Mad_Lad Registered User
#1

Ok so after a while of my brother and I trying to figure out the benefits of PCP we can't find any.

He's looking at getting a new Audi and we've been looking into pcp, he changes every 2 years or so and might have 15 k miles maximum on the clock so we thought pcp might suit him better.

You got to come up with a large deposit if you don't have a trade in and while your monthly payments appear low when you add in the fact you need a new deposit for the new pcp after 3 years your 300 a month pcp suddenly turns into 600+ pm.

So what's the benefit over hp or bank loan ?

The only hing with hp or loan is you pay the full interest where as pcp yup don't ?

Either way I see little benefit on a normal loan and trade in and re finance after 3 years or so. Only thing is VW bank has much lower interest than any other bank or finance.

For me doing 20-25 k miles a year pcp would leave me with not much on the gfv.

It seems to me that people could get caught out at the end because you can be damn sure you won't have much over the gfv to use as a deposit.

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#2

I personally think Pcp is for people who can't afford a new car. The low monthly repayments and low deposit in some cases suit them down the ground. Anytime you work out the actual costs it seems a lot more expensive unless your paying some rediculous interest rate on the traditional loan like 8-10%. But in the case of vag new cars where you can get a loan for around 2-4% Pcp makes no sense.

The only thing is a lot of people I know who when for a normal 3,4,5 year loan with vw bank weren't approved. As they are more interested in people who want 50% of them money rather than 70-80% of the money. I assume this is to do with the fact that the loan interest is low and they want to insure the value of the car always is more than the value of the loan.

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September1 Registered User
#3

It limits your risk and as in any case where risk is limited there is cost to it.

Mad_Lad Registered User
#4

I used to think that blowing savings on a car was mad, which maybe it is but if you're buying a car I think it's better to use money that you got than to borrow and pay interest however on VW low interest it would probably make more sense to just borrow the money and pay as you drive.

I think I agree with bpmull though that pcp is made to look attractive for people that don't have the money. I'm not sure if garages are making ultra clear that after the 3 years you got to come up with the same deposit again.

I think a lot of the advertised pcp deals deliberately try to make people think that they will have much more than the gfv to use as a deposit but they will need to come up with much more even if you do get more than the gfv.

In other words your cheap 300 a month turns into 500-550 because you got to add up what you'll need to pay to be able to come up with the deposit in 3 years.

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#5

As you said mad_lad a major point of Pcp is the fact that after 3 years you have no car and ultimately have to come up with a deposit for a new car or pay a big final payment on the one you have. Dealers are too quick to tell everyone about the benefits but never mention the risks but I suppose thats the same with ally of things. The problem with Pcp is at least if you take out a 3 year loan you pay it back after 3 years and that's it after three years the car is yours so I'd in 3 years time you financially can't afford to change the car maybe you just don't have to money at least you can drive your perfectly good 3 year old car for as long as you want. With Pcp after 3 years you suddenly have no car if you can't afford to stump up the substantial deposit for a new one or pay for the old one.

The only real way you could work it is to save the deposit over the 3 years but a lot people don't have enough discipline to do this. And if you do then realistically what was the benefit to talking out a loan over Pcp. Realistically the only possible use I can see for Pcp is if you can't get approved for a low interest loan like vw or/and you end up paying a high interest rate which may make Pcp cheaper but it mighten even.

As for you being against using savings to buy a car. That really depends if you have a huge amount of savings and buying the car won't cause them to take a huge hit then it makes sense to use savings. But with low interest loans from vw etc it really wouldn't make sense to use your savings as the benefit is too small.But then I would be of the opinion that one should really only take out a 3 year loan on a car. This taking out a 5 year loan on a car is stupid unless you are the type of person who keeps car for 5 plus years which most people don't.

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ofcork Registered User
#6

Who in their right mind would hand a car back after 3 years after paying a deposit and 36 payments,i assume dealers know most will either go for a new one or pay the balloon.

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Mad_Lad Registered User
#7

ofcork said:
Who in their right mind would hand a car back after 3 years after paying a deposit and 36 payments,i assume dealers know most will either go for a new one or pay the balloon.


Of course, the idea is to get you hooked. But people a lot of the time wrongly assume you are tied to the one dealer or manufacturer which is not correct.

At the end of the PCP you can go to any dealer you want and buy any car you want.

36 payments of 350 pm = € 12,600. That's a heck of a chunk of doe to walk away from indeed.

Buying a new car every 3 years is a mental amount of money if you add it up.

Take a bog standard Golf that costs 14,141 K new, average boring Irish poverty spec. (tendline)

I see one on carzone trendline 2011 70K miles for 14,995 OUCH !!!

10 K depreciation in 3 years, that's going by 70 K miles, I would have similar mileage after 3 years.

Though the seller would hardly have got the 15K trade in, more like 13,500 ?

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650Ginge Registered User
#8

Mad_Lad said:
Of course, the idea is to get you hooked. But people a lot of the time wrongly assume you are tied to the one dealer or manufacturer which is not correct.

At the end of the PCP you can go to any dealer you want and buy any car you want.

36 payments of 350 pm = € 12,600. That's a heck of a chunk of doe to walk away from indeed.

Buying a new car every 3 years is a mental amount of money if you add it up.

Take a bog standard Golf that costs 14,141 K new, average boring Irish poverty spec. (tendline)

I see one on carzone trendline 2011 70K miles for 14,995 OUCH !!!

10 K depreciation in 3 years, that's going by 70 K miles, I would have similar mileage after 3 years.

Though the seller would hardly have got the 15K trade in, more like 13,500 ?


Ah give me the figures on the golf again.

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Mad_Lad Registered User
#9

650Ginge said:
Ah give me the figures on the golf again.


Why ?

That's what I saw on carzone ?

#10

Mad_Lad said:
Why ?

That's what I saw on carzone ?


I think he means you can't buy a new golf for 14,141 euro I'm sure you meant 24,141k.

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Mad_Lad Registered User
#11

HAHa yeah see my cock up now, yeah I meant 25 k new.

10K depreciation is a lot though that's the reality of high mileage driving in new cars.

mickdw Registered User
#12

Mad_Lad said:
Only thing is VW bank has much lower interest than any other bank or finance.
.


You can also use vw bank for a traditional finance agreement where you pay off the whole car over a number of years. In my opinion, that is just about the best way to buy a new car at the minute as the interest rates are very good.

In relation to the pcp deals, the way I see it, you must look down the road to your next car if considering a pcp. If you can work out roughly how much equity you will have at 3 year stage (value over gfv) and see if you can then afford another new car with that equity amount as a deposit, well then you can afford the car. If on the other hand, you are relying on a large upfront deposit now in order to have a small monthly payment, you cannot really afford the car unless you will have access to similar deposit in 3 years time.
My audi dealer tells me 70% of new audi sales are PCP

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Mad_Lad Registered User
#13

mickdw said:
You can also use vw bank for a traditional finance agreement where you pay off the whole car over a number of years. In my opinion, that is just about the best way to buy a new car at the minute as the interest rates are very good.

In relation to the pcp deals, the way I see it, you must look down the road to your next car if considering a pcp. If you can work out roughly how much equity you will have a 3 year stage (value over gfv) and see if you can then afford another new car with equity amount as a deposit, well then you can afford the car. If on the other hand, you are relying on a large upfront deposit now in order to have a small monthly payment, you cannot really afford the car unless you will have access to similar deposit in 3 years time.


Yeah I agree the traditional finance is the way to go because even though the monthly payments are a lot higher it's the true amount you'll have to pay over the three years.

PCP also means you got to park in a empty part of the car park half a mile away where as normal finance means if you get a scratch you don't have to worry about it so much.

I would find hoping for a larger value than the gfv far too much of a risk tbh.

mickdw Registered User
#14

The car will be worth more than the gfv. Thats a given really unless you go seriously over mileage or make a mess of the car. If someone was the type of driver that tends to knock lumps off their car, well i dont think they should be going with one of these deals or indeed buying a new car full stop.

650Ginge Registered User
#15

650Ginge said:
Ah give me the figures on the golf again.


Didn't you mean the golf is 24k not 14, otherwise it would make money being 2/3 years old.

Thats all just pointing out a typo, sorry.

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