PCP finance.

mickdw

sillysocks wrote: »

So I applied for PCP on my new at this week. I think I understand the product and was happy I could afford it.
I am totally shocked by how easily I was given it though. Definitely feels like a return to throwing money at people. I understand the finance company still own the car so can take it back if you default but I was approved with zero proof of income, no bank statements, the dealer just asked roughly what I earned a month (I made a rough guess) and how long I was in my job (which is only 6 months!). I was sure he'd be back looking for further information but got the call today to say it was all approved! Almost too easy.

Are you putting up max deposit?

sillysocks

mickdw wrote: »

Are you putting up max deposit?

No... I think Max is 30% usually? Anyway putting in just shy of 20%-all from value of my current car, no cash.

mickdw

sillysocks wrote: »

No... I think Max is 30% usually? Anyway putting in just shy of 20%-all from value of my current car, no cash.

I only ask as I'd imagine the more deposit going in, the less risk for the bank.
What type of car was it for?

sillysocks

mickdw wrote: »

I only ask as I'd imagine the now deposit going in, the less risk for the bank.
What type of car was it for?

Hyundai..... still be 25k to finance so it's not a small amount! Was just so surprised how little checks there were and how I provided them with nothing only ID and a utility bill. Was delighted I didn't have the hassle of getting a load of documents and statements together. I've done a lot of research into the PCP side of it to make sure I understand it and made sure I could afford it but it would be easy for someone to get into it not knowing much and ending up with debt they couldn't afford.

gocall01

gocall01 wrote: »

I was in there on Saturday after my next door neighbour bought the Skoda Octavia Combi (Estate).

The deal quoted to me was similar to what was quoted to someone else earlier.
Deal: Skoda (Octavia Ambition 1.6 TDI 110bhp) was:

Car Cost €26,500

0% finance

Deposit: €5000

Remaining Finance after 3 years: €11000

Value of car after 3 years: €16000
(I think this figure is realistic but would be prepared for a grand less if needs be)

Monthly payment for 3 years: €275


Fair usage on mileage was discussed, think I will do 20000Kms/annum but even if I do 25000Kms/annum, no issues.
Will be wanting to get that in writing obviously.

I had no intention of even looking at new cars, was looking at 2011 or 2012 (at 6.9% finance) but then the neighbour rolled up and hey presto!!!

Am 90% sure I'll be going down the new car (on 0% PCP) route...

Was in Bandon Skoda yesterday to reconfirm everything.
Spoke directly with the Finance guy first and then back to the salesman who gave me the initial figures the week before.

Confirmed Deal: Skoda (Octavia Ambition 1.6 TDI 110bhp):
Car Cost €26,500
minus €1,500 (cash buyer)
minus €5,000 (deposit)
0% finance
€20,000 total finance.

€9,906 through PCP
€10,094 in remaining finance after 3 years.
Value of car after 3 years: €15,000
Monthly payment for 3 years: €275

For the 0% finance deal you must take the servicing package for €500 which can be paid up front or included in the monthly payment costing €13.99.

Upgrading to 17" alloys, mud flaps, mats and boot liner included.

Deposit paid!

Casati

gocall01 wrote: »

Was in Bandon Skoda yesterday to reconfirm everything.
Spoke directly with the Finance guy first and then back to the salesman who gave me the initial figures the week before.

Confirmed Deal: Skoda (Octavia Ambition 1.6 TDI 110bhp):
Car Cost €26,500
minus €1,500 (cash buyer)
minus €5,000 (deposit)
0% finance
€20,000 total finance.

€9,906 through PCP
€10,094 in remaining finance after 3 years.
Value of car after 3 years: €15,000
Monthly payment for 3 years: €275

For the 0% finance deal you must take the servicing package for €500 which can be paid up front or included in the monthly payment costing €13.99.

Upgrading to 17" alloys, mud flaps, mats and boot liner included.

Deposit paid!

Sounds like a great deal and likely to be cheaper than buying a 3 year old

irlrobins

Should the balloon payment (the outstanding finance at the end of the agreed period of monthly payments) be lower than the guaranteed future value? Or are they the one and same?

Falcon L

irlrobins wrote: »

Should the balloon payment (the outstanding finance at the end of the agreed period of monthly payments) be lower than the guaranteed future value? Or are they the one and same?

They're the same, but it should be less than the actual market value at the end of the term. That difference is your deposit for the next term.

irlrobins

Falcon L wrote: »

They're the same, but it should be less than the actual market value at the end of the term. That difference is your deposit for the next term.

That's what I thought, but in gocall01's example his balloon payment is lower than the GFV. Hence my confusion.

Falcon L

irlrobins wrote: »

That's what I thought, but in gocall01's example his balloon payment is lower than the GFV. Hence my confusion.

No, it's nearly 5K less.

gocall01

irlrobins wrote: »

That's what I thought, but in gocall01's example his balloon payment is lower than the GFV. Hence my confusion.

€10,094 in remaining finance after 3 years.
Value of car after 3 years: €15,000

The €10,094 figure is the finance I would need to cover after 3 years to buy the car outright.
After 3 years the estimated value of the car per the dealer is €15,000.
Basically this means the difference of ~€5,000 will be used as the deposit on the 191 car if I decide to go with the option.

My example is correct, there should be no confusion IMO.

sunnysoutheast

irlrobins wrote: »

That's what I thought, but in gocall01's example his balloon payment is lower than the GFV. Hence my confusion.

The GMFV is the 10k.

The 15k "future value" after three years is an estimated trade-in value.

irlrobins

gocall01 wrote: »

After 3 years the estimated value of the car per the dealer is €15,000.

Ok, so it's an estimate and not guaranteed. Makes more sense

Sam Russell

Looking at the Skoda example, the monthly repayments would need to be double so the ballon payment was in savings and to fully own the car after three years. If the second hand car market crashed such that the car was only worth €10,000 or less after three years, then gocall01 would be left with no car, and no deposit.

It is a risk. It is an incentive to be very careful with the car.

bidiots

I'm sure its been said and argued but this is a long thread.

If so many are choosing new over second hand, surely this means that the market to sell a second hand car is getting much smaller.
Crystal Ball:
When the majority of PCP clients have finished their 3 years
Its time to see how much more their car is worth over the GMFV, which is effectively the deposit for a new PCP
Seen as there are very few buyers left in the second hand car market, there is a distinct possibility that the car is worth much less than the GMFV

Result:
1. Client has to stump up the GMFV in order to keep the car.
2. Client cannot afford to pay the GMFV so has to hand back the car + the difference in GMFV

This could mean that GMFV of current cars is too high as it is.
But is this another ponzi scheme ready to fall? In the next couple of years will there be a major new car market crash?

I know PCP is a re-jigged HP arrangement, but is HP not normally over 5 years therefore protracted payment and clients keeping the cars rather than upgrading straight after 5years?

That's my brain fart for monday

Drummerboy08

If the car is worth less than the GFV after 3 years the customer can just hand it bavk and walk away from it owing nothing.

curiosity

gocall01 wrote: »

€10,094 in remaining finance after 3 years.
Value of car after 3 years: €15,000

The €10,094 figure is the finance I would need to cover after 3 years to buy the car outright.
After 3 years the estimated value of the car per the dealer is €15,000.
Basically this means the difference of ~€5,000 will be used as the deposit on the 191 car if I decide to go with the option.

My example is correct, there should be no confusion IMO.

€15,000 seems very good:). Do they guarantee that in writing, and/or is it dependent on mileage, normal wear & tear etc? I saw you'd mentioned that a service pack of €500 was mandatory if you wanted 0% finance.

If they're 'giving' you 15 grand for it, what'll they be looking for it on resale? :eek: 8 131 1.6 Octy Ambitions (dealer) on carzone atm, average asking price of €17,400!

http://www.carzone.ie/search/result/cars/keyword/ambition/make/skoda/model/octavia/min-year/2013-131/max-year/2013-131/fuel-type/diesel/min-engine-size/1-5/max-engine-size/1-7/seller-type/simi-dealer/seller-type/non-simi-dealer

Bigcheeze

curiosity wrote: »

€15,000 seems very good:). Do they guarantee that in writing, and/or is it dependent on mileage, normal wear & tear etc? I saw you'd mentioned that a service pack of €500 was mandatory if you wanted 0% finance.

If they're 'giving' you 15 grand for it, what'll they be looking for it on resale? :eek: 8 131 1.6 Octy Ambitions (dealer) on carzone atm, average asking price of €17,400!

http://www.carzone.ie/search/result/cars/keyword/ambition/make/skoda/model/octavia/min-year/2013-131/max-year/2013-131/fuel-type/diesel/min-engine-size/1-5/max-engine-size/1-7/seller-type/simi-dealer/seller-type/non-simi-dealer

The 15k will not be written down anywhere. It's an estimate from the dealer and not binding.

ofcork

I thought i had this pcp worked out but looking at toyotas site there it says the gmfv is payable if you renew or retain the vehicle at the end.

Drummerboy08

ofcork wrote: »

I thought i had this pcp worked out but looking at toyotas site there it says the gmfv is payable if you renew or retain the vehicle at the end.

Thats correct.

ofcork

I thought you only paid the gmfv if keeping the car,going into a new one you would hopefully have your deposit ie difference between the market value and gmfv.

curiosity

Bigcheeze wrote: »

The 15k will not be written down anywhere. It's an estimate from the dealer and not binding.

That's what I would have thought.:)

Bigcheeze

ofcork wrote: »

I thought you only paid the gmfv if keeping the car,going into a new one you would hopefully have your deposit ie difference between the market value and gmfv.

When trading in the gmfv is paid off by being deducted from the value of your trade-in. So you don't physically write a cheque but it is paid off.

zizou_

Drummerboy08 wrote: »

Thats correct.

@Drummerboy08 - do you expect to see the increased popularity of PCP impacting secondhand sales/values? Just curious as a lot of people who normally buy the 3 y/o trade ins seem to be buying new.

sheff the ref

Would be amazed if that was the case

Lets say I buy a car worth €25,000

Initial deposit (Trade-in): €7,000

Payments over 3 years: €9,000 in total

GMFV: €9000


Over 3 years I clock up huge mileage and have a few bumps and bruises because others have reversed into my parked car on Saturday shopping etc.

Car therefore is worth only €6900 after 3 years.

Would be very surprised if I could hand it back and walk away, and if it was possible to do it, I would imagine that I wouldnt get finance for another PCP elsewhere.

Drummerboy08 wrote: »

If the car is worth less than the GFV after 3 years the customer can just hand it bavk and walk away from it owing nothing.

Sam Russell

zizou_ wrote: »

@Drummerboy08 - do you expect to see the increased popularity of PCP impacting secondhand sales/values? Just curious as a lot of people who normally buy the 3 y/o trade ins seem to be buying new.

The point is that car sales were very low for the past number of years so there are not a lot of 2, 3, or 4 year olds at the moment but there will be a lot of them about in 3 years time. Prices could be low then, but that depends on demand and that depends on the economy. If we are back in boom time, then prices could be high again.

Bigcheeze

sheff the ref wrote: »

Would be amazed if that was the case

Lets say I buy a car worth €25,000

Initial deposit (Trade-in): €7,000

Payments over 3 years: €9,000 in total

GMFV: €9000


Over 3 years I clock up huge mileage and have a few bumps and bruises because others have reversed into my parked car on Saturday shopping etc.

Car therefore is worth only €6900 after 3 years.

Would be very surprised if I could hand it back and walk away, and if it was possible to do it, I would imagine that I wouldnt get finance for another PCP elsewhere.

The GMFV has a mileage limit. You can select higher mileage limits but the repayments go up and the GMFV goes down.

Every three year old car will have some scratches but dents or crash damage would need to be repaired

sheff the ref

Yes but in that case you are penalised for going over the mileage quota. My original point was that I would be very surprised if you could simply hand back the car without further payment if you had gone over mileage and say there was damage to the car.

There is bound to be a financial penalty, it couldnt be as simple as handing back the car.

Bigcheeze wrote: »

The GMFV has a mileage limit. You can select higher mileage limits but the repayments go up and the GMFV goes down.

Every three year old car will have some scratches but dents or crash damage would need to be repaired

Drummerboy08

If you go over the agreed mileage limit or damage the vehicle in excess of fair wear and tear (I. E. normal damage caused by every day usage, stone chips etc) then you'll be charged for it.

Maestro84

Is there a cooling off period with PCP?