PCP early upgrade

Wynner05

I know PCP has been talked to death but has anyone any experience with upgrading say 18-24 months into the 36 month cycle did you get a good deal? Was it worth it? I'm thinking I may have more value in the current car if I upgrade early?

carsfan2

A lot of variables here.
What car is it, how much deposit did you put in and how far into the term are you?
The trade in value of the car versus how much you have paid off will determine the level of equity you have in it if any at all. This is what you can use towards another car.

JoeA3

Yeah there's so many variables.

You are free to bail out at any time. It's a bank loan like any other. Bail out early (e.g. if you just wanted rid of the car and managed to sell it privately), then you just pay off the balance and you'd save a bit on interest repayments too.

The worst of the depreciation is in the first 2-3 years. It begins to tail off a bit after that. So if you bail out at 18 months you've suffered the worst of the depreciation curve and you are not taking any advantage of the period where it settles down a bit.

On the flip side, next year could be a big year for determining how PCP works out longer term. 181-182 is when we'll see a big glut of used PCP'd cars coming back onto forecourts. If you were to bail now you'd beat that queue and might get a better trade in than when there's 100's of your car on the forecourt next year.

What it boils down to is - what equity is in your car now versus what equity do you predict will be in it after the 3 years.

Wynner05

Its a Seat Ibiza Cupra, paid the full 30% deposit and got it on 0% interest and am 18months into the term. its not so much a desire to bail out but the temptation of a new car and a bit of an upgrade. I've seen a few people mention early upgrades but not many details on if it worked out well for them.

GavMan

Talk to the dealers but at 30% deposit, you could be stung on the equity and end up putting in big cash again. Especially if the car you want is a segment of 2 up from yours. Thats if you want similar repayments.

If you're happier to pay more monthly there might be enough equity to cover your deposit. Hard to know without knowing what you want to get into next, money borrowed on the Ibiza, etc

JoeA3

Wynner05 wrote: »

Its a Seat Ibiza Cupra, paid the full 30% deposit and got it on 0% interest and am 18months into the term. its not so much a desire to bail out but the temptation of a new car and a bit of an upgrade. I've seen a few people mention early upgrades but not many details on if it worked out well for them.

I'm in a similar position. I put up 30% too on a Golf a little under 2 years ago. I expect that whether I looked to change now or wait until the 3 years are up, there is no way I will have 30% equity in the car (and neither will you). What this means is, changing into the new car will not be a straight swap! If you want to keep the monthly repayments in or around the same level as what you pay now, you'll definitely have to stump up a few k to pad out the deposit up to 30% again.

i.e. people who went all in with the max deposit such as you and me will be in for some "man maths" to make the numbers add up again when it comes to trade in time. Knowing a bit more about PCP now than I did 2 years ago, I reckon the sweet spot is to put up around 10-15% initial deposit. That way your equity should be more than enough to maintain similar repayments into the next car. Problem with that approach on a higher end car such as your Cupra is that the monthlies can be pretty high.

carsfan2

A lot will depend on what you want to change the Seat to,
If another Seat or car in the same dealer they may give a very favourable value of your own to make the deposit easier for you. I.e. Put less money in yourself up front. If it's another make the price they put on your own might be much less.
No harm in asking the question of the dealer. As joe says I'm not convinced holding on until the end of term is always the most cost effective way to do it. But anyway if you're into your cars you can justify anything to yourself and others in my experience regardless of the finances.

Wynner05

JoeA3 wrote: »

I'm in a similar position. I put up 30% too on a Golf a little under 2 years ago. I expect that whether I looked to change now or wait until the 3 years are up, there is no way I will have 30% equity in the car (and neither will you). What this means is, changing into the new car will not be a straight swap! If you want to keep the monthly repayments in or around the same level as what you pay now, you'll definitely have to stump up a few k to pad out the deposit up to 30% again.

i.e. people who went all in with the max deposit such as you and me will be in for some "man maths" to make the numbers add up again when it comes to trade in time. Knowing a bit more about PCP now than I did 2 years ago, I reckon the sweet spot is to put up around 10-15% initial deposit. That way your equity should be more than enough to maintain similar repayments into the next car. Problem with that approach on a higher end car such as your Cupra is that the monthlies can be pretty high.

Yes I know what you mean, unfortunately there'll be nowhere near the 30%! I suppose it'll be a case of finding that sweet spot to try and balance out the monthly payments with the equity left in the car, I'll have to see with the dealer if the equity will better no or at the end of the term, either way I don't think there will be too much! I hope that golf is working out well for you I actually had a deposit down on one before I ended up with the Seat.

Wynner05

carsfan2 wrote: »

A lot will depend on what you want to change the Seat to,
If another Seat or car in the same dealer they may give a very favourable value of your own to make the deposit easier for you. I.e. Put less money in yourself up front. If it's another make the price they put on your own might be much less.
No harm in asking the question of the dealer. As joe says I'm not convinced holding on until the end of term is always the most cost effective way to do it. But anyway if you're into your cars you can justify anything to yourself and others in my experience regardless of the finances.

It was driving past the seat garage and seeing the new Leon Cupra 300 that started all this, so I may just stick with them, I'll have to pay a visit like you say and work out if it's going to be resonably the same as waiting until the end of the 3 years. Either way it looks like I will be taking a hit on either the deposit or the monthly payments.

JoeA3

Wynner05 wrote: »

Yes I know what you mean, unfortunately there'll be nowhere near the 30%! I suppose it'll be a case of finding that sweet spot to try and balance out the monthly payments with the equity left in the car, I'll have to see with the dealer if the equity will better no or at the end of the term, either way I don't think there will be too much! I hope that golf is working out well for you I actually had a deposit down on one before I ended up with the Seat.

If you're staying with Seat (or even within the VAG stable), I'd expect the dealers to massage the numbers a bit to make them at least seem favourable to you. There might be some deposit contribution or something like that. A big reason for them pushing PCP after all is to lock you in as a happy returning customer. If they piss you off with the finances for the replacement then they'll have lost a customer...

Are you looking at another Cupra?

Yeah very happy with the Golf!