Hi all

I understand what PCP is (and HP etc) but confuzzled as to the path to take.

Plan A - I currently own a First Edition SC which p/ex would fetch around £6.5/7K. I have another £20K cash and intention was to take a 2 year low APR bank loan of around £24K giving me £50K+ to spend on a 2014 SC. Monthly loan payment around a grand.

(I don't drive lots, around 5K a year, so one with current higher mileage would balance out overall after 2/3 years ownership.)

Plan B - Lately the SVRs and MY18 RRS have caught my attention so now thinking of PCP instead then after 3 years review accordingly. I know first 3 years is where the big depreciation occurs so can always hand it back but I am a contractor & work is not 'guaranteed' so a little more risk. Monthly PCP around £1200+

Head says Plan A; I'd own the car, most of the depreciation has already taken place and after 2/3 years I could get a decent p/ex towards a newer one.

Heart however says Plan B; don't really own it (although I could of course at end of term if I want to pay off the remainder) but it would be brand new, the depreciation not a factor, LR warranty in place and more peace of mind (although that may be debatable).

I know it's my decision end of day but any hints, tips, suggestions, experiences would be very helpful

Hi Kismet,

I'm a contractor too, so know exactly where you're coming from with this!
Just paid off the balance of my PCP on my 2011 RRS, which I 'bought' 2.5 years ago. While the monthly payments were easily affordable, even with the relatively low interest rate (7.9% APR) the total payable was a big chunk of money.
Even with a decent rate (apart from 0% of course) the interest doesn't reduce as you only paying down on part of the full balance. The 'bubble' will always be attracting interest at the full whack.
For the reasons you already know, I'd go with option A in a heartbeat- PCP on a brand new car (especially a Range Rover) will see you in a massive pit of negative equity within months, if not weeks. Option A, dude, option A!

Just my two penneth, as they say... You can't see the eyes of the demon until him come callin'

^^^

Thanks Slim for the prompt and honest response, appreciate it.

Even though the thought of owning a brand new toy that I've specified myself is very appealing and my heart is saying "treat yourself!" your comment is the type of thing I need to hear to bring me back to my senses!

I think Plan A it is and if all goes well then maybe 3 years or so look to trade in + another (hopefully cheap) loan towards an SVR ...

Cash is pretty much always the cheapest as with the other options you're pay some one for the use of their money (even if the interest is hidden) of course you need to get the price competitive.

^^^

Yeah, even though Plan A is not strictly speaking cash the loan element is very cheap; I pay around £1K over what I borrow.

I guess I wasn't just looking for the cheapest option as I know which one that would be but more the other pros or cons of one vs the other.

I would go with Plan B.

You get a newer car and a better car for the money.

In today's day and age of PCP and finance people generally change cars every 2-3 years anyway. If you put down £20k your monthly payments should be in the region of around £400 on a car costing circa £80k. After 36 months you should have at least £12k of equity left in the car enabling you to top up as appropriate and get another new car. No warranty hassles or maintenance issues if you find one with the service pack

Cash is always king as my daddy said but with finance available so cheap nowadays I'd rather use my money elsewhere where it can be put to better use than in a depreciating asset.

You'll of course get a lot of people who disagree in here too but in the end each to their own...I know what I would rather do

^^^

Cheers RRSMan, good to hear a differing viewpoint; that was the reason for the post!

Is that right though that if I put £20K down the payments can be as low as £400 per month for a (for example) 3 year old SVR?

Sounds a lot cheaper than the examples I saw that had seemingly reasonable APR so am happy to be corrected!

Dealers will quote you 9% APR on a used Range Rover but there are deals to be had at 5.9% APR and some have managed 4.9% too! It all depends on your negotiation skills to be very honest with you. Dealers have more scope in negotiating the interest rate on a used car than on a new one

RRSman wrote:

If you put down £20k your monthly payments should be in the region of around £400 on a car costing circa £80k. After 36 months you should have at least £12k of equity left in the car enabling you to top up as appropriate and get another new car. No warranty hassles or maintenance issues if you find one with the service pack

Thats painful fkarim!

When I bought my RRS in 2015 I put down £20k and sold it in 2016 and had an equity of £19k in the car! It was a basic HSE though!

I can't see SVRs dropping below £55k for some time IMHO

Last edited by RRSman on Tue Apr 03 2018 8:24pm. Edited 1 time in total

All I can say is well done on selling at the right time  Current: Volvo XC90 T8 Inscription Pro PHEV with some optionals on top
Gone: MY16 RRS2 3.0 SDV6 Autobiography Dynamic, Carpathian Grey & Santorini Black Sliding Pano/Ebony & Ivory 2 Tone
Gone: MY13 RRS 3.0 SDV6 HSE Black Edition, Orkney Grey/Ivory
Gone: MY09 RRS 2.7 TDV6 HSE, Santorini Black/Almond

Finance will always attract varying comments - there are plenty of threads like this on Pistonheads too OP - plenty of reading for you to do.

At the end of the day it's quite a personal thing...cash v bank loan v pcp - everyone has their own idea about it but I do know that 90% of all cars being sold out of one of the biggest RR dealers in the UK are via PCP!

RRSman wrote:

Dealers will quote you 9% APR on a used Range Rover but there are deals to be had at 5.9% APR and some have managed 4.9% too! It all depends on your negotiation skills to be very honest with you. Dealers have more scope in negotiating the interest rate on a used car than on a new one

I have heard a lot about Oracle too and have given them an opportunity to quote on 3 occasions now but they have never delivered for me and the dealers tend to give you a better deal.

fkarim wrote:

RRSman wrote:

If you put down £20k your monthly payments should be in the region of around £400 on a car costing circa £80k. After 36 months you should have at least £12k of equity left in the car enabling you to top up as appropriate and get another new car. No warranty hassles or maintenance issues if you find one with the service pack

£12k equity after 36 months? That’s some serious optimism. Especially given that the all new model (not just an updated MY) would be either out by then or just round the corner.

I paid the maximum allowed 40% deposit for my AB in September 2015. After 2.5 years and 21k miles I have been quoted a £3.5k equity. That’s while the new model is still 2-3 years away.