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scimmiamagia
Member Since: 05 Jan 2016
Location: Surrey
Posts: 130
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I am confused. I thought I had a head for numbers, but something does not look quite right about my figures.
I am looking to buy an LRD4 HSE. Budget £30k or thereabouts. This has been creeping up and I keep getting tempted by cars approaching £35k...
So, I go to my bank, and I enquire about a loan. I have around £10-11k deposit from the sale of my current car, and so am looking for a loan up to £25k. Gulp.
Cost pcm is £731. Total cost over three years is £26,326. So, £1,326 in interest. Total cost to buy the car = £36,326 inc. the deposit. In three years, should I decide to sell the car, I would hope to get around 50%(?) of that back, so gross TCO (excluding tax, insurance, servicing, petrol, etc) would be £18826, so say £19,000. That's quite a lot, I suppose, considering my current car will have cost me £6000 over three years.
Any way, out of curiosity, I decided to see what PCP would be on a new car; an HSE at £54500, after someone suggested it was a good way to buy a new car and 'everyone' is doing it.
I put a 10% deposit in the finance calculator on the LR website (therefore leaving me with around £5000 to spend on a new bathroom), over 37 months, and 12000 miles (usually only do 8000 but you never know).
Cost per month came out as £798 x 36 = £28,728. Interest amounts to £5534 after deducting the Finance Deposit Allowance. GFV is £25,887.
Now, if I sold that car after three years and got around 15-20% of the GFV as equity (as quoted by someone at LR) that amounts to nearly £4000 equity.
That means that the gross TCO of a new car is £29000 approx. in monthly payments + £5500 deposit - £4000 equity, - £5000 in my pocket having not used all my part-ex. in the deal = £25,500.
Have I got something wrong? That means owing a brand new car over three years on PCP is £6500 more than owning a second hand car? I was expecting it to be loads more.
I haven't factored in tax, which over the three years would be less on a new car, as would servicing, and fuel economy would be better, although I imagine insurance will be more and I would need GAP.
What am I missing?
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 19th Jan 2016 12:55 pm |
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CFB
Member Since: 02 Dec 2005
Location: Bradford, West Yorkshire
Posts: 6100
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I'm not sure I can unpick your figures but I do know that I'd set the mileage lower on a PCP as it will bring down the monthly cost and you only get penalised with excess mileage charges if you hand it back and walk away (which I doubt any of us would do)
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| 19th Jan 2016 1:03 pm |
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Pelyma
Member Since: 06 Jan 2005
Location: Patching, Sussex
Posts: 15496
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At the end of the loan you own the car, nothing more to pay. At the end of a PCP you take out a new one and carry on paying; you are effectively paying to use the car not buying it. I bought a HSE Lux just before Christmas that with the extras should have been about £62K, I put £10K down and pay just over £600 based on 15K miles. I could then pay £699 for the service pack so I don't have any service costs. In the long term it is more expensive than buying a car and hanging onto it, but in the short term it is cheaper as you are only repaying depreciation not the whole purchase price, interest is of course paid on the the whole amount. DS3 TDV6 HSE - Silver with Alpaca (old one) Gone
DS3 TDV6 HSE- Silver with Alpaca (new one) Gone
D4 HSE Lux - Montalcino Red Gone
Porsche Cayenne V8 Diesel S
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| 19th Jan 2016 2:02 pm |
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Dusty
Member Since: 23 Sep 2013
Location: London
Posts: 1022
 
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As has been said PCP is effectively contract hire for private individuals and for a fixed monthly fee you can drive a brand new car every 3 years. The salesman will always tell you there is at least 15-20% equity at the end, he wants you to sign on the dotted line!! But in reality there could be a lot less, as long as they meet the GFV and you've not exceeded the mileage and the condition is ok (read the small print) they have met there side of the bargain. It all depends how sales are going in 3 years.
If it was me I'd go for the 30k car and hope it's a goodun and in 3 years put down the 18k against a newer one which I would pay over 2 years, at which stage you've got a nice hefty deposit to put down on a brand new one which in a couple of years you own lock stock and barrel 
All a bit long term and depends if you're a Land Rover only type of guy. Also depends on your age I guess. I'm an 'old git' with grandchildren so borrowing to buy expensive cars is a bit in the past for me. Which is probably why SWMBO won't let me near a Land Rover dealer by myself  Discovery 4 HSE
SDV6
2015
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| 19th Jan 2016 2:40 pm |
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comedyharvey
Member Since: 04 Jul 2010
Location: Gloucestershire
Posts: 1727
 
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Having previously had company cars and buying my current D3 for cash when I took VR all of this is new to me.
So with a PCP, at the end of your three years, if you choose to hand it back you are basically back to square one and it's cost you the initial cash plus repayments? If you want a new car you pay a new cash sum and a new monthly payment.? Seems simple enough.
Is there any any 'flex' at the end, between the final outright purchase and it's actual value? I read people saying 'went into the dealer, offered a deal costing barely more than my current one so upgraded'. Anything in that? Arthur.
Comedy was a horse, Harvey a dog, both sadly gone. Thought I was choosing a password!
Currently;
Discovery 3 HSE 2009
101" Fwd. Control 1976
Nuffield 10/90 Tractor (10/60 with 6 cylinder conversion) 1964
Previously;
Series III Lightweight. 1976.
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| 19th Jan 2016 3:37 pm |
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lynalldiscovery
Member Since: 22 Dec 2009
Location: Maidstone
Posts: 7274
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As I understand it from some guys at work who do the same the next car requires no cash sum at all, just chuck in 3yr old motor and drive new one home for another 3 years.
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| 19th Jan 2016 7:55 pm |
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comedyharvey
Member Since: 04 Jul 2010
Location: Gloucestershire
Posts: 1727
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Thanks Lynalldiscovery, that was kind of what I was wondering, what actually happens at the end of the three (or whatever) years period. Arthur.
Comedy was a horse, Harvey a dog, both sadly gone. Thought I was choosing a password!
Currently;
Discovery 3 HSE 2009
101" Fwd. Control 1976
Nuffield 10/90 Tractor (10/60 with 6 cylinder conversion) 1964
Previously;
Series III Lightweight. 1976.
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| 20th Jan 2016 12:18 am |
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Dusty
Member Since: 23 Sep 2013
Location: London
Posts: 1022
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Basically 3 choices.
1. Hand the car back and asuming you have stayed within the agreed mileage and have not trashed it, you owe them nothing.
2. If they offer you more than the GFV value use the equity to provide a new deposit for a new car and new agreement. They won't let you drive off in a new one if a deposit is not paid with either the equity (if there is any) or some more cash.
3. Pay the GFV figure and then you own the car outright. Discovery 4 HSE
SDV6
2015
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| 20th Jan 2016 1:08 am |
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comedyharvey
Member Since: 04 Jul 2010
Location: Gloucestershire
Posts: 1727
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Thanks, that's clear.
So option 2 & 3, The GFV value, that's stated up front, at the time the deal is agreed. So at the end you can buy the car for the GFV but they might offer you more than that in which case you've got a bit towards the deposit.
Interesting, thanks for explaining that. Arthur.
Comedy was a horse, Harvey a dog, both sadly gone. Thought I was choosing a password!
Currently;
Discovery 3 HSE 2009
101" Fwd. Control 1976
Nuffield 10/90 Tractor (10/60 with 6 cylinder conversion) 1964
Previously;
Series III Lightweight. 1976.
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| 20th Jan 2016 1:41 am |
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LaserTam
Member Since: 31 Aug 2015
Location: Essex
Posts: 830
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Yes GFV is agreed at the start of the agreement. Fortunately gone are the days of 'balloon payment' which in contrast wasn't guaranteed, so the final payment could be a larger (or smaller) sum than the stated amount at the start of the agreement - which led to many negative equity situations. The financial authorities decided this wasn't fair, so now its GFV. MY2012 D4 HSE Nara Bronze with some extra stuff
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| 20th Jan 2016 8:52 am |
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A1GSS
Member Since: 12 Sep 2010
Location: Saffron Walden, Essex
Posts: 4691
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comedyharvey wrote:...the GFV value, that's stated up front, at the time the deal is agreed. So at the end you can buy the car for the GFV but they might offer you more than that in which case you've got a bit towards the deposit...
That's correct. Note that any cash deposit or P/X that you put in at the beginning of the deal is (likely to be) wiped out. Best way to do PCPs is minimal or no deposit, No P/X of any value, and plan on no uplift to GFV, that way you've lost no cash in the deal and the costs are completely transparent. If you want an ownership experience at the end of the term you might be better with HP or a personal loan. ____
Gone: 10MY L320 RR Sport HSE, Ipanema Sand
Gone: 20MY Jaguar iPace HSE, Silicon Silver
Gone: 17MY RR Evoque SE Tech, Loire Blue
Gone: 08MY Discovery 3 XS, Stornoway Grey
Gone: 07MY FFRR TDV8 Vogue, Stornoway Grey
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| 20th Jan 2016 9:02 am |
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DG
Site Moderator
Member Since: 12 Dec 2005
Location: The Gaff
Posts: 50965
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Pelyma wrote:At the end of the loan you own the car, nothing more to pay. At the end of a PCP you take out a new one and carry on paying; you are effectively paying to use the car not buying it. I bought a HSE Lux just before Christmas that with the extras should have been about £62K, I put £10K down and pay just over £600 based on 15K miles. I could then pay £699 for the service pack so I don't have any service costs. In the long term it is more expensive than buying a car and hanging onto it, but in the short term it is cheaper as you are only repaying depreciation not the whole purchase price, interest is of course paid on the the whole amount.
This is exactly what I have done for all of my Disco's ....I know I don't "own" it but I don't really care about that. I've effectively had a brand new motor every few years with my equity holding value and rolling forward each time. In terms of what I've paid out you could say in 10 years I've had 4 new discos for the price of 1.25 HSE's at today prices.
Horses for courses 21 year LR veteran > D2 GS 2003 > D3 S 2006 > D3 HSE 2009 > D4 HSE 2013 > D4 HSE 2015 > D5 HSE 2018 > DS HSE R-Dynamic P300e 2021
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| 20th Jan 2016 9:34 am |
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comedyharvey
Member Since: 04 Jul 2010
Location: Gloucestershire
Posts: 1727
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That's all very interesting and useful, much appreciated chaps.
Not owning outright wouldn't bother me and I can certainly see the attraction of a new motor every three years or so.
Not that I'm changing yet but when I do I'll be looking at the options. Arthur.
Comedy was a horse, Harvey a dog, both sadly gone. Thought I was choosing a password!
Currently;
Discovery 3 HSE 2009
101" Fwd. Control 1976
Nuffield 10/90 Tractor (10/60 with 6 cylinder conversion) 1964
Previously;
Series III Lightweight. 1976.
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| 20th Jan 2016 10:47 am |
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JackNorris
Member Since: 06 Jul 2012
Location: Beds/Bucks Border
Posts: 1877
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Ive always tried to avoid PCP as i didnt fancy the idea that at the end of the 3 years i may not own a car.
My yearly mileage at 25000 is another issue.
However, when it comes round again i may look at it.
The mileage only comes into play if you intend to give the car back and not carry on with another car. You can also look to change at 2 years and i was told the garage would ring and look to swap you to a newer car without you paying in any more money
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| 20th Jan 2016 11:40 am |
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