Pcp Finance

[Richard1200]

Always paid cash for my cars. My IS300 is coming up for two years old and I fancy another. I do not like finance but the PCP route does make sense with the special offers that come with it.

I have a Luxury with electric leather and sat nav but considering the new Advance model which will match my spec but is cheaper than I paid two years ago.

Anybody got any good or bad things to say about PCP as it all sound too good to me

[C Mclean]

Richard, I had the same opinion of PCP as you, always paid fully up front. But when I saw the way things were with dealer contributions and no penalty for early repayment I changed my view and went the PCP route intending to clear the balance within a couple of months. Such a shame that one year on I'm still fighting with my employer for unpaid allowances

[DJP]

What sounds too good to you? You are charged interest on the amount borrowed, and even with a dealer contribution it still costs you money in interest, and certainly more than you could earn on a deposit type account. The advantage, for me, is that it does free up cash that would otherwise be sunk into the car. The danger is 'forgetting' about the balloon payment and suddenly wondering where that money is going to come from, or having to hand the car back and forgetting about the agreed mileage you've gone over by a margin. Or having a row (as I did with Mercedes once) about fair wear and tear.

I'm sitting on a balloon payment at the moment. Will I hand it over and keep my IS300h? Highly unlikely. Much more likely is that I will p/x it, hopefully for more than the guaranteed residual, and use the excess plus a chunk of the cash I've set aside towards another vehicle, probably a nearly new NX. That'll have a balloon payment attached to it, and I'll have a period of time to accrue that whilst enjoying the vehicle.

YMMV.

Sent from my iPad using Lexus OC

[rayaans]

Always paid cash for my cars. My IS300 is coming up for two years old and I fancy another. I do not like finance but the PCP route does make sense with the special offers that come with it.

I have a Luxury with electric leather and sat nav but considering the new Advance model which will match my spec but is cheaper than I paid two years ago.

Anybody got any good or bad things to say about PCP as it all sound too good to me

PCP works out more expensive no matter what if you dont pay early due to the added interest. Take the extra discount they give, its usually £1k and pay the balance off after 14 days. Sometimes you have to pay 3 months worth of interest but its negligible compared to the discount given.

I tried PCP once on a Merc a while back. They take money off for absolutely everything, including wrinkled seats (wtf?). Apparently, it was wrinkled more than it should have been, i just told them to bugger off, bought the car with the baloon payment then sold it privately!

I dont think its worth the hassle though, I prefer getting PCP and paying it all off in a month or just buying with cash. Does work out cheaper buying with cash (although for some cars it doesnt if it depreciates alot, usually the high end models like the LS). Best to work it out first.

[Greenfield]

Interesting post, I too have always paid cash but this time went PCP with my IS300h Premier with the intention of paying it off after a couple of weeks to gain the discount. However 8 months on and I'm not sure, It's nice having the cash in the bank for a rainy day and if you subtract the interest it earns (not much) from the PCP interest then that helps, but my biggest reservation is with such a high value car with so much new technology how rock solid are the residual values? Will newer plug-in hybrids become the must have?, will Lexus finally offer a higher powered IS hybrid? this model could evolve very quickly to keep ahead of emerging plug-in models from Audi & MB (I tested the A3 plug-in e-tron and apart from the ride was very impressed). At this point I feel more comfortable with the option to just hand the car back after 3 years and start gain, the additional cost of the PCP seems a reasonable "insurance" to pay to safeguard against any unexpected drop in residual values although I do note the potential hassle of the wear and tear. I have also thought about paying off the PCP and planning to keep the cat longer term, but to be honest it scars be to think of the potential repair bills of a 6 year old hybrid - surely this must dent long term residuals?

[ganzoom]

It all depends on what you want to do with the car.

We initially wanted a 12-18 month old model, but after looking around my wife couldn't find the colour combination or the spec we wanted, so we just bought new. We went with PCP for the £1000 discount - paid it off last month, had to pay £250 'penalty', so in reality got £750 off, which isn't too bad for doing nothing.

I did half think about letting the PCP run and than replacing the IS300H with a plug-in hybrid/EV car, but my wife loves the IS300H, and at 50mpg, its hardly expensive to run. I also still love the way it drives, after-all it was the IS300H that made me look at full EVs in the first place :)

The actual charges for the interest on PCP isn't that bad, if you factor in the £1000 discount, my agreement would have cost me £1500 interest over 2 years, but we did put down a big deposit. I can see the appeal of having an extra £20K sitting in the bank rather than £20K sitting in the car deprecating....But interest rates are shocking at the moment, and sometimes when the car is good enough, it's worth paying extra for!!

I cannot see my wife wanting to change the Lexus for another 5 years+, and in the spec we have gone for it's got all the 'essential' safety gear that will become standard over the next few years. By the time we sell it (if we sell it)it may not be worth much, but the fact it's still a hybrid will make it worth more than a 320d or ICE Jag XE.

The hybrid drive in the Lexus is pretty mature technology already compared to full EV cars, Nissan has been able to improve the Battery chemistry in the Leaf apparently year-on-year. I cannot see my self 'buying' a full EV car until the technology curve plateaus, which I suspect wouldn't be for another 10 years +, given most academic centres are busy making next generation of batteries commercially viable.....Nano technology, Lithium air, Lithium Sulfur technology is all coming,

Both cost, and efficiency of Battery technology is going to improve quite quickly, don't take my word for it.

This is article in 'Nature' about Battery technology written last year....For those who don't know, 'Nature' is one of the worlds most respected scientific journals, it's almost impossible to get publications in 'Nature' unless you really are the world expert in a particular field, so this isn't science fiction stuff, this is stuff that's coming around the corner :)

http://www.nature.com/news/the-rechargeable-revolution-a-better-battery-1.14815

[Richard1200]

The incentives for PCP at the moment are £1500 Lexus contribution + £1000 dealer contribution and an APR of 3.9% on the IS model range only.

[rayaans]

The incentives for PCP at the moment are £1500 Lexus contribution + £1000 dealer contribution and an APR of 3.9% on the IS model range only.

Hard to argue with that. Do they give a discount on the actual list price though? In which case, take the deal and pay it off in a month :D

[ColinBarber]

Is there any fine print that means you have to pay interest for a certain number of months before you cancel otherwise the contributions have to be paid back? I thought they started to introduce this because of the number of people taking out a policy and instantly paying off the finance?

[ganzoom]

Is there any fine print that means you have to pay interest for a certain number of months before you cancel otherwise the contributions have to be paid back? I thought they started to introduce this because of the number of people taking out a policy and instantly paying off the finance?

If you try to cancel with-in 14 days of the agreement (ie: before you actually pay the first payment) they apparently try to claw the money back..but not sure how??

If you choose to terminate early, even if it's 1 months into a 24 months agreement, by UK law they can only charge you roughly 3 months of interest as an 'early settlement penalty'. I've just done this, phoned up 2 days after the first payment came out of the bank, asked for a full settlement figure, gave them my debit card details, and 30 seconds later, all done. No questions asked, no funny tricks, took at most 5 minutes, there are strict financial laws regarding termination costs, so the finance department cannot really play games. I got the confirmation letter from Lexus Finance confirming all the details regarding settling the finance three days later.

If your doing this route, it makes sense to pay as big deposit as possible, since the early settlement penalty is calculated on total your loan amount...So the smaller the overall loan the smaller the early settlement penalty.

[Richard1200]

Buying by cash. Decision made. I hate finance no matter how good the figures look.

Have been given a great offer by my dealer for the cash option. Very happy.

[ColinBarber]

If you choose to terminate early, even if it's 1 months into a 24 months agreement, by UK law they can only charge you roughly 3 months of interest as an 'early settlement penalty'. I've just done this, phoned up 2 days after the first payment came out of the bank, asked for a full settlement figure, gave them my debit card details, and 30 seconds later, all done. No questions asked, no funny tricks, took at most 5 minutes, there are strict financial laws regarding termination costs, so the finance department cannot really play games. I got the confirmation letter from Lexus Finance confirming all the details regarding settling the finance three days later.

If your doing this route, it makes sense to pay as big deposit as possible, since the early settlement penalty is calculated on total your loan amount...So the smaller the overall loan the smaller the early settlement penalty.

Thanks. I wasn't sure if there was a way the dealer and/or manufacturer allowance could be kept outside of the main contract and therefore not subject to the laws - sounds like that isn't possible :) so the only small print around cancelling within 14 days.

[rayaans]

Buying by cash. Decision made. I hate finance no matter how good the figures look.

Have been given a great offer by my dealer for the cash option. Very happy.

Are you selling yours privately?

[ganzoom]

Buying by cash. Decision made. I hate finance no matter how good the figures look.

Have been given a great offer by my dealer for the cash option. Very happy.

But if you can get a extra £1200 off via signing the PCP deal and than paying off after 1 months why not do that??

It literally takes 5 minutes, for a saving for over £1200 (Persuming early settlement charge of £300).

I even told the dealer I was doing this at time of buying, he didn't care what is did as long as I signed the PCP agreement and made the first payment. Don't think of it as finance, think of it as another £1.2k off the price :)