Car PCH/PCP after IVA

[Pilgrim Eight]

I am shortly finishing my IVA (last payment is in May 15), and after struggling for five years to keep a serviceable car on the road decided to do my sums - you wouldn't believe how good at budgeting and excel spreadsheets I have become over the IVA period!

I'm going to be almost exactly £1000 better off a month, and have already budgeted that I'll put £200 of that into savings, which leaves me with around £1600 after mortgage and all current bills are paid, so I'll be substantially better off.

As I said, I've struggled to keep a motor running over the course of the IVA, and have basically ran bangers and repaired as necessary. I have been doing on average about 18000 miles pa which as you can imagine is a pain, I work near Basingstoke and have my children alternate weekends - which means picking them up from Newcastle. My family have been good to me, lending cars etc whilst my bangers have been awaiting repair or more usually money to repair but to be honest I'm sick to the back teeth of wondering if the car is going to work and all the stress involved with that.

So, one of my workmates was telling me about how I should think about Leasing (PCH or Personal Contract Hire) or going for a PCP (Personal Contract Purchase), and getting a new car. I hadn't considered this to be honest as I am totally in the mindset that I was just going to save up and buy a car, but I opened Excel up and started crunching the figures.

I could save £300 per month, put it to one side, then in another year, go and buy a semi decent car for £3.5k. Then keep on saving the £300 per month, and after another three years have £10k etc etc, you get the picture.

Or, I could accept the fact that running a car will always cost me £300 per month, (running bangers has actually worked out at closer to £440 when the cost + repairs + MOT + tax is added in) and just pay £300 per month and get a brand new car, with warranty and servicing and tax included, run it for three years, rinse and repeat.

I'm not hung up on "owning" the car - to me it's a utility item that I must have for my work and to facilitate having my kids.

It seems ideal for my circumstances, so I've been browsing various manufacturers and leasing brokers etc and am quite happy that either PCH or PCP is the right thing both financially and for my own peace of mind.

However, I'm just finishing paying for the IVA - It ran for 5 years, equity wasn't released etc so will I be able to get agreement for PCP/PCH before the six year point, or indeed after that?

I would rather gather opinions and others experiences before I embarrass myself by being refused after I've picked the colour etc

If the answer is don't bother, I'll just go back to Plan A and eke another year out of the 12yo 190000 mile car sat outside and save my pennies; but my gut feeling is that this is a smart decision, not an impulse one although I am aware that others (my ex-wife who helped us get into the massive debt but did nothing to clear it) may not see it that way.

And you know what, it would be b***** nice to turn up with a new car to let her know how well I have done, thankyou very much.

[Foggy]

Hi there --- I, too, have considered the "Just add fuel" option, but thought it would have to wait until the IVA has gone from my record, so still run bangers at the moment ---- so would be interested to see what results you get.

My thoughts are they, as they retain ownership of the vehicle, they are more likely to forgive the iVA than a deal where you buy the vehicle.

[ilikewatch]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Pilgrim Eight

(running bangers has actually worked out at closer to £440 when the cost + repairs + MOT + tax is added in)

Sorry, this doesn't answer your question at all, but amazed that you are spending close to £440 a month to run a banger (assuming that this exludes fuel/parking?)- either this figure is wrong, or you've been seriously unlucky!

Although I do less mileage than you (about 13K) I am running a 2001 Diesel Volvo bought for £500 two years ago, and would estimate my monthly expenditure as below:
Tax £11.60
Insurance £18.00
Recovery subscription £3.75
MOT/repairs £12.50
Servicing £15.00
Depreciation £12.00
Total 72.85

[lifenoteasy]

The problem with older cars is that when they go wrong they seriously go wrong even with comparitively low mileage ones.

I would prefer spending 5k plus on one but restrictions mean that I cant and therefore end up with higher maintenance costs - a vicious circle.

[ilikewatch]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by lifenoteasy

The problem with older cars is that when they go wrong they seriously go wrong even with comparitively low mileage ones.

I would prefer spending 5k plus on one but restrictions mean that I cant and therefore end up with higher maintenance costs - a vicious circle.

But if you buy a car costing say £6K, it is probably costing you £75 per month just in depreciation (plus all maintenence costs/repairs). If you buy a £400 banger and it lasts 5 months before you scrap it for £100, then you're better off than you would be with the £6K car...

I must admit, I'm only ever happy when i have a car which is:
a) Still covered by manufacturers warranty.
or
b) Cheap enough to be disposable.

For example, if I bought a 61 plate Astra for £7K, then a year down the road it suffers terminal engine failure I'm stuck with repair bills of £2K+ or sell the car at £3K below list price as it stands.

However, a car still under manufacturer warranty this would cost nothing to repair, and with an old banger it would be scrapped and probably owe me a couple of hundred quid at most.

[lifenoteasy]

I just want a car that I don't have to worry about and at this stage that's proving difficult.

[FormerlyST1100]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by ilikewatch

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Pilgrim Eight

(running bangers has actually worked out at closer to £440 when the cost + repairs + MOT + tax is added in)

Sorry, this doesn't answer your question at all, but amazed that you are spending close to £440 a month to run a banger (assuming that this exludes fuel/parking?)- either this figure is wrong, or you've been seriously unlucky!

Although I do less mileage than you (about 13K) I am running a 2001 Diesel Volvo bought for £500 two years ago, and would estimate my monthly expenditure as below:
Tax £11.60
Insurance £18.00
Recovery subscription £3.75
MOT/repairs £12.50
Servicing £15.00
Depreciation £12.00
Total 72.85

Reading Pilgrims opening post, it seems to read that the £440 per month included the fuel costs.

I can quite believe his figures, for my car the fuel alone would be around £300 per month.

[lifenoteasy]

I live in a rural area and unleaded is now back up to 114p - £64 the other day to fill up mine and technically I'm only allowed £60 per week as a fuel allowance:(

[ilikewatch]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by lifenoteasy

I just want a car that I don't have to worry about and at this stage that's proving difficult.

The problem is that the only way you'll acheive that is by outsourcing the risk to a hire/lease company or warranty provider and that is never, ever cheap!

The next best thing is to limit your liability by owning dirt cheap cars that will never cost thousands to repair because they're only worth hundreds in the first place.

I feel far happier driving around knowing that in the worst case scenario I might have to find another £300-£400 to replace my car, than having to find the same amount of money to replace a couple of run-flat tyres, or a couple of thousand to replace a gearbox if I drove a newer, more expensive car.

[ilikewatch]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by ST1100



Reading Pilgrims opening post, it seems to read that the £440 per month included the fuel costs.

I can quite believe his figures, for my car the fuel alone would be around £300 per month.

Well, he says that he does about 18K a year, so if his car is a petrol and averages 35MPG then his fuel costs would be about £215 a month - since he's looking at spending £300 a month I struggle to see where he'll find a brand new car with tax, insurance and servicing included for the remaining £85 a month...

[lifenoteasy]

If you work in the NHS the car salary sacrifice scheme can easily do that.

[ilikewatch]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by lifenoteasy

If you work in the NHS the car salary sacrifice scheme can easily do that.

Wow, - I didn't realise that the NHS scheme was so cheap, I thought that the new rates made it comparable with a cheap privately sourced lease, especially when you factor in the tax cost of BIK.

[lifenoteasy]

If you factor in its a brand new car, fuel performance is better, they cover tyre blow outs, insurance, service, everything you may only only be paying £275 per month then it works out.

There are some tax implications but that's more to do with the amount or private usage and how rti is working.

[Pilgrim Eight]

Sorry, to clear up, I was also including the purchase price of the cars over the last four years, and I had miscalculated! I hadn't put in projected fuel costs so working at an average of 40mpg for my old cars (generous) and 120p per litre over the last four years, and a projected 60mpg for the new car at the same 120p per litre the figures seem to make more sense.

So currently running old cars over the last four years:

Current Car(s) over the last four years
Unit Multiples
Purchase Price 1600 1 1600
3000 1 3000
Tax 250 4 1000
Insurance 200 4 800
Repairs: 0
2x Turbos 720 1 720
MOT 45 4 180
MOT Repairs (Total) 710 1 710
Clutch 400 1 400
Injectors 510 4 2040
Hire car 1 80 1 80
Hire car 2 170 1 170
Hire van 380 1 380
Fuel 2500 4 10000

Totals Over 4 Years 21080
Per Annum 5270
Per Month 439.1666667

And the proposed car over the next three years:

Purchase N/A

Tax N/A 1
Insurance 200 3 600
Repairs N/A
MOT N/A
Rental:
3 Month Upfront 860 1 860
1 Off Admin 60 1 60
35 Months 286.67 35 10033.45



Fuel 1636 3 4908

Over 3 Years 16461.45
Per Annum 5487.15
Per Month 457.2625


So actually not that much different. I thought it was too good to be true and whilst I recognise that I have been unlucky perhaps with older cars (2 turbos and a clutch plus welding, front springs, injector seals on the Volvo V40, and all 4 diesel injectors on the current car), simply doing that kind of mileage in older cars is asking for that kind of issue.

Still, now I have looked at my maths again (thanks guys it did look too good to be true!), it's a little bit closer.

I'm not as convinced now but the depreciation factor is important naturally but more important is perhaps reliability.

Hmm - and the AA cover I currently have is about £20 per month!

[lifenoteasy]

...and breakdown cover is in the NHS scheme as well.

A lot of it depends on who you work for and there are no credit checks with some schemes.

Similarly if you are disabled and can transition from DLA to PIP then motability is a viable option.