PCP

xabi

Looking at a PCP currently and am confused

Car Price 24,045
Deposit 6,000
Monthly(36) 310
GFV 10,191

I would plan on paying the GFV at the end. That means that ill be paying in total 27,351 for a 24,045 car or 3,306 for the privilege of borrowing 7,854 over 3 years, doesn't seem so attractive now. Am i reading this right?

I have the funds but don't like the idea of lumping 24K outright on a car.

MuppetCheck

Ask them what the APR is but that seems off the wall. Is it possible there's a mistake?

xabi

APR is 7.9 but I assume that's on the 18,045 ie. 24,045 missus the 6,000 deposit

mickdw

But the finance house has paid the car manufacture in full for the car (less your deposit).
The finance people in this case had to pay out 18,045 on day one, then you are offsetting payment on a portion of that so that is where the interest is coming from.
In short, you are not borrowing 7800, you are borrowing 18045 and only paying off the last 10191 at end of year 3.
Still, there are excellent rates around and you should get the interest figure down.

h3000

xabi wrote: »

I have the funds but don't like the idea of lumping 24K outright on a car.

PCP is never as good as they make it sound.

If you have the 24k now I think it would make more sense to buy the car outright. There is no point in paying interest to someone as well as getting hit with the depreciation of the car.

xabi

mickdw wrote: »

But the finance house has paid the car manufacture in full for the car (less your deposit).
The finance people in this case had to pay out 18,045 on day one, then you are offsetting payment on a portion of that so that is where the interest is coming from.
In short, you are not borrowing 7800, you are borrowing 18045 and only paying off the last 10191 at end of year 3.
Still, there are excellent rates around and you should get the interest figure down.

Cheers, that makes sense, I'm paying the full interest even though I'd be paying it off early.

ironclaw

The figure you should really be looking at is the depreciation. If you waited 3 years, the €10k you pay it off at the end with would probably buy the same car outright. The market is currently excellent if you don't care what it says on the front and back.

xabi

ironclaw wrote: »

The figure you should really be looking at is the depreciation. If you waited 3 years, the €10k you pay it off at the end with would probably buy the same car outright. The market is currently excellent if you don't care what it says on the front and back.

No chance the 10k will buy a 3 year old one. It's a Qashqai, new model, the old model at 3 years old is making 16K now

milhous

7.9% is a massive APR for pcp. Credit unions are giving 6.9% on car loans.
I bought a VW on pcp, 1.9% APR. I think citroen are 0%. There are deals if you shop around.

Bigcheeze

milhous wrote: »

7.9% is a massive APR for pcp. Credit unions are giving 6.9% on car loans.
I bought a VW on pcp, 1.9% APR. I think citroen are 0%. There are deals if you shop around.

Citroen are 0% because no one wants one.

xabi

milhous wrote: »

7.9% is a massive APR for pcp. Credit unions are giving 6.9% on car loans.
I bought a VW on pcp, 1.9% APR. I think citroen are 0%. There are deals if you shop around.

No thanks on the Citroen, VW aren't very forthcoming with the rate on their website. How long ago did you get 1.9%? Anyway, I think VW are way over priced for what you get.

milhous

Bought in march, It depends what spec you get what APR you get.

I got the highline Passat, Very comfortable car, although had a problem that took 6 days to fix which I wasn't all too impressed with. After a lot of research at the time I couldn't of gotten a higher specced saloon for the same price/interest rate. Resale price is also good on them but the market might be flooded in three years time with the amount pcp plans they are selling.

testicle

xabi wrote: »

No thanks on the Citroen, VW aren't very forthcoming with the rate on their website. How long ago did you get 1.9%? Anyway, I think VW are way over priced for what you get.

VW PCP rate depends on the model and model variation. It's quite prominent on the website. It varies from 0 to I believe 4.9 without checking.

Bigcheeze

milhous wrote: »

Bought in march, It depends what spec you get what APR you get.

I got the highline Passat, Very comfortable car, although had a problem that took 6 days to fix which I wasn't all too impressed with. After a lot of research at the time I couldn't of gotten a higher specced saloon for the same price/interest rate. Resale price is also good on them but the market might be flooded in three years time with the amount pcp plans they are selling.

Presumably there's more margin on a highline so they can cut the finance rate.

Anyone know do you pay list price if you do pcp without a trade-in or is there some discount?

If not, it would add to the effective cost of pcp

h3000

h3000 wrote: »

PCP is never as good as they make it sound.

If you have the 24k now I think it would make more sense to buy the car outright. There is no point in paying interest to someone as well as getting hit with the depreciation of the car.

It makes no sense to lump 24k of savings into a car (unless it's only a small portion of your savings). Even if it's costing you money to borrow it's still better to have a lump sum cash available for unforeseen things, money towards a house deposit etc etc.

The problem with this PCP deal is the hight interest. I've been looking at VW cars recently and the PCP on nearly every one of them has been between 0 and 3.9%.

xabi

Bigcheeze wrote: »

Presumably there's more margin on a highline so they can cut the finance rate.

Anyone know do you pay list price if you do pcp without a trade-in or is there some discount?

If not, it would add to the effective cost of pcp

You can haggle the price down before you even start looking at the PCP option.

milhous

Bigcheeze wrote: »

Presumably there's more margin on a highline so they can cut the finance rate.

Anyone know do you pay list price if you do pcp without a trade-in or is there some discount?

If not, it would add to the effective cost of pcp

I think I got a 1400 decrease by not having a trade in.. That was off the RRP.

NIMAN

Anyone mind if I ask a quick PCP question.

Afaik, your monthly rate also depends on the amount of mileage you say you'll do annually?

If you say you'll do 20k but actually end up doing 15k, can you get any sort of refund or reduced payments for the next year?

Masala

NIMAN wrote: »

Anyone mind if I ask a quick PCP question.

Afaik, your monthly rate also depends on the amount of mileage you say you'll do annually?

If you say you'll do 20k but actually end up doing 15k, can you get any sort of refund or reduced payments for the next year?

following on that theme....is PCP applicable to users doing say 25k ++ kms a year.

sunnysoutheast

NIMAN wrote: »

Anyone mind if I ask a quick PCP question.

Afaik, your monthly rate also depends on the amount of mileage you say you'll do annually?

If you say you'll do 20k but actually end up doing 15k, can you get any sort of refund or reduced payments for the next year?

Not as far as I am aware. The expected mileage affects the GMFV which in turn impacts the monthly payments.

The actual mileage is only really relevant if you want to hand the car back at the end of the agreement.

milhous

Masala wrote: »

following on that theme....is PCP applicable to users doing say 25k ++ kms a year.

So with PCP they give a GMFV, and this is generally based on 20k km a year and they will only guarantee that value if you stick to that sort of km.

However after the three years on my car the GMFV will be about 13k but the car will more than likely be worth 18-19k if there is only 60k on the clock.

Therefore if you are trading it in at the end of three years the GMFV doesn't matter really, and if you are buying it out right from them at the end of three years it doesn't matter either

As said above that GMFV only matters if you're handing the car back at the end of the three years which I believe happens very rarely.

I'm doing 60k km a year at the minute, I reckon when I go to trade it in I'll have to add ~4-5k for the deposit and then just keep up the same repayments.

positron

milhous wrote: »

...the market might be flooded in three years time with the amount pcp plans they are selling.

I was thinking the same. I felt the relative shortage of 3-4 year old cars + strong sterling is keeping used car prices high. There got to be more 3 year old cars in the market in 3 years time, but not sure if Euro would gain against the Sterling.

Eirelh

Sorry I know it's been a while since there was a post on this thread but didn't want to open new one.

What do you think of this PCP quote I received today:

€250 per month - 36 months
€13,500 - GMFV
€8,698 - 30% deposit

APR 5.9%

2015 (152) A3 Sportback S-Line 1.6tdi Manual
€28,995 (reduced from €35,000)
€31,250 is the total amount I would pay (including interest) over 3 years.

Nonoperational

APR not great but you're getting a very nice car for feck all per month.

mickdw

Just be very clear on this. The car would need to be worth 22000 at end of term for you to get your next car at similar amount per month.
You are putting 8.5k in up front now. In order to have 8.5k equity at end of term, the car will need to be worth 8.5k more than the gfv.
I can't see a 4 year old A3 being worth anywhere near that. You will therefore be looking at a further cash injection to get into next car or much higher monthly cost.
Given the figures you have quoted, I can see very little equity in that car at the end of your term.

jca

mickdw wrote: »

Just be very clear on this. The car would need to be worth 22000 at end of term for you to get your next car at similar amount per month.
You are putting 8.5k in up front now. In order to have 8.5k equity at end of term, the car will need to be worth 8.5k more than the gfv.
I can't see a 4 year old A3 being worth anywhere near that. You will therefore be looking at a further cash injection to get into next car or much higher monthly cost.
Given the figures you have quoted, I can see very little equity in that car at the end of your term.

Exactly. Maybe his best option would be to refinance the gfv after the 3 years.

mickdw

jca wrote: »

Exactly. Maybe his best option would be to refinance the gfv after the 3 years.

Yep. Would be an option. Still that's not what is being sold to people. The sales talk is all about getting a new car every 3 years with low payments.
That's alot different to having to restart payments at year 3 to keep your car. In this case, the refinance payments at end of term could be higher than the 250 proposed now.
Personally, I think the figures have been pushed too far in this particular deal.

Drummerboy08

It depends on what the customer wants. I know I tell everyone EXACTLY what will happen in 3 years time with a 30% deposit and I push the lads here to do the same.

I reckon he'd have to top up the deposit in 3 years by 15% if he got the same car for the same payments.

Eirelh

Cheers for the feedback and comments guy's, much appreciated.

Still in limbo with the whole PCP arrangement but you're given me some food for thought.

jca

I was going to do it on a new octavia but didn't go through with it in the end. The thoughts of owing the bones of 11000 after 3 years or trying to find a hefty deposit to roll into another car just isn't my way of motoring tbh. I'll go to the credit union in the new year and borrow 10000 over 4 years ( I'll have it paid back in 3) a work colleague wants to buy my car so between the two amounts of money I should get up to a 132 and I'm free and clear in 3 years time.

Eirelh

jca wrote: »

I was going to do it on a new octavia but didn't go through with it in the end. The thoughts of owing the bones of 11000 after 3 years or trying to find a hefty deposit to roll into another car just isn't my way of motoring tbh. I'll go to the credit union in the new year and borrow 10000 over 4 years ( I'll have it paid back in 3) a work colleague wants to buy my car so between the two amounts of money I should get up to a 132 and I'm free and clear in 3 years time.

That's a fair point. I originally was very sceptical about paying a large deposit with 3 years of repayments plus another large amount at the end of the 3 years potentially. I am coming around a little however.

Think it's very much down to the individual and if the GMFV payment at the end of the 3 years is going to be a issue.

I only do around 10-12km per year so I'm within the mileage criteria for PCP. The repayments of €250 per month are affordable for me meaning I can save extra money per month towards the final balloon payment if I wish to buy the car outright.

jca

Eirelh wrote: »

That's a fair point. I originally was very sceptical about paying a large deposit with 3 years of repayments plus another large amount at the end of the 3 years potentially. I am coming around a little however.

Think it's very much down to the individual and if the GMFV payment at the end of the 3 years is going to be a issue.

I only do around 10-12km per year so I'm within the mileage criteria for PCP. The repayments of €250 per month are affordable for me meaning I can save extra money per month towards the final balloon payment if I wish to buy the car outright.

Saving the the extra money saved is easier said than done ( with me anyway) there's always something going to crop up to use it.

I went PCP on the Leaf, 450 PM V 750 for CU or back loan at that time. 25,000kms currently have 26,400 or close.

5 K trade in.

I don't want to keep it so why bother borrow the full amount of the car + interest to "own" it ? You still suffer the depreciation unless you want to keep it for years.