months then theoretically selling the car after 4 years for the Hyundai OFP value
PCP is from Hyundai - 48 monthly payments of £501.41
Lease is Initial rental £3,326.85 + £340 fee and 48 payments of £369.65pm
View attachment 147216

E&OE
Your lease figures are based on Business Lease. Not comparable to PCP
 

·
Registered
Joined
·
9 Posts
Your lease figures are based on Business Lease. Not comparable to PCP
No I was using personal lease prices, business is £308.03pm + vat

I would also do the figures for 2 and 3 years and compare those.

Also do not lease or PCP unless you have a reasonable safe and stable income (or / and you have savings to cover most of the remaining payments)
Also do not enter a long agreement on a car if you circumstance might change - family size, job.
 

·
Registered
Joined
·
40 Posts
No I was using personal lease prices, business is £308.03pm + vat

I would also do the figures for 2 and 3 years and compare those.

Also do not lease or PCP unless you have a reasonable safe and stable income (or / and you have savings to cover most of the remaining payments)
Also do not enter a long agreement on a car if you circumstance might change - family size, job.
Apologies. I misread. Lease certainly looks attractive.
 
1 - 20 of 21 Posts
Top