Will PCP go POP?

I agree with you, it can't continue as there simply isn't the market for the used cars. The way I see it there are 2 types of car buyer, those who can buy new cars either straight deals or on PCP finance and then you have those who can only afford older cars (5-8yr old cars) I don't think there is the market for the 2 and 3yr old cars and so therefore those cars are going to devalue quicker which will eventually cause the PCP game to grind to a halt.

I can safely say I will never even consider a PCP deal, I think they're terrible. I know loads people who borrowed the deposit and are paying €300-400 a month for their car and plan to continue doing that every 3 yrs. I have always borrowed to buy my cars, I own them outright within 2/3yrs and when I sell them the money is mine and not owed to anyone and can go towards a newer car. I generally buy 5 or 6 yr old cars as they're fantastic value compared to the new price.

rubbadubdub wrote: »

OK well borrowing for a PCP is lunacy IMO.

From speaking to a few 2nd dealers they are struggling to sell cars and if they werent importing some machines from the UK witha much higher margin they would be on their knees!

From SIMI we are close to boom times and the flow is currently more consistent.

I really think this will not end well for the consumer especially for those put high deposits on PCP to bring down monthly costs. For the people who paid bare min deposit for Higher monthly payments wont be so bad......

I've seen this stated before, but I don't understand why this is the case? Are you simply assuming that these will definetly be "rollover customers" and not those that will pay the balloon? With 0% finance, you will only pay the exact sale amount of the car. Using PCP is definetly better than borrowing from elsewhere. Also, keeping your monthly payments down allows you to put extra money into savings which will earn (albeit low) interest.

If you are 100% banking on trading up in 3 years and hoping your deposit then will definetly match you 30% deposit now, then you would be foolish to make that assumption, but if you are confident of having the option to either trade up or pay the balloon and walk away, then PCP holds no risk to you.

The big question is where the market will be for the PCP stuff handed back at the end of the 3 years, they will be coming on to an already flooded market of UK imports. The banks who lent for PCP will be needing a fire sale.

CIP4 wrote: »

Upto now the newest car I have owned was 4.5 years old so I have never been involved in car finance. However in the last few months I have been looking at brand new and demo cars. A few things I noticed, with most makes and models it only makes sense to buy brand new, demo save a few thousand or then 4 year old plus to get a substantially cheaper car. The 2/3 year old cars are too close to the new/demo prices in many cases to warrant buying them.

I am still undecided about PCP. I think it would have worked a lot better if half the people had been buying out the cars after 3 years and keeping them a few years whereas as it is almost all people are giving them back after 3 years and getting a new one. For me I have no intention of getting rid of a perfectly good 3 year old car that I have minded like a baby. But When I said it to salesman that I would be buying it out after 3 years they looked at me like I had 10 heads why would I do that if I could get another new one and just pay PCP monthly repayments forever. So for me if I could get a decent interest rate on HP that's the road I would go. But it obviously works for some people and some are happy to have permanent car repayment long long term.

My biggest surprise is the amount of people on PCP I have asked who don't know how much the balloon payment is on there car at all :eek: my favourite response is oh well we would be taking another new one out after 3 years as the car would be getting abit old for us at that. 90% of the time that's coming from someone who had €500 15 year old car before PCP came.

It's an unfortunate trait of Irish people that we are not very financially prudent. I am going for a PCP deal also, and like you will intend to keep the car at the end, so it works well for me. If the case arises whereby my car will have decent equity after 3 years that would enable me to get a new then I might consider it, but i'm not approaching it in that way. That would be a bonus not expected. As it is prior to this car the newest car I would have ever purchased was over 3 years old, so I would still be doing much better than previously anyway. My current car is approaching 7 years old and whilst to me that is not very old, it is very high mileage (it was a UK import) and it is approaching the phase where it could cost me thousands on a new flywheel, so I'm bailing out now.

ANother point on the UK imports, is that they tend to be very high mileage cars. So if you purchase a new car that is a sought after make and add some nice extras to make it stand above the rest, whilst keeping the mileage low, you might come out better on the equity front than many are predicting.

I also think that a lot of people like the idea of gettting rid of a car before it needs NCT'd and any maintenance it needs to pass that.

Its probably no surprise that the usual PCP term is 3yrs, so people 'buying' their car that way will never see an NCT centre is they keep trading in after 3yrs and getting a new car.

carsfan2 wrote: »

I have a theory that main dealers i.e. The motor industry have been keeping the asking price of used cars less than 3 years old artificially high to make people go for the new option often on pcp.
This is starting to unravel with the low sterling values making imports substantially better value in most cases.
Hopefully most buyers went into pcp with their eyes open but I fear a lot didn't and will get a rude awakening when they don't have the equity in the car anticipated at the end when balloon is due. The only thing is that I have no doubt that there will be "offers" out there in the future to keep the conveyor belt rolling.

This.

I was saying that for ages myself.

Back in the normal days 1-3 year old cars were nice bargains. Almost new cars with a good bit smaller price tag. Now all these 1-3 year old cars are so expensive and become even worse when you borrow it with very high APR. In the end, you are actually pay same or less price on brand new car, because of scrappage and 0% APR.
There are 2 explanations for what is happening:
1. I am putting my conspiracy tinfoil hat first: Dealers keep prices high on 1-3 year old stock to make PCP way nicer deal. In a lot of cases ( I heard, not first hand ), dealers just telling clients not to buy second hand older stock, but order brand new! Where back in the day, when I was looking at Brand new Astra all dealers were pushing 1-3 year old stock first, before new car.
2. Dealers are just fecking dumb and dont see what their doing. Or they do see it, but live by the rule of: "Its going to be future me and you problem".

The APR we pay for car is just insane. A lot of older cars 1-5 years old are very expensive when you count in APR from 5.5-11%. Lets be honest, not many people can go in and buy car from savings for 10-20k. Most of the time its finance. I personally even when have enough money to buy car, I will try to get low APR loan and buy it with banks money. I better have few grand in my pocket for emergency and pay small amount to bank for loan, then buy a car and have no savings left.

Finance expensive -> People dont buy 1-5 year old cars -> Cars sit there with very high price tags and rot.
So in grand scheme of all things we got in to situation where the only cars that properly sell are brand new on pcp and old cars with massive running costs. To make it worst now, Insurance is pretty much killed any value 10+ years old cars had. Those are dead stock.

As for pcp. I dont see much problem in it, but I am afraid that industry and stupid people will make the balls of it very fast. Its a good idea, which will back fire due to people idiocy.
PCP, as any product, is good for certain consumers, not everyone.
PCP is good:

If you have Money and you dont do too much millage, but like a nice car to drive, money is not an issue and you do realise its not a brand new car every 3 years on same payment. Its a brand new car every 3 years for a new deposit+monthly payments. If you can barely afford deposit and payments for the car, you should not look at pcp. In 3 years you will get a heart attack.
If you have Money and you want to own a car, but dont want to pay 5.9% APR on 20k eu. Take pcp with 0% APR with small deposit. Pay off 3 years with 0% APR. When you got landed 8k ballon payment, you pay maybe 4k eu or as much as you comfortable and refinance it again, most likely with dealers bank, which would be around 5.5% APR. If you do the maths it will be cheaper to pay 5.5% APR on 4k, then 5.9% on 20k! Best part, you will own car in 3 years, not in 5 like in HP.


Another wild card we got going now: Brexit and whole pound crash. Donedeal is overflooded with English cars. WAY cheaper with added VRT then anything you can buy here. Its scary. I am almost waiting for some second hand car price crash soon.

Sorry for long post, but I am researching it for a while now as I am planing on changing my car. I am not saying I am right lads, take it for whats its worth.

TherapyBoy wrote: »

For those who buy on PCP & get a new car every 3 years, and plan to continue doing this into the foreseeable future, what would be the difference in monthly cost between a PCP car & a leased car? Long-term lease for 2 years, then replace with a new car - leasing company takes all maintenance hits.

Nobody leases cars to private individuals in Ireland.

I really hope PCP finance doesn't end up being the motoring equivalent of the 100% or 110% property mortgages we had during the Celtic Tiger years. I'd hope we would have learnt something for that.

The way I see it, if you can afford the repayments on a pcp with about 10 to 15 percent deposit and you are in a position to obtain finance should you need it at end of term to keep the car, it is probably a safe enough way to go. With zero percent interest, it's probably as good as any.
worst case then even with a poor car market is to clear off balloon and keep your car for a couple of further years and see what it's worth then when you owe zero on it. Maybe that will give you a deposit on a new car again. Considering you would have had the car from new, there should be nothing scary about keeping it to 5 or 6 years - worst case.