Leaving PCP

Snakeweasel

Has anyone here ever taken the option of just walking away from the dealer they bought their car from at the end of their PCP?

In my case, I have an A4 which I have another year of PCP on. Any way I look at it, I will be tied in to another 3 years of car finance minimum either through getting a new car on PCP or financing the balloon payment. Would I be crazy to pay the penalty for going over my mileage and just walking away, and get a small loan for a second hand car elsewhere? I really dont want to be paying big monthly repayments for the rest of my life

AvonEnniskerry

Would you consider buying out the car instead?

jimmycrackcorm

No it wouldn't be crazy to walk away. It's basically about the maths and affordability.

A good option though is to change after the first pcp to a cheaper car and save extra money to buy the balloon outright. E.g. after 6 years you've gone through two new cars and are in a position to pay off the balloon and own a three year old car with your own history. Otherwise you're basically likely to be in a similar position if you take out a loan to buy an unknown car the second time over the same period or longer.

Snakeweasel

jimmycrackcorm wrote: »

No it wouldn't be crazy to walk away. It's basically about the maths and affordability.

A good option though is to change after the first pcp to a cheaper car and save extra money to buy the balloon outright. E.g. after 6 years you've gone through two new cars and are in a position to pay off the balloon and own a three year old car with your own history. Otherwise you're basically likely to be in a similar position if you take out a loan to buy an unknown car the second time over the same period or longer.

Do you mean move to something like a Golf? (I was told by sales rep when I bought I could get anything in the Volkswagen family)

As in I would be paying back probably half of what I am now as well as having a smaller balloon payment at the end of the 3 years?

AvonEnniskerry

Snakeweasel wrote:

Do you mean move to something like a Golf? (I was told by sales rep when I bought I could get anything in the Volkswagen family)

That's not correct. You can approach any garage with your PCP in order to renew. So any car is possible. Not just vw

Snakeweasel

AvonEnniskerry wrote: »

That's not correct. You can approach any garage with your PCP in order to renew. So any car is possible. Not just vw

Really? as in the Skoda dealership down the road from them? I thought the way it worked was that the Audi/VW dealer I bought from owned the car unless I paid the balloon?

jimmycrackcorm

Snakeweasel wrote:

Really? as in the Skoda dealership down the road from them? I thought the way it worked was that the Audi/VW dealer I bought from owned the car unless I paid the balloon?

No you can go to any dealer. You'll find also that another dealer for another marque may well give you a better tradein price. They then pay off the balloon and you can use whatever equity is remaining towards another different make.

You're not obliged to take another PCP either, so you could for example. put together a credit union loan with the trade in equity to buy something.

Snakeweasel

jimmycrackcorm wrote: »

No you can go to any dealer. You'll find also that another dealer for another marque may well give you a better tradein price. They then pay off the balloon and you can use whatever equity is remaining towards another different make.

You're not obliged to take another PCP either, so you could for example. put together a credit union loan with the trade in equity to buy something.

Ah here, I know how dim I look considering it was such a big purchase, but I didnt think you could use it as a trade in unless it was through PCP?? Since day one I left the dealers feeling as if my only 3 options were;
1. Take a new car on PCP, with the existing one as deposit
2. Buy car outright at the end of 3 years
3. Hand back the keys at the end of the 3 years and walk away with nothing.

So I could trade in my current car along with a small loan and buy a car outright?

AvonEnniskerry

Snakeweasel wrote:

So I could trade in my current car along with a small loan and buy a car outright?

When you go to change cars you still owe your gmfv which is your lump sum. When you go to a garage... any garage to change the car they will offer you a trade in value for your vehicle. It might be 20000 Whilst the gmfv is only 15000. If you decide to go ahead they will pay off the outstanding 15000 to the garage you purchased the car from and that'll leave you with 5000 to put towards a car of your choice from your chosen garage. You can then add to that 5000 with a small loan to purchase a car out right.

JoeA3

As everyone else says, PCP is just a term loan. In your case from "VW Bank". You are free to do whatever you like, all you need to ensure is that the loan is cleared off in the agreed time. The bank won't care about anything else!

James Bond Junior

I can only imagine these kind of threads are going to get very popular in the near future.

aerofoiled

No offense OP, but these PCP threads remind me of that 'I don't know what a tracker mortgage is' ad.
Did people learn nothing or does a shiny piece of metal remove all rational thought???

MarkN

aerofoiled wrote: »

No offense OP, but these PCP threads remind me of that 'I don't know what a tracker mortgage is' ad.
Did people learn nothing or does a shiny piece of metal remove all rational thought???

I'd also blame at least 50% at the dealers door who clearly took advantage of someone just to make a sale. It very evidently wasn't explained properly.

bidiots

MarkN wrote: »

I'd also blame at least 50% at the dealers door who clearly took advantage of someone just to make a sale. It very evidently wasn't explained properly.

Nope, don't agree with that...... reminds me of everyone blaming the banks for lending them half a million to buy a shoebox in Dublin. Don't understand the agreement? Don't take out agreement. Bit of personal responsibility and all that

Zurbaran

bidiots wrote: »

Nope, don't agree with that...... reminds me of everyone blaming the banks for lending them half a million to buy a shoebox in Dublin. Don't understand the agreement? Don't take out agreement. Bit of personal responsibility and all that

So it's alright for salesmen to act in an unethical manor just cause the customer doesn't know the ins and out of PCP's?

jelutong

Add "The Goverment made us buy diesel cars" to the list.

Zurbaran

Same goes for banks as well.

Donal55

aerofoiled wrote: »

No offense OP, but these PCP threads remind me of that 'I don't know what a tracker mortgage is' ad.
Did people learn nothing or does a shiny piece of metal remove all rational thought???

Haha.
In hindsight it actually appears that the banks themselves didn't know 'what a tracker mortgage is'.
I love it.

Audioslaven

Zurbaran wrote: »

So it's alright for salesmen to act in an unethical manor just cause the customer doesn't know the ins and out of PCP's?

Since when did a salesman care about acting in an ethical manner or a car dealership at that, bang in the banks as well.... they only care about the sale and their commission.. their loan sales etc. It is the responsibility of the customer to know what he/she is getting into. The customer as you state needs to stop acting like a naive fool.

Audioslaven

Donal55 wrote: »

Haha.
In hindsight it actually appears that the banks themselves didn't know 'what a tracker mortgage is'.
I love it.

Brilliant!!!

mickdw

As said, you can do whatever you wish.
I'd contact Audi dealer for a settlement figure on existing deal. Vw bank will send you an official letter after this request indicating what is owed on your car.
Walk into toyota dealer for example. Get a trade in value from them, produce your settlement letter and straight away you have you equity to go forward. It's as simple as that. You can then pcp a new car, buy outright a new car of any description or buy outright a used car.
Handing back the keys and also paying a penalty due to mileage would be criminal really when your car is most likely worth far in excess of the amount owed even with the excess miles on it.

Zurbaran

Audioslaven wrote: »

Since when did a salesman care about acting in an ethical manner or a car dealership at that, bang in the banks as well.... they only care about the sale and their commission.. their loan sales etc. It is the responsibility of the customer to know what he/she is getting into. The customer as you state needs to stop acting like a naive fool.

Accepting that the sales man is out for commission so anything goes is unacceptable.

You seem to know about these products like many of us do but if you were to be sold for example a mortgage/pension or a myriad of other financial products, should it be up to you to know you are being duped? Or maybe you did some research but still got made a fool of because the guy selling it knew more than you. Is that fair enough as well?

Tigger

Zurbaran wrote: »

So it's alright for salesmen to act in an unethical manor just cause the customer doesn't know the ins and out of PCP's?

I was part of a group secretly sent round vw group garages to gauge how pcp was being sold in late 2014 , basically for 15 cars
I found that it was explained very well and that my wife who accompanied me kept saying that we could have a 151 diesel car instead of the big engined high tax older cars I insist in buying.
New cars are very enticing they make non car people think you have a good car

jimmycrackcorm

Snakeweasel wrote: »

3. Hand back the keys at the end of the 3 years and walk away with nothing.

In most cases this would be a bad option where the trade-in value is worth more than the GMV. You'd be better off using any equity even as a trade-in on a cheap older second hand car than giving that money to the dealer for nothing.

Zurbaran

Tigger wrote: »

I was part of a group secretly sent round vw group garages to gauge how pcp was being sold in late 2014 , basically for 15 cars
I found that it was explained very well and that my wife who accompanied me kept saying that we could have a 151 diesel car instead of the big engined high tax older cars I insist in buying.
New cars are very enticing they make non car people think you have a good car

I'm sure most are fine. It doesn't excuse the bad ones though.

I'd be interested to know how you would approach these dealers. Would you be a knowledgeable buyer or go in as someone who knows very little about cars, financial products or both? Also why was it just VW garages and who were you working for?

Audioslaven

Zurbaran wrote: »

Accepting that the sales man is out for commission so anything goes is unacceptable.

You seem to know about these products like many of us do but if you were to be sold for example a mortgage/pension or a myriad of other financial products, should it be up to you to know you are being duped? Or maybe you did some research but still got made a fool of because the guy selling it knew more than you. Is that fair enough as well?

Stop digging!!. It is the responsibility of the purchaser to know the terms of the offer and the implications of the offer. Playing the dumb card just does not cut it.

GB FAN GALWAY 30

I've had a fear about the impending PCP bubble that's about to burst around the country. From a garage point of view the maths are also disastrous. In the initial deal the offered a guaranteed minimum future value. The problem now is that take a VW XY that they said would be worth €17,000 minimum after three years can now be bought in from the UK for maybe €13,000. That's quite a gulf to cover and it's being replicated across car brands. Also form a personal finance point of view I really think the next recession isn't far away!

Zurbaran

Audioslaven wrote: »

Stop digging!!. It is the responsibility of the purchaser to know the terms of the offer and the implications of the offer. Playing the dumb card just does not cut it.

Digging? Sure it's grand. Lambs to the slaughter.

mickdw

GB FAN GALWAY 30 wrote: »

I've had a fear about the impending PCP bubble that's about to burst around the country. From a garage point of view the maths are also disastrous. In the initial deal the offered a guaranteed minimum future value. The problem now is that take a VW XY that they said would be worth €17,000 minimum after three years can now be bought in from the UK for maybe €13,000. That's quite a gulf to cover and it's being replicated across car brands. Also form a personal finance point of view I really think the next recession isn't far away!

I don't agree that it's as bad as that at all. The gfv is set well below expected market value. A car with gfv of 17k would have retailed at 40k new approx.
There are not many 40k cars that can be landed here vrt paid at 3 years old for 13k.
I think there is more than enough room left in the figures to protect the finance companies from a disaster however, the customer will get screwed as actual value approaches gfv meaning no deposit to go forward.

milhous

I like the pcp option, it works well for me, it was explained very clearly by VW at the beginning ( I had it well researched before I went in tbf). I see it as a long term lease with the option of buying. 0% finance.

If Leasing (pch?) was available here for private use I'd prob use that instead tbf, as I have no intention of buying it at the end.

Current Passat has a gfv of 13.5k which will be the balloon payment at the end if I choose to keep it, but my model with the current miles are listed at between 23-25k at the minute, say 3k for the garage out of that for the hassle and another 8months depreciation and I should still have some equity there towards new yoke.

Marcusm

Zurbaran wrote: »

So it's alright for salesmen to act in an unethical manor just cause the customer doesn't know the ins and out of PCP's?

I suspect the salesmen are no less ignorant than the customers.

BoatMad

GB FAN GALWAY 30 wrote: »

I've had a fear about the impending PCP bubble that's about to burst around the country. From a garage point of view the maths are also disastrous. In the initial deal the offered a guaranteed minimum future value. The problem now is that take a VW XY that they said would be worth €17,000 minimum after three years can now be bought in from the UK for maybe €13,000. That's quite a gulf to cover and it's being replicated across car brands. Also form a personal finance point of view I really think the next recession isn't far away!

the people that talk about PCP " crashes " clearly have little understanding of a PCP

Firstly the garage has no liability or loss in the normal course of events , when you complete a PCP , the garage is paid in full like any other form of loan. IF the commercial value of the car is below the GMFV and no penalties occurs , then the loss is borne by the contracting dealer as he is contractually bound to clear the GMFV. . . The dealer gets a commission from the bank


If the market value of a car declines, and again you remain within your PCP , the dealer carries the can, but in general GMFVs are set to avoid that circumstances and evidences shows that most cars reach their GMFV at least . The dealer has the " cash " discount to buffer hime as well as for some reason that is not offered as a discount in finance sales


The misselling of PCPs occurs when punters are convinced that they will walk in in three years and somehow " swop " the car for a new one and continue to pay the same monthlies, none of that is guaranteed, thats the issue and recently many punters exited PCP to find that it was not possible to simply trade up in that way , leading to very disgruntled punters

A PCP is basically identical to the commercial balloon lease with a few bells on it ( the walk away option)

it always annoys me that dealers give discount for cash and none for finance, even though the net effect is in both cases they , the dealer , gets " cash " in full & upfront

BoatMad

milhous wrote: »

I like the pcp option, it works well for me, it was explained very clearly by VW at the beginning ( I had it well researched before I went in tbf). I see it as a long term lease with the option of buying. 0% finance.

If Leasing (pch?) was available here for private use I'd prob use that instead tbf, as I have no intention of buying it at the end.

Current Passat has a gfv of 13.5k which will be the balloon payment at the end if I choose to keep it, but my model with the current miles are listed at between 23-25k at the minute, say 3k for the garage out of that for the hassle and another 8months depreciation and I should still have some equity there towards new yoke.

a PCP is almost the same as a commercial balloon lease, contact hire ( aka long term hire ) , is an entirely different animal and isnt appropriate for private purchase per se as the VAT advantages are not applicable.

MarkN

bidiots wrote: »

Nope, don't agree with that...... reminds me of everyone blaming the banks for lending them half a million to buy a shoebox in Dublin. Don't understand the agreement? Don't take out agreement. Bit of personal responsibility and all that

To repeat for you, I said 50%.

Being sold what was essentially a new method of car finance in Ireland in 2014, they had a responsibility (and still do) to ensure the customer knew what they were getting into.

Your point about mortgages is even more reminder that they should be ensuring clarity.

carsfan2

BoatMad wrote: »

a PCP is almost the same as a commercial balloon lease, contact hire ( aka long term hire ) , is an entirely different animal and isnt appropriate for private purchase per se as the VAT advantages are not applicable.

Why is long term leasing not available in Ireland unlike the uk and many other markets for the private customer?

Anecdotally too I have talked to a lot of people who think they know what pcp is but really don't once you listen to them for a while.

JoeA3

I think it's a bit over the top to state dealers mis-sold PCP deals to customers. My experience (and of friends/family) of it has been very transparent. Generally the salesmen doesn't get very involved in the figures at all. There tends to be a dedicated finance person in-house who goes through all this. It was all explained very clearly to me. But like anything else, you either listen to the guidance / advice given or you don't. The loan also has to be approved like any other loan - you need to meet the criteria / be seen to be capable of repayments. I know that people have been refused PCP finance. It's not like the dealers are pulling some Del-Boy fast one and trying to sign you up to some dodgy deal. It's very above board!

"Walking away" from the deal at the end of the 3 years (i.e. handing back the keys) is definitely the worst option. Your car will definitely have equity in it over and above the GMFV. But you are free to take that equity to any other dealer.

Actually - one caveat - I've heard that at least some smaller (non franchised) dealers don't like getting involved in trade ins involving cars still on PCP arrangements. My sister ran into this problem last year. So if you were looking to trade down into a cheaper car, the smaller indie dealers might not be an option.

bidiots

MarkN wrote: »

To repeat for you, I said 50%.

Being sold what was essentially a new method of car finance in Ireland in 2014, they had a responsibility (and still do) to ensure the customer knew what they were getting into.

Your point about mortgages is even more reminder that they should be ensuring clarity.

But it still comes down to the buyer.
Ignorance is not an excuse.

milhous

BoatMad wrote: »

a PCP is almost the same as a commercial balloon lease, contact hire ( aka long term hire ) , is an entirely different animal and isnt appropriate for private purchase per se as the VAT advantages are not applicable.

Could well be wrong, I just got it from some finance show on bbc radio at some point. He was talking about finance option and was saying most people were going pcp but only something like 15% ever use the buying option. Said there was much better value in pch and you could negotiate more and it's usually over 24months. It just stuck with me and I googled pch and it seems to be everywhere in the U.K. And not a sight over here except for commercial (due to vat?).

grogi

milhous wrote: »

Could well be wrong, I just got it from some finance show on bbc radio at some point. He was talking about finance option and was saying most people were going pcp but only something like 15% ever use the buying option. Said there was much better value in pch and you could negotiate more and it's usually over 24months. It just stuck with me and I googled pch and it seems to be everywhere in the U.K. And not a sight over here except for commercial (due to vat?).

I think a lot of it is because of psychology and used terminology.

When doing PCP, you don't ever hear 'final payment'. You hear Guaranteed Future Value. You are not getting a loan, you enter into Purchase Plan. All of those have good vibe and I imagine have huge impact on decision making.

MarkN

bidiots wrote: »

But it still comes down to the buyer.
Ignorance is not an excuse.

Of course, fool me once and all that, I just feel some people might have been somewhat confused and is every single dealer as good as the best ones at explaining it all to a customer. I know someone who put 30% into an A5 sportback and couldn't understand why Audi wanted such a huge deposit again to get an A6 black edition with the same small repayments. I'd consider this guy sharp enough so I can't help but wonder was that crucial bit of info when putting in such a big deposit explained regarding the low repayments next time around. Then you have nearly every other buyer coming on here asking can they trade their car in at another brand / dealer etc

AvonEnniskerry

MarkN wrote:

Of course, fool me once and all that, I just feel some people might have been somewhat confused and is every single dealer as good as the best ones at explaining it all to a customer. I know someone who put 30% into an A5 sportback and couldn't understand why Audi wanted such a huge deposit again to get an A6 black edition with the same small repayments. I'd consider this guy sharp enough so I can't help but wonder was that crucial bit of info when putting in such a big deposit explained regarding the low repayments next time around. Then you have nearly every other buyer coming on here asking can they trade their car in at another brand / dealer etc

Personally I found the information good but you have to ask the right questions. I was on the phone to them every other day asking more questions. Checking online, ringing back up and asking more. I did my sales persons head in and many times he had to do his own research to answer them. I rang various different garages for prices and more information and I'm happy that i got the best price possible though it was a long couple of weeks. I think PCP can be a very good option for the consumer. It's not all about being shiny and new but in this day and age all cars seem to be going more and more electronic... Meaning more expensive to repair. Things need to be recoded in. Back to main dealer. Second hand cars are getting bigger problems and buying new gives you the comfort of warranty and reliability with no massive repair costs in your future. Just your steady monthly repayment and the odd service. We've two young kids and only one family car so reliability is of the utmost importance. I can not be stuck with out a car especially living in the country.

Monthly repayments for a reletively new second hand car would have been about the same with no warranties other than catastrophic engine failure. At the the end you've the option to buy out or trade in. Personally handing the keys back would not be the best option for the Consumer by any means.

bidiots

MarkN wrote: »

Of course, fool me once and all that, I just feel some people might have been somewhat confused and is every single dealer as good as the best ones at explaining it all to a customer. I know someone who put 30% into an A5 sportback and couldn't understand why Audi wanted such a huge deposit again to get an A6 black edition with the same small repayments. I'd consider this guy sharp enough so I can't help but wonder was that crucial bit of info when putting in such a big deposit explained regarding the low repayments next time around. Then you have nearly every other buyer coming on here asking can they trade their car in at another brand / dealer etc

If a salesman deliberately gives false and misleading information then that's a time to blame the salesperson.
Otherwise, whatever way you want to wrap the scenario, its the customers responsibility to know what they are getting into. It's that simple.

aerofoiled

MarkN wrote: »

To repeat for you, I said 50%.

Being sold what was essentially a new method of car finance in Ireland in 2014, they had a responsibility (and still do) to ensure the customer knew what they were getting into.

Your point about mortgages is even more reminder that they should be ensuring clarity.

PCP, hire purchase or any credit or insurance product can only be sold by a person regulated to do so.
In larger dealers this will be a Business Manager but smaller dealers will usually have a sales guy who is APA (Approved Product Advisor) qualified. In theory, this means the that the product has to be clearly explained and questions from the buyer/borrower answered in the same manner. I'm not naive to think this will always be the case.

Having said that, there is a still a huge onus the buyer to know what they're getting themselves into, so again, do people choose to hear what they want to hear and think 'ah sure, I'll worry about the balloon/GMFV/whateveritis in 3 years...'?

JoeA3

aerofoiled wrote: »

do people choose to hear what they want to hear and think 'ah sure, I'll worry about the balloon/GMFV/whateveritis in 3 years...'?

I think there's a big element of this.

MarkN

bidiots wrote: »

If a salesman deliberately gives false and misleading information then that's a time to blame the salesperson.
Otherwise, whatever way you want to wrap the scenario, its the customers responsibility to know what they are getting into. It's that simple.

We'll agree to disagree over this, it's all pro salesperson where you're coming from. You're not willing to see it from anyone else's side, fair enough.

bidiots

MarkN wrote: »

We'll agree to disagree over this, it's all pro salesperson where you're coming from. You're not willing to see it from anyone else's side, fair enough.

LOL, trust me, I'm not pro salesman. I'm pro 'moral responsibility'.
I can see it from all sides btw, I think you might be blinded though.
Again, no matter what way you want to wrap it, responsibility lies with the customer taking on the package. No passing the blame game as we've had for the past decade. Ignorance is not an excuse. Thats my last on the matter.

MarkN

bidiots wrote: »

LOL, trust me, I'm not pro salesman. I'm pro 'moral responsibility'.
I can see it from all sides btw, I think you might be blinded though.
Again, no matter what way you want to wrap it, responsibility lies with the customer taking on the package. No passing the blame game as we've had for the past decade. Ignorance is not an excuse. Thats my last on the matter.

Not blinded, don't have PCP on my car but know how all the nuts and bolts of it work. None of us know the merits of who and how this particular poster was briefed on it is all. All the customers who are confused and posting here must all be wrong so!

Audioslaven

bidiots wrote: »

LOL, trust me, I'm not pro salesman. I'm pro 'moral responsibility'.
I can see it from all sides btw, I think you might be blinded though.
Again, no matter what way you want to wrap it, responsibility lies with the customer taking on the package. No passing the blame game as we've had for the past decade. Ignorance is not an excuse. Thats my last on the matter.

Very true as at the end of the day you sign your name on the document so playing the dumb card just does not cut it

BoatMad

carsfan2 wrote: »

Why is long term leasing not available in Ireland unlike the uk and many other markets for the private customer?

Anecdotally too I have talked to a lot of people who think they know what pcp is but really don't once you listen to them for a while.

can you define what you mean by a " lease". It a fairly broad term

BoatMad

Having said that, there is a still a huge onus the buyer to know what they're getting themselves into, so again, do people choose to hear what they want to hear and think 'ah sure, I'll worry about the balloon/GMFV/whateveritis in 3 years...'?

of course, thats why balloon leasing exists, out of sight and out of mind . AT least in a PCP , the residual value of the asset is designed ( in the normal course of events ) to cover the balloon ( GMFV) , unlike commercial balloon leases, where the buyer is on the hook

I dont see any issues with PCPs from a buyer perspective , with the exception of the nonsense of " walk in in three years and get a new car " sals patter that Ive heard

carsfan2

BoatMad wrote: »

can you define what you mean by a " lease". It a fairly broad term

I suppose I mean personal contract hire like is available in the uk.