PCP finance.

bidiots

Deleted User wrote: »

An S80 is a bit big and will be hard enough on juice for the 2.4 imo the 1.6 will be too underpowered for a car that size.

My S80 2.4 is more economical than my previous A6 & A4 1.9's, by almost 80 miles per tank. Big car with big engine does not necessarily mean hard on juice, more torque etc....

Doff

Doff wrote: »

Thanks for the replies!



I'm working 2 on 2 off, 3 on 3 off, on average 15 days a month at 250km per day (125km each way).

If I was to go over the 90k limit by about 40k and ended up owing 4k, would that just be reduced from the gfv or would it be another expense I would have to pay?

My goal is to move closer to work, but the other half isn't so keen

Thanks again everyone

my understanding is that excess comes from the gfv so you would most likely not have any deposit going forward.

If you decide to buy the car then that means less gfv or less balloon to pay but I'm not 100% certain, so make sure this is explained clearly to you and don't be afraid to say you don't understand.

125 Kms each way is a curse of a commute. That's mental and time you'll never get back.

4 K fuel a year and paying off a new car is madness, just think of the repayments including depreciation ? and then add interest, it is huge money that could earn even a small bit of interest in the bank.

There are benefits to PCP such as much lower monthly payments if you can fall within the mileage limits and want to drive a new car every 3 years. But for such mileage it's mental.

If you could charge at work then the Kia Soul ev would save you a fortune and there are more than a few reports of it capable of 100 miles at 100 Kph, so at 120 could do 85-90. It will be the best affordable ev on the market in 2015 !

You could save a fortune on fuel and a decent amount on maintenance but if you can't charge at work it would be a problem because you don't want to rely on the fast charge network or risk having to queue but at your mileage the car could pay for itself over 4-5 years.

I must say I was impressed with the spin in the Kia ceed 1.6 115 hp estate I drove at the weekend, nice bit of low down torque and handles well. Herself is buying it. A remap should bring this engine to 135-140 hp.

The I30 has the same engine, no chain cam and no dpf or dmf, not 100% on the dpf. But cars like this should be low maintenance and trouble free and the Prius MK II III are ultra reliable.

I think when you have to travel 50 K Kms a year you spend too much on fuel to think about buying a new car.

bidiots

bidiots wrote: »

Big car with big engine does not necessarily mean hard on juice, more torque etc....

That's true and I don't think there would be a 1.6 in the S80 ?

There would be more economical cars for such a commute.

L-M

Mileage only comes into effect with PCP if you plan on handing the car back after three years. If you plan from the offset to buy the car at the end of the three years, you can do whatever mileage you want. If worst came to worst at the end of the three years there is usually a charge per kilometre.

Limerick man

Limerick man wrote: »

Mileage only comes into effect with PCP if you plan on handing the car back after three years. If you plan from the offset to buy the car at the end of the three years, you can do whatever mileage you want. If worst came to worst at the end of the three years there is usually a charge per kilometre.

yes but doesn't it mean that if you go over the mileage limit then that comes out of the gfv, so if you intend to buy it it means you pay less of a balloon and if you intend to change up to a new one you'll have less deposit going forward or none ?

L-M

Well more often than not the car is going to be worth more than the GFV. The ideal situation is the customer buys the car themselves afterwards with a loan of sorts, and then trade in the car as you normally would.

Failing that, there may or may not be equity left in the car after three years but that is down to the Dealer wanting to buy the car themselves for more than the GFV.

If you do want to hand the car back and be guaranteed the full GFV it needs to be within the mileage constraints or you'll pay a fee per kilometre which comes off the GFV.

If you want to swap for another one and continue the rolling contract, if there is no equity in your car you now need to come up with a deposit again, but you need to bear in mind how much your first deposit was (30percent?) And now your deposit may me smaller which will naturally increase your monthly payments.

PCP is ideal imo if you do low miles and intend to flog it every 3 years or if you want time to decide if you want to buy the car outright or not, in most cases you won't but if the gfv would be 4 k at the end you won't face a big balloon but it will still have cost a lot.

If you do low miles and you got say 12 K gfv then you're more likely to say no I'll put that towards a new car rather than pay off the old one you're most likely bored of now.

Doff

Sorry if I'm wrong, I still don't fully understand PCP.

So gfv is at 10k
Milage limit is 90k over 3 years
I do 60k over the limit at 10c per kilometer which is 6k

How much would it cost to buy out the car? (gfv-milage) 4k or (gfv+milage) 16k

Thanks again

Doff

Doff wrote: »

Sorry if I'm wrong, I still don't fully understand PCP.

So gfv is at 10k
Milage limit is 90k over 3 years
I do 60k over the limit at 10c per kilometer which is 6k

How much would it cost to buy out the car? (gfv-milage) 4k or (gfv+milage) 16k

Thanks again

The GFV at the end is the gfv - additional mileage, so if the gfv calculated at 10k and you have a 6k penalty then you have a gfv at the end of 4K

So if you want to buy the car you'll have to only pay 4K V 10 k if you had the original mileage that was calculated at the beginning before the excess mileage charges.

So the cost of the car is the repayments + deposit + excess.

As always make sure all this is clearly explained and don;t sign anything until you're entirly happy that you fully understand.

bear in mind because you're leasing then any damage beyond general wear and tear will come out of your pocket to repair, unless you decide to buy it.

L-M

Doff wrote: »

Sorry if I'm wrong, I still don't fully understand PCP.

So gfv is at 10k
Milage limit is 90k over 3 years
I do 60k over the limit at 10c per kilometer which is 6k

How much would it cost to buy out the car? (gfv-milage) 4k or (gfv+milage) 16k

Thanks again

As Mad Lad said the limit is 90k so anything over that is at a cost to you. But if you plan to buy after the 3 years all is irrelevant but the GFV.

mickdw

This is being over complicated.
The gfv is basically the portion of original car cost that you have deferred paying.
Therefore at 3 years stage, should you wish to buy the car, you owe the gfv. No more, no less regardless of Mileage on the car.
The mileage is only an issue if you wish to trade in or hand back the car. In that case, the mileage will be devaluing the car by the agreed amount per mile. That amount will be additional money out of your pocket.
So if handing in the car and walking away, you would owe nothing except the mileage charge.
If trading in, the excess mileage will theoretically reduce the equity you may have in the car (by the agreed mileage charge) but there is always room for bargaining there but you could assume it will hurt you by something like the penalty amount.
If buying the car after 3 years, you pay gfv.

sheff the ref

At the moment Skoda have an attractive 0% finance deal available on PCP on the Octavia.

Assuming the trade in value of my current car can be equal or greater than the initial down payment (€5948.64), the payments on a petrol Octavia (Retail Price €19,595) are advertised at €179 per month which includes a service plan. The final payment on such a car would be €7598 at the end of the three year term.

Granted I would not opt for a petrol car (I am a diesel man which naturally increases deposit, repayments and lump sum). However there is a lot to be said for being in a regular repayment system that provides a new car every three years assuming it works out as planned. The fact that you never really truly own the car isn't a factor because lets be honest.

My issue is that I generally average 40,000km a year through crusing the country to various matches, so PCP might not be the option for me.

I am not particularly in any rush to change but if this PCP was all it is cracked up to me, it would certainly be attractive. In any event if I opted for the high spec elegance model, it would be a grand car to make the final payment on at the end of the three years if the mileage was posing a problem. However it is the renewal thing I would prefer and the general idea of a new car every three years.

L-M

Have a look at 3year old Octavias with 120kms and see what their value is. Take that from you GFV and that's your equity to go again. (Obviously allowing for a few k for the trade in allowance etc.).

sheff the ref

The highest mileage Skoda on Autotrader is €12,950 and that has 105,000km. That is not an elegance model either. The asking price for Octavias with much lower mileage e.g. under 35,000km is anything up to €20,000

http://www.autotrader.ie/browse-used-cars/skoda/octavia/used-2012-skoda-octavia-1-6-tdi-s-dublin-fpa-70714077989095530

€12,950 - €7598 = €5352 but could be lower depending on door marks in car parks etc.

L-M

There you go 5k plus a few more k and you're back into a new one. It's all about shopping around the second time the same as any trade in to get as much value for your own to increase your equity.

sheff the ref

It is a guessing game really, a gamble on the future worth of the car. Best to be covered in terms of savings.

The payments are part of the budget anyway. The only real lump sum expense is the extra amount it might potentially cost me along with the future worth of the car to stay in the PCP system.

However I believe in having a car to use it and to drive it. I will drive to Ballycastle for the National League game in a few weeks. That will possible be in excess of 1000km for one trip alone. I wouldn't be the sort to park the car for fear of clocking up excessive mileage.

No point in me having a car if that was the case. There is not a hope that I would keep under any 20,000km PCP limit and that may be to my disadvantage depending on the structure of the PCP deal if I was to invest.

L-M

Well then just look at it as offsetting 35 percent of the car. If you were buying an Octavia there's no reason why you shouldn't go on PCP. Put the rest in a 3 year fixed account or something to that effect.

sheff the ref

Interesting article on the matter here

http://www.telegraph.co.uk/motoring/news/10683988/Is-PCP-finance-a-good-deal-in-the-long-term.html

I would love to speak to people who have come through this system to find out about their experiences three years later

Bpmull

When my dad picked up his new golf recently we were chatting to the sale person about Pcp not that my dad took it out he'd be very against it but just as a general chat. Basically the salesperson said that they weren't too fussed of you had gone slightly over the mileage limit (a few k km a year) or had the odd scratch on the car provided you were talking out another new car with them. If you are handing the car back to thrm though they would be a lot more strict as to what they would accept or charge you for.

I have loads of family that have Pcp on cars and they like it because it involves low deposit and repayments and they seem to just pretend the balloon payment isn't a real thing. To me if I ever need to get finance on a car it will be hp. As id rather have my own name on the log book, be able to drive as much as I want and just own it after the 3 or 4 years no messing with balloon payments. I don't know why you'd want to drag out the whole paying for the car process. Although it clearly suits some people.

sheff the ref

I guess for PCP to be beneficial, you have to go into it for the long haul, for say 9+ years rather than 3 years

Bpmull

sheff the ref wrote: »

I guess for PCP to be beneficial, you have to go into it for the long haul, for say 9+ years rather than 3 years

I suppose if you are the type that likes a new car every 3 years rather than holding on to it for a few years extra. I still don't see how it works out any cheaper than Hp assuming you get Hp on a reasonable rate which most are when going with the manufacture finance deal.

L-M

When you're trading the car in in three years you don't have to tell them you're on Pcp finance you just get a trade in alllowance as you usually would. There are very few cars that are going to be worth 35 percent of their value after 3 years. I think people are seriously over complicating something that is a relatively simple process.

sheff the ref

Obviously would like to discuss with someone who has been on a PCP to see how they fared after three years. However the clear advantage is as follows

To buy a car worth €25,000 on a credit union loan (8.5%) over three years would cost €785 per month on repayment. Even lowering the interest rate would still mean €700+ on a 3 year loan. A 4 year loan would mean monthly payments of €612. A 5 year loan would mean monthly payments of €509 and at the end of that 5 years, you own a car but it is a 5 year old car with high mileage. Deduct the deposit/trade in and you have lower repayments but you are still paying a good bit more.

Most of these PCP plans for a car of that price are generally in the €250 to €300 a month bracket. Assuming you meet terms and conditions, it is possible to refresh your car every three years without putting your hand in your pocket for anything other than continuous repayments.

Obviously it will cost money if you put up too much mileage, get scratches etc. but in theory it is easy to see why PCP is attractive at first glance

Bpmull wrote: »

I suppose if you are the type that likes a new car every 3 years rather than holding on to it for a few years extra. I still don't see how it works out any cheaper than Hp assuming you get Hp on a reasonable rate which most are when going with the manufacture finance deal.

Bpmull

sheff the ref wrote: »

To buy a car worth €25,000 on a credit union loan (8.5%) over three years would cost €785 per month on repayment. Even lowering the interest rate would still mean €700+ on a 3 year loan. A 4 year loan would mean monthly payments of €612. A 5 year loan would mean monthly payments of €509 and at the end of that 5 years, you own a car but it is a 5 year old car with high mileage. Deduct the deposit/trade in and you have lower repayments but you are still paying a good bit more.

I do see your reasoning behind it alright. I don't know of anyone that would take out an 8.5 % credit union loan on a new car when almost all major manufacturers are doing sub 4% Hp finance with a few even doing sub 2%. But I see what you mean you are looking at high repayments even at the lower interest rates.

I suppose Pcp suits a lot of people with the 300 euro repayments it just means you will always be repaying them if you are going to stay taking out a new car. I just personally don't like the system but then I wouldn't be into talking out a 5 year Hp loan as a 5 year loan on a car is ridiculous IMO unless your the type that keeps a car for 10 years. I think if you can't afford to pay for a car over 3 years 4 at a Max then you really can't afford the car in the first place but that just my view on it. I suppose Pcp is the only way your going to drive around in a new car for sub 300 a month.

sheff the ref

There is a lot to be said for it allright. However the only thing is that with PCP finance, if you are applying for a mortgage, for assessment purposes, you are deemed to be down the full amount of the PCP sum including the final fixed sum. That is a disadvantage if applying for a mortgage but once the mortgage is secured, it is no longer an issue

Limerick man wrote: »

When you're trading the car in in three years you don't have to tell them you're on Pcp finance you just get a trade in alllowance as you usually would. There are very few cars that are going to be worth 35 percent of their value after 3 years. I think people are seriously over complicating something that is a relatively simple process.

sheff the ref

Bpmull wrote: »

I do see your reasoning behind it alright. I don't know of anyone that would take out an 8.5 % credit union loan on a new car when almost all major manufacturers are doing sub 4% Hp finance with a few even doing sub 2%. But I see what you mean you are looking at high repayments even at the lower interest rates.

I suppose Pcp suits a lot of people with the 300 euro repayments it just means you will always be repaying them if you are going to stay taking out a new car. I just personally don't like the system but then I wouldn't be into talking out a 5 year Hp loan as a 5 year loan on a car is ridiculous IMO unless your the type that keeps a car for 10 years. I think if you can't afford to pay for a car over 3 years 4 at a Max then you really can't afford the car in the first place but that just my view on it. I suppose Pcp is the only way your going to drive around in a new car for sub 300 a month.

Certainly there is merit to PCP allright, if you wish to drive a new car every 3 years for significantly less than regular repayments. Bear in mind the PCP plan also has servicing built into the payment. To me without looking at the pitfalls, it is a better option than buying an immaculate second hand car because the payments are still significantly less. In fact it seems like a no brainer if you are the type that would like to upgrade regularly.

mickdw

sheff the ref wrote: »

Certainly there is merit to PCP allright, if you wish to drive a new car every 3 years for significantly less than regular repayments. Bear in mind the PCP plan also has servicing built into the payment. To me without looking at the pitfalls, it is a better option than buying an immaculate second hand car because the payments are still significantly less. In fact it seems like a no brainer if you are the type that would like to upgrade regularly.

You seem to be assuming that at the end of each term that there will be enough equity to give a good deposit and therefore keep repayments the same going forward.
In general, the low repayments are based on 30 percent deposit. I'm not so sure that the trade in will be worth gfv and 30 percent of the cost of the next car given alot of the figures I see meaning toy would need to come up with a lump sum to enable your next car to have the same low repayments.
No doubt it would be useful to see how people are fairing at the end of term.

sheff the ref

mickdw wrote: »

You seem to be assuming that at the end of each term that there will be enough equity to give a good deposit and therefore keep repayments the same going forward.
In general, the low repayments are based on 30 percent deposit. I'm not so sure that the trade in will be worth gfv and 30 percent of the cost of the next car given alot of the figures I see meaning toy would need to come up with a lump sum to enable your next car to have the same low repayments.
No doubt it would be useful to see how people are fairing at the end of term.

Rang a dealer there who had advertised the Skoda Octavia in the weekend papers. The first issue is that the mileage (Is it time to update our slang to kilometres) allowance is 20,000km.

My current car is almost 4 years old and I am on target to average an annual mileage of 40,000km. There is no point in pretending to myself that I will keep under the 20,000km limit, I wont, and I wont have any desire to. It just will not happen. That will have a definite impact on the future deposit though opting for a cheaper car next time is also an option I guess

mickdw

If they are giving low rate or 0 percent finance, it's hard to argue against the pcp regardless.

sheff the ref

mickdw wrote: »

If they are giving low rate or 0 percent finance, it's hard to argue against the pcp regardless.

Certainly, 0% finance in any mans language represents a significant saving on the cost of a car.

The repayments cost of on €14,000 over three years would come to almost €1000 at 4.5%