PCP deals.

iamdan

Chaps and girls,

Quick advice needed.

My daughter is after a cheap PCP deal on a new motor. Stupidly in her younger days, defaulted on a few payments and her credit file was affected by this - although the score is rising most months.

Does anyone have experience of getting a deal with a poor credit rating?

JiMMy 85

PCP dealing has apparently changed a lot since I last got involved.

iamdan

How so?

cafcfan

I haven't read it but The Bank of England issued a paper earlier this year expressing concerns about the PCP market. I'm guessing it is saying that insufficient checks are done on whether the punter can afford the repayments. Broadly, a purchaser - I use the term loosely - is doing nothing more than financing the depreciation of a vehicle over a period of time. So the finance/car provider don't really care whether it's affordable because they can just take the car back if payments stop coming through. So a credit check might have been a little lax for this product in the past. I suspect they have now been tightened up.
The set up has worked so far because second hand car residuals have been strong often meaning the punter has sufficient spare value to lob onto the replacement vehicle three years down the line. So the potential snag is the economy turns down and lots of people chop in their PCP cars early. This will have the impact of reducing second-hand car residuals and punters who continue to finance their vehicle will find there's insufficient spare cash to put a deposit down on the replacement.
I feel it will be an interesting few years in the car market.

Just found this article which explains the issues. https://ft.com/content/0e651206-0ee1-11e7-a88c-50ba212dce4d?mhq5j=e3

golfaddick

iamdan said:

Chaps and girls,

Quick advice needed.

My daughter is after a cheap PCP deal on a new motor. Stupidly in her younger days, defaulted on a few payments and her credit file was affected by this - although the score is rising most months.

Does anyone have experience of getting a deal with a poor credit rating?

tell her to do what we all did back in the day - buy a cheap Escort mark 2 & hang some furry dice from the rear view mirror.

moutuakilla

Try googling some synonyms - angeldust might be a good place to start

church-lane

iamdan said:

How so?

Iamdan - not sure you are both talking about the same type of PCP!!!

SDAddick

https://www.youtube.com/watch?v=7AEG_iq3Lrw

Stig

There was a programme on Radio 4 (either Money Box or You and Yours) about a month ago, where people had experienced problems with these sort of finance deals where they thought they'd own the car outright at the end of the term, but in fact still had to pay a lump sum out if the wanted to call the car theirs. It may be worth having a listen to that before signing up to anything.

smiffyboy

Stig said:

There was a programme on Radio 4 (either Money Box or You and Yours) about a month ago, where people had experienced problems with these sort of finance deals where they thought they'd own the car outright at the end of the term, but in fact still had to pay a lump sum out if the wanted to call the car theirs. It may be worth having a listen to that before signing up to anything.

Anyone that thinks this clearly has trouble tiing their shoes in the morning

iamdan

Knew I could rely in CL for the help I needed...

Carter

Wouldn't touch it personally mate, all puns aside I think the personal car plan pcp is a mugs game. You never own the car, get ripped off if you decide to buy it after having it 3 years and get no support from whatever dealer you go to and are comitted to payments each month.

You'd be better off getting a credit card in her name, spending 25 quid a month on it for a few months whilst clearing the balance each month to get her credit rating to a point she can go and get a nearly new motor with a bank loan.

Or pick up one of the thousands of bargain motors 6-8 years old for cash

Halix

I was in the new car trade for many years and personally never liked PCPs. Ok so its supposed to be a low capital way of getting into a new car, but I didnt like the large terminal bubble payment needed to actually own the car, especially when residual values are so low. Also the initial deposit now seems to be much larger than I remember. When you add penalties for going over the mileage allowance, and for any dings I'm very nervous.

I personally feel that if you can only afford to rent a car then you are better off getting a nearly new or 2/3 year old car that has already done most of its depreciation for you onlow rate finance. There are a lot of these cars on the market, often because of the success of PCPs when people dont pay the terminal payment and trade the cars in, often with low mileage because of the PCP mileage penalties.

Cars are so much more reliable now, warranties are longer, rust protection so much better, and new cars SO expensive (£15k for a bog standard Fiesta blows my mind) , that I find it hard to justify buying new (unless you're addicted to new car smell) and buying a nearly new/ low mileage used makes greater financial sense.

By the way, I like the way WBAC are now really stressing convenience rather than how much they will pay you, straw clutching at its best.

Pavo

Each to their own, have two motors on PCP - notice I did not use the word own in relation to the car... at point of purchase, I knew how much I wanted to put down, what my monthly budget was and they give you a guaranteed price at the end of the three year term that you can settle to own the car or (what I am doing) trade in for the next one if the value is higher than forecast, which is achievable if your annual mileage is lower than predicted. Unless you are into rare/vintage cars that hold or increase their value I think owning your car outright is a bit of an old fashioned way to operate, losing £1000s the minute your car drive off the forecourt. This is not the property market... PCP is working well for me!

buckshee

https://www.youtube.com/watch?v=vk6FIuXxK1M