PCP on nearly new cars?

Cyrus

Ive seen a few of the recent BMW and Audi PCP deals which may make sense for one of the cars in the cyrus household (something under warranty with a service pack for my wife)

We also do very low mileage so would comfortably fall under the thresholds for mileage.

My question is tho, do dealers offer PCP on one year olds or demos? Id rather pick up a 1 year old m sport rather than a brand new se if it was a bmw.

Cheers

MetzgerMeister

"Dealers" giving away drugs with cars now? Be the lord :pac:

listermint

Whats this PCP stuff?

Also you must be the most prolific car changer on boards cyrus

like a watch.

Cyrus

MetzgerMeister wrote: »

"Dealers" giving away drugs with cars now? Be the lord :pac:

did you not know

people be loving pcp every day (or so the dealers on the louis theroux documentary seemed to suggest)

anyway back to the serious business of car financing

Cyrus

listermint wrote: »

Whats this PCP stuff?

Also you must be the most prolific car changer on boards cyrus

like a watch.

jesus not any more, my own M3 is gone, and we have had the same e92 for 18 months now

couldnt justify keeping the m3 downstairs and hardly ever driving it, getting older and have responsibilities sucks! thats why im some active in the watch market now :cool:

once i build a house i will have a weekend driver, not for now tho :rolleyes:

Honey-ec

Cyrus wrote: »

Ive seen a few of the recent BMW and Audi PCP deals which may make sense for one of the cars in the cyrus household (something under warranty with a service pack for my wife)

We also do very low mileage so would comfortably fall under the thresholds for mileage.

My question is tho, do dealers offer PCP on one year olds or demos? Id rather pick up a 1 year old m sport rather than a brand new se if it was a bmw.

Cheers

Volkswagen Group will be offering it on used stock >3 years old fairly soon. No idea what pricing is going to be like, though.

listermint

So really what does PCP stand for ?

I dislike abbreviations immensely.

R.O.R

PCP = Personal Contract Plan (or maybe purchase).

There may be a VAT issue on used cars - we can't lease used cars (unless it's VAT qualifying and not on the margin scheme).

Honey-ec

listermint wrote: »

So really what does PCP stand for ?

I dislike abbreviations immensely.

R.O.R wrote: »

PCP = Personal Contract Plan (or maybe purchase).

Also sometimes known as FPS - Fixed Price Servicing

VGIE currently offer it on all new cars, it includes:

1x oil service at 15,000km or 12 months (whichever comes first)
1x interval service (including oil change) at 30,000km or 24 months
1x inspection service (including oil change) at 45,000km or 36 months

Think the intervals might be slightly different for Audi, but you get the gist...

R.O.R

Honey-ec wrote: »

Also sometimes known as FPS - Fixed Price Servicing

VGIE currently offer it on all new cars, it includes:

1x oil service at 15,000km or 12 months (whichever comes first)
1x interval service (including oil change) at 30,000km or 24 months
1x inspection service (including oil change) at 45,000km or 36 months

FPS and PCP are different things.

FPS is something VAG should have been offering for years to compete with the BMW service pack.

PCP is a personal lease on a car, giving you the option of either handing it back at the end of term or buying it for a set amount. I don't think PCP generally includes servicing so it would make sense to take FPS as well.

Honey-ec

R.O.R wrote: »

FPS and PCP are different things.

FPS is something VAG should have been offering for years to compete with the BMW service pack.

PCP is a personal lease on a car, giving you the option of either handing it back at the end of term or buying it for a set amount. I don't think PCP generally includes servicing so it would make sense to take FPS as well.

Ah ok. The OP specifically mentioned servicing so I assumed that's what he meant.

pa990

https://www.youtube.com/watch?v=wLZq5GGPxws

ofcork

These PCP plans make it sound like you are getting a car very cheap eg 199 pm but the deposit is around 30% and a large final payment or hand it back.

AltAccount

But the deposit is based on the presumption that you have a car to trade in, and the large final payment is in case you want to keep it instead of hand it back (like you're expected to with a lease).

Just because CBPs are included, doesn't make them a bad thing.

Cyrus

im sure they can be tailored to give higher monthly payments and lower deposits

AltAccount

Absolutely, but the lower the deposit/CBP, the higher the monthly payment (because you're paying more of the depreciation), and high monthly payments don't look as good in the ads!

ofcork

The headline is the low repayments but take the bmw 114(what a crap badge for a bmw)you pay a deposit over 6k,299 a month for 3 years and over 12k at the end or hand back so you could potentially pay over 16k for driving that for 3 years.

Nickindublin

I have PCP on my car but I bought it new. PCP are designed for people who change there car regularly like me. They are not for everyone. Best thing is to do your sums and see what suits your own personal needs.

Crackity Jones

AltAccount wrote: »

But the deposit is based on the presumption that you have a car to trade in, and the large final payment is in case you want to keep it instead of hand it back (like you're expected to with a lease).

Just because CBPs are included, doesn't make them a bad thing.

Yea but what happens when you look to change that car for another new one at the end of the monthly payments. You won't have that same trade in amount with the 'PCP' car so you will have had to build up a reserve in savings also to fund the next deposit.

Nickindublin

The idea with a PCP is that at the end of it your car is worth more than what the final payment is. This can then be used as a deposit on your new car if you decide to trade up.

AltAccount

Crackity Jones wrote: »

Yea but what happens when you look to change that car for another new one at the end of the monthly payments. You won't have that same trade in amount with the 'PCP' car so you will have had to build up a reserve in savings also to fund the next deposit.

Correct, you won't have paid to depreciate the car to zero, instead you'll have paid to depreciate it to the final balloon payment/buyout value.

You'll have paid less per month, but will have no equity in the car at the end.

Equity in a car isn't necessarily a good thing (ask anyone who bought a luxury 4x4 in 2007 ).

Drummerboy08

I don't really believe that PCP is of any real benefit to a private individual. Many will have the attitude of "Sure I pay x amount per month and I don't even own the car at the end? Sure what's the point?"

The only people who I feel it's of any use to is someone who has opted to take a car allowance over a company vehicle from their employer, and doesn't want to take the risk on the residual value of their car, or who actually has a need to change cars on a fairly regular basis.

There will be a small amount of others who it will suit, but I think most of these will actually understand the product and how it works.

Where this type of funding product comes into it's own is with Fleet or business users, albeit in a slightly different form. It makes more sense than buying outright or even using Hire Purchase as a method. Certain elements of VAT can be claimed back, and it doesn't show as an asset to that particular company which means it's money isn't all tied up in one big Audi on the books!

Audi might as well just call it a rental scheme for private users, at least that way it might be a bit more straightforward to some people.

Cyrus

Drummerboy08 wrote: »

I don't really believe that PCP is of any real benefit to a private individual. Many will have the attitude of "Sure I pay x amount per month and I don't even own the car at the end? Sure what's the point?"

The only people who I feel it's of any use to is someone who has opted to take a car allowance over a company vehicle from their employer, and doesn't want to take the risk on the residual value of their car, or who actually has a need to change cars on a fairly regular basis.

There will be a small amount of others who it will suit, but I think most of these will actually understand the product and how it works.

Where this type of funding product comes into it's own is with Fleet or business users, albeit in a slightly different form. It makes more sense than buying outright or even using Hire Purchase as a method. Certain elements of VAT can be claimed back, and it doesn't show as an asset to that particular company which means it's money isn't all tied up in one big Audi on the books!

Audi might as well just call it a rental scheme for private users, at least that way it might be a bit more straightforward to some people.

i think the benefit is, at least to me

for 4-500 a month (the cost of servicing say a 20k loan over four years) you can drive a 45-50k car (audi/bmw/whatever).

the way i see it, for someone who changes cars regularly and would rather use capital for investing in appreciating assets, i would be paying 500 quid a month one way or another, this way you get a better car for that 500 a month.

Drummerboy08

Cyrus wrote: »

i think the benefit is, at least to me

for 4-500 a month (the cost of servicing say a 20k loan over four years) you can drive a 45-50k car (audi/bmw/whatever).

the way i see it, for someone who changes cars regularly and would rather use capital for investing in appreciating assets, i would be paying 500 quid a month one way or another, this way you get a better car for that 500 a month.

You seem to understand what it's about and that allows you to appreciate it's value so.

In your case it probably does make sense alright.

maidhc

Cyrus wrote: »

i think the benefit is, at least to me

for 4-500 a month (the cost of servicing say a 20k loan over four years) you can drive a 45-50k car (audi/bmw/whatever).

the way i see it, for someone who changes cars regularly and would rather use capital for investing in appreciating assets, i would be paying 500 quid a month one way or another, this way you get a better car for that 500 a month.

But at the end of 4 years the 20k car is worth 10k, and the 45K car must be handed back or bought for a lumpsum?

Then again, €500 would go a long ways to buying my car!

Cyrus

Drummerboy08 wrote: »

You seem to understand what it's about and that allows you to appreciate it's value so.

In your case it probably does make sense alright.

i think there are only certain people it suits esp regarding the mileage restrictions, will deffo look into more in the new ear:)

mickdw

I Think some of the headline figures being advertised by Audi are crazy. Sure, you can drive an A6 for feck all per month if you have a large deposit but i figure they are using a balloon figure that is too close to what the car will be worth at end of term and therefore creating an unsustainable situation for you average car buyer, I.e. they can buy this car because of value build up in current car but in 3 years, they might have only 2k equity in the car to put towards new model.
If however the figures were moved around a little to increase monthly figure and a lower balloon, there would at least be money to put forward as deposit on next car.

I could currently get an A6 or similar for tiny repayment as I currently have the full value of my 08 A5 as deposit/trade in but then in 3 years I would have zero or at best tiny equity in the car above balloon value. Buying an A6 outright would make more sense in my situation.

R.O.R

mickdw wrote: »

I Think some of the headline figures being advertised by Audi are crazy. Sure, you can drive an A6 for feck all per month if you have a large deposit but i figure they are using a balloon figure that is too close to what the car will be worth at end of term and therefore creating an unsustainable situation for you average car buyer, I.e. they can buy this car because of value build up in current car but in 3 years, they might have only 2k equity in the car to put towards new model.
If however the figures were moved around a little to increase monthly figure and a lower balloon, there would at least be money to put forward as deposit on next car.

I could currently get an A6 or similar for tiny repayment as I currently have the full value of my 08 A5 as deposit/trade in but then in 3 years I would have zero or at best tiny equity in the car above balloon value. Buying an A6 outright would make more sense in my situation.

Some of the gauranteed future values that Audi use to hit their headline figures are what I'd class as "saucy", but then again, with the mileage restrictions you are looking at very fresh cars coming back that can be stuck straight on the forecourt.

Wonder what the fair wear & tear policy is?

Nickindublin

R.O.R wrote: »

Wonder what the fair wear & tear policy is?

I don't know what the wear and tear policy is as I traded my car in.

What I will warn is that some people in the UK are finding that when they go in at the end of there pcp the dealers are only offering what is owed on the car or just a fraction above that.

As I said it doesn't suit everyone. Weigh up all the options.

GavMan

So if the GFV is 18000 and the dealer offers 22k in a trade, 4k is your equity for a deposit on a new one?

As nick says, how likely are you get anything above the GFV?

Cyrus

mickdw wrote: »

I Think some of the headline figures being advertised by Audi are crazy. Sure, you can drive an A6 for feck all per month if you have a large deposit but i figure they are using a balloon figure that is too close to what the car will be worth at end of term and therefore creating an unsustainable situation for you average car buyer, I.e. they can buy this car because of value build up in current car but in 3 years, they might have only 2k equity in the car to put towards new model.
If however the figures were moved around a little to increase monthly figure and a lower balloon, there would at least be money to put forward as deposit on next car.

I could currently get an A6 or similar for tiny repayment as I currently have the full value of my 08 A5 as deposit/trade in but then in 3 years I would have zero or at best tiny equity in the car above balloon value. Buying an A6 outright would make more sense in my situation.

My presumption is that the part of the equation thats fixed is the GFV and you make the movements on deposit and monthly payment,

my preferred route is to keep the deposit small, monthly payment at a level i can afford and save an excess amount every month for my next deposit as i would intend on handing the car back after 36 months

Cyrus

GavMan wrote: »

So if the GFV is 18000 and the dealer offers 22k in a trade, 4k is your equity for a deposit on a new one?

As nick says, how likely are you get anything above the GFV?

it all depends on how your car has depreciated, they will give you the same trade in value that someone who owns the car outright i would imagine

Nickindublin

GavMan wrote: »

So if the GFV is 18000 and the dealer offers 22k in a trade, 4k is your equity for a deposit on a new one?

As nick says, how likely are you get anything above the GFV?

I have just traded my car for a new 13 plate. This is after 2 years so I am taking a hit. I think above what I owe I am getting 3500 approx.

GavMan

Nickindublin wrote: »

I have just traded my car for a new 13 plate. This is after 2 years so I am taking a hit. I think above what I owe I am getting 3500 approx.

Still a decent chunk to make up the next deposit. Wouldn't be so bad if you weren't trading a year early I suppose

Nickindublin

GavMan wrote: »

Still a decent chunk to make up the next deposit. Wouldn't be so bad if you weren't trading a year early I suppose

Actually that was the deposit.

Cyrus

Nickindublin wrote: »

Actually that was the deposit.

do you mind going into so more specifics nick?

Is it possible to trade after 2 years? and what kind of monthly payments do you have with such a small deposit?

Nickindublin

Cyrus wrote: »

do you mind going into so more specifics nick?

Is it possible to trade after 2 years? and what kind of monthly payments do you have with such a small deposit?

Not going into my financial figures but car is in 20ks range. You can put a deposit down of between 10 and 30%. Your monthly repayments are then calculated depending on the total deposit you put down. You can change the car no problem. I think reading my contract that there will be no extra charges after like 6months payments.

At end of 3 years you can simply pay off the car hand it back or trade it in.

Personally I like the pcp. It suits me at the moment.
But as I said do the sums.

R.O.R

Nickindublin wrote: »

Not going into my financial figures but car is in 20ks range. You can put a deposit down of between 10 and 30%. Your monthly repayments are then calculated depending on the total deposit you put down. You can change the car no problem. I think reading my contract that there will be no extra charges after like 6months payments.

At end of 3 years you can simply pay off the car hand it back or trade it in.

Personally I like the pcp. It suits me at the moment.
But as I said do the sums.

So there is no penalty to return the vehicle earlier than the contract end date? That would be highly unusual as you are paying depreciation on a straight line basis, whereas the car isn't depreciating at the same rate.

Nickindublin

R.O.R wrote: »

So there is no penalty to return the vehicle earlier than the contract end date? That would be highly unusual as you are paying depreciation on a straight line basis, whereas the car isn't depreciating at the same rate.

I would think if you hand back the car it would be the same as any hp contract but to trade in there is none. I'm no expert on it. I just do the sums up and pick know best option that suits me.

If you pay off the loan early there is no penalty.

GavMan

Thanks for the info Nick.

Previously I was unaware that equity could be built up in a PCP so this has been an informative thread. Changed my mind on PCP's from being no use at all to being a decent option if you have can come up with the deposit P/X

mickdw

GavMan wrote: »

So if the GFV is 18000 and the dealer offers 22k in a trade, 4k is your equity for a deposit on a new one?

As nick says, how likely are you get anything above the GFV?

You will get a fair price as you could turn around and buy the car for gfv then sell it for true value so dealers wouldn't get away with offering an artificially low price. That said, with some of the deals being promoted atm, the true value might be very close gfv.