PCP Car Finance is DESTROYING your wealth

Not sure what those monthly payments offered in PCP agreements really mean?

I’ve just been browsing autotrader and various manufacturers websites just looking at cars as you do i’m a huge car nut and i want to see what’s available and i’ve just saw the most stunning bmw m4 down the road from me it’s i’ll show you in a second it’s in the most incredible specification and what i saw was just being rammed down my throat was monthly payments

Monthly payments monthly payments and what i want to discuss to you today is the difference between pcp and higher purchase and why pcp is killing your personal wealth it is not allowing you to move up in cars every single time you change it is keeping you at the same level and it is the dealers and the manufacturers that are getting that money from you so

If you want to move up in the car say you’re currently in a bmw 4 series and you want to be at a 911 in a couple of years you’re gonna really struggle if you’re not building equity in your cars even if you get a huge pay rise from your job it’s not going to be enough to be able to get yourself in and jump cars to that level and towards the end of the video i

Will mention where pcp is good for your personal wealth and where it works for some people but what ends up happening is you go into a garage and you can go into a garage this weekend and see what happens because if you say that cars out of your budget then the dealer will say have you considered finance i can get you this car for this monthly amount and you

Can drive away a brand new car for insanely low monthly amounts and they’ve got on the side of their cars what the monthly payments that are so cheap everything is monthly payments but that’s the trap it’s nothing to do with the monthly payments it is everything else around it which is killing your personal wealth so let’s have a look at this bmw m4 i’ve just

Found online because it is stunning let’s have a quick look at it it’s a silver i think silver is a great color by the way i think silver is coming back in around like the early 2000s a lot of silver cars around now not so much but i’m seeing more brand new silver cars on the road and they look great this is exactly the specification i want it’s the competition

Package so it drives a lot nicer than the original m4 now that it’s been facelifted but what struck my my attention was these monthly payments here like 483 pounds per month that’s so cheap so i put 10 000 pounds in that’s what they will probably give you for your part exchange so you walk into the dealer and they say you can’t afford that bmw m4 let me have a

Look at the numbers for you let’s sit down at the computer so sits down on the computer and he puts in what he thinks your car is worth about ten thousand pounds and he says what kind of miles do you do you’re gonna daily drive this thing that you say yes say okay about ten thousand miles per year you say yeah about that he puts in ten thousand miles you wanna

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Keep the car for four years and it’s only coming to 483 pounds per month a bmw m4 competition package for 483 pounds per month to drive away today absolutely incredible but what’s really happening here let’s have a closer look what you need to do is go onto the website and go down to view full quote what pcp is for those that don’t know is you take your deposit

That’s a chunk of the value of the car and then they look at what the car is going to be worth at the end of your term so what they’re going to look at is it’s going to be worth about 15 700 pounds at the end of your term so they say well don’t loan that and don’t loan your deposit just loan the bit in between and then that reduces your monthly payments amazing

But what happens at the end of your term is you’ve got to find 15 700 pounds from where where is this 15 700 pounds going to come from you in four years time to be able to buy the car and keep the car and they say well it doesn’t matter just give it back just give the car back to us and that’s it we’ll put you in another car and if it’s worth more than fifteen

Thousand seven hundred pounds say it’s worth eighteen thousand pounds so it’s worth three thousand pounds more than this guaranteed value you could put that into your next car as a deposit amazing right and you say yeah that that sounds fantastic so what ends up happening is you put say it is worth 3 000 pounds more suddenly it’s gone up to 665 pounds per month

So you’re not getting yourself in a better situation because that is to get an identical car four years down the line you’re getting the equivalent car and paying more and therefore what happens another four years down the line and you don’t have a deposit because you didn’t put as much in this time in eight years time you’re going to be paying for the same car

743 pounds per month so where where is the logic in this so let’s put the 10 000 deposit back in let’s talk about today right now what you can do is go to your bank and take out a personal loan you can take out car finance or hire purchase and things like that i recommend going for a personal loan a bit more flexible if you can do it but if you tell them that

You’re buying a car with it normally you’re absolutely fine so what you can do is the car you have a 10 000 pound deposit the car is for thirty eight thousand nine hundred and ninety pounds you want to loan twenty eight thousand nine hundred and ninety pounds so after five years that’s only five three nine per month and four years 660 pounds per month but that’s

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More expensive right yes it is more expensive however there are a lot more benefits and at the end of this term the car is yours you can do what you want with it there is no fifteen thousand seven hundred pounds that you need to find so i’ve actually put four point five percent in here my car finance currently is three point six percent but to be honest in this

Climate due to covid and things like that i don’t think you’re going to get that i think you’re going to get closer to 4.5 i wanted to make this video as realistic as possible for you so let’s stick at 4.5 percent because pcp is always always more expensive apr again that’s how they get you so 660 pounds per month it’s more expensive so at the end of your term

You need to find let’s get a calculator up 15 700 pounds divided by the 48 months you need to save an extra 327 pounds on top of the 483 pounds per month so complete guesswork math so that is going to be four five six seven eight it’s gonna be like 900 pounds a month this car is costing you because you’re going to need to save them for 15 700 pounds over four

Years to be able to even keep the car six hundred and sixty pounds a month you don’t so let’s have a look at the difference in cost realistically calculated back out so so six so 660 divided by sorry minus 483 177 pounds per month extra this is costing you times by 48 8 500 pounds more it is cost that is oh that is almost half the amount of that 15 700 pounds

So not only has the dealer taken the 10 000 pounds off you they’re taking about another 8 000 pounds from your optional filing payment so there’s other huge advantages of a personal loan and higher purchase because you’re free to do whatever you want if you want if you’re someone like me and you want to change your car every three months because you just want

To try something different you get bored quickly then all you have to do is sell it privately you’ll get your market value for that car and then you can get yourself into another car especially for a personal loan because when you sell the car the money goes back into your bank account you don’t have to pay off the loan it goes back into your current account

And then you just get another car the bank doesn’t care what car you own or what you’re changing into what you’re doing with the money all you’re doing is just switching cars with the pcp agreement you have to go back to the dealer and see what the car is worth according to them and they can offer you anything they want they will offer you part x price for that

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Car because they want to make a profit on it when they have to sell it so you’re losing huge amounts there plus all of the admin fees to get out of the car also at the end of your agreement they decide how much your car is worth again part x prices so if they are if you can get 20 000 pounds for your car and they’re going to offer you that fifteen thousand seven

Hundred pounds so that is four and a half grand that you are missing out on as well that is going into the dealer’s pocket so your ten grand has gone there your four and a half grand has gone there all of your all of your equity that you should have in the car is going to the dealer and that is why pcp is going to destroy your personal wealth i said at the start

The video when it works it works on cars that don’t depreciate or you’re not good doing high mileage in so if you bought say a ferrari f12 where it’s not going to depreciate too much you’re not going to put miles on it it’s done most of its depreciation that makes sense because you can get back what you put in you don’t lose the deposit because you’re getting it

Back because the car’s value remains also say it would be the same for like maybe a 981 km s that’s probably not going to depreciate much i am actually going to do a full video on cars that don’t depreciate and what you can buy to try and dodge depreciation so if that’s the kind of content you want to see do subscribe if you haven’t already so that’s what also

All of the youtubers are doing they buy a car they’ve drive around in it they don’t put many miles on it they get lots of videos from it and they move on and they don’t lose any money because they’re getting all of their deposits back so when you hear them say i put 40k down i got that car that mclaren for like a thousand pounds a month 600 pounds a month and

They can’t believe what deal they got on it that’s what they’re doing they’re getting all of that money back i hope you found this video useful if you have give it a thumbs up and comment down below all of your experiences the finance what cars have you got to avoid depreciation what kind of deals have you got let us know down below and i’ll see you in the next video

Transcribed from video
PCP Car Finance is DESTROYING your wealth By Fully Planted