USED Car PCP & HP vs NEW Car Lease | Car Finance Comparison UK

I encourage everyone to do the same comparison on the car they are looking at . Check the small print especially for admin costs these can vary significantly.
Great demonstration of how to do a proper comparison.

So, when I was a lad (pause for jokes about ‘Rolling Stones’ magazine ACTUALLY being on stone tablets), I got a loan for a small motorcycle. It was just a little 100cc 2-stroke Suzuki but I was working in a shop, still at school, and this was brand new for £425. I loved it. Great times following my mother out under the Clyde Tunnel in Glasgow, to get home. I had no clue about anything. Like I say, great times. Now that loan was a case of: payments; total amount; interest rate APR (it’d just come in!); and deposit; and of course, my guarantor who was never needed as I even paid it off early. My ‘O’ grade Arithmetic was unchallenged…

So our daughter’s looking for a car now…I look in the AT online and see there’s alternate ways to ‘buy’ it. While comparing, I noticed something. There is the term of the loan, there is the APR, there is the amount per month, there is the total amount payable. All this, I understand from that day in 1980 already, on just two wheels. But as I change stuff, there’s a deposit amount (not nominal, it can be substantial), there’s a final amount to pay, there’s the cost of overrunning a mileage allowance you have plumped for, etc. This is a lot more ‘trap’ than I remember.

I did notice, that it seems pointless to constrain yourself with low mileage maximums. I put in 14,000 miles, and compared to say 9,000 miles per annum, there seemed little difference in any of the numbers involved, on updating etc the figures. So, where there is a penalty per mile for over-running these annual limits, I’d err on the high side. We’d never do 14,000 miles. We just about clear 7,000 per annum because we neither drive our offspring to their job any more (hospital, far side of the city), nor do I renovate a property 250 miles away as I once did. So, that’s my first lesson, that holds with that particular model, on the AT website.

Then, there’s that mileage penalty amount, to focus on for a mo. One dealer network’s model, showed ZERO pence per mile penalties. Obviously they build in the cost somewhere else, but that’s a useful feature depending on your situation. Others, like on Auto Trader, have 9p or something, but on top of petrol etc, 9p per mile might get onerous.

And this brings us to the final and most baffling issue, that I never met with my little Suzuki many years ago. A final payment. WTF? I thought. You’ve paid already! But it’s made really for people who never want to particularly own the car, and will turn it over, they will hand the vehicle back to avoid paying. So if that’s your decision, it’s like paying rental. And you should judge the payment plan therefore, on that basis. Personally, with my ‘O’ grade arithmetic, I would take the deposit, and spread it in my numbers, across the term of the deal. Add it to the numbers, and say that’s really what you are being asked for. You could also do the same for the final payment…and now you see how it really would look, had they not dreamed up this way of essentially, diluting the impact on buyers, of each and every aspect of payment.

That’s my view. That these methods, show a few thousand of deposit, not huge. A few thousand of final payment, not huge either on its own. And a couple of hundred a month, again not huge on its own. This system, is designed to blunt the impact of the numbers. to shove some of the debt to the front, to shove some to the back, and to sprinkle the rest in between.

But, many, many people have bought cars this way. With a crystal ball, you could maybe win. You could see that electric cars would hold or even increase in value in some cases, over a couple of years. To get a fixed amount set at the start, that you pay at the end for such a car, is probably beneficial to the buyer.

But I will leave you with what an accountant friend of our daughter’s decided to do. Hire Purchase. I make no claims for it, HP had the most terrible reputation back when I was whizzing around on just 100cc of smelly single-cylinder joy, that I also had to add oil in a small side-tank, to make it run without welding the piston rings to the cylinder wall. I think, the decision is not hugely one way or the other, from conversations with this young accounting professional.

In summary, I have appraised the present situation and for what it’s worth – not much – the same old rules hold true. If you can get your vehicle written off to some tax breaks, and earn enough to get the benefit, this is a very big aspect. Consider carefully, whether you can fit into this category, because it probably really pays to do so. I think, even PAYE employees, can do this. Especially if you do some small works on the side, perfectly legally. Nobody said you had to be a genius and make a profit. Apparently, Shell doesn’t, so consider that.

If you are not able to get tax breaks, then it’s you and the numbers. Do what the banks would do – they would want to know if you had any money soon coming. Forecast that. Maybe there’s nothing coming down the pipe, ok, that’s a parameter for you. I know one conclusion I have reached – unless and until I can turn my home into a power station (seriously, it’s about 24 off 700mm solar panels, a battery, and around £15k), Electric vehicles are out. Sure, maybe a little e-bike or scooter-e type thing, but not a car with 40kWh or something.

I was pressing my offspring to go electric, and now I am not. That young accountant that bought the petrol Audi, turns out to have made a decent decision. My evangelism of EVs has gone. I couldn’t advise myself to get one, without that £15k conversion job on the house first…and few young people have one! I got mine late, for my time, at the age of 24. Think of that now. And I could afford it pretty easily, on my £12k salary, at 3 or 3.25 x salary. This is where all the finance, falls away. Young people, are going to be made to pay rent by old money, that simply got there first and grabbed all the properties.

So I will give anyone reading this, my best advice: stay with mum & dad or anyone else that will have you, to keep costs down, and buy a property. But don’t live in it, let it out. Scrape by for the first 3 years in that situation. After that, re-appraise. To capitalise on a property buy, you really need to keep it for about 15 years plus. The profit is good, but it’s all the other side of 15 years time. At that point, you won’t even want to sell it, because it will be bringing in too much profit per month/annum.

Cars, fine. They drop by about 10% per annum in normal times. So the more expensive the car, the more you lose. But, if you need or want transport and can afford it, no reason not to. I could afford a big car, a V6 2.7 litre 24-valve Honda-engined Rover. It whirred. It was easiest to afford because I only went 3 miles to work and back, but once to France it returned 40+mpg. This shows how little cars have improved! We have a 1 litre turbo 3-cylinder that was praised on launch – it manages 44.5mpg on a long run. No, it doesn’t compute.

I haven’t got answers, but I do have knowledge, and I drop it here. Take care all, and remember, your desire is someone else’s leverage on you.

Again proves to me that leasing is the way. I have ONLY leased cars since the mid 90’s and have had the pleasure of driving some seriously nice cars in my time.

I am in the trade and personally see a crash coming, when electricity triples, jobs disappear, new non fixed mortgages going up, what will you pay for in Jan … your mortgage and utilities or the car, if so the financed vehicle will go to the repo man. not a good time to be saddled up with extra debt unless you are in a strong situation.

Great video thanks for taking the time to make it 👏

It basically come down to your choice of car, if you choose the bargain lease first then compare with pcp , lease will be cheaper.
If you choose the car you want first , then look at the lease compare with pcp I may be a different story

I must misunderstand your figures. If you had paid cash for the used car it would have cost £11,495 (price – predicted value + road tax). That's £851 (11,495-10,644) more than leasing a brand new car. It seems too good to be true/unviable to run a leasing company.

Hello lol as you asked.

great video again buddy, i am going to lease i think !

Helpful ! Hadn't considered leasing

The CARWOW calculator might be easy to operate but it is shocking that it is so misleading and wrong.

Firstly, the amount to be financed is wrong and is a typical trick to con people into thinking a PCP is a better deal. Interest is paid on the full price after the ‘customer deposit’ and ‘dealer contribution’. You do NOT deduct the ‘final payment’.

Secondly, the ‘Estimated monthly payment’ is wrong. They clearly do not understand how compound interest calculations work and have made a common mistake. This is typical of what happens when programmers use a third-party tool to perform calculations and lack any understanding to be able to check the results.

Great timing, looking at options around a new car. Did the sums and found that on paper Lease is 5K cheaper than PCP. But, i'd be interested to hear your thoughts on how easy it is to get out of PCP vs a lease? Can't help but think now is a really bad time to go into a either.

Hello.. interesting comparison.. I'm in the US.

Great video. Have you had any dealings with company called ONTO? We're looking for a smallish car for a few months and this company offers a Zoe for £499 on a rolling month by month contract, insurance etc covered and NO deposit! Seems too good to be true?

Brilliant thanks for your efforts 😊