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With PCP you are paying for the depreciation on the vehicle plus interest then you can and you can return the vehicle and start a new plan paying the depreciation once again. - this option means you never need to pay the entire debt. Or you can pay the remaining balance as a balloon or spread the balloon payment over a number of years.
HP you don’t own the vehicle until fully paid off. Only then does it become your asset. You cannot sell the car in until fully paid off without permission.
Lease is similar to PCP in that you are paying for the depreciation plus interest. You will never own the car and will return the car after a period of years and start the plan again. But you will never own the car. It’s not your asset to sell.
Which option is best for you depends on whether you want to keep the car or keep changing the car every few years for a new car.
If you want to own the car and keep it long term then go for HP.
If you don’t care about owing the car and just want a new car to use every few years then get a lease.
If you like the idea of having a new car every few years but would also like the option of maybe buying the car outright at a point in the future then PCP would be your best option.
Another factor to consider is interest on the lease or purchase.
HP will be the cheapest option as the car is in effect being used at collateral so the car can be taken if you don’t keep up repayments.
PCP is next expensive followed by lease normally. However check the rates being offered before making a decision.
Cheapest option though would be save and buy a cheaper car with cash and save your money to buy into a house.
Houses mostly appreciate in value (assuming you own the land ie freehold not a leasehold) whilst cars (except classic cars) depreciate in value.
Some wise person once said if you have money never buy anything that moves or eats. So no expensive cars bikes boats etc. Or horses etc.
Gotta stunt for the haters tho, also I'm following the 10% rule where my car payments don't exceed 10% of my monthly net.
Chief
Click & Clack, a couple of guys who had a radio show here in Boston on NPR used to say - "the most expensive smell you will ever smell is the smell of a new car". Buy an 8 year old BMW 4 series. They go for between $16k - $20k USD.
OP, you own some real estate yet? I'd rather save for a house/flat first before pumping this much into a car on a BDR salary but that's just my two cents.
Right... In process of buying a house right now. This is planning for a year or so in advance
Yh but gotta do some stunting for the haters tho
Car payments are for suckers.. I buy a $9k car pay cash I commute 40miles/ day round trip and put on an additional 2k miles per month.. I drive the wheels off the car then put on new wheels once that $9k car gets about 300k miles I trade it in (get about $3k for it and buy another $9k car. Been doing it for 15 years. They drive better with out a huge car payment.. don’t buy a car to impress people at a stop sign
Chief
YES!