PCP finance.

ELM327

If you're going PCP only for the better interest rates and intend to refinance the GFMV at end of term, will you still be subject to excess KM charge?

sillysocks

ELM327 wrote: »

If you're going PCP only for the better interest rates and intend to refinance the GFMV at end of term, will you still be subject to excess KM charge?

As far as I know that only kicks in if you are handing back the car after the 3 years. We refinanced and it wasn’t even asked.

DaveyDave

DaveyDave wrote: »

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...................

Skoda for example........
RECOMMENDED RETAIL PRICE
€46,200.00
DEPOSIT PERCENTAGE
30%
DEPOSIT
€13,860.00
AMOUNT FINANCED
€32,340.00
PERIOD (MONTHS)
36 Months
ANNUAL MILEAGE ('000S)
20km
FINAL PAYMENT
€18,480.00
36 MONTHLY PAYMENTS OF
€464.51
APR
3.9%
TOTAL COST OF CREDIT
€3,012.36


A bank loan may end up with you paying 20% + of the amount borrowed back in interest over 5 years but comparing that to APR PCP rates isn't at all accurate.

You won't find a car loan at 25% APR.

TheShow

DaveyDave wrote: »

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.

What banks are you using that charge 15/25%?
Banks are about 8/9/10 % tops for a car loan.

Daveydave must be taking about loan sharks.

Mickiemcfist

TheShow wrote: »

What banks are you using that charge 15/25%?
Banks are about 8/9/10 % tops for a car loan.

Daveydave must be taking about loan sharks.

I think he's talking about the cumulative cost of the loan but is forgetting that the 5.9% PCP interest also compounds.

Mickiemcfist

Mickiemcfist wrote: »

I think he's talking about the cumulative cost of the loan but is forgetting that the 5.9% PCP interest also compounds.

Indeed, APR is annual percentage rate, the 25% he mentions is quite likely what you describe.

............ what's a tracker mortgage :pac:

awec

Augeo wrote: »

Skoda for example........
RECOMMENDED RETAIL PRICE
€46,200.00
DEPOSIT PERCENTAGE
30%
DEPOSIT
€13,860.00
AMOUNT FINANCED
€32,340.00
PERIOD (MONTHS)
36 Months
ANNUAL MILEAGE ('000S)
20km
FINAL PAYMENT
€18,480.00
36 MONTHLY PAYMENTS OF
€464.51
APR
3.9%
TOTAL COST OF CREDIT
€3,012.36


A bank loan may end up with you paying 20% + of the amount borrowed back in interest over 5 years but comparing that to APR PCP rates isn't at all accurate.

You won't find a car loan at 25% APR.

I could be totally wrong here, and I'm sure someone will correct me if I am, but..

The monthly payment for 3 years is 464. But then at the end of the three years, you need to pay 18,480. If you were to save this amount up over the three years, you'd need to save ~513 a month, which means your car would be costing you ~977 (464+513) a month.

To take a standard car loan for the 32,340 instead, at current rates, would cost ~1020 a month. 43 quid a month more, which is about 1500 over three years. However, this option means no mileage limits.

It really is difficult to compare the two options like this, since they are totally different. Traditional finance is geared towards wanting to buy a car, pay for it, and then not have to pay for it any more, whereas PCP is geared towards encouraging people to regularly be changing their car and therefore always be paying for a car.

Lantus

Augeo wrote: »

Skoda for example........
RECOMMENDED RETAIL PRICE
€46,200.00
DEPOSIT PERCENTAGE
30%
DEPOSIT
€13,860.00
AMOUNT FINANCED
€32,340.00
PERIOD (MONTHS)
36 Months
ANNUAL MILEAGE ('000S)
20km
FINAL PAYMENT
€18,480.00
36 MONTHLY PAYMENTS OF
€464.51
APR
3.9%
TOTAL COST OF CREDIT
€3,012.36


A bank loan may end up with you paying 20% + of the amount borrowed back in interest over 5 years but comparing that to APR PCP rates isn't at all accurate.

You won't find a car loan at 25% APR.

Total cost of credit is for first 3 years only. The balance if financed also needs interest to be applied. On above example it will be 1300 to 2000 or less over 3 years so still a good deal.

Lantus

Lantus wrote: »

Total cost of credit is for first 3 years only. The balance if financed also needs interest to be applied. On above example it will be 1300 to 2000 or less over 3 years so still a good deal.

I know, I was merely giving a PCP example to illustrate that the chap's 25% view on bank loan compared to PCP was fairly not factual.

ShadowHearth

awec wrote: »

I could be totally wrong here, and I'm sure someone will correct me if I am, but..

The monthly payment for 3 years is 464. But then at the end of the three years, you need to pay 18,480. If you were to save this amount up over the three years, you'd need to save ~513 a month, which means your car would be costing you ~977 (464+513) a month.

To take a standard car loan for the 32,340 instead, at current rates, would cost ~1020 a month. 43 quid a month more, which is about 1500 over three years. However, this option means no mileage limits.

It really is difficult to compare the two options like this, since they are totally different. Traditional finance is geared towards wanting to buy a car, pay for it, and then not have to pay for it any more, whereas PCP is geared towards encouraging people to regularly be changing their car and therefore always be paying for a car.

If you plan to buy out on PCP then millage can be whatever you want. When you wrote that last check out, they won't run outside to have a look how many miles it has, then come back and say: sorry, you went 6k miles over the limit, it's balloon payment + 2k more.
A lot of people already confirmed that if you decided to trade in for another car in 3 years, dealers don't pay attention to millage.
The only reason they have millage limit, is to fend off fleet buyers, who will take out cheaper PCP cars and rack up astronomical millage, then just dump cars back to dealers.

mickdw

ELM327 wrote: »

If you're going PCP only for the better interest rates and intend to refinance the GFMV at end of term, will you still be subject to excess KM charge?

If you are buying out the car, the mileage or condition is of no concern to bank.
If you are trading it in for a new one, extra mileage will effect it's value like with any car being traded in.
If handing back, they will charge for additional mileage.

younggalway

Does anyone have experience of getting out of a PCP agreement early? I'm not talking about forfeiting etc. but I know you can just pay the balance owed and walk away.

I purchased a new car in March this year but now I am planning to emigrate in about 12 months, so basically looking to run a banger and save on payments over the next year. I'm not really in any rush to sell but I do think I will get the best price for my car if I sell before 2020. Now I have spoken to someone in the similar position, and VW bank said they could sell privately if the payment was made direct to them by the purchaser.

I'm wondering if anyone has heard of something like this or if anyone know what the best option would be? I know I'm going to lose a fair few pound at this point but if I'm would be happy for the price to just cover the outstanding amount. Do you think a dealer would sell this on my behalf, as I think he likelihood of someone buying a 191 car privately is null. Or maybe if the price was attractive enough I might sell it privately? Any advice appreciated?

bazz26

Talk to the dealer you bought it from.

mickdw

What car is it?

ELM327

If your deposit plus the total repayments so far exceed 50% of the initial purchase amount then you could hand back on the half rule.
Otherwise you're going to be taking a huge hit imo handing back a 191 so soon.

TheShow

most likely pay the settlement which will be high enough, but any cash up front is gone.
So your handing back the car and no money coming back your way.

Deleted User

Deleted User wrote: »

Ok so after a while of my brother and I trying to figure out the benefits of PCP we can't find any.

He's looking at getting a new Audi and we've been looking into pcp, he changes every 2 years or so and might have 15 k miles maximum on the clock so we thought pcp might suit him better.

You got to come up with a large deposit if you don't have a trade in and while your monthly payments appear low when you add in the fact you need a new deposit for the new pcp after 3 years your 300 a month pcp suddenly turns into 600+ pm.

So what's the benefit over hp or bank loan ?

The only hing with hp or loan is you pay the full interest where as pcp yup don't ?

Either way I see little benefit on a normal loan and trade in and re finance after 3 years or so. Only thing is VW bank has much lower interest than any other bank or finance.

For me doing 20-25 k miles a year pcp would leave me with not much on the gfv.

It seems to me that people could get caught out at the end because you can be damn sure you won't have much over the gfv to use as a deposit.

Funny, I just read this post again lol

Now that I'm on my 2nd PCP, my Brother also, we think it's great, works well for us.

Any questions please ask . It is a great way to finance a car once you know what it's all about.

I can't believe the thread is still active, and I can't believe I started this thread 5.5 years ago, time flies !!! but just wanted to say that I would not hesitate now to recommend PCP.

CoBo55

[Deleted User] wrote: »

Funny, I just read this post again lol

Now that I'm on my 2nd PCP, my Brother also, we think it's great, works well for us.

Any questions please ask . It is a great way to finance a car once you know what it's all about.

I can't believe the thread is still active, and I can't believe I started this thread 5.5 years ago, time flies !!! but just wanted to say that I would not hesitate now to recommend PCP.

Not for a leaf though... You lost your bollox on that baby.

CoBo55

CoBo55 wrote: »

Not for a leaf though... You lost your bollox on that baby.

Could have been much worse, the value of the car could have been 7 K, on PCP I couldn't care less because if it was worth 0 then it's not my problem.

Depreciation wasn't to do with PCP this was leaf values at the time, this is what a lot of People don't understand, I mention PCP and alarm bells immediately ring out in People's heads and instantly think , ah ha, see I knew PCP was a con. It isn't. Depreciation is !

Interest at that time was around 11-12% with regular finance or bank loan. PCP was around 8%

I could have paid the 9,500 K to own the leaf, for what , to end up loosing more money ? I put that towards the i3 instead , I got a cracking deal on that, a much nicer car and a hell of a lot more fun to drive, a no brainer, it was a rare bargain to find in Ireland on that car, what it's worth in the end is anyone's guess but it won't be PCP dictating this.

The other thing going against me at the time was bringing a Nissan to a BMW garage, that's never going to work in anyone's favour. They wanted nothing to do with it and immediately sold it to the trade.

I've no doubt I probably would have done better if I had to go to a Nissan dealer and get another Leaf but after driving the i3 that was never going to happen I was just blown away by how good it was to drive.

CoBo55

[Deleted User] wrote: »

Could have been much worse, the value of the car could have been 7 K, on PCP I couldn't care less because if it was worth 0 then it's not my problem.

Depreciation wasn't to do with PCP this was leaf values at the time, this is what a lot of People don't understand, I mention PCP and alarm bells immediately ring out in People's heads and instantly think , ah ha, see I knew PCP was a con. It isn't. Depreciation is !

Interest at that time was around 11-12% with regular finance or bank loan. PCP was around 8%

I could have paid the 9,500 K to own the leaf, for what , to end up loosing more money ? I put that towards the i3 instead , I got a cracking deal on that, a much nicer car and a hell of a lot more fun to drive, a no brainer, it was a rare bargain to find in Ireland on that car, what it's worth in the end is anyone's guess but it won't be PCP dictating this.

The other thing going against me at the time was bringing a Nissan to a BMW garage, that's never going to work in anyone's favour. They wanted nothing to do with it and immediately sold it to the trade.

I've no doubt I probably would have done better if I had to go to a Nissan dealer and get another Leaf but after driving the i3 that was never going to happen I was just blown away by how good it was to drive.

PCP and depreciation are intertwined with each other as you found out, something people need to consider if they plan changing again in 3 years. Some cars are a much safer bet than others when it comes to depreciation. And as you found out some dealers are better than others too. As I've said to anyone who's interested, PCP is great as long as you know what you're getting into, never forget the balloon payment!!!

CoBo55

CoBo55 wrote: »

PCP and depreciation are intertwined with each other as you found out, something people need to consider if they plan changing again in 3 years. Some cars are a much safer bet than others when it comes to depreciation. And as you found out some dealers are better than others too. As I've said to anyone who's interested, PCP is great as long as you know what you're getting into, never forget the balloon payment!!!

Yes that's true but you pay the calculated projected depreciation + interest to drive for 3 years and xx Kms, it could have gone either way but definitely giving a leaf to a BMW dealer didn't help but you're not paying the full cost of the car + interest unless you pay the balloon.

PCP can be a good way to see how depreciation is working out before you have a car that's half worthless, at year 3 you can decide to cut your losses which is exactly what I did and it's never a bad idea to abandon a sinking ship.

Finance would have ended up the same, depreciation + higher interest.

The best thing to do was get out and I was fully aware of the worst case which was having no value at the end, I said it in my thread also at the time.

However, I am really glad I didn't throw almost 10 K at the leaf to suffer further depreciation, that was much better put into the i3 Rex which gives me much greater driver satisfaction, more range and the Rex, passing charger queues is great fun !

Remember those who think they get good deals are probably the ones paying higher monthly payments, they are paying for the deposit they think they're getting for free , they're not getting anything for free, PCP us usually calculated so that you have something at the end it's just this time depreciation on the leaf was higher than calculated by Nissan.

Remember the winners are always the finance company and the dealer when you buy a car, you're always the looser, you want a car you pay for it simple as.

lcstress2012

I have a fiesta 171 coming to the end of my agreement this year. I’m going to keep the car but need to pay the remaining €7500 balance. Should I get a credit union loan or just refinance with the dealer? Anyone else ever in this situation what did you do ?

Salary Negotiator

lcstress2012 wrote: »

I have a fiesta 171 coming to the end of my agreement this year. I’m going to keep the car but need to pay the remaining €7500 balance. Should I get a credit union loan or just refinance with the dealer? Anyone else ever in this situation what did you do ?

I havent done it, but I'd just go with whichever is cheaper.

My local CU has loans at 7.9%, if the finance company is less than whatever your offers pick them.

Lantus

lcstress2012 wrote: »

I have a fiesta 171 coming to the end of my agreement this year. I’m going to keep the car but need to pay the remaining €7500 balance. Should I get a credit union loan or just refinance with the dealer? Anyone else ever in this situation what did you do ?

You can do either. Get quotes from all and compare. Some cus offer a 5.8% rate on pcp balloon and over 5 years.

You can also pay off a lump sum before or after you start repayments on finance. Usually its the full outstanding amount after your paying and at very little cost.

micks_address

Hi folks,
My pcp is up next year. I've a high spec skoda Octavia auto, Diesel, 150bhp, sportline etc. 172 d, I suspect I won't have a huge amount of equity to play with come next year when changing. After the three years lump sum will be about 12.7k.. the car new cost 35.5k, 0 percent finance.

I'm half wondering if handing back the car would be a crazy option? If I'm offered 3k equity.. to buy a similar priced car I'll probably have to put 5 or 6k into the deal myself to buy same again. I've already got a few prices and have been offered as low as 15k this year.. 53k km on the car.. I got 16k for my 3 year old Civic when buying the Octavia.. maybe I'm underestimating the trade in value I'll be offered next year. If I'm offered 18k might be workable but is that realistic?

Other option is to finance the balance and keep the car. Very happy with it so don't want to change for something and have to pay a lot to stay in similar for the sake of a new car..

Cheers,
Mick

Casati

micks_address wrote: »

Hi folks,
My pcp is up next year. I've a high spec skoda Octavia auto, Diesel, 150bhp, sportline etc. 172 d, I suspect I won't have a huge amount of equity to play with come next year when changing. After the three years lump sum will be about 12.7k.. the car new cost 35.5k, 0 percent finance.

I'm half wondering if handing back the car would be a crazy option? If I'm offered 3k equity.. to buy a similar priced car I'll probably have to put 5 or 6k into the deal myself to buy same again. I've already got a few prices and have been offered as low as 15k this year.. 53k km on the car.. I got 16k for my 3 year old Civic when buying the Octavia.. maybe I'm underestimating the trade in value I'll be offered next year. If I'm offered 18k might be workable but is that realistic?

Other option is to finance the balance and keep the car. Very happy with it so don't want to change for something and have to pay a lot to stay in similar for the sake of a new car..

Cheers,
Mick

Sounds like a lovely car you have, you’d be mad to get rid of it next year especially when your mileage is so small. Enjoy it for another two or three years

Lantus

Handing back car only makes sense if you won't drive again or the economics of the car market are broken.

In your case just pay of the lump sum. You've a nice car, low mileage. Why get rid?

mickdw

You will be throwing away money if you hand it back. Finance the remainder at best rate possible and keep it as long as you like.
Remember, you don't have to return to same dealer or same brand. You can go anywhere. They will give you difference between amount owed and trade in offer to go toward new car.

Id imagine you should do ok on trading in a low mile good spec Octavia.

EndaHonesty

micks_address wrote: »

Hi folks,
My pcp is up next year. I've a high spec skoda Octavia auto, Diesel, 150bhp, sportline etc. 172 d, I suspect I won't have a huge amount of equity to play with come next year when changing. After the three years lump sum will be about 12.7k.. the car new cost 35.5k, 0 percent finance.

I'm half wondering if handing back the car would be a crazy option? If I'm offered 3k equity.. to buy a similar priced car I'll probably have to put 5 or 6k into the deal myself to buy same again. I've already got a few prices and have been offered as low as 15k this year.. 53k km on the car.. I got 16k for my 3 year old Civic when buying the Octavia.. maybe I'm underestimating the trade in value I'll be offered next year. If I'm offered 18k might be workable but is that realistic?

Other option is to finance the balance and keep the car. Very happy with it so don't want to change for something and have to pay a lot to stay in similar for the sake of a new car..

Cheers,
Mick

I rolled my PCP over from a 152 Octavia VRS to a 182 Superb and it worked out quite well for me.

But, I had started looking to change in 172 and was given terrible trade-in offers and started to worry.

When it came to the end of the PCP the figures seemed to suddenly change and I was offered a fairly good deal.

So my advice is to; not worry, see out the PCP and see what offers are available then.

You'll have more equity than you think and the dealers will be happy to offer you an attractive deal to get you into a new car....

ELM327

At the end of the day the whole point of PCP is to get you to buy a new car every three years. They will give you a good deal at teh end of the pcp term