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Y15HAL

Buy Outright or PCP?

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Good Morning All,

 

I'm in a bit of a dilemma, and thought that i'd post on here for people's thoughts......

 

My current car (2011 530d F10) is the most expensive car i've bought outright at around £22k - this was 2.5 years ago.

 

I am now looking to move on, and am looking at receiving anything between 12k(dealer)-13.5-14k(private) - so am potentially looking at depreciation of around 9k in 2.5years......

 

My next car will cost anything between 17-22k (don't want to spend too much outright)....

 

Is it worth doing this again? I could potentially lose the same amount again in 2 years time, but if i keep the car longer, then it won't depreciate as much each year?  Problem with owning outright, after the first year of ownership, i'll be out of warranty and will have to fork out on full repair costs (some of which could be quite costly) :| 

 

Or shall i go the PCP route? A friend is in the trade and has good relationships with dealers, and could potentially get me a good enough saving on a pre-regisetered car, putting down around £7k and then £400 per month (circa 30k car) - would work out £4800 for the year.  Good thing about this is that the car is covered under warranty for a longer period if any faults were to occur......

 

I just want the best possible deal, and not looking to spend a great deal, as we don't really do much mileage in it (circa 6k per annum).

 

Any help much appreciated :) 

 

Vishal

 

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Understand your dilemma, either way it's costing you around £4.5k p.a. but at least with an outright purchase there's no 'balloon' payment at the end and you have a disposable asset.

 

Another thought and a way of avoiding the possible high 'incidental' repair costs is to take an aftermarket warranty with a reputable supplier such as the AA. I did that with an MG-ZT 1.8t I bought a few years back. They are notorious for eating cylinder heads if the cooling system hasn't been properly maintained and although mine came with 3 month's warranty I felt it better safe than sorry.

 

Sure enough, I had the car for 5 months then unbeknownst to me it developed a leak in one of the radiator hoses. Sure enough the temperature went off the scale and I cooked the head, unfortunately the way the temp gauge works the damage is done before it registers the increase in temperature. I contacted the AA, 10 days later I had the car back following a £1100 engine strip and it only cost me the £75 excess (plus the five £44 per month payments I had already made) and they continued to cover the car with no premium increases until I sold it 18 months later.

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Yes, you have the ballon payment at the end, or give the car back and start again, but then you have large equity in the next car? :| 

 

I don't fully understand the end of the PCP cycle/start of next cycle to be honest :wacko:

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You have three options at the end of the PCP contract:

 

1) Buy the car by making the balloon payment. That is the final 'Guaranteed Future Value' (GFV) payment that will be agreed with you at the start of the contract. If you don't have enough spare cash to make the payment you can normally negotiate a car loan.

2) Hand the car back. Providing you have kept the car in good nick (allowing for reasonable wear and tear) with no dings or scratches, kept to the agreed mileage and servicing schedules you can simply hand the keys back and walk away.

3) Buy another car. The value in the car you are returning will be the difference between the final payment and the trade value, so if your balloon payment is £7500 and the trade value of the car is £10,000 you will have £2,500 as a deposit on your next car. Be warned though, the difference is not normally very big as they calculate the GFV very keenly at the start of the contract, so you may wind up with only a few hundred quid to kick off the next PCP!

 

Edited by pauliexjr
additional info

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3 minutes ago, pauliexjr said:

You have three options at the end of the PCP contract:

 

1) Buy the car by making the balloon payment. That is the final 'Guaranteed Future Value' (GFV) payment that will be agreed with you at the start of the contract. If you don't have enough spare cash to make the payment you can normally negotiate a car loan.

2) Hand the car back. Providing you have kept the car in good nick (allowing for reasonable wear and tear) with no dings or scratches, kept to the agreed mileage and servicing schedules you can simply hand the keys back and walk away.

3) Buy another car. The value in the car you are returning will be the difference between the final payment and the trade value, so if your balloon payment is £7500 and the trade value of the car is £10,000 you will have £2,500 as a deposit on your next car. Be warned though, the difference is not normally very big as they calculate the GFV very keenly at the start of the contract, so you may wind up with only a few hundred quid to kick off the next PCP!

 

 

The usual option would be option 3 i assume, otherwise i would be back to square one (looking for a used car but with no money left to buy it outright).......or go back into another PCP, and could potentially need to find another £7k or so for another deposit :|

 

Sounds like i'd be better off buying outright, and then investing in a warranty (sometimes upto £1500 p.a), or putting that much away for a rainy day.....

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22 minutes ago, Y15HAL said:

 

The usual option would be option 3 i assume, otherwise i would be back to square one (looking for a used car but with no money left to buy it outright).......or go back into another PCP, and could potentially need to find another £7k or so for another deposit :|

 

Sounds like i'd be better off buying outright, and then investing in a warranty (sometimes upto £1500 p.a), or putting that much away for a rainy day.....

The difference will obviously include your initial deposit, but as I said, they calculate that at the beginning so you should know what you will need to pay v the potential value of the car at the end of the contract, you are offsetting your deposit against your monthly payments rather than the final value. The lower the deposit, the higher the monthly payments but the GFV won't vary.

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When buying AUC, you could always ask about 2nd year warranty so you've 2 years cover. It's what I tend to do when buying outright. 

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With leasing I go by one metric whatever the purchase price of a car is your lease with a reasonable deposit should be the same or lesser per month/100

So a car at £50k should be =
I.e. I was offered a £70k+ 740Ld for £520. (3*36) The Volvo Xc90 was £58k and we are paying £380 (9*23)

To be honest the deals are rubbish at the moment and a lot of the smaller lower margin companies have disappeared.

Sent from my SM-N9600 using Tapatalk

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Whether you buy or PCP,  you are financing depreciation.

 

With a PCP you can afford to run a new car for what it would cost to borrow the money for one three years old. With a PCP you can be in a new car every three years with perhaps just an oil service to pay in that time and a couple of tyres. You should be ok for brakes, exhaust etc.

 

If you like the car, you have the option to buy. German cars are usually better on PCP's due to their higher residuals. Go for a low APR, the minimum or no deposit if you can, as you might as well add the deposit to the monthly cost. You might get a better deal on a car in the showroom or an old model run out such as on the 3 series at the mo.

 

Don't buy a car. Never invest in a depreciating asset my old granny used to say. If you borrow the money as well, you are hit twice in interest AND depreciation.

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Or, if you live in the city centre, and don't need a car daily or for work, it could be cheaper just to rent a car as and when. This costing won't allow for the convenience factor of just being able to jump in your car and go whenever, and wherever you want.

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13 hours ago, sanjx said:

When buying AUC, you could always ask about 2nd year warranty so you've 2 years cover. It's what I tend to do when buying outright. 

 

Negotiate a good price on the 2nd year, or ask them to throw it in :) 

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10 hours ago, Steve van hool said:

Or, if you live in the city centre, and don't need a car daily or for work, it could be cheaper just to rent a car as and when. This costing won't allow for the convenience factor of just being able to jump in your car and go whenever, and wherever you want.

 

Unfortunately, dont live in the city centre, and need the convenience of having a car with two little ones :) 

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You will loose ~£10 a day without too much bother on a F10/1 with depreciation.  My dad lost atleast that when he traded in his 2012 530d at 6 years old having had it for 5 years.

 

Don't use it this weekend?  It will still cost you north of £20 sitting on your driveway.

 

Buying on the never never is still the same.  Monthly payments of between £300 and £400 is easily £10+ per day and at the end of the three years you have nothing to show for it.

 

I bought mine outright three years ago.  Yes its depreciated to the tune of around £10 a day but after three years I have an asset that is worth something still. But it wasn't new when I got it.

 

I would love to spec a new car one day before Westmosnter and the loonies at Holyrood ban the sales of cars with ICE.

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1 hour ago, 535i Andrew said:

You will loose ~£10 a day without too much bother on a F10/1 with depreciation.  My dad lost atleast that when he traded in his 2012 530d at 6 years old having had it for 5 years.

 

Don't use it this weekend?  It will still cost you north of £20 sitting on your driveway.

 

Buying on the never never is still the same.  Monthly payments of between £300 and £400 is easily £10+ per day and at the end of the three years you have nothing to show for it.

 

I bought mine outright three years ago.  Yes its depreciated to the tune of around £10 a day but after three years I have an asset that is worth something still. But it wasn't new when I got it.

 

I would love to spec a new car one day before Westmosnter and the loonies at Holyrood ban the sales of cars with ICE.

 

Would people think twice about buying new if they sat down and did the sums? probably not, as there is something nice about a new car, and you carn't take it with you at the end of the day, just enjoy your motoring whatever you drive. 

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1 hour ago, Steve van hool said:

 

Would people think twice about buying new if they sat down and did the sums? probably not, as there is something nice about a new car, and you carn't take it with you at the end of the day, just enjoy your motoring whatever you drive. 

 

Totally agree, the bit about not taking it with you was how I convinced myself to buy my first E60:P.

 

Besides if there was nobody doing the never never, then there would be a distinct lack of three year old cars for folk like me to buy!

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10 hours ago, Y15HAL said:

 

Negotiate a good price on the 2nd year, or ask them to throw it in :) 

 Depends on the deal but I've quite a good relationship with my local dealership and they tend to show the value. c£600 for 2nd year on F01

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2 hours ago, Y15HAL said:

Think i'm just going to go with outright purchase, and see what the dealer can offer for the second year (if anything).....

 

Money talks, cash is king, and all that, tell them you want a 2nd year as part of the deal.

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Money talks, cash is king, and all that, tell them you want a 2nd year as part of the deal.
I was told officially by a self proclaimed reliable source (a lying salesman) that BMW has now banned dealers from doing this.

Money talks but this money also walked.

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12 hours ago, Steve van hool said:

 

Money talks, cash is king, and all that, tell them you want a 2nd year as part of the deal.

 

Taking that literally for a moment. Cash isn't king when it comes to buying a car, well not BMW AUC anyway. The dealer told me they cannot accept cash in that quantity for fear of money laundering and the hassle they have of holding massive sums of money on the premises and then the effort to bank it. Aww bless.

 

When I bought mine (outright after negotiating the screen price down a good whack plus getting them to do a few things to the car before hand) I asked how I could get a better deal.

 

The answer was to take their finance.

 

This lowers the screen price but of course you end up paying more if you do run with the finance. I wonder if you agree to take the finance to lower the screen price, and the next day phone up and pay off in full the finance as part of the "cooling off" period, you will save even more?

 

Oh and good luck getting a second years AUC warranty. I got told no chance!

 

But don't let that stop you asking. Good luck.

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Doesn’t look like dealers want to play ball much at all.....

 

one dealer not budging at all on price....

 

the other only willing to knock £250 off the price (22k)!!! :|

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're, cash is king, I didn't mean literally, just that you have a good hand for negotiations, if you are in a position to buy outright.

Actually they want you on finance to get the commission kick back..... So actually cash isn't king.

 

 

 

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