The PCP cost includes depreciation, paying off the PCP either upfront or full term sees you paying three years depreciation upfront and then by refinancing, you extend that a further two years... Yes you have the asset(car) at the end, (the only bit that makes sense).
No, because you are paying the loan over a period, yes you have an obligation, but its only realised over the 60 months you are paying it. I do understand that PCP gives you the option to get out (under the halves and thirds rules), but so does selling the car. A kia picanto is hardly a rare beast and its values are predictable at various points in its life.
The PCP cost also includes interest on the bullet payment, which you never bring down (obviously), which is part of the reason why you pay more in interest over 3yrs to kia than under the 5yr loan. The only thing that actually matters when its all washed up is the total cost of ownership on a monthly basis. Doing it under pcp (assuming you got an identical deal in month 37 as in month 1) would give you a total cost of ownership of £269 pcm plus fuel. Under a loan its £170. So, taking that saving of £99pcm vs pcp gives a saving of £5940 over 5yrs. So, unless I get less than £60 for the 5yr old picanto, you are in the money doing it my way.
Playing with the numbers is all well and good, but ultimately, if you have to finance it you can't afford it, and if you need to finance it over a longer period, you really can't afford it. Appreciating assets are a different matter.
You can't compartmentalise like that, it just doesn't work. Taking this example, we *could* buy it in cash from funds in a savings account, but that money is part of the proceeds of sale of our house that has been earmarked for the self build that is coming up, so by your 'logic' I should buy the kia in cash, then borrow the same amount in a loan to fund the home renovations (an appreciating asset). That's all good by your rules, but would see us missing out on the £1000 discount from kia, for absolutely no reason.