In the old days, a deal to buy a car was between you and a car dealer. The car dealer buys cars in bulk at a discount. She then sells you an individual car at a higher price. There was one transaction – you got a car and the dealer made a profit.
But now you no longer deal with just the car dealers – they have brought in Finance Houses, Credit Institutions and their own set ups like Ford Capital Europe and Volkswagen Bank.
All these geniuses want to make a profit too – from YOU. So they came up with PCP.

What is PCP?

Generally the plan works in 3 stages, by you stumping up a deposit, paying installments for a number of years and then actually buying the vehicle at the end with a lump sum.

Or using the remaining “equity” and “rolling it” into the upgrade to a new car. (I’m laughing out loud as I type this bit)

What does SP think PCP is?

Stoic Paddy thinks PCP is a marketing ploy to take advantage of people by keeping them in long term debt arrangements by preying on an inability to resist a shiny new car and poor math skills.

PCP or Personal Contract Plan is a mathematical method of sucking as much money from you at every single stage of the deal. The term PCP is pure marketing – Personal Contract Plan. It make it sounds like it is tailored specifically for  you  and that you are in control – which is fucking hilarious.

I would hazard a guess that the person who made up the term had a laugh at the similarity to the other PCP i.e. the drug Phencyclidine a.k.a. Angel Dust which causes mind altering effects and out of control behaviour. Sounds appropriate.

What is GMFV?

GMFV is a term which means Get Mega-Money From Vehicle. The marketing term used is Guaranteed Minimum Future Value. The concept is that when you return a vehicle in say, three years, you and the car company have a set price regardless of the current market. Either way it is a term made up by some wizards who wish to extract as much cash from you as humanly possible for a depreciating asset.

GMFV values are calculated by people smarter than you using computing software and algorithms you don’t understand.  Who do you think is going to win?


Top 5 Reasons not to do PCP

  1. You will be the person who will SUFFER the cost of depreciation on a vehicle you are only renting!
  2. You have to stump up a considerable deposit just to LEASE a vehicle
  3. You will PAY for all maintenance and repairs to a car that you are leasing
  4. You ALLOW the company to dictate what maintenance and repairs must be carried out (most likely by their mechanics at their overpriced rates)
  5. You will only own the car after you STUMP up a significant last installment – By which stage you have been bled dry, the car is a number of years old and devalued

Top 3 reasons to do PCP

  1. You are really bad at math
  2. You are immature and have no ability to delay gratification
  3. You like giving free money to car companies and banks

What would Stoic Paddy Do?

Buying a new car is a luxury. People have forgotten that. It is not an emergency. Luxury spending of this nature is probably best undertaken when you are financially secure with zero debt.

Stoic Paddy would never willingly enter into a PCP deal. Stoic Paddy would give car finance companies the finger by saving up and buying a vehicle with cash.

Ultimately, entering into a PCP is financially reckless.