Experience of PCP

September1

There is number of threads where people discuss PCP, but they have mostly discussion on current offers and experience of people who have PCP deal now. I wonder if there are any members who completed PCP - what did you do in the end? Did you traded in old car for brand new one? If so did you have to top up deposit? Or perhaps someone just returned the car? Are you satisfied how it worked for you?

ajamesr

I'd like to hear some example also.
Here is one taken from another thread that was pretty informative and the type of examples that would be nice to get:

From dloob:
....................................................................................................................................................
So I've moved onto my second PCP recently and I guess there would be some interest in how that went.

On the first PCP I got a 131 Audi A3 Sportback 1.6 TDI.
It was 29.5K, it was the last of the old model so it got the S Line upgrade cheap along with some other bits like tinted windows and bigger alloys.
Deposit 6K
Cost 29.5K
Repayments 345
Settlement 12K
Mileage 20K a year

So almost 3 years later it's time to finish the deal.
No cheap S Line upgrades on offer this time and I want moar power too so I'm expecting it to cost more.
Audi offer a trade in of 18600 against a S Line A3 Sportback 1.4 TFSI 150.
Deposit 131 Audi + 800
Cost 36K
Repayments 476
Settlement 14K
Mileage 20K a year


Other dealers offered better trade ins but the best was BMW
BMW offered 21500 on a 120i sport (cost of about 38.5K)
Deposit 131 Audi
Cost 38.5K
Repayments 417
Settlement 16K
Mileage 15K a year

So I have a 120i now, Audi did later increase the trade in to 19K when informed of the better offers
They still seemed surprised when I told them I wouldn't be buying their car.


So in my case the monthly is up by over 50 on the original deal but then I did switch to a car costing near to 10K more up front.

I handed the Audi to BMW when I picked up the 120i and they sent a cheque to Audi Finance clearing the remaining finance.
Audi Finance still took another months payment out of my bank a week later mind you but it was no hassle getting it back from them.

Vicxas

In the case where you go for your first PCP and your car doesn't meet the trade in value, do you go out and get a CU loan for the balance?

I'm curious.

Vicxas

Vicxas wrote: »

In the case where you go for your first PCP and your car doesn't meet the trade in value, do you go out and get a CU loan for the balance?

I'm curious.

Having the money for the deposit in savings would be the way most would go about it I'd imagine. Having a CU loan on top of your PCP repayment will take away two of the main advantages of PCP, a fairly low monthly repayment and paying little or no interest (the CU loan will have a much higher interest rate than the PCP).

September1

It is reassuring that it worked for some, and as people are more likely to complain than praise it would seem it is not frequent case where one has to put deposit when moving from one PCP to another.

ctlsleh

September1 wrote: »

It is reassuring that it worked for some, and as people are more likely to complain than praise it would seem it is not frequent case where one has to put deposit when moving from one PCP to another.

If the APR on the finance is 7%, Whats the best approach? I assume max deposit is best?

Or is PCP just not competitive vs standard bank loan at this level where you're still paying interest on the full amount but you own it in the end?

grogi

ctlsleh wrote: »

Or is PCP just not competitive vs standard bank loan at this level where you're still paying interest on the full amount but you own it in the end?

It is as simple as that: if APR is the same, the financing costs you the same. There might be different "preparation" payments associated with different options though - bear that in mind.

September1

ctlsleh wrote: »

If the APR on the finance is 7%, Whats the best approach? I assume max deposit is best?

Or is PCP just not competitive vs standard bank loan at this level where you're still paying interest on the full amount but you own it in the end?

The higher APR the more you gain by having larger deposit. In fact with so high cost of loan you might save on interest part of payments by choosing other finance options.

There is a good thread on financial aspects of PCP here http://www.boards.ie/vbulletin/showthread.php?p=88363360 worth reading.

Charles Babbage

Discussion of PCP on RTÉ Radio 1 Sean O'Rourke show at moment.
All great if people with a tradein worht something to get into the PCP, maybe not so good in 3 years time.
People will not fully understand the trade in value of their car at the end.

September1

It would be great if regulator required car dealers to provide estimated equity at end of the lease.

Drummerboy08

September1 wrote: »

It would be great if regulator required car dealers to provide estimated equity at end of the lease.

Can you supply the crystal ball so?

Nonoperational

September1 wrote: »

It would be great if regulator required car dealers to provide estimated equity at end of the lease.

I would have thought it would be pretty obvious? Trade in value - GMFV.

carsfan2

You can always ask the sales guy if you're thinking of taking out pcp what they estimate. In fairness they can't tell the future but barring major disaster they would have a fair idea of what a certain model is likely to fetch give or take a couple of grand I would think.

I heard the piece on the radio this morning and thought it was pretty poor overall.
You would imagine most car buyers are eejits the way they were going on or maybe I'm wrong and lots of people haven't a clue what they're signing up to.

Maybe the government should do ads like the " I don't know what a tracker mortgage is" ones they used to do to educate us...

icv1111

Everyone tells me to stay away from PCP as you get stuck with it in the long run and it's not worth it.

Yet, every dealer I've visited has tried to push it on me so much. Which makes me doubly more suspicious.

Really finding it hard to getting it explained in very simple english.

September1

Drummerboy08 wrote: »

Can you supply the crystal ball so?

They propably already estimate it for sake of GMFV, anyway it possible to make decent estimations without crystal balls.

Nonoperational wrote: »

I would have thought it would be pretty obvious? Trade in value - GMFV.

Yes, they could also estimate trade in value at end of PCP contract and provide it before contract is signed.

carsfan2 wrote: »

You can always ask the sales guy if you're thinking of taking out pcp what they estimate. In fairness they can't tell the future but barring major disaster they would have a fair idea of what a certain model is likely to fetch give or take a couple of grand I would think.

I just think they should say it always and always explain what is risk. Overall PCP is least risky way for consumer to buy a car, so there is nothing to hide.

NIMAN

I heard a guy on the Sean O'Rourke show the other morning discussing PCP deals, and overall he seemed to be pretty negative about them.

He made a statement and it confused me, I was wondering could someone clarify it?

He said that when your 3 years is up, for example if your car is judged to be worth €10500, and the guaranteed min value was set at €10000, then you only have the difference of €500 to carry over into your next PCP as a deposit.

Is that correct?

CountingCrows

The short answer is yes. Have a read of this

http://www.thecarexpert.co.uk/car-finance-pcp-explained/2/

bazz26

Yes, it's called equity.

ThisRegard

September1 wrote: »

It would be great if regulator required car dealers to provide estimated equity at end of the lease.

They give a guaranteed minimum value anyway, (GMV). As people have said, it's hard to know if there's any additional equity there. If there's a glut of people returning the same model after 3 years it will affect the value negatively.

icv1111 wrote: »

Yet, every dealer I've visited has tried to push it on me so much. Which makes me doubly more suspicious.

It's understandable because at the end of the PCP term people are probably more likely to stick with the same marque if they decided to switch cars, so they potentially have a customer getting 2 or 3 cars from them over the next 10 years or so.

NIMAN wrote: »

He said that when your 3 years is up, for example if your car is judged to be worth €10500, and the guaranteed min value was set at €10000, then you only have the difference of €500 to carry over into your next PCP as a deposit.

Is that correct?

Don't you also have the value of the car you have as the deposit?


Hyundai and Kia seem to be doing well out of them anyway, the roads are full of new Tuscons and Sportages, a good portion I reckon are on PCP.

CountingCrows

ThisRegard wrote: »

Don't you also have the value of the car you have as the deposit?

No. You only have any value above the guaranteed future value (GFV).

ThisRegard

Ok, so you'll have any value above the GFV into your pocket.

So if say 3 years down the line you want to hand your current car back and grab a new car, the GFV of the car clears the current finance, and you have to find the deposit yourself like you would if you were starting a PCP for the first time.

Not such a good way to finance a car when you take that into consideration.

Lawros Tache

ThisRegard wrote: »

Ok, so you'll have any value above the GFV into your pocket.

So if say 3 years down the line you want to hand your current car back and grab a new car, the GFV of the car clears the current finance, and you have to find the deposit yourself like you would if you were starting a PCP for the first time.

Not such a good way to finance a car when you take that into consideration.

That is indeed the case if you were to pay minimum deposit (can pay between 7-30% and can include scrappage or trade-in) and minimum monthly repayments (also flexible).

To be fair you could max your deposit & max ur monthly payments then you would be left with no deposit required after 3 years, as equity in the car would equal (or maybe greater than) the deposit.

That won't suit everyone obviously but I'd argue that if you can't do that then you can't afford the car.