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Pcp Or Pch Your Next Van?


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#1 phil1041

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Posted 19 November 2011 - 03:32 PM

I have leased my new car every 3 years for the past 20 years at least, my car is coming up for renewal and it got me thinking, wonder why you can't do the same with your vans? or maybe you can.

It would seem that over 60% of new vehicles are now leased, either as company cars or, as in my case, as a private lease (the same really, you just pay the VAT) Wonder if it would work for new vans?

Just a thought.



Phil.

#2 radfords

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Posted 19 November 2011 - 08:03 PM

It is possible now to use/buy a caravan without paying the entire cost. A loan or HP will provide you with the funds to acquire a caravan. A leasing arrangement would not be any cheaper as the owner/lessor of the caravan carries the same risk as any lender. Namely default in the payment of lease charges by the lessee or loan repayments by the borrower is the same risk and would carry the same premium.

#3 norfolkguyuk

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Posted 20 November 2011 - 01:02 AM

I'm also guessing it would be much harder to police - if someone stops paying for a car on HP its easy to get it found and recovered - the HP company report it as stolen etc... With a van, there would be no way without checking the chassis details etc....

#4 phil1041

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Posted 20 November 2011 - 08:42 AM

It is possible now to use/buy a caravan without paying the entire cost. A loan or HP will provide you with the funds to acquire a caravan. A leasing arrangement would not be any cheaper as the owner/lessor of the caravan carries the same risk as any lender. Namely default in the payment of lease charges by the lessee or loan repayments by the borrower is the same risk and would carry the same premium.


I think you may be misunderstanding the point of leasing. As with cars, you never own it, i have had 8 new cars in the last 2o years i havn't owned any of them, i simply hand them back after say 3 years and pick up another new one. With HP you are purchasing the vehicle, something i am not interested in. With PCP you have the option to purchase the car for an afreed amount at the end of the leasing period, with PCH , my prefferd method, you never can own the vehicle, you simply pass it back and start again with another vehicle.

I don't see any reason why this could not work with caravans.



Phil.

#5 Landcrab

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Posted 20 November 2011 - 02:31 PM

Phil,
Leasing is really only an option if you cover a lot of miles.
For instance, I purchased my car more than 12 years ago and to date it has covered 52000 miles. that would have cost a lot of money in rent by changing every two or three years.Not really worthwhile unless your very wealthy.

Bryan.

#6 Brian Dobbie

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Posted 20 November 2011 - 02:41 PM

Leasing is an expensive way to run a car because you are always paying interest on the financed amount.
Plus you never own the car so you have no liquidity when you come to change cars.
The cost per month/annum is less when you buy the car and px after three years.
The people who gain by leasing are the manufacturers and dealers not the purchasers.
Brian

Edited by Brian Dobbie, 20 November 2011 - 02:42 PM.


#7 reevsie

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Posted 20 November 2011 - 04:22 PM

When I lease my car I claim back for all kinds as it is used for business use. If I did not use it for business and could not claim anything back I would rather buy a car and own it.

I would love to see my accountants face if I said I wanted to put the caravan through the business.

But some people could actually use a caravan for trade shows etc. You could still put it down as a company asset but I am not sure how it would be classed.

Another way is to get a loan for a new vant then after 3 years stop paying for it and they will come and repossess it. Either way you will never own it. But it would not do much for your credit rating...not recommended



#8 radfords

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Posted 20 November 2011 - 08:55 PM


I think you may be misunderstanding the point of leasing. As with cars, you never own it, i have had 8 new cars in the last 2o years i havn't owned any of them, i simply hand them back after say 3 years and pick up another new one. With HP you are purchasing the vehicle, something i am not interested in. With PCP you have the option to purchase the car for an afreed amount at the end of the leasing period, with PCH , my prefferd method, you never can own the vehicle, you simply pass it back and start again with another vehicle.

I don't see any reason why this could not work with caravans.



Phil.

Unfortunately you don't simply hand a leased car back after three years - you have paid 36 months of rentals. The rentals are also subject to VAT which is an additional tax not applied to HP repayments.

#9 phil1041

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Posted 20 November 2011 - 09:17 PM

Unfortunately you don't simply hand a leased car back after three years - you have paid 36 months of rentals. The rentals are also subject to VAT which is an additional tax not applied to HP repayments.


Yes you do, i have done it for 20 years!!

By not paying the full amount on HP you are not funding the depreciation half as much, swings and roundabouts i guess, i just can't be bothered with all the hassle of selling and part exing!!


Phil.

#10 reevsie

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Posted 20 November 2011 - 11:15 PM

Unfortunately you don't simply hand a leased car back after three years - you have paid 36 months of rentals. The rentals are also subject to VAT which is an additional tax not applied to HP repayments.


If you think VAT is not applied to HP payments you are not correct. An example is my Nissan Navara on a lease. If I was to pay per month £300 + VAT total £360 as it is a commercial I can claimthe full VAT back. So I can claim £60 per month back. (on a car you can claim 50% of the VAT back)

If you had the same Nissan on a HP you would just pay £360 per month. (the VAT is already included) VAT is applied to almost everything.

Go for a drink, buy a meal, buy a suit, fill your car up, DIE!!! you will pay VAT on it.

#11 phil1041

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Posted 20 November 2011 - 11:27 PM


If you think VAT is not applied to HP payments you are not correct. An example is my Nissan Navara on a lease. If I was to pay per month £300 + VAT total £360 as it is a commercial I can claimthe full VAT back. So I can claim £60 per month back. (on a car you can claim 50% of the VAT back)

If you had the same Nissan on a HP you would just pay £360 per month. (the VAT is already included) VAT is applied to almost everything.

Go for a drink, buy a meal, buy a suit, fill your car up, DIE!!! you will pay VAT on it.


Thanks for this reevsie. There is a lot of misunderstanding with regard to vehicle leasing, some people just think you have to own the car, Up to them, i only keep my cars for 3 years, no mot or repairs to worry about, as soon as the warranty runs out i hand it back and get another, yes it really is that simple Honest!



Phil.

#12 reevsie

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Posted 20 November 2011 - 11:41 PM


Thanks for this reevsie. There is a lot of misunderstanding with regard to vehicle leasing, some people just think you have to own the car, Up to them, i only keep my cars for 3 years, no mot or repairs to worry about, as soon as the warranty runs out i hand it back and get another, yes it really is that simple Honest!



Phil.


I used to work in a garage and done a lot of the finance deals. 90% of people take out finance on a car and sell it before it is payed off.

So an example is you buy a car for £15,000 PX your old car for £5000 but you still owe £3000 on your old car.
So you lend £12,000 and pay it back over 3 - 5 years at £xxx.xx per month. (you pay intrest on the £12,000)
But if you replace it within the 3 - 5 years (as most peole do) you still owe £xxx.xx on the car. So you do not actually own it.

But if you lease a car you are ownly really borrowing it for 3 years. you never own it. But in the above examle you never own it as it is on finance. The finance company owns it. So the lease car is £15,000 and in 3 years it is worth say £7,000 so you pay off the £8,000 plus intrest on the £8,000. So it is cheaper.

I think in the last survey done 90% of cars under 5 years old are either on PCP, HP or lease. Either way you do not own them

Edited by reevsie, 20 November 2011 - 11:44 PM.


#13 phil1041

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Posted 20 November 2011 - 11:46 PM


I used to work in a garage and done a lot of the finance deals. 90% of people take out finance on a car and sell it before it is payed off.

So an example is you buy a car for £15,000 PX your old car for £5000 but you still owe £3000 on your old car.
So you lend £12,000 and pay it back over 3 years at £xxx.xx per month. (you pay intrest on the £12,000)
But if you replace it in 3 years you still owe £xxx.xx on the car. So you do not actually own it.

But if you lease a car you are ownly really borrowing it for 3 years. you never own it. But in the above examle you never own it as it is on finance. The finance company owns it. So the lease car is £15,000 and in 3 years it is worth say £7,000 so you pay off the £8,000 plus intrest on the £8,000. So it is cheaper.

I think in the last survey done 90% of cars under 5 years old are either on PCP, HP or lease. Either way you do not own them



Really, didn't realise it was 90%, so that means only 10 % of new ish cars on the road are actually owned by the driver! fascinating.

Now, why don't we do it with caravans?



Phil.

#14 Livi

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Posted 21 November 2011 - 12:56 PM



Really, didn't realise it was 90%, so that means only 10 % of new ish cars on the road are actually owned by the driver! fascinating.

Now, why don't we do it with caravans?



Phil.


Probably because there would be little interest from the leasing companies.
Most cars coming off lease go to auction. There's not a lot of opportunity for that with caravans.
I reckon if there was a market there it would have been opened up by now.

Personally I have no interest in permanently paying our money for something I will never own.

#15 volvoman9

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Posted 21 November 2011 - 01:09 PM



Really, didn't realise it was 90%, so that means only 10 % of new ish cars on the road are actually owned by the driver! fascinating.

Now, why don't we do it with caravans?



Phil.





I tend too agree with this.I,ve been saying for years why do any of us bother too buy a car with all the related costs and losses.It would be better too just go into a dealers every couple of years and say i,ve got £x too spend each month so what can i have.Would it work with caravans ?? well i dont see why not.As brits we have too own everything its in our mentality.Maybe its because were islanders i dont know.


peter.

#16 Brian Dobbie

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Posted 21 November 2011 - 01:40 PM

The amount you pay to lease a car also includes interest on the money they have in fact lent you.
You can call it what you want but you are financing 50-60% (over three years) of the cars initial value.
The VAT situation for business users may make it attractive but for the private individual it isn't attractive unless you are short of cash to buy a car.
Same applies to caravans, put your money, every month, in an ISA and then pay for the caravan/car when you want a new one.
If you px every three years you can get a good caravan and tow car for much less than the amount you have saved in an ISA.
Brian

#17 reevsie

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Posted 22 November 2011 - 02:36 PM



Really, didn't realise it was 90%, so that means only 10 % of new ish cars on the road are actually owned by the driver! fascinating.

Now, why don't we do it with caravans?



Phil.


Not 90% of all cars. I was quoting in the garage I worked 90% of the cars I sold were purchased with some kind of finance involved to help with the purchase

#18 Fenester

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Posted 22 November 2011 - 02:38 PM

HP has no VAT on payments the full VAT is charged on the purchase price of the vehicle on inception because it is effectively a deferred purchase arrangement. In leasing VAT is not charged up front but charged on each consecutive rental as is contract hire both of which are normally reserved for business hirers.

In HP the title passes to the hirer at the end of the agreement on payment of all payments and an option to purchase fee. Most private finance arrangements are conditional sale agreements ( variants of HP), or PCP.

PCP private contract purchase means title can pass to the hirer at the end, if required, and as it is a purchase that is financed or effectively deferred again VAT is paid at the beginning not on the rentals.

Any service element to the monthly payment will be subject to VAT on top though.

One of the benefits that doesn't always come to mind of PCP is a lower financial risk, if your circumstances change - job loss etc -, as your liability is only to the rentals due during the primary term not the full value of the vehicle as the lump sum RV is underwritten by the lender and/or supplier in these circumstances. As much as one would not want to hand in the keys at the end of the agreement the financial risk is nevertheless much lower.

PCP is not offered on caravans because of water ingress frightening any lender from taking residual value risk; whether the new trend around alutech vans from Bailey changes this position creating strong more reliable RVs to construct PCP around will be very interesting.

With PCP a large lump of value is deferred to be paid by the value of the vehicle achieved at the end of the agreement giving lower payments during the contract period; however by deferring a large lump sum interest accrues and the interest bill is substantially higher than a full payout agreement based on standard HP agreement over a longer period. So beware of low APRs as it is the total interest paid that is the figure to look for.

The decision to go cash or finance is a personal one depending on whether you have cash or not and what your monthly cash commitments are. For those that change cars regularly PCP is a viable option, lets face it if it wasn't why would it be so popular.

Edited by Fenester, 22 November 2011 - 02:41 PM.


#19 Fenester

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Posted 22 November 2011 - 03:04 PM



Really, didn't realise it was 90%, so that means only 10 % of new ish cars on the road are actually owned by the driver! fascinating.

Now, why don't we do it with caravans?



Phil.

Because a high percentage of caravans leak; meaning there is too much risk in vendors or finance companies taking residual; value risk. They couldn't guarantee the value of a caravan at the end of the agreement. Also caravan manufacturers probably don't have strong enough balance sheets to carry the residual value credit line.

#20 peterjohn

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Posted 22 November 2011 - 03:14 PM

Quote.
Because a high percentage of caravans leak;
Are you saying that somewhere there is a database saying that a high percentage of caravans leak? I'm very interested as I have been saying that for years!! Peter




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