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[eddie the seagull]

What is a PCP deal? Is this one of those dodgy deals where you keep on paying but never actually buy anything?

[ric]

Probably doesn't affect that many of us here, but a PCP is a contract (that's what the C stands for).

This will affect any future mortgage or renegotiation of one at any time throughout the PCP period as there is less money available for the multiplier calculations.

[Mark M]

Apparently "Personal Contract Purchase, or PCP, is a variation of a Hire Purchase agreement. The key difference is that the value of the car at the end of the contract is calculated at the start of the agreement and this value is deferred. This deferred sum is usually referred to as the Guaranteed Minimum Future Value (GMFV) and is based on a number of factors including how old the car will be at the end of the agreement and how many miles it is expected to have covered. The future value of the car is guaranteed by the lender so will not fluctuate. Deferring the GMFV to the end of the agreement in this way means that your regular monthly payments are lower than those on a comparable HP agreement over the same term. A PCP agreement also gives you the flexibility to decide whether you would like to own the car outright at the end of the agreement by paying the deferred value (GMFV), or returning the car to the lender and entering into a new car finance agreement." The GMFV is also called the balloon payment I believe and is not fixed at the outset, if the value of the car goes down during the contract period you pay more. A friend who knows about this says that these payments are rising at the moment because the second hand car market is weakening and I also heard that some consumer organisations reckon that PCP might be the next PPI scandal. It came from America apparently!

REgards, Mark

[Rattlebattle]

PCP deals are the most popular way of financing a new car these days and you only need to read a modern bike mag to realise that bikes are going the same way. Often at the end of a bike test there is a panel showing a typical PCP deal eg deposit £2000, 36 monthly payments of, say, £139 and a final payment of perhaps £3,500. There is also an agreed mileage, perhaps 5,000 miles per year. The higher this is the higher the monthly figure. At the end of the period, typically 3 or 4 years, you have the option to simply walk away (or presumably catch the bus...), to pay the agreed final sum (and the bike is yours) or to use the equity in the bike as part of the deposit on the next deal. This is how a lot of people drive cars or ride bikes that if they had to pay cash they couldn’t afford. The big risk is that neglect of the bike results in the agreed value at the end of the deal being less than the contract (and the market suddenly being swamped with three year old bikes as the early agreements come to fruition doesn’t help). Most people also just accept the deal offered by the manufacturer, whereas in fact you can do it independently. Better still just get a personal lease that way. Here the monthly payments are higher but you just lease the bike for an agreed rental and mileage, repeating it at the end of the agreement (probably the only sensible way of having an electric vehicle. Be aware also that the rate per mile above the stipulated total attracts a premium ( which is why clocking is in favour again). Ultimately we are only the keeper of a vehicle whether we own it or have exclusive use of it so if you want to have the latest v hickory and change every three or four years a personal lease arranged independently makes sense, especially if the optional maintenance agreement is added on. Caveat emptor and all that - if something sounds too good .... don’t moan when you get ripped off and expect everybody else to pay for your stupidity.

[Felix]

Sounds like a regular lease in the US. You make a down payment and monthly payments on a vehicle, insure the thing against everything and after a while they let you buy the vehicle. Then you can start paying installments to really buy the thing.
Works great here for "business vehicle" tax deductions to avoid taxes.

[another Allan]

PCP is a great way for people with no/little cash to afford to drive/ride a new vehicle, so that's ok then. Unfortunately it is also the most expensive way to drive/ride a new vehicle.....There's no such thing as a free lunch! Back on topic, I'll wait for a 650 Himalayan, I think.

[RocketRR]

The 410 will be perfect for me to wizz around the beautiful lanes, byways and the New Forest down here in sunny Hampshire. BMW'S are for boring motorways Enfield's are for enjoying the world as it plonks by at a leisurely pace 🏍💨for me anyway 😀

[2cvandy]

"PCP is a great way for people with no/little cash to afford to drive/ride a new vehicle, so that's ok then. Unfortunately it is also the most expensive way to drive/ride a new vehicle.....There's no such thing as a free lunch!" - So true! - Which is why my 2009 Enfield is the newest vehicle I own,,,,,,,,,,,,, Sat in the garage with a 2004 Sportster, a 2002 Citroen C5, a 1989 2CV, a 1987 600 Transalp, and a 1978 CX500. Most of which have thankfully stopped depreciating too,,,,,,,,,,,,,, PCP ? - Paying Credit Permanently !

[Sid]

Got mine before christmas, quit impressed

[another Allan]

"PCP ? - Paying Credit Permanently !" I love it!!