PCP finance.

NIMAN

I think PCP really caught on as people like the idea of paying E250, E350 per month or whatever, and having a new car without the worry about expensive repairs, nct etc.

They are happy not to own the car, as often by the time people actually own their car the traditional way it's old, expensive to run, worth little.

Throw in some free servicing, warranty, no repairs, maybe no tyres to change and it's a no brainer for those who haven't 25 or 30k lying around to go out and buy a decent car.

CoBo55

BelovedAunt wrote: »

Lads what's the general consensus on PCP. My friend was telling me it's a good (but expensive) way of having a new car every three years, even if you never own it.

I think it's brilliant. You need to know what's involved particularly in 3 years time when the balloon payment is due, driving away in the second new car isn't as simple as the dealers portray especially if you started the first PCP with a high deposit/ trade-in.

bazz26

BelovedAunt wrote: »

Lads what's the general consensus on PCP. My friend was telling me it's a good (but expensive) way of having a new car every three years, even if you never own it.

Have a read of some of this thread from the beginning. You don't have to read all 183 pages to get an understanding of it as many pages are just posters asking the same questions multiple times.

NIMAN

CoBo55 wrote: »

I think it's brilliant. You need to know what's involved particularly in 3 years time when the balloon payment is due, driving away in the second new car isn't as simple as the dealers portray especially if you started the first PCP with a high deposit/ trade-in.

Care to explain that point?

FarmerBrowne

NIMAN wrote: »

Care to explain that point?

I'm guessing they mean they had the 30% or very near first time round from the trade in which resulted in the lowest possible monthly repayments for the PCP, when changing subsequent times the equity alone in the car won't amount to 30% so higher monthly repayments (unless you throw in a bit of cash to get near the 30% again)

CoBo55

FarmerBrowne wrote: »

I'm guessing they mean they had the 30% or very near first time round from the trade in which resulted in the lowest possible monthly repayments for the PCP, when changing subsequent times the equity alone in the car won't amount to 30% so higher monthly repayments (unless you throw in a bit of cash to get near the 30% again)

Exactly, thanks.

DriveSkill

FarmerBrowne wrote: »

I'm guessing they mean they had the 30% or very near first time round from the trade in which resulted in the lowest possible monthly repayments for the PCP, when changing subsequent times the equity alone in the car won't amount to 30% so higher monthly repayments (unless you throw in a bit of cash to get near the 30% again)

Exactly - that is what you need to be aware of.


Take simple example, first time around you are looking to PCP on a car for €30K, lets assume you have a trade-in for €10K, assume repayments of about €200 per month with a €10K GFMV after 3 years to keep it all simple.



So now you come back and your €30K car is worth maybe €15K but you owe €10K so you have €5K "equity" or deposit for the next new car. Therefore you are €5K short of the original deal so you either need to stump up €5K cash and keep your repayments at around the €200 mark or your repayments go up to maybe closer to €300....if you dont understand what you are getting in to this is what comes as a shock as most people believe they can roll over to the next version of the car they bought originally and keep repayments as they were.


If you had started with a €5K deposit on the first PCP you might be able to do that but once you go with a big deposit first time you need to either back it with cash or accept higher repayments next time around.

i57dwun4yb1pt8

nothing wrong with a 0% PCP if you plan to ballon pay after 3 and keep for 5 years or more in total .

its free money at 0%

pity in my case it was a sh1tty skoda that i ended up with , if it had been a quality make .....

Toyotafanboi

NIMAN wrote: »

Care to explain that point?

3 years ago, I went alnost max deposit into a new Golf diesel Highline. We put down €9500 and the PCP payment was around €255 a month. GMFV was around €9750.

Re-PCP'd last month, Golf diesel Highline, offered 15k car for the car, that gave us a deposit, 5250, we put €1k cash onto that, €6250. That made the new PCP payment €395 because you still have to pay for a full two thirds of the car over the first 36 months, no matter what. That leave's the GMFV somewhere around €10k again*.

*all ballparky figures, dont remember 100%.

So a lower deposit increases the price per month, people who took our their first PCP with a middling deposit are more likely to continue into a second as their monthly payment will be more likely to stay similar as opposed to shooting upwards if you dont have a lump sum to put into the deal again.

NIMAN

I ask as I'm considering a PCP deal, and have a trade-in that's above even the max deposit.

So was trying to work out if I would put down 10% and take more cash back, or put down max 31% deposit and take a lower cheque from dealer.

trickybicky

Lantus wrote: »

Vw is typically 5.9 and payable over 1, 2 or 3 years. You can pay off early easy enough and the set up is seamless. Just one document to sign and some Id. I even had a 1 month gap between the old and new deal payment wise which was no issue.

If you pay via credit union the car is yours so even if economy goes bonkers and you default on cu loan they can't take car....

Do you know if they do a new credit check on you when moving from PCP to a finance loan to pay the balloon payment? Do you have to provide bank statements etc.?

bazz26

They would be foolish not to.

CoBo55

NIMAN wrote: »

I ask as I'm considering a PCP deal, and have a trade-in that's above even the max deposit.

So was trying to work out if I would put down 10% and take more cash back, or put down max 31% deposit and take a lower cheque from dealer.

It really depends on how much you want the monthly payments to be.

NIMAN

CoBo55 wrote: »

It really depends on how much you want the monthly payments to be.

If you have flexibility, would it make more sense to pay a higher monthly amount and less deposit?

As this is more likely to leave a renewed PCP deal with a new monthly payment similar to your old one?

mickdw

trickybicky wrote: »

Do you know if they do a new credit check on you when moving from PCP to a finance loan to pay the balloon payment? Do you have to provide bank statements etc.?

bazz26 wrote: »

They would be foolish not to.

If they approved you for a pcp 3 years earlier and if you declare no changes in circumstance, Id say checks are at the minimal end of the scale as after all they still have a secured asset same as when on pcp.

mickdw

NIMAN wrote: »

I ask as I'm considering a PCP deal, and have a trade-in that's above even the max deposit.

So was trying to work out if I would put down 10% and take more cash back, or put down max 31% deposit and take a lower cheque from dealer.

Personally id put down 15% but most important thing to firstly look at is to be sure they are giving you the a proper deal on you trade in.
Its too easy for them to screw you when they are adding in dealer contributions, any discount etc.
putting in 15% gives you a very good chance of being able to move to a new car putting in little to no deposit. Sure you could go for a very low monthly now but in 3 years you would be looking at increased monthly then. It could be argued that if someone cannot afford the monthly based on 15% deposit, they should look at a cheaper car.

Lantus

NIMAN wrote: »

I ask as I'm considering a PCP deal, and have a trade-in that's above even the max deposit.

So was trying to work out if I would put down 10% and take more cash back, or put down max 31% deposit and take a lower cheque from dealer.

If your going to keep car long term max deposit or look at hp as it may suit better or cu loan.

If you want to roll over into new car go for 15pc deposit. Dealer may not give cash for that though.... Short term loan for deposit and sell car privately??

sillysocks

trickybicky wrote: »

Do you know if they do a new credit check on you when moving from PCP to a finance loan to pay the balloon payment? Do you have to provide bank statements etc.?

We refinanced through the dealer and provided nothing like bank statements or salary certs for the refinance. Was very surprised.

NIMAN

Lantus wrote: »

If your going to keep car long term max deposit or look at hp as it may suit better or cu loan.

If you want to roll over into new car go for 15pc deposit. Dealer may not give cash for that though.... Short term loan for deposit and sell car privately??

I always like to keep a fresh-ish car, so I would imagine that in 2/3 years time I would be considering changing again.

As it stands, my trade-in leaves me with cash back, even paying the max 31% deposit. I was going to max the deposit and this would have left a monthly of e300. The monthly amount is not really too concerning for me, so I am thinking it might be better to pay less of a deposit and pay e400 per month, from what you folk have said.

That way, when I change it is more likely the renewal monthly might be something similar.

ShadowHearth

NIMAN wrote: »

If you have flexibility, would it make more sense to pay a higher monthly amount and less deposit?

As this is more likely to leave a renewed PCP deal with a new monthly payment similar to your old one?

It depends. I personally took out my car with 25% deposit. Pretty high, but it keeps my monthly payments very low, which gives me ability to put away money each week to separate account. My PCP ends in May next year and I am only short 350eu from full balloon amount already. So when times comes I will have a lot less stress and more options to what to do. If I won't get a deal I want, I'll just pay it off as money for that already put away.
So it's your personal choice how you want to tackle it. I don't think there is a right answer of which is better, high or low deposit. Only how comfortable you are to deal with your finances and what works better for you personally.

vintagevrs

If the finance is free, then it makes more sense to go in with the lowest possible deposit, as the you are not paying interest on it from a mathematical point of view, as you are borrowing for free and technically that cash could be working for you elsewhere. In reality though, it probably makes little difference. 5K or 10k isn't going to earn you a lot of interest these days...so do what ever works for you.

Lantus

NIMAN wrote: »

I always like to keep a fresh-ish car, so I would imagine that in 2/3 years time I would be considering changing again.

As it stands, my trade-in leaves me with cash back, even paying the max 31% deposit. I was going to max the deposit and this would have left a monthly of e300. The monthly amount is not really too concerning for me, so I am thinking it might be better to pay less of a deposit and pay e400 per month, from what you folk have said.

That way, when I change it is more likely the renewal monthly might be something similar.

Get a quote for 15pc deposit to get an idea on monthly for next deal. If you go full deposit can you save money each month to pay off remainder or as next deposit?

NIMAN

Yeah to be fair, going with Max deposit gives me a cashback at the start of 7.5k v Gmfv of 11.3k

Cutting the deposit to 20% gives me a cashback of 10.8k, nearly the value of the Gmfv, so I could put that aside to have it to pay of Gmfv.

BTW, is the Gmfv negotiable?

ShadowHearth

NIMAN wrote: »

Yeah to be fair, going with Max deposit gives me a cashback at the start of 7.5k v Gmfv of 11.3k

Cutting the deposit to 20% gives me a cashback of 10.8k, nearly the value of the Gmfv, so I could put that aside to have it to pay of Gmfv.

BTW, is the Gmfv negotiable?

Nope, it's just 30% ( if I am not mistaken )of a whole price. The only way to lower it, is to lower over cars price.

Putting that away would be perfect. You don't need to pay off car, but next time you change you might use that as a little fund to bring up deposit for next car. For example in 3 years time next deposit is 10k, the car that you will give back might have 5k left for that deposit and you can take other 5k from that little fund. Still a nice sum leftover.

bazz26

NIMAN wrote: »

Yeah to be fair, going with Max deposit gives me a cashback at the start of 7.5k v Gmfv of 11.3k

Cutting the deposit to 20% gives me a cashback of 10.8k, nearly the value of the Gmfv, so I could put that aside to have it to pay of Gmfv.

BTW, is the Gmfv negotiable?

The GMFV is set by the manufacturer and is the balance of what you owe on the car after 3 years. It's not negotiable. To have equity in the car in order to roll over to another PCP deal you need a trade in allowance value greater than the GMFV. The difference between the trade in allowance figure and the GMFV would be your equity or deposit towards the next PCP car.

vintagevrs

ShadowHearth wrote: »

Nope, it's just 30% ( if I am not mistaken )of a whole price. The only way to lower it, is to lower over cars price.
.

Gfmv is not calculated as 30% of the cost of the car. May not be a million miles away but it is set by the manufacturer and options on a car won't make a difference to it but will put the price of the car up. Shows that in reality they add little value to a car. For example, I remember for a golf the only option that made a difference to it (engine and trim level aside) was if it had a dsg gearbox. So sunroof, leather, dynaudio, big wheels etc made no difference. You could easily spend 7k on options with no impact on gfmv.

mickdw

vintagevrs wrote: »

Gfmv is not calculated as 30% of the cost of the car. May not be a million miles away but it is set by the manufacturer and options on a car won't make a difference to it but will put the price of the car up. Shows that in reality they add little value to a car. For example, I remember for a golf the only option that made a difference to it (engine and trim level aside) was if it had a dsg gearbox. So sunroof, leather, dynaudio, big wheels etc made no difference. You could easily spend 7k on options with no impact on gfmv.

Gfmv could be around 40 percent of new price in a lot of cases.
You can lower the gfmv (amount owed at end) meaning you payoff more of the car up front and will have more equity for next car. The way to lower it is to take out a deal with a high mileage allowance. It wouldn't make any sense to do that in reality.

sk8board

sillysocks wrote: »

We refinanced through the dealer and provided nothing like bank statements or salary certs for the refinance. Was very surprised.

its not terribly unusual - PCP refinance is far less risky than starting a new PCP with a new customer, or indeed getting a 'normal' car loan, the latter could be 5 years to begin with.

the vast majority of balloon amounts will be under 20k - we had a new €29k Mk7 golf on 3 year PCP and have a €10k balloon - I wouldn't expect to provide more qualifying information in year 3 than in year 1, considering I've repaid every month on schedule.

To agree with another point above, as a simple rule - if the finance is 0%, I'd pay the lowest deposit possible. If theres an interest rate, I'd put in the max deposit (as the cash in the bank will never earn more than that interest rate).

DaveyDave

Even if you are paying interest the cost of credit will be considerably lower than a bank or credit union loan. Apart from the likes of BMW I believe the higher end of PCP rates are around 5.9%? A bank loan is around 15% for 3 years up to 25% for 5 years.

In terms of PCP deposits, even if you're paying interest I wouldn't say throw in the biggest deposit possible. Work out a middle ground of comfortable monthly payments along with savings for a deposit or partial final payment. You won't be paying mad interest anyway.

I hate when people say if you put in a 30% deposit it's going to be more expensive second time around, that's not true. It's only true if you can't afford to save the deposit while also paying monthly payments. You also won't need as much second time around as long as you have some equity. When I was getting PCP on my Golf so many people were saying how it's more expensive next time as if it's a rule.

Lantus

DaveyDave wrote: »

I hate when people say if you put in a 30% deposit it's going to be more expensive second time around, that's not true. It's only true if you can't afford to save the deposit while also paying monthly payments. You also won't need as much second time around as long as you have some equity. When I was getting PCP on my Golf so many people were saying how it's more expensive next time as if it's a rule.

It is true unless you save save save then? You won't find that advice in car dealerships or on any paperwork. It's down to financial savvy on the part of the consumer which some but many do not have.

Vw does well for equity compared to many other brands, golf especially so.

Its right to say that unless you save for a new deposit in conjunction with your monthly that your monthly will increase if the deposit was high first time. It's an affordability question. Get a quote at 15pc deposit. If its too high month on month beware!!