What to do - car coming to end of PCP

[Hicardo]

Hi Folks, thought id solicit views from you guys 

My PCP comes to an end in June.  Honda have written and said I can buy my car for about 12.5K, I can hand the keys back and walk away (yeah right), or I can negotiate on a new replacement.  I think there's a fourth option, go to another manufacturer dealership. 

So - I like the car, there's a rattle needs to be sorted, otherwise its more or less perfect and has done 28K miles.   I have the 5 year warranty / 5 year freebie service plan. 

I'm inclined to either:

- perhaps buy it for 12.5K
- check the deal on a like for like new Crosstar - latest model year
- check the deal on a Toyota Aygo X with a sunroof - and automatic. 

Have a few months to decide. 

[CB72]

No brainer, your car is worth about £19,000, you're prepared to spend £12.5K, that adds up to £31,500, more than enough for a new Crosstar Advance 

Toyota Aygo! why not a Yaris?

[5thcivic]

Can I ask about the economics of PCP please? How much have you spent on the 3 years ownership?

[Lord Voltermore]

No brainer, your car is worth about £19,000, you're prepared to spend £12.5K, that adds up to £31,500, more than enough for a new Crosstar Advance 

Have I missed something with PCP's?  You will already have spent the £12.5K cash  buying the rights to the old car. You gain  £6.5K by buying the rights  but its still only £19K of assets towards the new car. Not £31.5K   

[John Ratsey]

I think you'll find that any vehicle which isn't a full hybrid or an EV to be a step backwards in terms of usability.

If you can buy your car outright for £12.5k but it's worth significantly more then that's what I would do as the first step. Once you own the vehicle you can then investigate the options.

[CB72]

No brainer, your car is worth about £19,000, you're prepared to spend £12.5K, that adds up to £31,500, more than enough for a new Crosstar Advance 

Have I missed something with PCP's?  You will already have spent the £12.5K cash  buying the rights to the old car. You gain  £6.5K by buying the rights  but its still only £19K of assets towards the new car. Not £31.5K

You're right Lord Voltermore, it doesn't add up. What I meant was, try and get a deal on a new Crosstar or Jazz.
I dont understand PCPs myself, they tried to sell it to me when I bought my car, all sounded a bit dodgy. I paid outright, so its all mine right from the start

[Expatman]

No brainer, your car is worth about £19,000, you're prepared to spend £12.5K, that adds up to £31,500, more than enough for a new Crosstar Advance 

Have I missed something with PCP's?  You will already have spent the £12.5K cash  buying the rights to the old car. You gain  £6.5K by buying the rights  but its still only £19K of assets towards the new car. Not £31.5K

You're right Lord Voltermore, it doesn't add up. What I meant was, try and get a deal on a new Crosstar or Jazz.
I dont understand PCPs myself, they tried to sell it to me when I bought my car, all sounded a bit dodgy. I paid outright, so its all mine right from the start

Play them at their own game! If you plan to pay cash but they are offering a "contribution”  to take out a PCP then do so - then within the legal 14 day cooling off period call the finance company and pay off the balance in one go without any penalty. That way you get the benefit of the manufacturers contribution - I got £2000 last time - and paid off with no bother.

[5thcivic]

I'm trying to understand PCP too, have always part exchanged or bought for cash.

IF.... the 3 year PCP cost is close to the 3 year depreciation, then what is the downside? If it is more, some added might be worth it for a hassle free new car every 3 years?

Was the car 24-26K new? and 19k now? Say 6k depreciation, how much was PCP for example?

I suppose it depends on interest rates at the time, and the vagaries of the second hand market prices which have seen some large swings the last couple of years.

[Lincolnshire Rambler]

On most PCPs you end up paying the full amount of interest on the amount left after your deposit. So if the car is £25 k to buy and you put £5k deposit the loan is £20 k . So the interest is charged on £20k for the 3 ,4 or 5 years you have taken it out over . At the end you hand it back or buy it for the amount you agreed at the start of your agreement . Hence the massive amount of money you pay in finance charges of which the dealer earns his commission from !

[Whiteshark]

Except of course pcp’s are a very effective way people get into a new car. They were very popular when interest rates were low, so no massive finance charges as you allude. It has of course changed now interest rates are higher, and I bet it is consequently affecting sales. I don’t understand why people have a downer on these schemes, whilst I don’t use them myself, friends do and they are extremely content. Live and let live.

[Hicardo]

Thanks for the interesting comments guys.

Approximate figs.  I paid £21000 for the Crosstar new after discount.  After 36 mths PCP expires in June, including the original deposit, and the £12,500 cost to purchase outright,  will have paid approx £23,000 for the car, had use of it for 3 years, and it will still be worth approx 18K (trade in).  3 years motoring will have cost about 5K.     

Agyo X rather than Yaris - because you can spec it with a sunroof, and we fancy a sunroof 

[Hicardo]

Sorry ...need to revise those figs as I miscalculated the PCP as 1 year instead of 3... doh...

So need to add additional to the cost, therefore the car has cost me about 9K over 3 years....between 8 and 9K anyway

[5thcivic]

Thanks for that, it gives an idea of the cost of a new car every three years compared to depreciations.

[Hicardo]

No....brain failing me, I was right in the first place, total amount paid after 3 years is 23.8K, so car has cost me approx 5.8 K over 3 years....

[Whiteshark]

I think that is a very good deal.