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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 7:05 am 
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Based on those examples it seems like PCP is an excellent way for people to blow their savings on new car depreciation.

And they go back for more!

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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 8:32 am 
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Eschatologist wrote:
Based on those examples it seems like PCP is an excellent way for people to blow their savings on new car depreciation.

And they go back for more!


But that’s true of buying a new car in any format it’s not pcp specific

Look at it as renting a car that’s the simplest way, what’s it costing you a month to rent your brand new merc vw or whatever and what will it cost to rent a new one.

Keep the deposit low and that way there is no big shock come trade in time


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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 8:44 am 
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cyrusir wrote:
Eschatologist wrote:
Based on those examples it seems like PCP is an excellent way for people to blow their savings on new car depreciation.

And they go back for more!


But that’s true of buying a new car in any format it’s not pcp specific

Sure, at the end of the day there is no reliable way for large numbers of people to buy new cars without losing money, but I think the complexity of PCP agreements is sufficient that retail lust can overcome reality.

Regardless of how you do it, trading in new cars every two years like the example from boards seems like setting fire to money. I like new cars (most of my cars have been purchased new), but I tend to keep them for a decade and haven't used credit since the first one. People justify trade ins by saying that new cars are more reliable, but that's not my experience. If something goes wrong it's most likely going to be in the first two years.

Anyway, no time bombs to see here. :D

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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 12:02 pm 
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Eschatologist wrote:
If something goes wrong it's most likely going to be in the first two years....


The 'bathtub curve' in action.

Agree - no timebomb but my biggest takeaway is not to ever ever consider a PCP, even with someone else's money.


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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 12:37 pm 
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owenm wrote:
Eschatologist wrote:
If something goes wrong it's most likely going to be in the first two years....


The 'bathtub curve' in action.

Agree - no timebomb but my biggest takeaway is not to ever ever consider a PCP, even with someone else's money.


what is your reasoning for that?


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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 1:55 pm 
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Posts: 2737
Eschatologist wrote:
cyrusir wrote:
Eschatologist wrote:
Based on those examples it seems like PCP is an excellent way for people to blow their savings on new car depreciation.

And they go back for more!


But that’s true of buying a new car in any format it’s not pcp specific

Sure, at the end of the day there is no reliable way for large numbers of people to buy new cars without losing money, but I think the complexity of PCP agreements is sufficient that retail lust can overcome reality.

Regardless of how you do it, trading in new cars every two years like the example from boards seems like setting fire to money. I like new cars (most of my cars have been purchased new), but I tend to keep them for a decade and haven't used credit since the first one. People justify trade ins by saying that new cars are more reliable, but that's not my experience. If something goes wrong it's most likely going to be in the first two years.

Anyway, no time bombs to see here. :D


Your problem is you're a socialist so you don't appreciate Western Capitalist Decadence :P

You like new cars, and you know about cars, but the average age of your car during your ownership is 5 years old. For a PCP buyer it's 18 months. In Ireland, like it or not people judge themselves and other on 'how well they're doing in life' by the car they're driving. Old car = I'm a failure or you're a failure. People who drive old cars are the cranks. And I say that as the owner of a succession of Panzer Luxobarges, the annual motor tax of which equates over 3 years to a €6k top-up on a PCP.

I think you buy new cars because you like control. You want to know it was serviced properly and not abused. Psychologically, in car terms, you have Madonna-Whore complex. I have a worse problem. I have a Grab-a-granny fetish :P


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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 2:29 pm 
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GameBlame wrote:
Your problem is you're a socialist so you don't appreciate Western Capitalist Decadence :P

I do have an instinctive anti-consumption reaction, it's not so much decadence as people measuring human worth by wealth, which is obviously absurd to anyone who has spent any time around first-generation international rich people who are for the most part boring, rude and selfish with bratty children. I prefer relatively poor people because they tend to be kinder, funnier and more interesting.

GameBlame wrote:
You like new cars, and you know about cars, but the average age of your car during your ownership is 5 years old. For a PCP buyer it's 18 months. In Ireland, like it or not people judge themselves and other on 'how well they're doing in life' by the car they're driving. Old car = I'm a failure or you're a failure. People who drive old cars are the cranks.

I like new cars because they have cool new features, like power assisted brakes and electric windows.

I come from a culture where rich people (or at least the interesting, polite and generous ones) tend to drive old shitboxes, or old classics, and so I tend to judge people that think nice new car = successful person (regarding themselves or others) as grasping aspiration proles.

GameBlame wrote:
And I say that as the owner of a succession of Panzer Luxobarges, the annual motor tax of which equates over 3 years to a €6k top-up on a PCP. I think you buy new cars because you like control. You want to know it was serviced properly and not abused. Psychologically, in car terms, you have Madonna-Whore complex. I have a worse problem. I have a Grab-a-granny fetish :P

You have excellent taste.

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Tyrion Lannister


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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 6:39 pm 
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Old Time Landlord

Joined: Jan 31, 2007
Posts: 378
Location: Middle Earth
cyrusir wrote:
owenm wrote:
Eschatologist wrote:
If something goes wrong it's most likely going to be in the first two years....


The 'bathtub curve' in action.

Agree - no timebomb but my biggest takeaway is not to ever ever consider a PCP, even with someone else's money.


what is your reasoning for that?


It empowers borrowing on a rapidly depreciating asset.
if you fall outside the glidepath of reasonable usage or have an accident it's going to cost you.
Breaks in gainful employment mean the car could be taken repossessed in short order - inhibiting the ability to get back into gainful employment
Any repossession like this could exclude you from future PCP's - I'm guessing.


My usual approach is to buy outright or with ~50% finance, usually a 3-5 year old car (in the optimal span of the bathtub curve), My current car had a full service history when I bought it and I could see a replaced starter motor, clutch & 2 calipers - all in the first 2.5 years. I've had it for nearly 3 and had nothing like this to fix.


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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Tue Nov 13, 2018 7:01 pm 
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Joined: Sep 13, 2012
Posts: 5474
owenm wrote:
My usual approach is to buy outright or with ~50% finance, usually a 3-5 year old car (in the optimal span of the bathtub curve), My current car had a full service history when I bought it and I could see a replaced starter motor, clutch & 2 calipers - all in the first 2.5 years. I've had it for nearly 3 and had nothing like this to fix.

Actually, I think depreciation rate is fairly constant at 20% for maybe the first ten years.

So the smart move is to buy a cheaper car, not necessarily an older car. Or just hold it long enough that it gets cheap.

_________________
"It's easy to confuse what is with what ought to be, especially when what is has worked out in your favour"
Tyrion Lannister


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 Post subject: Re: PCP Car Finance - A ticking time bomb
PostPosted: Wed Jan 09, 2019 2:33 pm 
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Joined: Nov 4, 2011
Posts: 6049
Location: SthDub
As Arcade Fire sang....
"But they don't know where and they don't know when
It's coming
Oh, when, but it's coming
Keep the car running"

https://www.irishtimes.com/business/fin ... -1.3751716
Quote:
One in six used cars on sale may be at risk of repossession as they still have finance outstanding on them.

In a study of a sample of 5,906 used cars offered for sale and history-checked by vehicle history checking website Cartell.ie, 16.6 per cent still had outstanding debt, meaning the finance provider was the ultimate owner of the vehicle and not the seller. In December 2017 it stood at 14.3 per cent. In July 2016 the rate was just 9.5 per cent.


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