Seems more and more people I know are opting to finance cars on Personal Contract Purchase or PCP.

Just wondered what everyones thoughts on the system are. Partically in line with BMW's.

I have always bought cars with a personal loan or in effect straight HP. I sleep easier at night knowin the car will be mine in a couple of years and I'll be able to draw a few grand out of it for deposit on the next one.

What are the REAL advantages of PCP, I cant see any other than you get a nice shiny new motor every couple of years and the dealer dips your pockets for payments, servicing and potenially any excess miles or damage you do to his car.

Don't know? I've always paid cash for cars.

it's just a cheap way of getting your a*se into a brand new car for subsidised monthly payments, starts off with your deposit, which is usually your trade-in, then your "low" monthly payments for 3 years, then the baloon payment at the end, which if you want to keep the car you'll have to probably take out a bank loan to settle the debt, thus adding another few years onto your term (not appealing, you're probably sick of the car by then) or you can give them the car back and walk away (not very appealing - as stevie says, nothing to show for all that money), or three you trade her in for the new model, with your agreed value of the car going towards your deposit next time and the whole cycle starts again

nice way for the manufucturers and dealers to keep getting repeat business, and of course you have to stick to an agreed mileage, not damage the car, and get it serviced at stipulated intervals by a main dealer...

there is also a risk that if the market slumps against the price you paid for your car, as happened in thousands of cases over the last two years, you may be left with not enough equity in it to finance the deposit of your next PCP, which means you'd have to downsize the car to one with a lower deposit (e.g. Ford Mondeo -> Focus -> Fiesta -> Ka)

just looking at BMW Select, they don't give example £ p/m figures (boo, hiss!)

neither does Porsche Preferences, christ even Lamborghini does a PCP plan!

bm select used to give you examples for some reason theyve stopped.

PCP = Too many restrictions and too much debt.

Never thought of the market slumping and you being caught out taking the hit. interesting

I don't think you can get hit like that these days stephen.  Although I may be wrong of course, as I have never actually done this PCP thing.  I think the dealers agree a value for the car at the end of the term in the contract.  I believe this helps determine the monthly payments.

probobly best for somebody with experience of doing it to answer for sure though.

interesting topic though.

If you gotta borrow, get a personal loan, car finance is a rip off and can bite you in the ass!

Mike

ive alway's felt that HP or any other finance deal is a bit like your driving a hire car ..... i started out (many moon's ago) when i was 16 and saved for my first car which i bought at 17 kept it for 3 year's while i was saving for my next car, ive stuck to doing it that way for 18 year's now and it work's  i'll sometime's by the odd (been a few) car with my saving's, fix it up and sell it on at profit which all get's returned to my "car pool fund"