Can anyone clarify how PCP works?

fricatus

I've heard people going on about how great PCP is as a way to get a new car, but there's a part of it that I just don't understand, which is what happens at the end of the three years.

The quotes typically look something like this:
Deposit: €8,000
Repayments: €350 monthly over 36 months
GMFV: €10,000

So in this example, I need to stump up €8k (or a trade in up to that value, plus cash to make it up) and then pay €350 a month for the three years.

And then what happens? Am I understanding the following scenarios correctly?

1. I don't need a new car: I hand over the keys and say thanks!
2. I love the car and want to keep it: do I have to pay the GMFV as a balloon payment?
3. I want a new-new car! Do I now have to hand over the three-year-old one and come up with a new deposit?

draiochtanois

This post has been deleted.

surpy

fricatus wrote: »

I've heard people going on about how great PCP is as a way to get a new car, but there's a part of it that I just don't understand, which is what happens at the end of the three years.

The quotes typically look something like this:
Deposit: €8,000
Repayments: €350 monthly over 36 months
GMFV: €10,000

So in this example, I need to stump up €8k (or a trade in up to that value, plus cash to make it up) and then pay €350 a month for the three years.

And then what happens? Am I understanding the following scenarios correctly?

1. I don't need a new car: I hand over the keys and say thanks!
2. I love the car and want to keep it: do I have to pay the GMFV as a balloon payment?
3. I want a new-new car! Do I now have to hand over the three-year-old one and come up with a new deposit?

Yes to all 3.
It's a minimum value so your car may be worth more. You can also pay a higher deposit now, take out a personal loan to cover the lump sum or save a bit as you go and have a extra euro when it's time to change

fricatus

Ah that's perfectly clear now. Thanks lads!

zurbfoundation

can i ask what if your trade in is not deemed to be worth the deposit value (in the opinion of the dealer i suppose)

fricatus

zurbfoundation wrote: »

can i ask what if your trade in is not deemed to be worth the deposit value (in the opinion of the dealer i suppose)

I'm guessing that you just come up with the balance of the value in cash, right? So if the dealer reckons my trade in to be worth €6k, in my example above, I would have to come up with another two grand.

I also imagine there would be flexibility up to a certain point, so if your deposit wasn't the full amount, they might take the car and adjust your monthly payments upwards.

RyanMGF

After the 3 year term is up you can refinance what is left on the car.

sunnysoutheast

fricatus wrote: »

Ah that's perfectly clear now. Thanks lads!

Be aware that with option 1, handing it back, you will pay mileage charges for any over the agreed amount and any damage. If you keep the car or trade for a new PCP you won't.