I used to think it was crazy for people to want to buy new cars but now I think it's great. I've finally recognised that if people didn't buy new stuff and get bored with it, I wouldn't be able to buy the same thing for half the price three years later. Keep buying new stuff, you're doing a great job :-)
of course. I don't see how British people can afford to keep paying these prices. Everyone, including the country itself, is in so much debt.@@thewalrus6833
When I was a kid in the 70s, if I saw a fella in a merc, Rover or a Granada I'd think wow he's got a few bob...there goes success. Nowadays if I see someone in a new Merc or Range Rover, I simply think there goes someone up to their necks in debt without a pot to P*** in.
TBH, it was the same in the 90s. The proliferation of expensive cars being driven by the masses seemed to begin following the global crash, ironically. I heard a stat the other day that said 80% of Britons have less than £500 in their bank accounts. If that's even half true then one look at our roads tells you where all the money is going.
Only driven an old car. I often consider getting a newer car on PCP, but can never justify the extra monthly spend. I think I’ll run my current car into the ground first
@@MutantNinjaDonutvery very true. I’m paying easy £600+ on my service each year. Did the math though and this still works out cheaper when factoring in my desires from a car
@@MutantNinjaDonut it's much cheaper than a new one at the moment given the purchase/finance costs and touch wood, it's not costing me much in repairs. Breakers yards have lots of Rovers :)
@@MutantNinjaDonut Believe me, it's really not. Buy a car for £5k and after 10 months you're laughing. After 48 months you're well on your way to a house deposit.
A lot of people, I suspect, including myself, are fearful of the second hand car or van market, you just don't know what you're buying. Full service history means nothing in my opinion, everyone chasing the cheapest fuel prices generally the inferior supermarket fuel, mileage that's been altered or frozen as the vehicle is driven. In my experience, I'm currently going through this, once the warranty runs out it seems a button is pressed somewhere in some secret location and things start going wrong. I've thrown all sorts of money at my van to keep it going which brings me to another point, garage repairs..... Does anyone truly fix anything these days? Looks like I'm on my third turbo in less than two years!!! Yes it gets replaced but why's it happening? No one is interested and that's the stock that's being moved around in the second hand market, hence the success of the deals that are no more than the length of a warranty
@@straty5598 That's a valid point and one that I've heard many say about their own car purchases. Added to that the fact that anything manufactured these days is designed to fail after a few years at most. At the same time manufacturers are claiming to be green and saving the planet. It just doesn't add up. I would love a newer car but it's not in my budget at the moment and newer cars are very poor quality with unnecessary complications that nobody wants or needs.
@@54356776 You're right, the newer vehicles are overcomplicated, not sure why it's necessary to over engineer something that's done a good job previously, likely, as you say, to meet the green targets. Nothing green about millions of cars and vans going in and out of garages for repairs. Yeah it keeps the world turning but it's an expensive necessity, in my case anyway... That's just cars and vans nevermind TV's, central heating boilers, washing machines, the list goes on
Want to save money on driving. But a Toyota or Lexus new or used. Keep it until 250,000 miles then repeat. Compared to your clever neighbour who has been through five leases, PCPs or whatever in the same period, you will have saved a mint.
I have had 2 used cars in the last 9 years One depreciated 3k the other 4 K So I lost 7 k in depreciation My work mate has leased 3 cars in the last 9 years ,( each car a 3 year lease deal ) and his average monthly payment was around £300 a month So he has spent £32,000 in the last 9 years and now doesn't have a car lol Madness
I have a 2011 Toyota with 92k on it. It's all paid for and reliable. I think about getting something newer but newer cars are more complex and there's too many electronics to go wrong.
The problem with leasing is they are hard to get out off if your circumstances change, they will both cost heavily if this is needed. Where selling a car you already own even if you had a bank loan for it is much easier.
My question is has pch and pcp put the price of cars up for retail customers because the focus is on the affordability of the monthly payment rather than the total price of the car?
@user-tt6il2up4o but isn't pcp basically cheaper than classic credit but the dealers get their money anyway or they get back the car resel it make more profit or this plus having the chance for getting more money from you by getting you another contract so it basically gives em more customers therefore more money
Totally agree... It's all show. I earn a good salary, but I bought two small cars that actually fit into my garage. That was the most important thing. None of this scraping the ice off my windscreen!
Good video. I think you should mention cash via a bank loan/private loan though. It has advantages and flexibility and can cost less overall than dealer financing.
You beat me to it. Unsecured personal loans from a bank are often the cheapest alternative AND the car is yours at the end, to either keep running or use as a deposit 👍
Totally agree, a secure loan is nearly always a much better interest rate and therefore cheaper monthly payments, plus more flexibility on the duration of the loan
This !! I applied for a bank loan and instantly got approved. Then used it to buy a used 2020 Peugeot 3008. I told the dealer that I’m going to buy it cash but he kep on persuading me to go finance. When I did the math the interest on car finance is way higher so is the monthly payment around £300. Now I’m paying only £200 a month to the bank plus I get to own the car and not tied up to the dealer.
@@fissshhI've been doing this for 20 years! I typically buy a 3 year old car (which still feels new to me) which has lost a huge amount of its value (17k vs 33k for my last one) and then use a personal loan to pay it off. Can sell the car any time I like and just repay the loan, and i usually have years and years and years when i pay no finance at all before the car needs replaced
Yes I thought about this as well. I guess the only issue with this is, if you have other assets and can no longer afford to pay the loan for whatever reason. They can come and take anything to repay. Whereas a secured loan, they will only take the car (I think).
Here’s what I do. Bank loan for about half the cost of vehicle (lowest interest and not tied to car). 25% cash and 25% from trading in your previous vehicle. The vehicle you buy is typically 2 to 3 years old with around 10 to 20k miles on the clock and approved used. That way you can negotiate and extra year’s warranty. If you can’t then walk away. But some offer two years anyway. In my opinion and experience dealer warranties are the only ones worth having. Keep the vehicle 3 to 4 years but pay your loan over 4 to 5 years ( to keep monthly payments low). Then repeat. Avoid HP and PCPs and leasing as you will pay through the nose. PCPs are a rip-off. Your interest includes the balloon payment and then should you decide to buy at the end, you’ll pay interest again when you refinance. No way. My method isn’t perfect but it finds the sweet spot of having a nearly new low mileage vehicle with dealership warranty at the best price. Job done.
Also consider a standard bank loan. If you have a good credit record, you can get up to £25k and at a cheaper interest rate than most car finance deals. Then buy that 3 year old model and run it as long as possible.
100%, and if you’re buying second hand a car that has had the bulk of its depreciation the rate you’ll get from an unsecured bank loan will be a lot cheaper than the car finance company who use the car as collateral. Second hand APR will exceed 10% in most cases now.
45k for a Golf is ridiculous but then absorbing all that depreciation in the first 3 years and handing it back is about as sensible as wearing a down jacket in 45°c.
Agreed. We're probably the only country who pays this much for this car. It's totally ridiculous. Calling it a Club Sport doesn't add value. It is after all, just a Golf. Original GTI's were best, and affordable. Car prices have gone totally nuts in the UK
If it’s a new EV , the only sensible option is PCH. Under no circumstances should a private motorist buy one cash or finance . Let the lease company take the gamble on future residual values on EVs. My opinion is the values will tank.
I bought my car in 2007 for 18000 I still have it and use it with minimum expenses. My cash purchase was good for me because I have been using the same car all this time. I do not focus on the price of the car but on the value I can get from it.
Leasing is almost always a lot cheaper than a PCP on the same car because leasing deals include fleet volume discounts. PCP is a retail consumer product where an individual consumer buys one car, pays interest on the amount financed and does not qualify for fleet discounts. Another big difference is that a car lease is a long term rental agreement whereas a PCP is a credit agreement - hence a deposit rather than initial rental. 90% of people don’t actually pay the balloon payment and keep the car at the end (why would you even if you had the money?) so have therefore effectively leased the car anyway, but almost certainly paid more / higher payments on a PCP than if they had just leased. Also, most don’t realise that the guaranteed future value / balloon payment to buy the car is actually an interest bearing loan that sits on your credit file until paid or the car returned. That could restrict your mortgage lending ability. As for HP that will after PCP definitely be the highest monthly payment. Unless you definitely plan to own the car for a long time and are happy with older car running costs and issues I can’t see the appeal. What’s the car market going to be like in 4 years time or by 2030?
"older car running costs and issues". You do know we're not living in the 1970's anymore yes!? In my opinion, most new cars are where the problems lie, how many new cars get called in for warranty work?
That's the main problem of everyone who is talking g about pcp. Nobody will ever tell you the secret until its too late: when your pcp is ending you can sell your car to any dealer (like for example Arnold C.) then call to your lease provider (bank) and tell them that you want to pay balloon. Its almost guaranteed (depends of condition of your car) that dealer will pay more than balloon so at the end you will have few grands extra in the pocket. I got that information from my dealer day after I gave back my car to lease provider and I lost about 3500£.
@nevermind824 That's true. Same story with renting a house. Many people have opinion that it's better than mortgage because you can change location whenever you want and there's practically no maintenance costs compared to mortgage, but after years of renting, you will end with nothing and nobody will convince me that "you can save the difference between both" especially in these days.
@DavidSmith-ls1mv unfortunately not. Balloon is a difference between whole amount of a credit and sum of monthly payments. So when you sign it you agree that will be "predicted future value" of this particular car with mileage on which you agreed and good condition. Bank doesn't care if you will keep it your air conditioned garage and make no milage or it will be heavy usage in workplace with millions of miles per year. If at the end of contract valuation made by single man from this bank is lower than Balloon then you have to pay the difference but if market says its higher then you will get nothing until you sell it by yourself to a person who wants to give more than Balloon. Of course if bank take back that car they gonna sell it for higher price than Balloon or lease it again and earn even more
Surely if you have the money (and don't need to rely on credit - which has the added cost of interest), the cheapest option is an outright purchase - and then ru the car for as long as possible. depreciation is only really an issue of you sell the car after a few years' of ownership - where you lose the most money. If you have the car for 15 years, years 6-15 are pretty painless in terms of depreciation! Of course, if everyone wants to drive a car that is only a couple of years old, they have to pay for that privilege somehow. But that's what makes owning a car so expensive - and why people need to come up with ever more inventive ways to convince themselves that they can afford it!
I bought my Tesla M3P for cash £53000 but I had £3500 back from the Government so it cost me £49500. I’ve had it 4 years and 5 months, and it’s now worth £25000. But if I had it on A lease it would have been £500 down and £1000 a month, which means I would have paid £53500 and not owned it, so I would be £25000 out of pocket
Tesla is a completely different entity and has its own economic system and they also charge 9% interest at the moment. So you have saved interest, it's not as much to do with the finance model surely? Naturally the 100% relief on tax is also a good move on your part. When your car sells, post back what it went for. 99% of cars do not however have that 100% tax relief on the whole purchase in the first year, so if people want to drive they have limited choices. Either way - anyone paying anything for cash over PCP will always win, because there is no interest, there is also no interest on a lease. Cars that are hard to shift or devalue fast are going to be very expensive on both PCP and Lease and especially when there is fever pitch demand for them. M3P are currently £200-£300 less per month than 4 years ago. So the notion of your paying cash here is the point. Same with a house vs mortgage - have you seen how much a house really costs when you add the interest? Thanks for the reference example.
Our family has always brought brand new because we only do low mileage and driven them till they drop 20+ years. Getting everything out of it. My mums car is 25 years old and done 23,000 miles from new. My van is 8 year old and just done 22,000. Deprecation doesn’t matter if you’re planning to keep it 20 years.
I got a new car on PCP three years ago with 0% APR and a good deposit contribution from the finance company. It’s been a gem so I’ve decided to keep it until ready to go electric in the future. The price I paid was much better than the cash price so it can be beneficial and there is no way I could find a car this well looked after at 3 years. Some cash buyers take out a PCP in order to get the deposit contribution then end it after minimum term e.g. 1 month so they have effectively bought it for cash but with the added discount. New PCPs are really expensive due to increase in vehicle costs and higher rates of APR. I suspect the days or cheap or reasonable car finance are over.
@@petermartinaitis8166 Ford Credit through local Ford dealer. Every time for the past 6 cars within the household. Appreciate may not be common with other brands.
HP via bank loan all day. Usually cheaper apr than any pcp scheme. If you want lower monthly payment just extend the term. You can still trade the car in mid way through the loan as most have low early repayment charges. It literally ticks all the boxes. Cheapest, flexible and easy to understand.
we own our house outright. paid it off in 10 years flat. i have never bought a car on hp or leased one. all my cars are cheap cars and i buy them with cash. having no mortgage is the key. no rent. nothing. cash pouring in so buying a new car outright is childs play i'm just a normal working class fella btw. anyone that has a mortgage or pays rent should not be getting ANY car on finance or lease. concentrate all your cash into paying off your home first. once you've done that then u can buy a nice car easily.
You are so right on this, we have 2 cars & 1 motorbike, owned for 14, 7 & 16 years, one car bought with a bank loan & the others cash. My mortgage is on target to be paid off 9 years earlier than the term. My brother luckily bought his house in 97 before house prices rocketed, but has had 7 new cars, bought & leased over 20 years, but have only managed to pay off £20k on their house in 20 years!
@@boyasaka , my brother & sister in law had 7 new cars in 20 years, but only managed to pay off £20k on their mortgage, now splitting up & having to start again with a £200k mortgage at 50 years old, idiots.
Buy the best car you can afford for cash after it has stopped depreciation so badly. That way you have one less bill each month so less stress and will enjoy your life more... simple👍🏾
Very helpful thank you. I've always wondered about that 'balloon' payment and never really understood it and now everything makes sense. It's very clever marketing. The car company over prices their vehicles so people that want to buy out right pay an excess, whereas the majority of us finance and therefore the brand gets a steady flow of cash and the customer is locked in to the brand meaning the cash flow will continue into the future. This isn't new to most people but if definitely is to me!
When I was selling my house a couple turned up to view one day, the first thing they said to me is please don’t look at the car we’re not Slavs to a car, paid me full asking price cash, this has always stuck in my mind as I drive round in my 2006 Kia sorento debit free!
i buy all my cars cash. never ever lease or buy a car on Hp. we got 3 new cars all paid in cash. 8% interest here now on cars. 8% on a deprectiating asset is clinical insanity
@craigbeesley9601 with guaranteed over 8% returns? While there's returns higher than that it'd be a gamble. If you have the cash, buy it. If you don't, don't. Don't borrow inorder to invest, might as well get a leveraged loan and stick it on the market.
I think you’ve missed a key fact with your buying the car outright section. Opportunity cost, £45k invested could quite possibly make £3k per year or £10k over a three year period.
Low miles aren't always the best option. You want a car that's used for driving longer distances. A lot of short distance trips with a cold motor aren't great.
What about a personal loan from the bank, not attached to the car? You own the car from the outset, the interest rate is usually much lower, and you're free to trade up or down as it suits you. If you're clever about it you can even trade in and clear the loan whenever it suits you without losing out.
I bought my first car from auction for £110, second from a neighbour for £10 (written off), third from an ex school teacher for £1100 and fourth from a family friend for £1200 and its still going 12 years later! That spans 20 years and £2420. While everyone i knew had nice cars and debt, I saved for a house deposit. More than one way to skin a cat! (Whatever that means)
Decent used car that’s just going to cost you tires and brakes on a low rate personal loan to tie in with how long you want to keep it. this is the best option because, you own the car, the loan is unsecured, the car will have some most of its depreciation so will have a value when the loan is paid which can be your deposit for the next one.
Now if he spoke about interest too on PCP you'd soon realise that while you don't have to pay the balloon payment you're paying interest on the entire amount all the way through ....
In Spain, the odd thing is depreciation is a very gentle curve which means a new car much more realistic. €20k new, 3 years on with 40k Kms, it's only €3k to €4k cheaper.
You really needed to run through the numbers on all the examples, not just the PCP one. I bought my car cash, and am just into 3.5 years of ownership. As I look after my cars, it will last me at least 10 years without much bother, but I'm hoping to get 20 years out of this one as I bought it nearly new and am looking after it meticulously.
@@miskatonic6210Only if you skimp on maintenance. People are cheap and stupid and skimp on maintenance. They only work on their car when things fail, they don't do preventative maintenance, like changing a water pump BEFORE it fails, but around the time they usually fail. It's not rocket science to keep a car running for many years.
@@miskatonic6210 I purchased a seat Ibiza brand new in the 1980's, I owned the car for over 20 years, apart from regular servicing the only other items I had to replace were the clutch cable, battery, and a complete exhaust which lasted 19 years.
What happens if there is some damage to the car whilst it`s on PCP or PCH.I think I know the answer, but what if the damage is to the battery on an EV which may need replacement?
Every time you see someone getting out of the Merc,Audi or BMW first thought is leased and has no money. When i was a lad the thought was, now there goes a rich dude.
Thanks, today i have finallyunderstood the difference between these. And it came roght on time when someone was going to try sell me a PCH car as though it was a PCP! Saved me from making the mistake! Thank you.
Buying anything on finance will end up more expensive. Buy outright with cash with a big discount off official price and keep car for quite a few years will always be cheapest.
Strongly disagree. Last time I bought a car, it was £25k. Cash or PCP. I had the £25k cash. But I was able to get a bank loan for the £25k @2.9% APR over 5 years. So I took out the bank loan and put the £25k into stocks. So far, the 25k in stocks is worth £33k. That increase in stock value is way more than the interest costs of the bank loan. So finance absolutely makes sense, depending on your financial situation
@@JonathanGray_UK that's all well and good put people need to be aware that stocks go down as well as up, so whilst in this case it has worked for you, it may not work for everyone. If you have the cash, I would only take finance if it was either 0% or the interest rate was lower than if you put the same amount into a high interest account
@@filmalive I don't think it's fair to discount stocks based on risk, you can get some pretty low risk stocks and you only lose money in the event you sell when the market is down
I agree in most part BUT, unless it's a back street garage, franchised dealers will not knock any money off for cash. They get way more commission from finance deals...
I recently found another benefit to doing HP. Bought a car in April and the engine was dead in 8 days. The dealer was no help. MotoNovo effectively owned the car and had it inspected. Confirmed it to be a failure at point of sale. The vehicle was returned. I got my money back plus interest and plus additional for inconvenience. I will never not finance a car in the future.
The cost of those types of cars has skyrocketed. I bought a Mondeo for £600, used it for 4 years with only minimum maintenance costs. When I looked to replace it for something similar, it was going to set me back about £1700. I don't think the scrappage scheme helped. It took a lot of perfectly good old cars off the road. I opted to buy a low mileage 7 year old car for 9k, and I'll keep it for a long time.
Yeah, it's best when you don't need a car, you clown. With a family and a job you can't afford cars that break down any second. Every time it will cost you days of trouble. Getting rid of the old car, rental car, finding a new car, registration, insurance... A lot of time better to be spent to make money to buy a way better car.
It's an interesting presentation. Obviously heavy bias for leasing. All three options have depreciation, with non cash options this is why you pay all that money for years, have car worth 16k car at the end. Also i like the bit where he says. "Lets not talk about interest". Ah yeah that bit that makes you pay almost double for the car.
2015 I ordered an AUDI S3 for £37,000 deposit/trade in of £12,000 so financed £25,000 over 5 years at approx £500 PM. All paid in 2020 and have not financed another car since as I still have my AUDI with 30,000 miles so far and it's current value is somewhere around £16,000 to £18,000 (for an 8 year old car). Due to the low mileage I can still purchase AUDI Service Plans but so far the maintenance costs have been very good. The car is ULEZ compliant and my only real complaint is trying to get updated maps for the MMI (every time I try AUDI get very evasive). I am very happy with my car and have no intention of changing any time soon. The saving to me of not paying any finance or hire costs for the last 4 years is far better for my mental health and pocket than trying to massage my ego with a new car every 3 years. If I were doing higher mileage then my scenario wouldn't work as well.
30000 in five years in my Xiaomi m365 I had 12000 for two years plus trains milage so I got more milage then you,with 300 pounds in total spent,but Audi is Audi and the insurance cost and fuel forget about having car in Lond😅n.Cheers.
Good video, but you also need to explain PCP and HP usually have to pay lots of interest to pay as well which is getting more and more expensive as rates go up…..
A PCP is akin to a 95% mortgage, to get something you could normally never afford. A PCP is also on the understanding that you'll hand the car back for a new car at the end of the initial contract period, unless you really love the car - and have saved enough to pay the balloon payment (difference in initial value and the equity accrued in payments over the initial period). The other alternative is that you refinance the outstanding balance for another term, which is almost always a bad, expensive idea. It's therefore effectively a zero equity, zero ownership method to drive a far nicer car than you'd normally be able to afford, provided you don't want to keep it and you're happy with the caveats. Some PCP deals include VED and servicing, akin to full leasing agreements, which I think some people like for the simplicity. I would find that quite inflexible though. The only new cars I've bought were on HP, where each monthly payment was directly paying off the loan from the finance company you effectively take out to own the vehicle. No balloon payments, just a fixed monthly, no mileage or usage limits like are commonplace with PCP. That worked well for me in the years when we had exceptionally cheap finance (Ford Credit was something like 1.4% HP, 0.9% PCP!). Nowadays I'd only buy on a personal loan or cash, unless I could get a sub-3% HP offer and was able to put down a generous deposit.
A couple of recent factors to consider: a. PCP protects you when the car depreciates at a much higher rate than expected. You simply hand the car back instead of paying the final balloon payment, walk away, and then buy it back off the forecourt at the lower market price the day after. b. Recent articles by Martin Lewis etc. about compensation claims looming (quote - of the same magnitude as PPI). As I understand it, this applies to cases where the dealer could agree an interest rate with the finance company and was incentivised by commission to make this a high rate. Can anyone put any detail on this story - I had a couple of PCP deals over that period, but the interest rate was set in advance by the car manufacturer's finance arm (3.9% in both cases); so are they in scope? I don't believe the dealer had any freedom to vary the rate.
When I was broke I used to buy second hand and had a world of problems every time. I eventually PCP cars that were a year old, paid it off and keep driving for a few more years before selling. Never had to do anything besides change the tyres and the occasional break pads. Depends on your income.
@@RevealedFilmsexactly, buy a car 6 months old, have all the reliability and warranty value out of it and pay it off at the end. Leasing is a never ending cost per month, along with all the general costs of running a car you’d have anyway. This idea of a depreciating asset makes me laugh, if you spend all your life paying for leased cars, you’ve never had value out of the car. I bought my car for £26,000, 6k miles, after 4 years I paid it off, the value at the time was £22,300. This car, a 19 plate golf GTI mk7.5, will last me for years. I now have no monthly payment so I can save more. I don’t see the point in leasing as an individual unless you’re well off and that monthly payment doesn’t impact your disposable income. If ever I want to sell the car, it’ll have value that will go back in my pocket, further increasing the value I get out of it.
What about comparative costs when you include annual service, insurance, road tax, maintenance, repairs, tyres, etc? Some leasing companies include servicing.
If you buy cash and keep the car for a reasonable period then it's way cheaper. My very nice brand new Mazda 6 will cost me a little over £100 per month.
My Hyundai Tucson is 2015. I got it 2016 so a year old 4000 miles done. £17000 vs £29000 new price. Still have it only MOT and usual servicing. Paid it off a long tome ago. Yes i know not very spectacular but does the job with the dogs. Get a good quality car and use it until it fails. The amount of money people waste on cars. But then say they cannot buy a house do waste on rent.
I have a ten-year- old car which I bought new for cash. It has now depreceited to one third of it original value although it's a false third because prices for the same model have increased. It's only done 60k miles and as I'm now elderly and nothing to prove, I'll be keeping it until either it or I go for scrap.
Yeah good video but one major risk with leasing is that when you hand the car back they go around it with a Lazer and hit you with a bill for every scratch they can argue is "not fair wear and tear", so the money you thought you'd saved on leasing over PCP in deposit could then be evened out. More chance of this also if you don't take another lease from the same company I'd say and on top of that, with no trade in option, you have to have lined up your next lease in time for handing back the original, which with current car lead times is a moving target, so you could find yourself in a hire car for a while before your next arrives.
You could always extend it or buy it if desperate. Not really an issue, finance is catching more people out with the claim you can get out of it but then you come to find that you owe money to do such a thing. As for damage, very few actually get charged unless you are an animal and drive a battered vehicle?
In 18 years I’ve never once had a charge when returning a car from a lease. All funders and leasing companies must use the industry standard BVRlA fair wear and tear guidelines which allows for reasonable Wear and tear for the age, mileage etc of the car. This also applies to PCP finance because like with a lease, the car belongs to the funder (unless you pay the balloon payment to keep it) If the car has unreasonable damage then, fair enough , it must be charged for . If you own a car and try to sell it with scratches, scuffed wheels, dints in the body work you will get less for it - unless you fix it.
@@domaindave2422 on paper that is right but the key difference with PCP is they exist so you keep trading up for a new car and in that case they overlook the condition and often won't expect it before cutting the deal, same as if you trade your private car. Almost no one hands back a PCP. With a lease, it's a much more rigid process so if you do have excessive damage on the returning car, you will definitely bear the cost of it.
@@slugger7440 PCP is a genius too for dealers to tie you in to their brand because you have to tell them that you are wanting to sell or indeed looking to change car. You can’t sell a car on a PCP finance agreement without settling the finance because it’s not your car legally. With PCP agreements 90% of people do not pay the balloon payment and keep the car (so therefore they have effectively leased the car, but in most cases paid significantly more than they needed to had they actually personally leased the car) . Yes, PCPs do exist to keep you upgrading your car , with the same brand / dealer which is tying you in and just one of the reasons for the widely covered PCP mis selling scandal. As for overlooking damage on the car that’s just part of the smoke and mirrors part exchange game that dealers play. Dealers make a lot more profit on a PCP than they do an a personal lease. As for excessive damage I’ve never had any end of lease charges and dint know anyone that has returned a car with excessive damage.
@@domaindave2422 you hit the nail right on the head with your points. PCP is a scam the majority of the time and you aren’t better off in any case if there is damage with either to be fair. The only way I can see any excuse for damage is if you were leasing and got the charges waived due to leasing another vehicle. That does work with VWFS with minor damage I hear
Your addition of horizontal lines and comment on your graph at 6:17 is misleading/erroneous. The money lost through depreciation at year 3 is only the amount from £45k to where the graph intersects (about your 4th horizontal line), not down to zero. Otherwise a useful video - thanks.
Bought four used cars in my life; 2 lasted no more than a year before being scrapped, 1 was alright and 1 requires ££££ of repair bills to get it road worthy. I can say buying new gives you the peace of mind that your car won't cost you any more money if it comes in to issues within warranty when you most need it.
I have been leasing for many years. At first I was very resistant to the idea, but I think it’s fantastic. Granted I’m self-employed and can get the VAT back which does make a significant difference. I think it’s a fantastic system when you factor in the very significant depreciation of most vehicles.
You forgot to mention the excess milage payout at the end. Give the car back and have to pay out thousands extra as no real life person drivers less than 6000 miles in 2 years
That car you drew is definitely the Hammerhead Eagle iThrust I bought my first 2 cars with cash and my third with a mix of cash and an interest free credit card. all were old (12 years) but my most recent has low milage and so far seems ok. Once I've paid off the credit card, I own it outright, will have paid no interest and just have to hope the bottom doesn't fall out of it.
The complexity worsens when you consider that a car that's say, 2 years old and has an APR of 10% per annum versus buying a brand new car at 0% APR. The monthly premiums might be the same but I know which I'd prefer IF I had no intention of keeping the car after the 36 months. A good example of this is a Ford Puma having 0% APR on 26 months whereas the used Puma is closer to 10%.
In the first example you gave, pcp, the deposit, repayments and final balloon payment added up to £45 k, you neglected to add any interest which changes things considerably.
The quoted depreciation of 20% when you buy a car because of VAT is a myth. The second hand value of a car is down to supply and demand. Try and buy a Porsche GT car foe list price minus 20%.
Cars has become something like a Phone where someone buys a phone paying it monthly, and after the contract is almost up, a new phone comes up and either they sell it off to pay for a new one or trade it in to cut down the cost of the new one. For HP, the only time to buy a brand new one really is if you are loaded. Cause cars depreciate in value and it will always do regardless. Your investment in a brand new car, the money just goes out the window over time. PCP is like paying for something you will never own. PCH I guess thay cheaper down payment looks rather juicy. But I guess if one is an average consumer/customer who just want a daily commute car for work or doing the grocery etc. The best one I guess is buying a decently priced used car with not so high mileage. With a good track record/reliability in the market. And abundant enough in the wild thay if it broke down there are plenty of spare parts. Plenty of spares =cheaper parts if you get me. But yeah, HP brand new? Maybe if I won the Lottery! Or be a son of an oil sheikh.
HP can work if you have either enough deposit or an old car with trade in value. I bought my last two cars on HP partly because I wanted to not be subject to the usual PCP restrictions on things like class of use, mileage or modification. With any new car purchase, getting at least VRI or RTI GAP insurance is essential. I had a car stolen and the GAP covered the difference in assessed value and original list price (car was two years old), which enabled me to put down a hefty deposit on a new car and get PCP-level HP monthly payments. Silver linings and all that.
I buy the pone outright and run it 6 years on dirt cheap SIM only deals. The savings are huge, much as they are buying a car cash and making the most of it. Those obsessed with disposable consumerism are the ones paying through the nose for their sins (and like to convince themselves it's fine because they're "used to paying it") Quite difficult to alter the mindset of these people to get their capital working for them rather than against them!
You have to take the mileage restriction the maintenance the big stuff like cam belts and when the warranty runs out after 3 years and the brake down cover after 12 months.i leased my vehicle for 4 years and dreading something serious going wrong now it's out of warranty Then the inspection for any damage Would not lease again
Hey, thanks for watching and the Q. All material things have a monthly cost for life unfortunately, and not all cars are £500 a month. And yes, unless we purchase cash all forms of car finance arrangements are leases, with different names. In leasing's case however you are not paying dealer margin or APR...over time APR alone can be quite considerable especially on used cars at 12%
Buying new and / or financing a car is a great way to throw money away. Up to 50% depreciation in first 3-5 years, so buy after then. Financing adds additional cost to a depreciating capital cost. Def not clever. Leasing is still debt so same principles apply.
Why is it throwing money away, people buy new cars because they enjoy them, and the cost of depreciation is one they find acceptable in return for the pleasure of ownership. Who are you to judge how other people spend THEIR money?
My wife and I drive a 2008 Ford Focus and a 2007 Ford Mondeo. It would be nice to drive a new(er) cars, but we don't have a chunk of money as a deposit. Is HP our better option?
Just to let you know, with hp there's usually a clause that allows you to hand the car back with no penalty after the first half of the term of the agreement, say after the 18th payment on a 36 payment plan. I did it once, you just phone them up and they come and collect the car. It usually states it doesn't affect your credit rating, but whether it does or not i don't know. I didn't have any trouble getting another hp deal straight after.
I’ve been driving my own cars for 40 yrs. I’ve tried all methods of buying and yes everything has depreciated. I had my fingers very badly burned with Ford Options and now I have a private lease. One month down, £380 per month including maintenance (not a service plan) and I have a car that gets me to work etc without problems. I wish it had been available to private motorists 20 yrs ago. PCP has its place only because the monthly payments are easier, but you could take a personal loan over a longer period instead and by the time you have made your last PCP payment I bet you’ll have more equity in the car with a loan, even though you haven’t paid it off and you own the car from the first payment. Just my thoughts 👍
The other thing to take into consideration when but a new car is the interest you lose on your capital - assuming you are paying cash for it or putting a big deposit down. I bought a two owner fsh 1997 Bentley brooklands with just 50,000 miles on it and it was absolutely mint. That car cost over £100,000 new but I paid £13,000 for it. You can of course get them cheaper from about £8k but with much higher mileage. I've now done 12,000 miles in it and it's cost me less than £2000 in fuel and service costs. You can't buy a Dacia for what I paid for the Bentley. Which would you rather have?
Great thought provoking video simply explaining options well done. My issue is if I have 30k for a new civic E hybrid and pay cash i could lose 10k in value over 3 years. If I Leased same car for, say 350 a month, would have paid out 12.6k over 3 yrs. sound better to pay cash up front then?
£30,000 becomes £35,197 over 4 Years at 4% compound. Spending cash on a new car will kill your initial investment and any future interest. Whichever way you cut it; cars all lose money, all we can do is look at ideas to mitigate these losses. If its bottom-line pound for pound just about cash Leasing appears cheapest. There are lots of for and against for all options. Feel free to jump on the Money Saving Experts forum for example, and see what they all say about this or your specific finance example, and let us know how you get on?
Why is the question always framed as a 3 year scenario. Social programming by the car dealers and leasing companies have been really successful eh! Frame the two scenarios over 6 years (oh no! Driving a car for more than 3 years, the tragedy 😂) then watch leasing absolutely crumble.
I have bought new and used but in Europe the depreciation is much, much lower than the UK... Used prices are much higher than the UK... That's good and bad news for buyers and sellers.. I would say purchase a reliable brand of a well serviced/loved vehicle.. Buy at 3-4 years with a decent warranty ( perhaps original dealership brand) and then look after the vehicle with plenty, good servicing... Buying privately is okay on vehicles still under manufacturer warranty if the seller is pricing the car correctly ( many try to sell at forecourt prices and that is not the way to go)... Keep the vehicle as long as it is running well but be careful of going past 15 years unless it is becoming a classic or it is hyper reliable..
Been driving a 14 year old car for 12 years now and it's been so reliable, economical and cheap to tax & run I can't see the point in changing it until it's kaput. I have also paid off my mortgage and took early retirement. I guess it's just personal choice, but to me the most important thing was clearing the mortgage ASAP. My car ain't too pretty now, it looks like a 14 year old vehicle but it doesn't bother me. I've never understood why so many people must have a new car. Who cares what others think? It's a mugs game trying to keep up appearances or project an image of yourself! Everyone knows that most of the new cars are leased or on PCP etc. Massive consumer con and more fool you.
So I got finance on a car 2 and a half years ago. The 3 years of payments are finishing in October. Are you telling me that I still won't own the car???
I got into EVs initially because I was looking at ebikes and realised that I could get a cheap electric car for not much more than a long range electric bike. I also came to the conclusion that riding a bike on the M62 was probably not a good idea! If you have a shorter commute it's definitely a good option though..
All my friends have fancy cars while i still drive my lovely 2006 golf gti but most of my friends cant afford three holidays a year like i do and will still be working past 65 as they live a life of luxury buying things they cant afford. My parents taught me to only buy what you can afford and at the age of 40 i can say they were definitely right
Strongly disagree with the anti-finance brigade. Last time I bought a car, it was £25k. Cash or PCP. I had the £25k cash. But I was able to get a bank loan for the £25k @2.9% APR over 5 years. So I took out the bank loan and put the £25k into stocks. So far, the 25k in stocks is worth £33k. That increase in stock value is way more than the interest costs of the bank loan. So finance absolutely makes sense, depending on your financial situation
HP: Tight on money. However i've just realized it is best to pay the car off within 3 years because in case anything happens to the car (write off) or you. Since you don't own the car until you've paid it off.
I am on a lease, it has cost me £7500 over 3 years on an EV, which would have dropped by £15,000 if I had bought it new 3 years ago and sold it this month
Always lease, why buy,lease,cash or HP it. I can get the best car for the least amount of money. I’ve a M340 touring paying less than £500 a month fully maintained. List price of car new £64k I will have paid £20k for the car over three years. You wouldn’t get that on hp,pcp or cash would I. No brainer. Another deal recently Maxus t90 pick up £50k ev truck £139 inc vat inc maintenance 2 yrs. total lease cost £4170 vrs loss of Vat if purchased £8333
Personal bank loan, which isn't attached to the car, so I own the car outright as soon as i get in it. I can sell the car any time and kill the loan, (mostly). Someone else paid for the depreciation, and i can trade in the moment i drive into a dealership and see something else i like. I can trade in every year just adding a few thou or whatever i have spare, say 5k. You can start with a 10k car on a loan, in 5 yrs you have a 35k car and you own every car you've had for the whole 5 yrs. If stuff turns to shit you can just cash in and all you owe is whatever is left on your original 10k
@@davidkyle5552 Yeah sorry i didn't really explain myself too well. I meant get a bank loan for a car 3-4 yrs old, so the worst of the depreciation was paid for by the previous owner, then trade up every year, car prices in general go up so if you're careful you won't lose much if anything over a year, and if you add a few thou to your pot and buy up each time you'll end up with quite an expensive car that you own outright, but your fixed payments are only to the value of your original loan. That way you've got the choice to stay with cars 3-4 yrs old or make the choice to take a depreciation hit and buy newer. The advantages are that at any given time you have an asset that you own and can liquidate or add value to as it suits you. You also get to go shopping for cars every year, which if you're a petrolhead like me is great, and the neighbours think you're minted because you've always got a different car (if that's your thing). The EV thing will change everything though, because it will be all about battery life, which equates more to mileage and less about age. If what's important is the number on your license plate and not value for money, you're screwed and will be caught in the depreciation/never owning your car trap unless you have a company car.
I purchase and keep the car for at least 10 years. Save for the replacement whilst owning the current car. Last car was a pre reg 2015 Honda CRV new £20k (5k off the new facelift model), 3 years 0% PCP, paid minimum monthly payment, 3 years later paid the outstanding final payment but had 3 years on interest on the final payment before handing it over. Car is still good for another 5 years, may think about another car then. Cars are for going from A-B, they will stuck all your money if you let them, choose a good reliable car, at a price you can afford, keep it until you’ve got the saved money in your hand to get another and you will save thousands to spend on holidays and other stuff that actually makes a difference to your life.
And here was I thinking that PCP only stood for _phenylcyclohexyl piperidine._ Or Angel Dust. Not that I've ever tried it. *_Honest!_* As for leasing, I only did it when i was working. it was the only way for me to get a new car and I did it through my company. But unless some _Golden Finger_ points at me, I'm going to remain carless. The problems of being retired early due to ill health. Oh! Well C'est la vie... _As the French say!_ However. Howard makes even a dull...ish subject, very watchable 8-))...
To compare PCP vs Lease prices overall feel free to start with these special offers. leasing.com/special-offers/
I used to think it was crazy for people to want to buy new cars but now I think it's great. I've finally recognised that if people didn't buy new stuff and get bored with it, I wouldn't be able to buy the same thing for half the price three years later. Keep buying new stuff, you're doing a great job :-)
Could not agree more!!
You don't need people buying these cars. Leave it to the companies, they get huge discounts anyway.
so you're buying
Same with anything electronic. Imho, this year's new technology has only one purpose - to make last year's cheaper.
Now that's how to win at buying cars!
£45,000 for a Golf!! Is it just me, but that's insane.We are being ripped off, royally.
It's not just the Golf, the price of most new cars is insane.
of course. I don't see how British people can afford to keep paying these prices. Everyone, including the country itself, is in so much debt.@@thewalrus6833
Honda civic, good car, but over £35k is crazy.
Definitely not just you. I literally swore the moment he said it!
Yeah. 45,000 for a Golf GTi Clubsport.
It is a lot, but that’s a top model.
When I was a kid in the 70s, if I saw a fella in a merc, Rover or a Granada I'd think wow he's got a few bob...there goes success.
Nowadays if I see someone in a new Merc or Range Rover, I simply think there goes someone up to their necks in debt without a pot to P*** in.
Yeah, I remember those days. My Dad's boss had a granada and we all thought it was mega fancy.
TBH, it was the same in the 90s. The proliferation of expensive cars being driven by the masses seemed to begin following the global crash, ironically.
I heard a stat the other day that said 80% of Britons have less than £500 in their bank accounts. If that's even half true then one look at our roads tells you where all the money is going.
You and me both -
🤣
Some people only live for today as one day it will be your last, your only here once so to speak.
Only driven an old car. I often consider getting a newer car on PCP, but can never justify the extra monthly spend. I think I’ll run my current car into the ground first
I'm still running my 2004 MG ZS from new! Not sure for how much longer hence being on this video, but go me and my ZS!
@@mike9696that’s awesome! Hats off to you and your baby
@@MutantNinjaDonutvery very true. I’m paying easy £600+ on my service each year. Did the math though and this still works out cheaper when factoring in my desires from a car
@@MutantNinjaDonut it's much cheaper than a new one at the moment given the purchase/finance costs and touch wood, it's not costing me much in repairs. Breakers yards have lots of Rovers :)
@@MutantNinjaDonut Believe me, it's really not.
Buy a car for £5k and after 10 months you're laughing.
After 48 months you're well on your way to a house deposit.
I've never understood why people do any of this. I'm happy drive an older car. Have paid off my mortgage and I am going to retire at 55.
Because they still care about what other people think. Like teenagers. They never grew up.
A lot of people, I suspect, including myself, are fearful of the second hand car or van market, you just don't know what you're buying. Full service history means nothing in my opinion, everyone chasing the cheapest fuel prices generally the inferior supermarket fuel, mileage that's been altered or frozen as the vehicle is driven. In my experience, I'm currently going through this, once the warranty runs out it seems a button is pressed somewhere in some secret location and things start going wrong. I've thrown all sorts of money at my van to keep it going which brings me to another point, garage repairs..... Does anyone truly fix anything these days? Looks like I'm on my third turbo in less than two years!!! Yes it gets replaced but why's it happening? No one is interested and that's the stock that's being moved around in the second hand market, hence the success of the deals that are no more than the length of a warranty
@@straty5598
That's a valid point and one that I've heard many say about their own car purchases. Added to that the fact that anything manufactured these days is designed to fail after a few years at most. At the same time manufacturers are claiming to be green and saving the planet. It just doesn't add up.
I would love a newer car but it's not in my budget at the moment and newer cars are very poor quality with unnecessary complications that nobody wants or needs.
@@54356776 You're right, the newer vehicles are overcomplicated, not sure why it's necessary to over engineer something that's done a good job previously, likely, as you say, to meet the green targets. Nothing green about millions of cars and vans going in and out of garages for repairs. Yeah it keeps the world turning but it's an expensive necessity, in my case anyway... That's just cars and vans nevermind TV's, central heating boilers, washing machines, the list goes on
Nice being a boomer i guess
Want to save money on driving. But a Toyota or Lexus new or used. Keep it until 250,000 miles then repeat. Compared to your clever neighbour who has been through five leases, PCPs or whatever in the same period, you will have saved a mint.
I have had 2 used cars in the last 9 years
One depreciated 3k the other 4 K
So I lost 7 k in depreciation
My work mate has leased 3 cars in the last 9 years ,( each car a 3 year lease deal ) and his average monthly payment was around £300 a month
So he has spent £32,000 in the last 9 years and now doesn't have a car lol
Madness
Totally agree! You sound like you come from Africa! All Africans love Toyota... Owned Toyotas ever since I could buy my own car. Never regretted it!
so true. my brother has my dad's old Corolla. The thing just refuses to die
I have a 2011 Toyota with 92k on it. It's all paid for and reliable. I think about getting something newer but newer cars are more complex and there's too many electronics to go wrong.
@@6581punkand they are trackable via electronic senders
The problem with leasing is they are hard to get out off if your circumstances change, they will both cost heavily if this is needed. Where selling a car you already own even if you had a bank loan for it is much easier.
My question is has pch and pcp put the price of cars up for retail customers because the focus is on the affordability of the monthly payment rather than the total price of the car?
Yes
@user-tt6il2up4o but isn't pcp basically cheaper than classic credit but the dealers get their money anyway or they get back the car resel it make more profit or this plus having the chance for getting more money from you by getting you another contract so it basically gives em more customers therefore more money
Car prices have been artificially inflated over recent years to get everyone onto PCP, 45k for a Golf is a joke.
Facts!
Strikes me, the bottom line is people wanting new cars they can't necessarily afford. People seem to be infatuated with cars nowadays. Most bizarre.
It's the image cult.
Totally agree... It's all show. I earn a good salary, but I bought two small cars that actually fit into my garage. That was the most important thing. None of this scraping the ice off my windscreen!
Consumerism...
Why is it bizarre. What’s wrong with someone wanting a new car?
There’s some very strange viewpoints on here.
@@senseofthecommonmanWhy does something being bizarre mean it was wrong?
When buying a car get this complicated you know for sure there is a con going on.
If you think this is complicated then you’re hopeless
@@caio5987 I always suspected as much. Thanks for your confirmation.
Good video. I think you should mention cash via a bank loan/private loan though. It has advantages and flexibility and can cost less overall than dealer financing.
You beat me to it. Unsecured personal loans from a bank are often the cheapest alternative AND the car is yours at the end, to either keep running or use as a deposit 👍
Totally agree, a secure loan is nearly always a much better interest rate and therefore cheaper monthly payments, plus more flexibility on the duration of the loan
This !! I applied for a bank loan and instantly got approved. Then used it to buy a used 2020 Peugeot 3008. I told the dealer that I’m going to buy it cash but he kep on persuading me to go finance. When I did the math the interest on car finance is way higher so is the monthly payment around £300. Now I’m paying only £200 a month to the bank plus I get to own the car and not tied up to the dealer.
@@fissshhI've been doing this for 20 years! I typically buy a 3 year old car (which still feels new to me) which has lost a huge amount of its value (17k vs 33k for my last one) and then use a personal loan to pay it off. Can sell the car any time I like and just repay the loan, and i usually have years and years and years when i pay no finance at all before the car needs replaced
Yes I thought about this as well. I guess the only issue with this is, if you have other assets and can no longer afford to pay the loan for whatever reason. They can come and take anything to repay. Whereas a secured loan, they will only take the car (I think).
Here’s what I do.
Bank loan for about half the cost of vehicle (lowest interest and not tied to car).
25% cash and 25% from trading in your previous vehicle.
The vehicle you buy is typically 2 to 3 years old with around 10 to 20k miles on the clock and approved used. That way you can negotiate and extra year’s warranty. If you can’t then walk away. But some offer two years anyway. In my opinion and experience dealer warranties are the only ones worth having.
Keep the vehicle 3 to 4 years but pay your loan over 4 to 5 years ( to keep monthly payments low).
Then repeat.
Avoid HP and PCPs and leasing as you will pay through the nose.
PCPs are a rip-off. Your interest includes the balloon payment and then should you decide to buy at the end, you’ll pay interest again when you refinance. No way.
My method isn’t perfect but it finds the sweet spot of having a nearly new low mileage vehicle with dealership warranty at the best price.
Job done.
*in this method you NEED a previous car*
Exactly
Also consider a standard bank loan. If you have a good credit record, you can get up to £25k and at a cheaper interest rate than most car finance deals. Then buy that 3 year old model and run it as long as possible.
Absolutely.
100%, and if you’re buying second hand a car that has had the bulk of its depreciation the rate you’ll get from an unsecured bank loan will be a lot cheaper than the car finance company who use the car as collateral. Second hand APR will exceed 10% in most cases now.
45k for a Golf is ridiculous but then absorbing all that depreciation in the first 3 years and handing it back is about as sensible as wearing a down jacket in 45°c.
Agreed. We're probably the only country who pays this much for this car. It's totally ridiculous. Calling it a Club Sport doesn't add value. It is after all, just a Golf. Original GTI's were best, and affordable. Car prices have gone totally nuts in the UK
Cheapest Golf here is over €37k. 95BHP 1.0l
@@asphalthedgehog6580 Wow. 37k? 1.0L. Whaaaaat!
all overpriced rust buckets . Main dealers will never go out of bizz .
That's because a majority of the country are sheep
Cash, for a 2.5 / 3 year old car. You'll be richer at the end of the day.
Reacher not always mean happier. Not everything sold for money.
Yes to used car, loan rather than cash
90% of buyers use PCP. I always wondered how all these expensive cars are on the road.
Exactly
Yep! PCP
Ummm.... PCP is renting, not buying.
@@WoolyChewbakker, what suits some won't suit others.
If it’s a new EV , the only sensible option is PCH.
Under no circumstances should a private motorist buy one cash or finance . Let the lease company take the gamble on future residual values on EVs. My opinion is the values will tank.
Very sensible comment. They are tanking as I type this. Keep your capital, and go PCH. Better still, stick with diesel or petrol.
I bought my car in 2007 for 18000 I still have it and use it with minimum expenses. My cash purchase was good for me because I have been using the same car all this time. I do not focus on the price of the car but on the value I can get from it.
Got to love this video said the quiet bit out loud, the clever people don't buy new cars 🤣
But clever people earn lots of money so they can afford to buy new cars.
Or you can be clever and keep your new car for longer. Good for the environment and your pocket.
Clever people get the biggest discounts on new cars 😂
If you buy new keep it,nissan navara 2008 485k still going
Love you! ❤️ (Friend for life!)
The terms of PCP etc have always put me off where they state things like “maximum mileage”.
Leasing is almost always a lot cheaper than a PCP on the same car because leasing deals include fleet volume discounts. PCP is a retail consumer product where an individual consumer buys one car, pays interest on the amount financed and does not qualify for fleet discounts. Another big difference is that a car lease is a long term rental agreement whereas a PCP is a credit agreement - hence a deposit rather than initial rental. 90% of people don’t actually pay the balloon payment and keep the car at the end (why would you even if you had the money?) so have therefore effectively leased the car anyway, but almost certainly paid more / higher payments on a PCP than if they had just leased. Also, most don’t realise that the guaranteed future value / balloon payment to buy the car is actually an interest bearing loan that sits on your credit file until paid or the car returned. That could restrict your mortgage lending ability. As for HP that will after PCP definitely be the highest monthly payment. Unless you definitely plan to own the car for a long time and are happy with older car running costs and issues I can’t see the appeal. What’s the car market going to be like in 4 years time or by 2030?
So what would you say is the best thing to do if you’re trying to purchase a new car?
@@ds_7104 He answered the question
"older car running costs and issues". You do know we're not living in the 1970's anymore yes!?
In my opinion, most new cars are where the problems lie, how many new cars get called in for warranty work?
PCH is a waste of money, PCP is a scam, and HP is expensive. Buy a cheap old car.
So e people gotta have a new car in case something simple goes wrong and it needs a visit to a garage, the horror!
That's the main problem of everyone who is talking g about pcp. Nobody will ever tell you the secret until its too late: when your pcp is ending you can sell your car to any dealer (like for example Arnold C.) then call to your lease provider (bank) and tell them that you want to pay balloon. Its almost guaranteed (depends of condition of your car) that dealer will pay more than balloon so at the end you will have few grands extra in the pocket. I got that information from my dealer day after I gave back my car to lease provider and I lost about 3500£.
Except you don't have more money. You've paid for years the monthly cost and at the end you have no vehicle. Youre down either way
@nevermind824 That's true. Same story with renting a house. Many people have opinion that it's better than mortgage because you can change location whenever you want and there's practically no maintenance costs compared to mortgage, but after years of renting, you will end with nothing and nobody will convince me that "you can save the difference between both" especially in these days.
That 3.5 k would of been off your previous monthly payments so would of reduced the money you paid out.
@DavidSmith-ls1mv unfortunately not. Balloon is a difference between whole amount of a credit and sum of monthly payments. So when you sign it you agree that will be "predicted future value" of this particular car with mileage on which you agreed and good condition. Bank doesn't care if you will keep it your air conditioned garage and make no milage or it will be heavy usage in workplace with millions of miles per year. If at the end of contract valuation made by single man from this bank is lower than Balloon then you have to pay the difference but if market says its higher then you will get nothing until you sell it by yourself to a person who wants to give more than Balloon. Of course if bank take back that car they gonna sell it for higher price than Balloon or lease it again and earn even more
Wait a second so you say you can pay balloon to make it officially yours but the dealer will buy it for more than youpayed in the balloon?
Surely if you have the money (and don't need to rely on credit - which has the added cost of interest), the cheapest option is an outright purchase - and then ru the car for as long as possible. depreciation is only really an issue of you sell the car after a few years' of ownership - where you lose the most money. If you have the car for 15 years, years 6-15 are pretty painless in terms of depreciation!
Of course, if everyone wants to drive a car that is only a couple of years old, they have to pay for that privilege somehow. But that's what makes owning a car so expensive - and why people need to come up with ever more inventive ways to convince themselves that they can afford it!
Exactly
I bought my Tesla M3P for cash £53000 but I had £3500 back from the Government so it cost me £49500. I’ve had it 4 years and 5 months, and it’s now worth £25000. But if I had it on A lease it would have been £500 down and £1000 a month, which means I would have paid £53500 and not owned it, so I would be £25000 out of pocket
Tesla is a completely different entity and has its own economic system and they also charge 9% interest at the moment. So you have saved interest, it's not as much to do with the finance model surely? Naturally the 100% relief on tax is also a good move on your part. When your car sells, post back what it went for. 99% of cars do not however have that 100% tax relief on the whole purchase in the first year, so if people want to drive they have limited choices. Either way - anyone paying anything for cash over PCP will always win, because there is no interest, there is also no interest on a lease. Cars that are hard to shift or devalue fast are going to be very expensive on both PCP and Lease and especially when there is fever pitch demand for them. M3P are currently £200-£300 less per month than 4 years ago. So the notion of your paying cash here is the point. Same with a house vs mortgage - have you seen how much a house really costs when you add the interest? Thanks for the reference example.
That’s the beauty of electric cars they are so cheap to own and run😂😂
It's the future 😂😂😂 @@senseofthecommonman
Yes, this. This is what happens in reality. Nothing like what the guy in this video describes, which is misleading, imho
It wont sell at 25k
Our family has always brought brand new because we only do low mileage and driven them till they drop 20+ years. Getting everything out of it. My mums car is 25 years old and done 23,000 miles from new. My van is 8 year old and just done 22,000. Deprecation doesn’t matter if you’re planning to keep it 20 years.
bought not brought are you from the crewe area ??
But if you bought 3 year old cars with low mileage etc., you would have more money.
I got a new car on PCP three years ago with 0% APR and a good deposit contribution from
the finance company. It’s been a gem so I’ve decided to keep it until ready to go electric in the future. The price I paid was much better than the cash price so it can be beneficial and there is no way I could find a car this well looked after at 3 years.
Some cash buyers take out a PCP in order to get the deposit contribution then end it after minimum term e.g. 1 month so they have effectively bought it for cash but with the added discount.
New PCPs are really expensive due to increase in vehicle costs and higher rates of APR. I suspect the days or cheap or reasonable car finance are over.
Ah, that’s a good trick to know. Thank you!
@@kieranchamberlain9833 welcome 👍🏻
A finance company giving you 0% APR on a PCP deal............who was that then.
@@petermartinaitis8166 Ford Credit through local Ford dealer. Every time for the past 6 cars within the household. Appreciate may not be common with other brands.
@@petermartinaitis8166 the agreement was on a Ford
HP via bank loan all day. Usually cheaper apr than any pcp scheme. If you want lower monthly payment just extend the term. You can still trade the car in mid way through the loan as most have low early repayment charges. It literally ticks all the boxes. Cheapest, flexible and easy to understand.
we own our house outright.
paid it off in 10 years flat.
i have never bought a car on hp or leased one.
all my cars are cheap cars and i buy them with cash. having no mortgage is the key. no rent. nothing. cash pouring in so buying a new car outright is childs play
i'm just a normal working class fella btw.
anyone that has a mortgage or pays rent should not be getting ANY car on finance or lease. concentrate all your cash into paying off your home first.
once you've done that then u can buy a nice car easily.
When i grow up I wanna be like you.
Do I fuck , what a condescending twat.
You are so right on this, we have 2 cars & 1 motorbike, owned for 14, 7 & 16 years, one car bought with a bank loan & the others cash. My mortgage is on target to be paid off 9 years earlier than the term.
My brother luckily bought his house in 97 before house prices rocketed, but has had 7 new cars, bought & leased over 20 years, but have only managed to pay off £20k on their house in 20 years!
Isaachunt
You sound just like me
And I can't understand at all why everyone I know has Cara on pcp ,moratges and zero savings ¡!!!!
@@boyasaka , my brother & sister in law had 7 new cars in 20 years, but only managed to pay off £20k on their mortgage, now splitting up & having to start again with a £200k mortgage at 50 years old, idiots.
Buy the best car you can afford for cash after it has stopped depreciation so badly. That way you have one less bill each month so less stress and will enjoy your life more... simple👍🏾
Very helpful thank you. I've always wondered about that 'balloon' payment and never really understood it and now everything makes sense. It's very clever marketing. The car company over prices their vehicles so people that want to buy out right pay an excess, whereas the majority of us finance and therefore the brand gets a steady flow of cash and the customer is locked in to the brand meaning the cash flow will continue into the future. This isn't new to most people but if definitely is to me!
When I was selling my house a couple turned up to view one day, the first thing they said to me is please don’t look at the car we’re not Slavs to a car, paid me full asking price cash, this has always stuck in my mind as I drive round in my 2006 Kia sorento debit free!
i buy all my cars cash. never ever lease or buy a car on Hp.
we got 3 new cars all paid in cash. 8% interest here now on cars. 8% on a deprectiating asset is clinical insanity
Invest the cash into cash flowing assets and use the cash flow to buy the car.
Yes and you've still got your cash at the end. @craigbeesley9601
@craigbeesley9601 with guaranteed over 8% returns? While there's returns higher than that it'd be a gamble.
If you have the cash, buy it. If you don't, don't.
Don't borrow inorder to invest, might as well get a leveraged loan and stick it on the market.
its not an asset
You're the smart guy
Buy it new is best strategy
These schemes are for those who can't afford it
I think you’ve missed a key fact with your buying the car outright section. Opportunity cost, £45k invested could quite possibly make £3k per year or £10k over a three year period.
Hi cheers for video. So is the cheapest option to buy a 2-3 year old car with low miles good history?
Low miles aren't always the best option. You want a car that's used for driving longer distances. A lot of short distance trips with a cold motor aren't great.
What about a personal loan from the bank, not attached to the car? You own the car from the outset, the interest rate is usually much lower, and you're free to trade up or down as it suits you. If you're clever about it you can even trade in and clear the loan whenever it suits you without losing out.
Exactly
How did we get to a place where a Golf is 45K, utter madness
I can’t understand why ppl lease a car or get into a “deal” where you pay through the nose & never own that car?
I bought my first car from auction for £110, second from a neighbour for £10 (written off), third from an ex school teacher for £1100 and fourth from a family friend for £1200 and its still going 12 years later! That spans 20 years and £2420. While everyone i knew had nice cars and debt, I saved for a house deposit. More than one way to skin a cat! (Whatever that means)
Everyone has different priorities
Decent used car that’s just going to cost you tires and brakes on a low rate personal loan to tie in with how long you want to keep it. this is the best option because, you own the car, the loan is unsecured, the car will have some most of its depreciation so will have a value when the loan is paid which can be your deposit for the next one.
Now if he spoke about interest too on PCP you'd soon realise that while you don't have to pay the balloon payment you're paying interest on the entire amount all the way through ....
In Spain, the odd thing is depreciation is a very gentle curve which means a new car much more realistic. €20k new, 3 years on with 40k Kms, it's only €3k to €4k cheaper.
You really needed to run through the numbers on all the examples, not just the PCP one. I bought my car cash, and am just into 3.5 years of ownership. As I look after my cars, it will last me at least 10 years without much bother, but I'm hoping to get 20 years out of this one as I bought it nearly new and am looking after it meticulously.
Keeping a car for 20 years will get one hell of expensive in the last 5-10 years...
@@miskatonic6210Only if you skimp on maintenance. People are cheap and stupid and skimp on maintenance. They only work on their car when things fail, they don't do preventative maintenance, like changing a water pump BEFORE it fails, but around the time they usually fail. It's not rocket science to keep a car running for many years.
@@miskatonic6210
I purchased a seat Ibiza brand new in the 1980's, I owned the car for over 20 years, apart from regular servicing the only other items I had to replace were the clutch cable, battery, and a complete exhaust which lasted 19 years.
What happens if there is some damage to the car whilst it`s on PCP or PCH.I think I know the answer, but what if the damage is to the battery on an EV which may need replacement?
Every time you see someone getting out of the Merc,Audi or BMW first thought is leased and has no money. When i was a lad the thought was, now there goes a rich dude.
Most high end cars are leased. No one with a brain would actually buy, especially new.
Thanks, today i have finallyunderstood the difference between these. And it came roght on time when someone was going to try sell me a PCH car as though it was a PCP! Saved me from making the mistake! Thank you.
Buying anything on finance will end up more expensive. Buy outright with cash with a big discount off official price and keep car for quite a few years will always be cheapest.
Strongly disagree. Last time I bought a car, it was £25k. Cash or PCP. I had the £25k cash. But I was able to get a bank loan for the £25k @2.9% APR over 5 years. So I took out the bank loan and put the £25k into stocks. So far, the 25k in stocks is worth £33k. That increase in stock value is way more than the interest costs of the bank loan. So finance absolutely makes sense, depending on your financial situation
@@JonathanGray_UK that's all well and good put people need to be aware that stocks go down as well as up, so whilst in this case it has worked for you, it may not work for everyone. If you have the cash, I would only take finance if it was either 0% or the interest rate was lower than if you put the same amount into a high interest account
@@filmalive I don't think it's fair to discount stocks based on risk, you can get some pretty low risk stocks and you only lose money in the event you sell when the market is down
I didn't have 7.5k to blow on a used car I'm afraid 😂😂 paying installments was my only option
I agree in most part BUT, unless it's a back street garage, franchised dealers will not knock any money off for cash. They get way more commission from finance deals...
I recently found another benefit to doing HP. Bought a car in April and the engine was dead in 8 days. The dealer was no help. MotoNovo effectively owned the car and had it inspected. Confirmed it to be a failure at point of sale. The vehicle was returned. I got my money back plus interest and plus additional for inconvenience. I will never not finance a car in the future.
£500 burner cars are best
Run it for 12 months if it gets knackered get £100 back scrap price then go and get another
The cost of those types of cars has skyrocketed. I bought a Mondeo for £600, used it for 4 years with only minimum maintenance costs. When I looked to replace it for something similar, it was going to set me back about £1700. I don't think the scrappage scheme helped. It took a lot of perfectly good old cars off the road. I opted to buy a low mileage 7 year old car for 9k, and I'll keep it for a long time.
Yeah, it's best when you don't need a car, you clown. With a family and a job you can't afford cars that break down any second. Every time it will cost you days of trouble. Getting rid of the old car, rental car, finding a new car, registration, insurance... A lot of time better to be spent to make money to buy a way better car.
It's an interesting presentation. Obviously heavy bias for leasing. All three options have depreciation, with non cash options this is why you pay all that money for years, have car worth 16k car at the end.
Also i like the bit where he says. "Lets not talk about interest". Ah yeah that bit that makes you pay almost double for the car.
2015 I ordered an AUDI S3 for £37,000 deposit/trade in of £12,000 so financed £25,000 over 5 years at approx £500 PM. All paid in 2020 and have not financed another car since as I still have my AUDI with 30,000 miles so far and it's current value is somewhere around £16,000 to £18,000 (for an 8 year old car). Due to the low mileage I can still purchase AUDI Service Plans but so far the maintenance costs have been very good. The car is ULEZ compliant and my only real complaint is trying to get updated maps for the MMI (every time I try AUDI get very evasive). I am very happy with my car and have no intention of changing any time soon. The saving to me of not paying any finance or hire costs for the last 4 years is far better for my mental health and pocket than trying to massage my ego with a new car every 3 years. If I were doing higher mileage then my scenario wouldn't work as well.
30000 in five years in my Xiaomi m365 I had 12000 for two years plus trains milage so I got more milage then you,with 300 pounds in total spent,but Audi is Audi and the insurance cost and fuel forget about having car in Lond😅n.Cheers.
Good video, but you also need to explain PCP and HP usually have to pay lots of interest to pay as well which is getting more and more expensive as rates go up…..
This is a fair point thanks, this will be covered.
I have never understood PCP but I do understand no repayment can cover the depreciation. Most luxury cars lose 50% over 3 years.
A PCP is akin to a 95% mortgage, to get something you could normally never afford. A PCP is also on the understanding that you'll hand the car back for a new car at the end of the initial contract period, unless you really love the car - and have saved enough to pay the balloon payment (difference in initial value and the equity accrued in payments over the initial period). The other alternative is that you refinance the outstanding balance for another term, which is almost always a bad, expensive idea.
It's therefore effectively a zero equity, zero ownership method to drive a far nicer car than you'd normally be able to afford, provided you don't want to keep it and you're happy with the caveats. Some PCP deals include VED and servicing, akin to full leasing agreements, which I think some people like for the simplicity. I would find that quite inflexible though.
The only new cars I've bought were on HP, where each monthly payment was directly paying off the loan from the finance company you effectively take out to own the vehicle. No balloon payments, just a fixed monthly, no mileage or usage limits like are commonplace with PCP.
That worked well for me in the years when we had exceptionally cheap finance (Ford Credit was something like 1.4% HP, 0.9% PCP!).
Nowadays I'd only buy on a personal loan or cash, unless I could get a sub-3% HP offer and was able to put down a generous deposit.
I had a decent idea about all these , but nice to have it explained further
Excellent, concise and clear. The car you drew is a Mercedes S Class. 😄
A couple of recent factors to consider:
a. PCP protects you when the car depreciates at a much higher rate than expected. You simply hand the car back instead of paying the final balloon payment, walk away, and then buy it back off the forecourt at the lower market price the day after.
b. Recent articles by Martin Lewis etc. about compensation claims looming (quote - of the same magnitude as PPI). As I understand it, this applies to cases where the dealer could agree an interest rate with the finance company and was incentivised by commission to make this a high rate. Can anyone put any detail on this story - I had a couple of PCP deals over that period, but the interest rate was set in advance by the car manufacturer's finance arm (3.9% in both cases); so are they in scope? I don't believe the dealer had any freedom to vary the rate.
ALWAYS buy a second hand car you can afford, and NEVER lease. Ever.
When I was broke I used to buy second hand and had a world of problems every time. I eventually PCP cars that were a year old, paid it off and keep driving for a few more years before selling. Never had to do anything besides change the tyres and the occasional break pads. Depends on your income.
@@RevealedFilmsexactly, buy a car 6 months old, have all the reliability and warranty value out of it and pay it off at the end. Leasing is a never ending cost per month, along with all the general costs of running a car you’d have anyway. This idea of a depreciating asset makes me laugh, if you spend all your life paying for leased cars, you’ve never had value out of the car. I bought my car for £26,000, 6k miles, after 4 years I paid it off, the value at the time was £22,300. This car, a 19 plate golf GTI mk7.5, will last me for years. I now have no monthly payment so I can save more. I don’t see the point in leasing as an individual unless you’re well off and that monthly payment doesn’t impact your disposable income. If ever I want to sell the car, it’ll have value that will go back in my pocket, further increasing the value I get out of it.
What about comparative costs when you include annual service, insurance, road tax, maintenance, repairs, tyres, etc? Some leasing companies include servicing.
If you buy cash and keep the car for a reasonable period then it's way cheaper. My very nice brand new Mazda 6 will cost me a little over £100 per month.
My Hyundai Tucson is 2015. I got it 2016 so a year old 4000 miles done. £17000 vs £29000 new price. Still have it only MOT and usual servicing. Paid it off a long tome ago. Yes i know not very spectacular but does the job with the dogs. Get a good quality car and use it until it fails. The amount of money people waste on cars. But then say they cannot buy a house do waste on rent.
I have a ten-year- old car which I bought new for cash. It has now depreceited to one third of it original value although it's a false third because prices for the same model have increased. It's only done 60k miles and as I'm now elderly and nothing to prove, I'll be keeping it until either it or I go for scrap.
Informative and hilarious, great job
What about a salary sacrifice car lease scheme. How do they stack up?
Definitely a 4 series with that air intake grill 😂
6:25 VAT only applies to very first purchase of the vehicle: not if you’re buying ‘nearly new’ that’s already been registered by dealer.
Wrong
Yeah good video but one major risk with leasing is that when you hand the car back they go around it with a Lazer and hit you with a bill for every scratch they can argue is "not fair wear and tear", so the money you thought you'd saved on leasing over PCP in deposit could then be evened out. More chance of this also if you don't take another lease from the same company I'd say and on top of that, with no trade in option, you have to have lined up your next lease in time for handing back the original, which with current car lead times is a moving target, so you could find yourself in a hire car for a while before your next arrives.
You could always extend it or buy it if desperate. Not really an issue, finance is catching more people out with the claim you can get out of it but then you come to find that you owe money to do such a thing. As for damage, very few actually get charged unless you are an animal and drive a battered vehicle?
In 18 years I’ve never once had a charge when returning a car from a lease. All funders and leasing companies must use the industry standard BVRlA fair wear and tear guidelines which allows for reasonable Wear and tear for the age, mileage etc of the car. This also applies to PCP finance because like with a lease, the car belongs to the funder (unless you pay the balloon payment to keep it) If the car has unreasonable damage then, fair enough , it must be charged for . If you own a car and try to sell it with scratches, scuffed wheels, dints in the body work you will get less for it - unless you fix it.
@@domaindave2422 on paper that is right but the key difference with PCP is they exist so you keep trading up for a new car and in that case they overlook the condition and often won't expect it before cutting the deal, same as if you trade your private car. Almost no one hands back a PCP. With a lease, it's a much more rigid process so if you do have excessive damage on the returning car, you will definitely bear the cost of it.
@@slugger7440 PCP is a genius too for dealers to tie you in to their brand because you have to tell them that you are wanting to sell or indeed looking to change car. You can’t sell a car on a PCP finance agreement without settling the finance because it’s not your car legally. With PCP agreements 90% of people do not pay the balloon payment and keep the car (so therefore they have effectively leased the car, but in most cases paid significantly more than they needed to had they actually personally leased the car) . Yes, PCPs do exist to keep you upgrading your car , with the same brand / dealer which is tying you in and just one of the reasons for the widely covered PCP mis selling scandal. As for overlooking damage on the car that’s just part of the smoke and mirrors part exchange game that dealers play. Dealers make a lot more profit on a PCP than they do an a personal lease. As for excessive damage I’ve never had any end of lease charges and dint know anyone that has returned a car with excessive damage.
@@domaindave2422 you hit the nail right on the head with your points. PCP is a scam the majority of the time and you aren’t better off in any case if there is damage with either to be fair. The only way I can see any excuse for damage is if you were leasing and got the charges waived due to leasing another vehicle. That does work with VWFS with minor damage I hear
Your addition of horizontal lines and comment on your graph at 6:17 is misleading/erroneous. The money lost through depreciation at year 3 is only the amount from £45k to where the graph intersects (about your 4th horizontal line), not down to zero. Otherwise a useful video - thanks.
Bought four used cars in my life; 2 lasted no more than a year before being scrapped, 1 was alright and 1 requires ££££ of repair bills to get it road worthy. I can say buying new gives you the peace of mind that your car won't cost you any more money if it comes in to issues within warranty when you most need it.
I have been leasing for many years. At first I was very resistant to the idea, but I think it’s fantastic.
Granted I’m self-employed and can get the VAT back which does make a significant difference.
I think it’s a fantastic system when you factor in the very significant depreciation of most vehicles.
You forgot to mention the excess milage payout at the end. Give the car back and have to pay out thousands extra as no real life person drivers less than 6000 miles in 2 years
That car you drew is definitely the Hammerhead Eagle iThrust
I bought my first 2 cars with cash and my third with a mix of cash and an interest free credit card. all were old (12 years) but my most recent has low milage and so far seems ok. Once I've paid off the credit card, I own it outright, will have paid no interest and just have to hope the bottom doesn't fall out of it.
The complexity worsens when you consider that a car that's say, 2 years old and has an APR of 10% per annum versus buying a brand new car at 0% APR. The monthly premiums might be the same but I know which I'd prefer IF I had no intention of keeping the car after the 36 months. A good example of this is a Ford Puma having 0% APR on 26 months whereas the used Puma is closer to 10%.
exactly, no one talks about this
In the first example you gave, pcp, the deposit, repayments and final balloon payment added up to £45 k, you neglected to add any interest which changes things considerably.
This was mentioned.
The quoted depreciation of 20% when you buy a car because of VAT is a
myth. The second hand value of a car is down to supply and demand. Try and buy a Porsche GT car foe list price minus 20%.
Can anybody explain please, will this deal better for taxi business?
Cars has become something like a Phone where someone buys a phone paying it monthly, and after the contract is almost up, a new phone comes up and either they sell it off to pay for a new one or trade it in to cut down the cost of the new one.
For HP, the only time to buy a brand new one really is if you are loaded.
Cause cars depreciate in value and it will always do regardless.
Your investment in a brand new car, the money just goes out the window over time.
PCP is like paying for something you will never own.
PCH I guess thay cheaper down payment looks rather juicy.
But I guess if one is an average consumer/customer who just want a daily commute car for work or doing the grocery etc.
The best one I guess is buying a decently priced used car with not so high mileage. With a good track record/reliability in the market. And abundant enough in the wild thay if it broke down there are plenty of spare parts.
Plenty of spares =cheaper parts if you get me.
But yeah, HP brand new? Maybe if I won the Lottery! Or be a son of an oil sheikh.
HP can work if you have either enough deposit or an old car with trade in value. I bought my last two cars on HP partly because I wanted to not be subject to the usual PCP restrictions on things like class of use, mileage or modification.
With any new car purchase, getting at least VRI or RTI GAP insurance is essential. I had a car stolen and the GAP covered the difference in assessed value and original list price (car was two years old), which enabled me to put down a hefty deposit on a new car and get PCP-level HP monthly payments. Silver linings and all that.
I buy the pone outright and run it 6 years on dirt cheap SIM only deals. The savings are huge, much as they are buying a car cash and making the most of it.
Those obsessed with disposable consumerism are the ones paying through the nose for their sins (and like to convince themselves it's fine because they're "used to paying it")
Quite difficult to alter the mindset of these people to get their capital working for them rather than against them!
You have to take the mileage restriction the maintenance the big stuff like cam belts and when the warranty runs out after 3 years and the brake down cover after 12 months.i leased my vehicle for 4 years and dreading something serious going wrong now it's out of warranty
Then the inspection for any damage
Would not lease again
so if I lease my cars I'm basically paying five hundred odd quid a month for the rest of my life? that sounds pretty naff.
Hey, thanks for watching and the Q. All material things have a monthly cost for life unfortunately, and not all cars are £500 a month. And yes, unless we purchase cash all forms of car finance arrangements are leases, with different names. In leasing's case however you are not paying dealer margin or APR...over time APR alone can be quite considerable especially on used cars at 12%
What about subscription like Volvo offers?
Is this Matt Watson's brother?
😂😂😂
Fantastic video. Simplifying something so seemingly complicated
Buying new and / or financing a car is a great way to throw money away. Up to 50% depreciation in first 3-5 years, so buy after then. Financing adds additional cost to a depreciating capital cost. Def not clever. Leasing is still debt so same principles apply.
Why is it throwing money away, people buy new cars because they enjoy them, and the cost of depreciation is one they find acceptable in return for the pleasure of ownership.
Who are you to judge how other people spend THEIR money?
My wife and I drive a 2008 Ford Focus and a 2007 Ford Mondeo. It would be nice to drive a new(er) cars, but we don't have a chunk of money as a deposit. Is HP our better option?
Just to let you know, with hp there's usually a clause that allows you to hand the car back with no penalty after the first half of the term of the agreement, say after the 18th payment on a 36 payment plan. I did it once, you just phone them up and they come and collect the car. It usually states it doesn't affect your credit rating, but whether it does or not i don't know. I didn't have any trouble getting another hp deal straight after.
I’ve been driving my own cars for 40 yrs. I’ve tried all methods of buying and yes everything has depreciated. I had my fingers very badly burned with Ford Options and now I have a private lease. One month down, £380 per month including maintenance (not a service plan) and I have a car that gets me to work etc without problems. I wish it had been available to private motorists 20 yrs ago. PCP has its place only because the monthly payments are easier, but you could take a personal loan over a longer period instead and by the time you have made your last PCP payment I bet you’ll have more equity in the car with a loan, even though you haven’t paid it off and you own the car from the first payment. Just my thoughts 👍
If you have a private lease it's not your car
The other thing to take into consideration when but a new car is the interest you lose on your capital - assuming you are paying cash for it or putting a big deposit down. I bought a two owner fsh 1997 Bentley brooklands with just 50,000 miles on it and it was absolutely mint. That car cost over £100,000 new but I paid £13,000 for it. You can of course get them cheaper from about £8k but with much higher mileage. I've now done 12,000 miles in it and it's cost me less than £2000 in fuel and service costs. You can't buy a Dacia for what I paid for the Bentley. Which would you rather have?
Great thought provoking video simply explaining options well done. My issue is if I have 30k for a new civic E hybrid and pay cash i could lose 10k in value over 3 years. If I Leased same car for, say 350 a month, would have paid out 12.6k over 3 yrs. sound better to pay cash up front then?
£30,000 becomes £35,197 over 4 Years at 4% compound.
Spending cash on a new car will kill your initial investment and any future interest.
Whichever way you cut it; cars all lose money, all we can do is look at ideas to mitigate these losses. If its bottom-line pound for pound just about cash Leasing appears cheapest. There are lots of for and against for all options.
Feel free to jump on the Money Saving Experts forum for example, and see what they all say about this or your specific finance example, and let us know how you get on?
Buy yourself an older car. Be smart.
Why is the question always framed as a 3 year scenario. Social programming by the car dealers and leasing companies have been really successful eh! Frame the two scenarios over 6 years (oh no! Driving a car for more than 3 years, the tragedy 😂) then watch leasing absolutely crumble.
I have bought new and used but in Europe the depreciation is much, much lower than the UK...
Used prices are much higher than the UK... That's good and bad news for buyers and sellers..
I would say purchase a reliable brand of a well serviced/loved vehicle.. Buy at 3-4 years with a decent warranty ( perhaps original dealership brand) and then look after the vehicle with plenty, good servicing... Buying privately is okay on vehicles still under manufacturer warranty if the seller is pricing the car correctly ( many try to sell at forecourt prices and that is not the way to go)...
Keep the vehicle as long as it is running well but be careful of going past 15 years unless it is becoming a classic or it is hyper reliable..
Been driving a 14 year old car for 12 years now and it's been so reliable, economical and cheap to tax & run I can't see the point in changing it until it's kaput. I have also paid off my mortgage and took early retirement. I guess it's just personal choice, but to me the most important thing was clearing the mortgage ASAP. My car ain't too pretty now, it looks like a 14 year old vehicle but it doesn't bother me. I've never understood why so many people must have a new car. Who cares what others think? It's a mugs game trying to keep up appearances or project an image of yourself! Everyone knows that most of the new cars are leased or on PCP etc.
Massive consumer con and more fool you.
Buy a car on a 0%credit card
So I got finance on a car 2 and a half years ago. The 3 years of payments are finishing in October. Are you telling me that I still won't own the car???
Happy to own a bicycle. Runs on fat....
I got into EVs initially because I was looking at ebikes and realised that I could get a cheap electric car for not much more than a long range electric bike. I also came to the conclusion that riding a bike on the M62 was probably not a good idea! If you have a shorter commute it's definitely a good option though..
Can you go on a 10 days vacation on your bike 1000 km away?
my question sis imple what did you last use on your last car purchase/acquisition?
lol 45k for a golf
All my friends have fancy cars while i still drive my lovely 2006 golf gti but most of my friends cant afford three holidays a year like i do and will still be working past 65 as they live a life of luxury buying things they cant afford.
My parents taught me to only buy what you can afford and at the age of 40 i can say they were definitely right
These sanctimonious comments are hilarious 😂
Strongly disagree with the anti-finance brigade. Last time I bought a car, it was £25k. Cash or PCP. I had the £25k cash. But I was able to get a bank loan for the £25k @2.9% APR over 5 years. So I took out the bank loan and put the £25k into stocks. So far, the 25k in stocks is worth £33k. That increase in stock value is way more than the interest costs of the bank loan. So finance absolutely makes sense, depending on your financial situation
How did you put bank loan into the stock when it is not allowed to use personal loan into any stock investments ?
@@oaip1878 bought the car with the bank loan cash, already had my own cash invested before the loan came through
No mention of the costs for finance - sounds so straightforward simple when money is free !
COMMENTS QUIZ: WHICH FORM OF CAR FINANCE ARE YOU ON AND WHY?
HP: Tight on money. However i've just realized it is best to pay the car off within 3 years because in case anything happens to the car (write off) or you. Since you don't own the car until you've paid it off.
I am on a lease, it has cost me £7500 over 3 years on an EV, which would have dropped by £15,000 if I had bought it new 3 years ago and sold it this month
Always lease, why buy,lease,cash or HP it. I can get the best car for the least amount of money. I’ve a M340 touring paying less than £500 a month fully maintained. List price of car new £64k I will have paid £20k for the car over three years. You wouldn’t get that on hp,pcp or cash would I.
No brainer.
Another deal recently Maxus t90 pick up £50k ev truck £139 inc vat inc maintenance 2 yrs. total lease cost £4170 vrs loss of Vat if purchased £8333
Personal bank loan, which isn't attached to the car, so I own the car outright as soon as i get in it. I can sell the car any time and kill the loan, (mostly). Someone else paid for the depreciation, and i can trade in the moment i drive into a dealership and see something else i like.
I can trade in every year just adding a few thou or whatever i have spare, say 5k. You can start with a 10k car on a loan, in 5 yrs you have a 35k car and you own every car you've had for the whole 5 yrs. If stuff turns to shit you can just cash in and all you owe is whatever is left on your original 10k
@@davidkyle5552
Yeah sorry i didn't really explain myself too well. I meant get a bank loan for a car 3-4 yrs old, so the worst of the depreciation was paid for by the previous owner, then trade up every year, car prices in general go up so if you're careful you won't lose much if anything over a year, and if you add a few thou to your pot and buy up each time you'll end up with quite an expensive car that you own outright, but your fixed payments are only to the value of your original loan. That way you've got the choice to stay with cars 3-4 yrs old or make the choice to take a depreciation hit and buy newer.
The advantages are that at any given time you have an asset that you own and can liquidate or add value to as it suits you. You also get to go shopping for cars every year, which if you're a petrolhead like me is great, and the neighbours think you're minted because you've always got a different car (if that's your thing).
The EV thing will change everything though, because it will be all about battery life, which equates more to mileage and less about age.
If what's important is the number on your license plate and not value for money, you're screwed and will be caught in the depreciation/never owning your car trap unless you have a company car.
I purchase and keep the car for at least 10 years. Save for the replacement whilst owning the current car. Last car was a pre reg 2015 Honda CRV new £20k (5k off the new facelift model), 3 years 0% PCP, paid minimum monthly payment, 3 years later paid the outstanding final payment but had 3 years on interest on the final payment before handing it over. Car is still good for another 5 years, may think about another car then. Cars are for going from A-B, they will stuck all your money if you let them, choose a good reliable car, at a price you can afford, keep it until you’ve got the saved money in your hand to get another and you will save thousands to spend on holidays and other stuff that actually makes a difference to your life.
And here was I thinking that PCP only stood for _phenylcyclohexyl piperidine._ Or Angel Dust. Not that I've ever tried it. *_Honest!_*
As for leasing, I only did it when i was working. it was the only way for me to get a new car and I did it through my company.
But unless some _Golden Finger_ points at me, I'm going to remain carless. The problems of being retired early due to ill health.
Oh! Well C'est la vie... _As the French say!_
However. Howard makes even a dull...ish subject, very watchable 8-))...
interest on any loans?