PCP finance.

Falcon L

sheff the ref wrote: »

This Volkswagen Jetta is only two and a half years old and seems to be well priced. Highly unlikely that it would have been possible to enter a new PCP deal if trading if this is the sale price after the Garage get their cut

http://www.carzone.ie/used-cars/volkswagen/jetta/used-2015-151-volkswagen-jetta-2-0-td-kerry-fpa-6275272045318280329

The normal PCP car will have half the mileage of that though.

sheff the ref

Falcon L wrote: »

The normal PCP car will have half the mileage of that though.

Higher mileage is something that you may not necessarily be able to predict when entering a PCP deal 3 years ago. E.g your distance to work etc. could change

Falcon L

sheff the ref wrote: »

Higher mileage is something that you may not necessarily be able to predict when entering a PCP deal 3 years ago. E.g your distance to work etc. could change

Yeah, but that's the point. If you go into a deal with a mileage allowance of 15k a year and you do double that, every year, you shouldn't expect to get the same value for your returning PCP car.

Masala

Falcon L wrote: »

Yeah, but that's the point. If you go into a deal with a mileage allowance of 15k a year and you do double that, every year, you shouldn't expect to get the same value for your returning PCP car.

I heard from a garage that it could cost you €1,000 off your trade in value for every 10,000 kms over the allowance as a penalty.

Falcon L

Masala wrote: »

I heard from a garage that it could cost you €1,000 off your trade in value for every 10,000 kms over the allowance as a penalty.

Generally, the penalty is around 6 cents per Km.

Millem

I have a vw pcp and am allowed to do 20,000km per year. With nissan it was 15,000km per year.

NIMAN

Seen a piece on some British TV programme too about PCP, and it wasn't positive either.

Think it might have been Newsnight.

I get the impression quite a few experts reckon it could be the next big financial bomb. Like sub-prime mortgages, it appears too many people were given it despite not being able to afford it.

NIMAN

NIMAN wrote: »

Seen a piece on some British TV programme too about PCP, and it wasn't positive either.

Think it might have been Newsnight.

I get the impression quite a few experts reckon it could be the next big financial bomb. Like sub-prime mortgages, it appears too many people were given it despite not being able to afford it.

I don't know why these programmes keep this nonsense up about comparing it to sub prime mortgages. There is no comparison at all and no "bomb" to go off.

Can't afford the car, hand it back. Repayments stop, garage sells car to recoup finance and that's it. Yes the person loses the deposit and equity but they aren't in debt.

grogi

Andres Slimy Staircase wrote: »

I don't know why these programmes keep this nonsense up about comparing it to sub prime mortgages. There is no comparison at all and no "bomb" to go off.

Can't afford the car, hand it back. Repayments stop, garage sells car to recoup finance and that's it. Yes the person loses the deposit and equity but they aren't in debt.

In the States there is a big problem with sub-prime car loans.

https://www.youtube.com/watch?v=4U2eDJnwz_s

PCP is not one of them...

jimmytwotimes 2013

Bought recently. Looked at PCP but the thought of hitting a point where every extra kilometre would cost extra didn't appeal.

Would be an sh1tty way to go driving with the little voice inside saying 'well those kilometres cost you X'.

For people who can stay below the 15-20,000 kms it's worth thinking about but if probably just go over that each year.

An accident could be costly too.

Atlantic Dawn

Andres Slimy Staircase wrote: »

I don't know why these programmes keep this nonsense up about comparing it to sub prime mortgages. There is no comparison at all and no "bomb" to go off.

Can't afford the car, hand it back. Repayments stop, garage sells car to recoup finance and that's it. Yes the person loses the deposit and equity but they aren't in debt.

The bomb going off is for the banks who gave the finance being stuck with cars that they can't sell in a possible market flooded with them down the line where the values are lower than expected. The dealers and customers will be fine.

grogi

jimmytwotimes 2013 wrote: »

Bought recently. Looked at PCP but the thought of hitting a point where every extra kilometre would cost extra didn't appeal.

Would be an sh1tty way to go driving with the little voice inside saying 'well those kilometres cost you X'.

But they still do! You just don't know exactly how much upfront

For people who can stay below the 15-20,000 kms it's worth thinking about but if probably just go over that each year.

The mileage penalties are really irrelevant. Very few people would give the car back and walk away - and that's when they apply.

If you want to keep the car - you have to pay the balance. It does not depend on how many miles you did.

If you want to roll the PCP, it is the trade-in price offered by the dealer that really matters (technically it is the equity you will have, but they are related). It does not matter if the km were done with a car bought with cash or on PCP. The trade-in price will be similar in both cases

An accident could be costly too.

It is in any new car anyway...

grogi

Atlantic Dawn wrote: »

The bomb going off is for the banks who gave the finance being stuck with cars that they can't sell in a possible market flooded with them down the line where the values are lower than expected. The dealers and customers will be fine.

Majority of the banks financing PCP are owned by the motor industry. It makes the money by selling the cars, not selling the loans.

Atlantic Dawn

grogi wrote: »

Majority of the banks financing PCP are owned by the motor industry. It makes the money by selling the cars, not selling the loans.

Yes VW bank would be the biggest operator in the country I would say for PCP deals but the same risk remains if there's no market for the car or the expected retail price was not as expected at the end. Your pobably looking at a margin at best of 10% for the manufacturer per car.

mickdw

I think its quite simple.
If you can afford your car, pcp is fine. If you cannot afford it and managed to just get into the car via pcp, its a bad idea regardless of collapse or not in prices.

So say you could always afford the car. You go back at 3 years mid collapse. You can buy your car out and ignore any collapse and drive happily for ever more at same cost as envisaged day one.
Or
You can look at the situation and decise to hand back the no worthless to you car, then make use of the collapse and buy a similar car even cheaper than envisaged day one.
A collapse would likely mean that alot of buyers might not be able to replace with new every 3 years but that would be the same if bought any other way- If the car going back is worth little, it will be hard to trade up to new again.

mickdw

I think its quite simple.
If you can afford your car, pcp is fine. If you cannot afford it and managed to just get into the car via pcp, its a bad idea regardless of collapse or not in prices.

So say you could always afford the car. You go back at 3 years mid collapse. You can buy your car out and ignore any collapse and drive happily for ever more at same cost as envisaged day one.
Or
You can look at the situation and decise to hand back the no worthless to you car, then make use of the collapse and buy a similar car even cheaper than envisaged day one.
A collapse would likely mean that alot of buyers might not be able to replace with new every 3 years but that would be the same if bought any other way- If the car going back is worth little, it will be hard to trade up to new again.

Skodafan

Getting a great deal on an Octavia RS and am deciding whether to PCP or CU loan.

Repayments on the Octavia are 1.9% interest for 3 years.

My logic is good PCP with my end goal always keeping the car and getting loan to pay the balance when the 3 years is up.

My logic is over 6 years I will be paying 1.9% for 3 years and around 6. 9% for the next 3.

Is this correct or am I missing something ?

grogi

Skodafan wrote: »

Is this correct or am I missing something ?

Yes, that's more less correct.

CeilingFly

Skodafan wrote: »

Getting a great deal on an Octavia RS and am deciding whether to PCP or CU loan.

Repayments on the Octavia are 1.9% interest for 3 years.

My logic is good PCP with my end goal always keeping the car and getting loan to pay the balance when the 3 years is up.

My logic is over 6 years I will be paying 1.9% for 3 years and around 6. 9% for the next 3.

Is this correct or am I missing something ?

- this is where pcp works best. Take the very cheap rate and at end of it, pay baloon payment off with cu loan.

bazz26

Skodafan wrote: »

Getting a great deal on an Octavia RS and am deciding whether to PCP or CU loan.

Repayments on the Octavia are 1.9% interest for 3 years.

My logic is good PCP with my end goal always keeping the car and getting loan to pay the balance when the 3 years is up.

My logic is over 6 years I will be paying 1.9% for 3 years and around 6. 9% for the next 3.

Is this correct or am I missing something ?

Is that the 15 reg grey one in the BMW garage or a brand new RS?

PCP option sounds good, pay 1.9% for 3 years and take out a normal loan to repay the balloon payment rather than paying a high interest rate over the entire 6 years.

Lantus

Skodafan wrote:

My logic is over 6 years I will be paying 1.9% for 3 years and around 6. 9% for the next 3.

Skodafan wrote:

My logic is over 6 years I will be paying 1.9% for 3 years and around 6. 9% for the next 3.

Sounds like a cheap way to buy a new car...

It's easy to compare credit and look at the total cost of ownership for the purchase. If you can save anything over the initial 3 years your total cost will be even lower as you will be able to reduce the outstanding capital.

Falcon L

All this talk of bubbles, bombs and collapses just shows that there is still a group of people that don't understand what PCP is all about. Mick and grogi show that some understand it fully.

When I took out my PCP The dealership owner an I were discussing the mileage limits. His attitude was "we won't fall out over the mileage". In fact he pointed out to me that there was a saving to be made contracting for 10k Kms and doing 15K Kms because the "penalty" for the extra 5K would be less than the increased monthly payment over the time of the contract.

FWIW, I can afford the payments without issue. I could have bought the car with cash, but I wanted to use that cash for something else.

Skodafan

bazz26 wrote: »

Is that the 15 reg grey one in the BMW garage or a brand new RS?

PCP option sounds good, pay 1.9% for 3 years and take out a normal loan to repay the balloon payment rather than paying a high interest rate over the entire 6 years.

Brand new. I said I would look at the options available as the vrs is the holy grail for me.

And was surprised I could actually afford one.

It all seemed a bit too simple for me. 20,000km a year milage limit on it but won't be too worried about that.

Servicing plan included in my monthly payments as well

TheShow

Skodafan wrote: »

Getting a great deal on an Octavia RS and am deciding whether to PCP or CU loan.

Repayments on the Octavia are 1.9% interest for 3 years.

My logic is good PCP with my end goal always keeping the car and getting loan to pay the balance when the 3 years is up.

My logic is over 6 years I will be paying 1.9% for 3 years and around 6. 9% for the next 3.

Is this correct or am I missing something ?

not sure where you are based, but Sheey skoda in Naas are doing 0% on used skodas atm. worth checking out.

bazz26

The mileage limitation is really a red herring on PCP and really only there to frighten away fleet or psv drivers. It only really applies if you have to hand the car back and walk away or if it's well above the threshold then it's factored into the trade-in value at the end of year 3 when you go PCP again.

EndaHonesty

bazz26 wrote: »

The mileage limitation is really a red herring on PCP and really only there to frighten away fleet or psv drivers. It only really applies if you have to hand the car back and walk away or if it's well above the threshold then it's factored into the trade-in value at the end of year 3 when you go PCP again.

+1

I've a VRS on 0% PCP and the mileage "limit" is 12,000 kms per year. So 36,000 kms for the 3 years.

I'm 22 months into the term and I've 75,000 kms on the car...

My plan was to buy the car outright at the end of the 3 years, but I'll see what the dealer will offer.

12,000 kms per year is generally considered too few for a modern diesel so IMO my car with 40,000 kms per year is "better" than one with 12,000.

ShadowHearth

Skodafan wrote: »

Getting a great deal on an Octavia RS and am deciding whether to PCP or CU loan.

Repayments on the Octavia are 1.9% interest for 3 years.

My logic is good PCP with my end goal always keeping the car and getting loan to pay the balance when the 3 years is up.

My logic is over 6 years I will be paying 1.9% for 3 years and around 6. 9% for the next 3.

Is this correct or am I missing something ?

That is correct. And thats how I personally would encourage people to look at pcp. Its cheapest way to buy brand new car and honestly, most convenient.

I said before, I took my cupra with 0% apr and 3k scrapage. Got way more for alfa, then if I would go second hand trade in.
Final payment will be 8.5k eu only. I am covering it by putting away 50eu every week to separate account. In 3 years I will have 8.2k. I see what dealer will offer me if I will want to take new cupra. If not, I got money ready.
Might even just pay 4k of my own and tale a loan for the rest over 2 years. So in the end I will pay only that little intrest on 4k, not on 25k.

sheff the ref

ShadowHearth wrote: »

That is correct. And thats how I personally would encourage people to look at pcp. Its cheapest way to buy brand new car and honestly, most convenient.

I said before, I took my cupra with 0% apr and 3k scrapage. Got way more for alfa, then if I would go second hand trade in.
Final payment will be 8.5k eu only. I am covering it by putting away 50eu every week to separate account. In 3 years I will have 8.2k. I see what dealer will offer me if I will want to take new cupra. If not, I got money ready.
Might even just pay 4k of my own and tale a loan for the rest over 2 years. So in the end I will pay only that little intrest on 4k, not on 25k.

PCP is not a problem in my book. I took on a PCP at 0% finance knowing I would have a lump sum at the end, and knowing that I would drive about 40-45,000km a year. Therefore I have 2 options, trade in with small equity or just continue the payments (with interest) on the remaining lump sum of around €6500 for another 3 years. You will buy very few three year old cars for €6500. It is certainly the best way to buy a new car when you only pay interest for year 4, 5 and 6 and own the car outright then.

I cannot understand why some people feel they will drive in after 3 years with a 161 and drive out with a 191 without any terms and conditions attached but for some reason, some people do.

DaveyDave

Correct me if I'm wrong but it's my understanding that the balloon payment can be financed through the dealer for another year or two or whatever it is. Is this not true? If it is, what kind of percentage would you have? I see people using a credit union or bank loan for the balloon payment (great way to get a new car to be honest) so I'm assuming a dealer would have a high interest rate?

mickdw

Its not in the dealers interest to offer you the cheapest way of keeping your car so im sure whatever rate they will offer will be easily beaten elsewhere.
Im sure the sales pitch will be targeted around this too asking why would you pay 7.9 percent interest to keep an old car when he can give you a new one on a zero interest deal.