PCP finance.

FaganJr

PCP does work, its been in the UK for many years, so its tried and tested.

I was tempted and based it on the following

Looked at a car circa 30k
Based on 33% deposit (which you can get) 10k
Roughly 300pm ( actually a little less maybe 289pm)
Trading in car for 16500
Cheque back from dealer for 6500
6500 / 289 = 22.5 months paid for
leaving 13.5 months @ 289 = 3901 (actual cost to me for 3 years )

3 year old same model car on forecourt is 20k

Trade in car in 3 years with owing 10k and getting back 8500 (18500 trade in value )
Stick 1500 with that and have another new car.

So over 6 years the cash from my account would be 1st car 3901 + 2nd car (10404 + 1500)= 15805

So after 6 years would have another nest egg well built up to either buy out right or start PCP again

But in the end I just bought for straigh cash, answer to nobody!

frankz

FaganJr wrote: »

PCP does work, its been in the UK for many years, so its tried and tested.

I was tempted and based it on the following

Looked at a car circa 30k
Based on 33% deposit (which you can get) 10k
Roughly 300pm ( actually a little less maybe 289pm)
Trading in car for 16500
Cheque back from dealer for 6500
6500 / 289 = 22.5 months paid for
leaving 13.5 months @ 289 = 3901 (actual cost to me for 3 years )

3 year old same model car on forecourt is 20k

Trade in car in 3 years with owing 10k and getting back 8500 (18500 trade in value )
Stick 1500 with that and have another new car.

So over 6 years the cash from my account would be 1st car 3901 + 2nd car (10404 + 1500)= 15805

So after 6 years would have another nest egg well built up to either buy out right or start PCP again

But in the end I just bought for straigh cash, answer to nobody!

Absolutely it does seem to work in the uk.

In your example a car that costs 30k is in three years time going to be work 20k? That seems unlikely no? Perhaps I am missing something.

FaganJr

frankz wrote:

In your example a car that costs 30k is in three years time going to be work 20k? That seems unlikely no? Perhaps I am missing something.

As I said the office is based on actual main dealer forecourt stock.
Sticker price on 3 year old stock.
I was looking at 161 same model car.

It all stacks up from actual research carried out by myself by going to dealers and going through figures and comparing quotes against actual stock.

frankz

FaganJr wrote: »

As I said the office is based on actual main dealer forecourt stock.
Sticker price on 3 year old stock.
I was looking at 161 same model car.

It all stacks up from actual research carried out by myself by going to dealers and going through figures and comparing quotes against actual stock.

Perfect, I wasn't doubting you at all - just making sure I understood because am struggling to get head around/make pcp work for me.

Can you say what model car this is for - as the figures sound doable for me.

guylikeme

Can anyone discuss their experience at the end of a PCP finance deal?

For me I've a few months left on mine. Can afford to pay the balance.

Would i be better off saying that "Ill pay it off" so that they might offer me a better PCP offer on a newer car? Does such thing happen (as i imagine the garage are keen to keep you on the PCP hook)?

Drummerboy08

They'll give you a value on your own car noe to go against a new one, and then run the new pcp figures based on that.

No point in saying you'll pay it off if you have no intention to, cos they just won't offer you anything then!

As always, try a few different dealers to get the best price.

opinionated3

Just to add my own 2cents... i contacted a dealer regarding pcp on a new vw gti. I thought it might be something i could look at and if it was affordable i would probably go for it. He sent back a quotation to me. ....interest rate was good but he was giving me feck all for my trade in. Roughly undervaluing my car by 3500 -4000. That finished my interest in a deal. ...

vintagevrs

Interest rate should be 0% on a gti.

Sell your own privately.

Drummerboy08

opinionated3 wrote: »

Just to add my own 2cents... i contacted a dealer regarding pcp on a new vw gti. I thought it might be something i could look at and if it was affordable i would probably go for it. He sent back a quotation to me. ....interest rate was good but he was giving me feck all for my trade in. Roughly undervaluing my car by 3500 -4000. That finished my interest in a deal. ...

The question is who's opinion on the value of your car is correct, yours or the dealers?

Price it somewhere else and you'll find out fairly quickly.

opinionated3

I had priced it elsewhere by checking like for like on carzone and other websites. Anyway i suppose what i was getting at was i thought maybe he might have pushed a better deal. To me, he seemed miles off the mark even though i had dealt with him previously. Not to worry. ....i realise the best way is to sell privately and then haggle so i might just look at that in the next few months.

Drummerboy08

Did you just take the average price of the car on carzone and run with that or did you allow for a few grand less for it, by the time the dealer prepares it, has margin to give discount and makes a few quid?

FaganJr

frankz wrote:

Perfect, I wasn't doubting you at all - just making sure I understood because am struggling to get head around/make pcp work for me.

I was looking at a few different makes and models, but this would apply closely with hyundai i40 with extras or mazda 3 exec 2.2 with extras. Again shop around, I was researching and phoning dealers all over country since November.

MarkN

vintagevrs wrote: »

Interest rate should be 0% on a gti.

Sell your own privately.

Only if you have €11,000 deposit.

vintagevrs

Really? Never knew the rate was dependent on deposit. Not that it matters for me anyway, I'll not be buying a new car.

MarkN

vintagevrs wrote: »

Really? Never knew the rate was dependent on deposit. Not that it matters for me anyway, I'll not be buying a new car.

Yeh they have the list of deposits needed for the various 0% deals on their website. 11k to sink into a Golf (or any car) is quite a lot IMO.

sheff the ref

PCP definitely works but only for low mileage drivers.

You don't specify what mileage you do, so I assume you are a low mileage driver to estimate value at €20,000 after 3 years

FaganJr wrote: »

PCP does work, its been in the UK for many years, so its tried and tested.

I was tempted and based it on the following

Looked at a car circa 30k
Based on 33% deposit (which you can get) 10k
Roughly 300pm ( actually a little less maybe 289pm)
Trading in car for 16500
Cheque back from dealer for 6500
6500 / 289 = 22.5 months paid for
leaving 13.5 months @ 289 = 3901 (actual cost to me for 3 years )

3 year old same model car on forecourt is 20k

Trade in car in 3 years with owing 10k and getting back 8500 (18500 trade in value )
Stick 1500 with that and have another new car.

So over 6 years the cash from my account would be 1st car 3901 + 2nd car (10404 + 1500)= 15805

So after 6 years would have another nest egg well built up to either buy out right or start PCP again

But in the end I just bought for straigh cash, answer to nobody!

Karmella

Hi, wondering if ye have advice for me on whether PCP is a good option for me...

Basically I have a 00 vw polo 1.4l automatic which I've had since it was 4 yrs old, and alas it's really starting to fade on me. So starting what is potentially a panic search for a replacement.
I know I was spoilt with my polo, it had ridiculously low mileage and never really gave me an ounce of trouble in the past 11 years. I'm almost certain that 'they don't build em like they used to'

But anyway my criteria are:
Must be automatic
Preferably At least 1.4 ( but I could drop to 1.2)
4 / 5 doors with decent boot space (2 small kids)
Ive no preference between petrol / diesel / hybrid. My mileage is very very low.

Now to money:
I can probably scrape together 7k ...
So do I try and get a 2nd hand car for this or use the money for a deposit?
I couldn't afford much more than 200 a month on repayments so this kinda rules out HP / bank loan. But if a decent 2nd hand car was out there in the 10-12 grandi could maybe borrow the balance between the price & my 7k. Ack I don't know.

Having read through a lot of posts here, there's been a few recommendations to save over the 3 years for the final payment. This sounds like a good idea, especially as the kids will have the car destroyed And I've no problem hanging onto a car (obviously;) ) it's just having the amount to actually put away is the issue, I'm close to the wire every month as it is as I've cut down to 4 days at work.

But also I just don't know what to go for, I guess the 0% are the ones to go for yes? So is it just vw bank (vw, seat, skoda) that are doing 0%?

Nissan seem to be 7.9%, Toyota 5.9%,

Kia will do 0% but only with a 40% deposit (/trade in) and over 4 years. Otherwise they are the same as Toyota.

Hyundai 6.9%

So that's as far as I've gotten really....

What to do? Any of ye wise people have some advice? Go for PCP or run a mile?

MarkN

Karmella wrote: »

Hi, wondering if ye have advice for me on whether PCP is a good option for me...

Basically I have a 00 vw polo 1.4l automatic which I've had since it was 4 yrs old, and alas it's really starting to fade on me. So starting what is potentially a panic search for a replacement.
I know I was spoilt with my polo, it had ridiculously low mileage and never really gave me an ounce of trouble in the past 11 years. I'm almost certain that 'they don't build em like they used to'

But anyway my criteria are:
Must be automatic
Preferably At least 1.4 ( but I could drop to 1.2)
4 / 5 doors with decent boot space (2 small kids)
Ive no preference between petrol / diesel / hybrid. My mileage is very very low.

Now to money:
I can probably scrape together 7k ...
So do I try and get a 2nd hand car for this or use the money for a deposit?
I couldn't afford much more than 200 a month on repayments so this kinda rules out HP / bank loan. But if a decent 2nd hand car was out there in the 10-12 grandi could maybe borrow the balance between the price & my 7k. Ack I don't know.

Having read through a lot of posts here, there's been a few recommendations to save over the 3 years for the final payment. This sounds like a good idea, especially as the kids will have the car destroyed And I've no problem hanging onto a car (obviously;) ) it's just having the amount to actually put away is the issue, I'm close to the wire every month as it is as I've cut down to 4 days at work.

But also I just don't know what to go for, I guess the 0% are the ones to go for yes? So is it just vw bank (vw, seat, skoda) that are doing 0%?

Nissan seem to be 7.9%, Toyota 5.9%,

Kia will do 0% but only with a 40% deposit (/trade in) and over 4 years. Otherwise they are the same as Toyota.

Hyundai 6.9%

So that's as far as I've gotten really....

What to do? Any of ye wise people have some advice? Go for PCP or run a mile?

If you feel like you'd be leaving yourself tight with repayments and have 7k in savings then buy a car for 7k. Plenty of good cars out there for that money. Boring answer but the right one if you're conscious of monthly bills.

Kenny Logins

Skoda Fabia/combi? Interest free, 3 years servicing included, @~€;150 p.m. and the max deposit would be closer to 5k.

MojoMaker

Renault Clio - current pcp rate 2.9% and a perfect car for your needs, would have to check if there's an auto option I don't know.

Cracking looking car as as big as the Megane was a few years ago.

KFed

You bought a 4 year old car and it's served you hassle free for 12 consecutive years.

I'd advise you do something similar. If your own is on it's way out, and it's 16 years old, it's probably worth next to nothing as a trade in / private sale. That leaves you as a cash buyer at a dealer, or a cash buyer in a private sale.

If your current budget is a max of 7k, but you're wondering should you spend the max and enter into a PCP / HP / Loan deal - what if something unforeseen comes along?

A new baby / a cut in hours at work / an unforeseen illness?

You say things are tight as it is as you've gone down to a four day week so I honestly wouldn't enter into a PCP whereby you hope to save the final bullet payment over the term. If you're shy on the bullet payment, you have to get a loan to cover it - what if the bank won't give you the loan? Or, does this force you into handing the car back, now you've no car? Or, does this force you to trade it in and take a new car on PCP but be locked into repayments with a new bullet on the back end?

Any car you buy will depreciate, a new car more so.

If you've had a good experience in the second hand market (12 years trouble free motoring) why not try for the same again?

Also as regards your budget, if you have 7k - it doesn't mean you have to spend the full 7k. Why not spend say 5.5k and keep 1.5k to cover a full service, new set of tyres etc?

Just because you have 7k, doesn't mean you have to spend it!

In the Celtic Tiger there were 110% mortgages - buy the house, pay the legal fees and stamp duty, upgrade the car and take a foreign holiday. Look at how that could and did work out.

Rather than go for a brand new car on PCP - why not upgrade a few years?

If you bought say a 07 - the values on these have taken a hit as they're on the old tax. But the old tax on small petrol engined cars is c. 385, which isn't vastly removed from the 'low tax' on the new diesels. But generally you have a simpler petrol engine mechanically so unlikely to need expensive DPF repairs that can occur with the 'low tax' modern diesels?

If you bought an 07 and it lasted as well as your Polo has - you'd have another 7 years of service. If you can pick one up for the 5-6k mark, that's cheap and cheerful motoring.

In contrast, a new car on PCP will cost you your full 7k budget plus a monthly repayment plus a bullet on the end... While is has a value at that point, your cash flow is strained right through that time, and you'll have taken a big hit on depreciation. The total cost of ownership is likely to be much higher for you on the newer car.

There ought to be good low mileage automatic examples out there. I'd start there with the private sales. The old saying is buy the seller. If you can find a good private sale example, great. If you go to the main dealers, you have a good level of comeback (but you'll pay a premium for that privilege). If you do go for a second hand car, a lot of the older examples (like the 07 vintage I'm advocating) are at smaller garages some of whome have dubious reputations.

Do your homework carefully, insist on having your own mechanic inspect the car. Look for a service history (are their receipts to support it, is there a stamped history and can you corroborate it by ringing the mechanic/garage who did the work), do the NCT certs show the mileage and when it was NCT'd, can you get a cartell report (35e?) to show the history on the car.

If you're not 100% on the seller, or the history of the car, walk away.

It would be better to use some of your fund to pay for more bus journeys / the odd taxi while you find the right car, rather than spend your budget and find you have an unreliable car!

KFed

Galway might be a long way to look at a car but if you ring and enquire about the service history etc, it might give a sense of whether it's viable. E6,650 for a 07 automatic polo with 42k km?

carzone.ie/used-cars/volkswagen/polo/used-2007-volkswagen-polo-polo-co-galway-fpa-201603240473015

Cork may be a long way to travel but a main Volksagen dealer has a 2008 automatic polo asking 8,995? 1 owner from new. IF Volkswagen main dealer are selling it directly themselves then they obviously are confident that they can sell it and it won't come back and cost them money through warranty work. I'm sure you could negotiate money off that, but if your budget is 7k you could borrow 2k and pay it back over 2 years at about 90e a month from the credit union.

carzone.ie/used-cars/volkswagen/golf/used-2008-volkswagen-golf-plus-1-cork-fpa-201314538292972710?SOURCE_ID=SOURCE_ID_FPA_FROM_FEAT_LIST

Granted, neither of these cars are brand new, but, I think that type of car would suit your circumstances.

I'm an accountant by trade and a PCP deal is actually a product which has a deposit up front, but then it's a loan the same as any other for the full amount but the payments are simply structured to give a low monthly for a term (36 months say) with a final payment on the back end. It's just a type of bank loan.

The headline rates scream at you (0% finance etc etc) but the manufacturer sits on the other side of that trade. Why sell their cars to buyer A (on PCP) for less than they can sell them to buyer B (cash buyer/funded by bank or credit union loan).

The trade markets the PCP deals as the low monthly payments make that new car appear more affordable, but you'll find they make the same profit overall. If they're in business to make a profit, why would they sell on PCP if they make less money overall?

You as a consumer sit on the buy side of the trade, the manufacturer and bank sits on the lend/retail side of the trade. Everyone is out for the most profitable deal for them so run the numbers and go with what suits your circumstances.

Be wary of stretching yourself financially though.

Karmella

Thanks KFed, I've been having a re-think alright this morning and I definitely can't afford the PCP, even at a 0%.

It was actually the thought of trawling through done deal & carzone to find a decent car for my budget was killing me - like I said I was completely spoilt with the polo, it fell into my lap at the time!

One thing I've noticed about the automatics for sale out there is that an awful lot of them are Japanese imports - which wouldn't be a problem for most, but the light levers on these tend to be on the right hand side of the steering wheel and this is a problem for me (the same reason I have to drive an auto).

Anyway, thanks for the advice all, I'm off on the search!

MojoMaker

Don't forget if you are moving from a pre-08 petrol car to a new diesel you will probably save a couple of hundred a month just through fuel costs and tax, not to mention the absence of maintenance on the new car - this can add up and might help offset the monthly PCP outlay meaning the net cost to change becomes quite small.

Sit down and do the maths, and if you're having trouble even take a look at the Nissan Go Calculator for some ballpark ideas.

sheff the ref

At least with PCP you have a new car and you have it from the very first day.

Secondhand cars can be clocked meaning that sometimes you aren't getting what you believe you are getting

If a car had it's mileage strategically reduced by say 10,000km before each service at the cost of €80-€100 as indicated by this article, then it would mean that the true mileage would go undetected by the service history.

http://www.theaa.ie/blog/shock-aa-report-shows-11-of-uk-car-imports-have-false-mileages/

NIMAN

Wonder would PCP ever work for me?

Current situation, I own (outright) a 131 Ford Focus, bought last year. Not sure what it would be worth, maybe €14000?

Usually when I change car (which will probably be in 2017 sometime), I aim to trade up to a 2 yr old car, so next year I would be hoping to buy a 15 car around the same segment (so Focus, Golf, Pulsar, etc). I hope to do this but adding cash to the trade-in amount to change up.

Would PCP work at all in my case, to get a brand new car?
Would I lose out money? Would adding cash to trade-in always work out better for me, or would it be a case or going along and getting a PCP quote?

FaganJr

sheff the ref wrote:

You don't specify what mileage you do, so I assume you are a low mileage driver to estimate value at €20,000 after 3 years

sheff the ref wrote:

PCP definitely works but only for low mileage drivers.

Yes 8-10 max

carsfan

Was in BMW and got pcp quotes for a 3 series.
On the offer there are different monthly rates for 15,20,25k km per year.
Also mentions 7 cent extra per km over allowance.
Am I correct that these km penalties only come into play if I hand the car back and walk away?
The finance guy said just go for the 15k rate.
Also if I pay off early I have to pay 3 months interest and documentation fee to settle the finance.
I did a pcp with VW and was never offered different rates and never told about interest charges for paying off early.
Are these charges peculiar to BMW or did VW neglect to tell me about the small print?
The gfv is 44.4% for the BMW as opposed to 38% with VW which seems optimistic to me.

vintagevrs

There are no charges from VW for paying out early. You actually pay less interest as you are not borrowing for the complete term, but a shorter term. Call your dealer and they can give you a settlement figure very easily. By them accessing this, you will get a letter in the post shortly after detailing the amounts automatically from VW.

You are right regarding the km allowance, the 7c/km only applies if walking away. The lower you make your annual KM, the higher your GFMV will be making monthlies lower. But balloon payment bigger at end. Idea being if you stick to the low km you agreed your car will be worth more to cover it.

sheff the ref

Would be very interested in seeing how that would stand up in the future. At 7cent a km, that equates to 700 euro for every 10,000 km.

30,000 km over budget would be €2100 of a penalty which does not seem excessively harsh considering the probably devaluation of a car with 30,000 more km on the clock