First 3 years of ownership as seen in finance

rrrrrrrr · 30-01-2015 11:53pm

I suppose my specific questions are:

1)With the vw PCP scheme, are the deposit and monthly payments on a new car the same, regardless of whether you hand back your old car, or you pay off the 'optional final payment' and keep the old car?

2) Is the 'optional final payment' on a 2 yr old golf likely to be more or less than the market value? It's in perfect condition, with low mileage. I think he said the optional final payment would be e9,5k, it was bought in April 2013 and he's been paying e449/mth since then.

It seems a no brainer, but, I could have the numbers wrong somewhere.

Boskowski · 31-01-2015 12:30am

Sorry, never looked at this PCP thing before.
Basically if you keep rolling and get a new car of similar price every 3 years your actual monthly cost is roughly your monthly instalment by 2. If you do it as a once off and keep the car it'll cost 10% to 15% more than that.

Did I get that right? Or am I doing something wrong?

September1 · 31-01-2015 10:23am

rrrrrrrr wrote: »

2) Is the 'optional final payment' on a 2 yr old golf likely to be more or less than the market value? It's in perfect condition, with low mileage. I think he said the optional final payment would be e9,5k, it was bought in April 2013 and he's been paying e449/mth since then.

It seems a no brainer, but, I could have the numbers wrong somewhere.

Final payment is designed to be significantly below value of car, so when you trade it in this additional value is used for deposit for next car.

rrrrrrrr · 31-01-2015 2:14pm

September1 wrote: »

Final payment is designed to be significantly below value of car, so when you trade it in this additional value is used for deposit for next car.

Ahh ok. Thanks.

I just rang VW and you're dead right.

They offer you the market value for your old car , towards a deposit, which they said for a mid range golf is currently about 3k more than the final payment.

So why would anyone take option 3 and just hand back the car? Even if you were giving up driving altogether you could just pay the final payment and sell it privately and make 3k (or a bit less I suppose, as you wouldn't get that much for it privately)

ofcork · 31-01-2015 7:56pm

I suppose with some folks don't think it through enough and don't have enough cash at year 3 to put with the value above the gfv to buy a new motor.

Cleveland Hot Pocket · 31-01-2015 8:27pm

I think the way it's structured, if you keep within the miles limit and dont scratch the car, you will pretty much be able to just move to a new car on another PCP agreement in 3 years without a further deposit.

CiniO · 31-01-2015 9:02pm

So let me see if I understand it right?

You want to buy a car which costs 20k.
You pay 5k deposit, and then 250 per months for 36 months (3 years).
After 3 years, you can return the car or pay 9k baloon payment and own it.
Total what you'd pay then is 5k + 250x35 + 9k = 23k. So 3k is the price on interest.

Now if after 3 years, instead of paying 9k to own the car, you decide to give it back as trade in, will they accept that car value is f.e. 14k and this will cover 9k baloon payment + 5k deposit on new car... So all you have left now is to keep paying 250 per month, and you can upgrade every 3 years to new car???

Or it it not as good as it looks?

(figures just for purposes of example)

ofcork · 31-01-2015 9:06pm

Don't think 20k car will be worth 14k maybe 11k so that would only leave 2k as deposit which wouldn't be enough.

Cleveland Hot Pocket · 31-01-2015 9:07pm

ofcork wrote: »

Don't think 20k car will be worth 14k maybe 11k so that would only leave 2k as deposit which wouldn't be enough.

Couldnt see what you are referring to with 20k car, assuming its the post above yours.
Either way, the repayments and initial deposit combined with a GFV are meant to make it easier for you to take a new pcp deal in 3 years.

ofcork · 31-01-2015 9:11pm

I would imagine so yeah to keep you tied in as such,looking at a 22k focus there with nearly 7k deposit then 36 x 226 with a gfv of just over 9k.

CiniO · 31-01-2015 9:15pm

ofcork wrote: »

Don't think 20k car will be worth 14k maybe 11k so that would only leave 2k as deposit which wouldn't be enough.

So I would need to fork out another 3k out of my pocket and keep paying 250 per month to upgrade to new car in that case.

It doesn't sound stupid, as this can help people own new cars, without actually forking out bigger money for them.
Interesting.

ofcork · 31-01-2015 9:19pm

I assume all these pcp deals came about because of the banks refusing to lend etc,i notice with some pcp deals they will allow you to finance the final payment instead of paying a lump sum if you keep the car.

shabbyalonso · 31-01-2015 10:46pm

Hi all.

Have been reading thread and am curious. Maybe I missed it but can the pcp finance deal apply to a second hand car? Maybe 1 or 2 years old? Thanks

Foreign Sports · 31-01-2015 11:09pm

shabbyalonso wrote: »

Hi all.

Have been reading thread and am curious. Maybe I missed it but can the pcp finance deal apply to a second hand car? Maybe 1 or 2 years old? Thanks

I don't think it's too common on second hand cars.

Audi definitely do it though;

http://www.audi.ie/ie/brand/en/finance_offers/used_car_pcp.html

rrrrrrrr · 31-01-2015 11:59pm

VW defo told me today that the "equity" (i.e. the "market value" - "Optional Final Payment") you would have in a 3 yr old mid range golf after paying an initial deposit and 36 repayments would be at least 3k, which is more than the min 10% required for a new one.
He said that because it is then your deposit for your new car, the exact amount of equity determines your future repayment amounts.

He defo said "market value", as opposed to "guaranteed future value", but maybe that's what he meant.

Mc Love · 01-02-2015 9:13am

When you want to get a new car - do you have to front up a deposit after the 3 years or use the current car as a trade in granted it matches the deposit?

September1 · 01-02-2015 9:56am

CiniO wrote: »

So let me see if I understand it right?

You want to buy a car which costs 20k.
You pay 5k deposit, and then 250 per months for 36 months (3 years).
After 3 years, you can return the car or pay 9k baloon payment and own it.
Total what you'd pay then is 5k + 250x35 + 9k = 23k. So 3k is the price on interest.

Now if after 3 years, instead of paying 9k to own the car, you decide to give it back as trade in, will they accept that car value is f.e. 14k and this will cover 9k baloon payment + 5k deposit on new car... So all you have left now is to keep paying 250 per month, and you can upgrade every 3 years to new car???

Or it it not as good as it looks?

(figures just for purposes of example)

This example is unlikely, as I mentioned before final value is designed to include your deposit so it is well below 50% of value of car. But yes, unless some second car market crash happens you just keep paying X per month and keep driving new car every 3 years.

mickdw · 01-02-2015 12:22pm

While the gfv is set to allow some deposit at year 3, it is by no means certain that you will have similar deposit to what you original paid at the start.
It is quite likely that when you sign up for your next car, your monthly payment will rise significantly unless to inject some cash deposit also.
It really depends on what the original figures were but some car brands are advertising very low monthly payments via 30 percent deposit and a high gfv.
Take some of the early deals on audi a6. Roughly 19500 gfv, 15000 deposit and over 400 per month.
Using those figures, your 3 year old a6 coming back in would need to be worth 34500 in order to have a 15000 deposit again. That is not going to happen on a car worth about 45K new.
best way to approach these deals is attempt to work out what the car would be worth over gfv after 3 years then see what your repayments will be using that amount of deposit now.
If that repayment suits your finances, you are set as you should be able to get a new car every 3 years then without injecting further cash

01-02-2015 1:02pm

Scratches dents and poorly kept interior will also be deducted from the GFV.

Another thing to think about is if you go for a higher mileage limit than you think you need, this way you pay more per month but you'll have a higher GFV at the end with a greater chance of having a decent deposit without having to come up with the cash. Provided of course that you don't go over the mileage limit.

First 3 years of ownership as seen in finance

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