Stay lucky
sir
Cash or PCP ?
- Thread starter KWS
- Start date
sir
I took my K1600GT on PCP when I bougth it last year - even though originally I was going to just buy it outright
The main driver for this was that it is a very niche bike (and also fecking heavy)
I got a vey good deal indeed on the price of the bike and then also a very attractive offer (in my view) on the PCP. Almost like they didnt want the cash!
Again, I think, because they are rather difficult to sell in the first place.
Which means, in a couple of years time - I can give them a lump sunm and keep it if I still enjoy it as much as I do now OR just hand it back, if I so chose.
This appealed to me for seveal reasons, as potentially,
The bike I think will be difficult to sell on or worth realtively little as a trade in.
It will be expensive to service when the service contract runs out.
The wife decides she no longer wants to tour on a bike. (main reason we have it)
It may be just too bloody heavy for me!
I sat and pondered and weighed up the pros & cons and overall costs over the next 4 years.
For me, in my circumstances, I decided PCP was the right move on 'this' particular vehicle
Did I mention it is heavy?
The main driver for this was that it is a very niche bike (and also fecking heavy)
I got a vey good deal indeed on the price of the bike and then also a very attractive offer (in my view) on the PCP. Almost like they didnt want the cash!
Again, I think, because they are rather difficult to sell in the first place.
Which means, in a couple of years time - I can give them a lump sunm and keep it if I still enjoy it as much as I do now OR just hand it back, if I so chose.
This appealed to me for seveal reasons, as potentially,
The bike I think will be difficult to sell on or worth realtively little as a trade in.
It will be expensive to service when the service contract runs out.
The wife decides she no longer wants to tour on a bike. (main reason we have it)
It may be just too bloody heavy for me!
I sat and pondered and weighed up the pros & cons and overall costs over the next 4 years.
For me, in my circumstances, I decided PCP was the right move on 'this' particular vehicle
Did I mention it is heavy?
You kept quite about thatDid I mention it is heavy?
I think there's a lot of bravado about paying cash for bikes and cars and people if arguing the case need to factor in the lose of interest on your £30 k gs (£5k ish) and the pcp works out cheaper as well as more flexible. I couldn't care less what anyone does but what on earth is wrong with having something you don't have the full amount of money for especially if you only want it for a short period and its cheaper than buying over 3 years.
I would rather take a 5 or 6 year personal loan than a 3 year PCP as you can chop the bike easily at any time, even flogging it for cash if you need the money desperately, this will bring the payments down in line wit PCP anyway.
The PCP wins when you think it will be worth less than the GFV, or manufacturer is propping up the finance, a lot of this about since the government interferred, I got a Sofa on credit in a "sale", I said I did not want the finance as I had cash, and they clearly had to fund the "interest free" deal - was told they cannot do that as if there is a cash discount then it is unfair on the mongs who put everything on finance, cannot count and typically default on everything they buy - and that's the law!
So I took the Finance and kept my cash in a high interest account instead, so sometimes everyones a loser baby!
Manufacturers propping up finance is also a great way to hide discounting, I remember having a GS offered to me with free luggage a £1k deposit contribution and cheap finance - probably worth £3k - but unlike KTM knocking £3k off a bike BMW were not "discounting" it, and the poor sod who did not get a grand of deposit paid for him, spent another £1500 on luggage and had an extra grand of interest on the deal when he bought one a week ago probably did not notice what a shit deal he got.
The PCP wins when you think it will be worth less than the GFV, or manufacturer is propping up the finance, a lot of this about since the government interferred, I got a Sofa on credit in a "sale", I said I did not want the finance as I had cash, and they clearly had to fund the "interest free" deal - was told they cannot do that as if there is a cash discount then it is unfair on the mongs who put everything on finance, cannot count and typically default on everything they buy - and that's the law!
So I took the Finance and kept my cash in a high interest account instead, so sometimes everyones a loser baby!
Manufacturers propping up finance is also a great way to hide discounting, I remember having a GS offered to me with free luggage a £1k deposit contribution and cheap finance - probably worth £3k - but unlike KTM knocking £3k off a bike BMW were not "discounting" it, and the poor sod who did not get a grand of deposit paid for him, spent another £1500 on luggage and had an extra grand of interest on the deal when he bought one a week ago probably did not notice what a shit deal he got.
And there we have it in a nutshell - almost.
PCP is the reason nobody drives a Cavalier/Vectra any more and why Ford all but disappeared as a force in Europe.
Given a choice between a 3-Series, an A4 or a Sierra, the world voted en masse.
PCP can be a very effective way of financing any depreciating asset, as long as you properly understand how it works, how the numbers stack up and what you’re actually signing up to.
All the “cash-only, every time” bods are talking nonsense. However, anybody who takes on a PCP without understanding the consequences is a bit daft. It’s more complex than just the APR. Things like the residual value, relative to purchase price are often what makes the biggest difference.
Remember that PCP deal a while back on the Nortons for £50 (ish) a month for two years? How was that not a great, risk free way to have a cool bike in the garage for a while?
Me, ordinarily I buy bikes for cash. Right now though, I’m feeling pretty smug that my diesel-guzzling car is on PCP and that before too long I’ll be able to hand it back, with the depreciation being somebody else’s problem.
Oh - and whilst I’ve been driving round in a lovely comfortable car that the ‘gain sayers would describe as belonging to somebody else, I spent the cash I didn’t bung to the JLR dealer on a nearly-new V4S that I’ve just sold for 70% of what I paid for it 18 months ago, having put well over 20k miles on the clock.
There is no absolute right and wrong. It’s just about understanding the market and being clear what you’re trying to achieve…
This.
After all, how did we all manage to buy a house, if it wasn’t through borrowing? For at least 25 years, most of us have been living in a place we called ours but that, when push came to shove, actually belonged to Howard from the Halifax…
Absolute nonsense. If you ever try to return a PCP vehicle that hasn’t been properly looked after, you’ll find out why…
Is this a serious question?
The choice of mileage you opt for on a PCP is entirely down to you. I’ve seen more than one PCP where the mileage penalties were so low, by far the best idea was to under state the mileage and swallow the penalty.
It’s not complicated, just pick what works for you…
As an alternative view, I spent a number of years on the board of a (large) airline. We owned 1/3 of our fleet (ie paid cash). Had 1/3 on finance leases (ie personal loans) and 1/3 on operating leases (ie PCP).
No one way was “right” or “better”. The key was in the balance and the decision on each new airframe and/or engine was made at the point of acquisition, depending on things like how much cash we had sitting around, what else we could do with that cash and the various deals we could get at the time - including the trade-in values.
Yes, I know the parallels aren’t perfect but the principle is universal. It’s about much more than which is the overall cheapest form of ownership. It’s about that irritating little fact of life and business - cashflow - and how you put the cash to work to get the best outcome for you personally.
I had my last one for five absolutely faultless years. Now into my second. No luck needed - yetStay lucky
Agreed
My missus took a landrover on pcp and the best/ cheapest overall deal was to take the minimum mileage and just pay the excess on anything over at the end.
It worked out significantly cheaper than taking an initial higher annual mileage deal.
The devil is always in the details
You think so.If I can't afford it i don't have it.I don't need to keep up with the Jones's.Some of us are quite happy moving through life not owing anything to anyone.If I want something newer,I'll put some extra shifts in,save a bit more-I certainly won't be getting credit for anything,no matter what the terms and conditions are.
I sleep easy,have savings and don't really need anything more than I have.But thanks for telling me its nonsense.
Great post.
It’s fair to assume the OP will now know who to ask when he is next looking to buy a dozen airplanes.
You do seem to get a bit of a holler than thou attitude from certain people, with regard's to paying cash though.
rustycloe
Registered user
If it’s genuinely going to be a keeper, I’d lean towards buying rather than going down the PCP route. You’ll own the bike outright, have no mileage restrictions or balloon payment to worry about, and can keep it for as long as you like. The downside is that you need to budget for servicing and unexpected repairs once the warranty expires. PCP makes sense if you enjoy changing bikes every few years and want predictable monthly costs, but over the long term you could end up paying more without ever owning one. Personally, I’d buy the best example I could afford and put some money aside for maintenance and repairs.
Over the last 30 years I have always paid cash for my cars and bikes, the only time I haven't was if it was a good interest free deal, and that was only once. I prefer to lend myself the money. I tend to keep my bikes longer than the usual three years as on PCP and HP schemes. I dislike the thought of owing anyone money and paying interest, and being tied into a contract.
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