I have never used PCP for various reasons and knew very little about it until recently and following quite a bit of reading and an offline discussion with a knowledgeable forum member I now have a better understanding of the product and can't help thinking (based on my limited knowledge) that it may not be the best way to finance an RS3, other cars yes but not RS3.
Whether you choose PCP or not is probably determined by two main factors, namely availability of funds and access to other forms of credit. I have never owned an RS car before, but RS3's in particular seem to hold there values very well and owners tend to be very loyal to the brand, plus they appear to be produced in quite limited numbers, so you would expect residuals to be high.
Reasons for using PCP
1. Ease of approval
2. Low monthly deposit and payment options
3. Should the market crash you can simply give it back at the end of term
Reasons for not using PCP
1. Interest rate is high at 6%
2. You pay interest on the whole amount including the balloon/GFV
3. If you don't have the funds available at end of contract you will have to borrow more money effectively paying interest twice on the balloon
4. In the unlikely event that the market crashes I can't see most owners simply giving their cars back
at end of term and if you do intend to do this, effectively leasing the car it's a very expensive way to do it.
If you are fortunate enough to have cash there seems to be two schools of thought
1.Don't put your money into a depreciating asset as you could make it work harder elsewhere
or
2. Cash is king and for most none sophisticated investors your money will be lucky to earn more than 2% interest on your savings, so if you can pay cash you are saving 4%.
Very roughly on a car with an OTR price of around £50k with a £10k deposit over 4 years you will pay around £7200 in interest if using PCP
I am sure I must have missed something?
Whether you choose PCP or not is probably determined by two main factors, namely availability of funds and access to other forms of credit. I have never owned an RS car before, but RS3's in particular seem to hold there values very well and owners tend to be very loyal to the brand, plus they appear to be produced in quite limited numbers, so you would expect residuals to be high.
Reasons for using PCP
1. Ease of approval
2. Low monthly deposit and payment options
3. Should the market crash you can simply give it back at the end of term
Reasons for not using PCP
1. Interest rate is high at 6%
2. You pay interest on the whole amount including the balloon/GFV
3. If you don't have the funds available at end of contract you will have to borrow more money effectively paying interest twice on the balloon
4. In the unlikely event that the market crashes I can't see most owners simply giving their cars back
at end of term and if you do intend to do this, effectively leasing the car it's a very expensive way to do it.
If you are fortunate enough to have cash there seems to be two schools of thought
1.Don't put your money into a depreciating asset as you could make it work harder elsewhere
or
2. Cash is king and for most none sophisticated investors your money will be lucky to earn more than 2% interest on your savings, so if you can pay cash you are saving 4%.
Very roughly on a car with an OTR price of around £50k with a £10k deposit over 4 years you will pay around £7200 in interest if using PCP
I am sure I must have missed something?