PCP Car Finance is DESTROYING your wealth

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Fully Planted

Fully Planted

2 yıl önce

Not sure what those monthly payments offered in PCP agreements really mean?
This video explains how you can use finance to your advantage and upgrade your car every year.
The key word is 'equity', for every monthly payment you make, you want to get as much of that money back when it comes to selling the car.
With PCP, you gain very little equity in the car with each payment and therefore when you come to sell the car you receive nothing back and are forced in to another PCP agreement with higher monthly payments just to stay in the same standard of car which you have driven for the last 3-4 years.

LewF20 Yıl önce
Couldn’t agree more, over the past few years I started out doing bank loans and have steadily built up more and more equity, and now I have just been able to afford a dream BMW M135i which is nearly new! Never though it would be affordable, but because I have never done PCP I’m not in the position of constantly loosing money 😃
John Boyle
John Boyle Yıl önce
A great principle in life to follow is if you can't buy anything cash don't buy it. You may think its great having a lovely car on the drive but the ongoing costs etc and how much you lose out takes away the pleasure. This recent pandemic has taught us better to save for a rainy day
Mugtree Yıl önce
I bought my Mini Cooper S in 2003. I saved up for it and bought it for cash. 18 years on it is still running like a dream it has 250k miles and i go to Norway and France every year. And now I’ve been told it may become a modern classic so who knows it may end up being worth what i paid for it 🤞
R Yıl önce
It all depends on the PCP rate versus the Bank finance rate and type of car. PCP definitely works in some circumstances. Did for me anyway. Also if you’re in a position to buy the car outright at the end of PCP term and sell privately, that also really helps, garage will never give market price
jonscoupe Yıl önce
Very good advice. Never used PCP myself. Always managed to buy decent used cars with cash topped up with a bank loan now and again, but I'm sure there are times when people need PCP to get transport. Cheers, Jon.
Ravi Mall
Ravi Mall Yıl önce
So many people do not understand this. I did exactly what you said, got a loan instead of going into other finance routes as I feel you get stuck in a cycle of constantly having to finance. I also suggested the same to my wife so hopefully in 3/4 years time we'll be in a better financial position for the future. More people need to watch this!
DodgeViperAS Yıl önce
I think it’s pretty simple. If you haven’t got much in savings, don’t get a juicy PCP because then you won’t be able to save much and you’ll be in a perpetual cycle as described in the video. If you do have decent savings then go for it. Cars are meant to be enjoyed and at the end of the day they are a depreciating asset so whether you get PCP, HP or a loan, you’re losing money. Life is too short to worry about how much money you’re gonna lose on a PCP. If you can manage your savings such that you either already own a house or are able to as well as saving extra above the PCP monthly payment then who cares.
Torben Cook
Torben Cook Yıl önce
Great informative video, I literally went to look at a car today on pcp and this has placed a seed of doubt. You’ve raised a few points that I hadn’t thought about 👍 I know it’s financially not the smartest approach but for me it’s about cash flow, even though in the long term I may lose out I’m able to manage whatever gets thrown at me financially due to having lower outgoings. The monthly outlay of a personal loan is significantly higher than pcp plus I’d have to get a much older car. What is the situation with an individual selling the car towards the end of the term to pay the finance off?
Josh Fairweather
Josh Fairweather Yıl önce
Hey man, nice vid. Can you please explain the method of building equity in your cars and taking each next car to the next level? Currently wondering whether to HP a 16/17 plate or PCP a 20/21 plate. Bigger deposit on the HP to own and no deposit on PCP. Hope you see this - Thanks.
Stu Yıl önce
Agree fully with the sentiment of the video, the difference in cost PCP to bank loan is purely in the difference in interest rate. PCPs usually sky high circa 10%
CRD Yıl önce
Absolutely smashed it bro, I get asked this question all the time but you've explained it super clear and demonstrated the hidden cost that people miss
Andrew Daley
Andrew Daley Yıl önce
Very good advice. Also, don't risk falling into a debt trap.
Lee Mason
Lee Mason Yıl önce
Nice video. I have a PCP finance agreement with Peugeot over 4 years and have a year left on it. If I wish to keep my car I have to pay a balloon of 10K. I’ve had enough of paying out every month now for vehicles as this is the second vehicle that I’ve done this with and feels like it is never ending.
Matthew Caldwell
Matthew Caldwell Yıl önce
Great video, really informative. I have opted to go PCP on a BMW 2 series gran coupe which I’m expecting delivery of in 2 weeks time. As a 22 year old I found it far easier for me to go this route for now but in future would like to go personal loan as you discussed. Reason for me choosing this was BMW APR being only 2.9% and having built up very little credit rating personal loans were all the way up at 24.9%. I have part exed my car as part of the deal worth £4000 in deposit. As I am now actively building my credit rating up, do you believe it would be worthwhile near the end of my PCP deal taking out a personal loan to cover the optional buy fee or is that then far too many years of payments with interest in a car?
Qiyuan Zhang
Qiyuan Zhang Yıl önce
This is good advice, But I have to say it only works for people who don't make long-term financial plans and determine their monthly spending ONLY based on how much disposable income they have in that particular month. Using the example given in the video, if you go with HP or get a loan from the bank, the monthly payment would be over £650. If you go with PCP, the monthly payment would be reduced to £480. Hence the owner of the video has made the following point: Although PCP is a few hundred pounds cheaper every month, you don't get to invest in the equity of the car so at the end of the contract, you wouldn't have any capital to go towards the deposit for the next car. This is a valid point, but it is based on the assumption that the people would use all the money they saved on PCP on CONSUMPTION alone, which to be fair is what most people do. However, if you use the saved money on INVESTMENT - buying any thing that could potentially appreciate in value, it would be a complete different story. So it's not the PCP which destroys people's wealth - it's just a financial instrument like any other - It is some people's spending habit that put themselves in a difficult situation.
C Lewis
C Lewis Yıl önce
Yes and For PCP I hadn’t realised if you go over the mileage (for the term you signed up for ) then they reduce the GMFV which could be thousands even if your excess mileage charge was only a couple of Hundred pounds. Got you both ways!
CJ Yıl önce
Spot on video. Its convenience that people like about PCP (including myself) but a little more effort can save a lot of money. As a basic alternative you can find more competitive PCP providers out there who are independent of the dealership and give much more attractive rates.
Laurence Nyein
Laurence Nyein Yıl önce
Good video and gave me a few things to think about. For me personally, I don't have a very good credit score, (current at FAIR), and whenver I compared loans, I always get better rate for PCP than personal loan. It makes sense to me beause personal loan is usually unsecure loan and PCP, the loan company owns the car. So I wonder if it's better for me to just go for PCP because of the loan rate is cheaper. (of course I will need to also save up for the final lump sum)
Farris Latief
Farris Latief Yıl önce
Nice video mate. With the ban on new internal combustion engine cars around the corner, do you think their value will increase eventually as they become more rare?
Xada Sol
Xada Sol Yıl önce
Most dealerships/salesman are disliking this video as this video is gonna get them jobless sooner or later!
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