Returning a PCP car

Guy:Incognito

ForestFire wrote: »

I think this is a bit pedantic,
.

It really isn't. You're buying the car first. It doesn't matter whether you sell it 5 minutes after you pay for it or 5 years.

ford2600

Pelvis wrote: »

Well an argument can be made that spending 25k+ on a new car is crazy regardless of your salary. I personally don't "get it", and couldn't see myself ever buying a new car unless my salary was running into 6 figures. I realise this wouldn't be a view held by the majority in this forum though.

I've been doing 50k km a year for 20 years. I've never bought new.

The lowest mileage on a car I've bought is 100k km.

I've never had a breakdown in that time; none of the things people fear when they are convinced to buy a new car they can't afford.

Oil and filter changes done myself with suspension/brake work done by mechanic. Depreciation at 2-3k per year isn't hard if you keep purchase price low, look after car and don't buy a lemon.

Someone renting and buying a new car with that commute is mental.

I have a brother in law with a couple of garages; among his gang the way they tall of PCP reminds me a cheap finance circa 2006/07.

Potential bumble in the making if people like OP'S GF in any numbers say fcuk this. Higher and higher rents increase that likelihood

ForestFire

Guy:Incognito wrote: »

It really isn't. You're buying the car first. It doesn't matter whether you sell it 5 minutes after you pay for it or 5 years.

5 mins is pedantic.
Ignoring the rest of my post and the reasons behind what I said is pedantic.
But that's just my opinion.

Do you think it was right to advice the OP that they could not sell their car now as it is MID PCP, and this option was completely non existent in any form?

givyjoe

ford2600 wrote: »

I've been doing 50k km a year for 20 years. I've never bought new.

The lowest mileage on a car I've bought is 100k km.

I've never had a breakdown in that time; none of the things people fear when they are convinced to buy a new car they can't afford.

Oil and filter changes done myself with suspension/brake work done by mechanic. Depreciation at 2-3k per year isn't hard if you keep purchase price low, look after car and don't buy a lemon.

Someone renting and buying a new car with that commute is mental.

I have a brother in law with a couple of garages; among his gang the way they tall of PCP reminds me a cheap finance circa 2006/07.

Potential bumble in the making if people like OP'S GF in any numbers say fcuk this. Higher and higher rents increase that likelihood

Ultimately though this potential bubble will surely, mostly, only harm the dealers themselves, i.e. a influx of cars handed back at the end of PCP (as buyers cant afford to keep them) meaning lots of cheap, nearly new second hand cars.

acronym Chilli

Deleted User wrote: »

[/B]

In England, many people have experienced reduced estimates of their car after the term _ some dealers are assessing the car with a fine tooth comb and deducting value for the smallest of issues.

I can imagine that happening... it'd be like the worst car-rental hand-back inspection of all time... lots of debate about what "normal wear and tear" is etc., are stone chips on the bonnet normal? what about scuffed alloy rims? or any chipped/broken bits of interior trim? Basically anything that can't be pushed back onto warranty by the driver.

mrbrianj

ShadowHearth wrote: »

It has no bearing on my monthly payments or balloon. It will be same. It will have only any kind of bearing if I decide to put the keys on the table and walk away after 3 years.
If I decide to trade in for another new car, then it depends from a dealer. If he wants your business, they dont even look at millage.

I went through 2 pcp deals, before the end of both deals the dealer did reduce the value of the car for excess kms on any offers for a renewal of pcp on a new car.
Both times I was lucky enough to be able to pay off the balloon and keep the car and then sell on. I would of had to add a deposit to get a new car on PCP.

The credit is cheap and I am not sure how much of a deal you can get for buying rather than renting - dealership seem more interested in flogging cars on PCP.

ShadowHearth

mrbrianj wrote: »

I went through 2 pcp deals, before the end of both deals the dealer did reduce the value of the car for excess kms on any offers for a renewal of pcp on a new car.
Both times I was lucky enough to be able to pay off the balloon and keep the car and then sell on. I would of had to add a deposit to get a new car on PCP.

The credit is cheap and I am not sure how much of a deal you can get for buying rather than renting - dealership seem more interested in flogging cars on PCP.

One way or another, I had never illusions that I will be able to jump to a new car after 3 years without increasing payments or adding extra on deposit. Its given and who ever though that its going to be just same monthly payments all the time without any extra money put down was not supposed to even buy that car on pcp.

I talked to my dealer when I did my service last week and he was very helpful. He said straight up that I can take the car to any dealer or brand if I want in 3 years. I know some dealers like to hide that fact. On top of that I asked if I can go for ex demo or older car if they dont have anything that I want brand new, ( no ibiza cupra in new body so far ) and he said no problem, they even started doing pcp on 1-2 year old cars if I wanted. Another thing he suggested - if I tell them few months in advance, they can find a car I want from other Seat dealers. To be honest, I wouldnt mind to take 1-2 year old leon cupra after this car.

Guy:Incognito

ForestFire wrote: »

5 mins is pedantic.
Ignoring the rest of my post and the reasons behind what I said is pedantic.
But that's just my opinion.

Do you think it was right to advice the OP that they could not sell their car now as it is MID PCP, and this option was completely non existent in any form?

What was said was they couldn't sell it with finance owing as they don't own it. Which is true. Any other muddying of the waters is irrelevant. You clear what's owed, the car then belongs to you and you sell it. That's not selling it with finance owed.

Dakota Dan

Danjamin1 wrote: »

In fairness if anyone is going in to buy a car without having given thought to how they are financing it then it's on them. I'm on a PCP deal as it works well for what I want but I researched every last thing about it before I went in to the dealers. I agree dealers aren't always that clear or up front with the ins & outs of the arrangement but if it looks too good to be true then it probably is. If anyone honestly thinks they can buy a new €27k car and only pay €300 a month for 3 year to pay it back then they need to go back to school. This doesn't seem to be what the OP is saying though, it's more the running costs of the car due to the distance from the workplace that seems to be the problem rather than the price of the car.

Surely she knew how far away her work was when buying the car.

ForestFire

Guy:Incognito wrote: »

What was said was they couldn't sell it with finance owing as they don't own it. Which is true. Any other muddying of the waters is irrelevant. You clear what's owed, the car then belongs to you and you sell it. That's not selling it with finance owed.

You did not answer my question, did you read or understand who and why I was writing what i wrote from previous posts in the tread?

The only people Muddy the waters were the people who said (Prior to your posts)...

"You cannot not sell a car on PCP before the PCP term ends"

This is not true, as in every post I have posted on this and others confirmed, it is possible when you clear the finance or get agreement for the buyer to pay off the fiance directly.

And you are telling me to keep up?

Danjamin1

Dakota Dan wrote: »

Surely she knew how far away her work was when buying the car.

That's the point though, the car itself is affordable but she's exceeding the mileage allowed under the PCP arrangement and incurring excessive running costs.

emeldc

ForestFire wrote: »

You did not answer my question, did you read or understand who and why I was writing what i wrote from previous posts in the tread?

The only people Muddy the waters were the people who said (Prior to your posts)...

"You cannot not sell a car on PCP before the PCP term ends"

This is not true, as in every post I have posted on this and others confirmed, it is possible when you clear the finance or get agreement for the buyer to pay off the fiance directly.

And you are telling me to keep up?

It seems you're all saying the same thing, only differently :rolleyes:

Dakota Dan

Danjamin1 wrote: »

That's the point though, the car itself is affordable but she's exceeding the mileage allowed under the PCP arrangement and incurring excessive running costs.

Yes but she knew her mileage before buying the car and surely she traded in a car as a deposit and knew it's running costs. All she had to do is add her running costs to repayments to see if she could afford it. Any penalty for excess mileage will only affect her if she hands back the car or use it as a deposit for a new car.

ford2600

ford2600 wrote: »

I've been doing 50k km a year for 20 years. I've never bought new.

The lowest mileage on a car I've bought is 100k km.

I've never had a breakdown in that time; none of the things people fear when they are convinced to buy a new car they can't afford.

Oil and filter changes done myself with suspension/brake work done by mechanic. Depreciation at 2-3k per year isn't hard if you keep purchase price low, look after car and don't buy a lemon.

Someone renting and buying a new car with that commute is mental.

I have a brother in law with a couple of garages; among his gang the way they tall of PCP reminds me a cheap finance circa 2006/07.

Potential bumble in the making if people like OP'S GF in any numbers say fcuk this. Higher and higher rents increase that likelihood

Without New cars you won't drive, simple.

MarkN

ShadowHearth wrote: »

One way or another, I had never illusions that I will be able to jump to a new car after 3 years without increasing payments or adding extra on deposit. Its given and who ever though that its going to be just same monthly payments all the time without any extra money put down was not supposed to even buy that car on pcp.

Sorry to highlight this but that isn't always true. If the equity left after the GFV is achieved is the same or more than your initial deposit then your repayments should in theory stay the same or go down - assuming the price of the car/model hasn't gone up in the 3 years (if you were going for same model).

ShadowHearth

MarkN wrote: »

Sorry to highlight this but that isn't always true. If the equity left after the GFV is achieved is the same or more than your initial deposit then your repayments should in theory stay the same or go down - assuming the price of the car/model hasn't gone up in the 3 years (if you were going for same model).

In perfect world - yes. Thing is, we dont live in one and you should be prepared and plan ahead. If you went in to pcp in to last 2 years and expected to have enough equality left for next trade in then you had your head burried in sand. There were articles and discussion everywhere about second hand car values falling on its arse. Those people did not do their homework before signing on a quite a big financial decision.

Lantus

MarkN wrote:

Sorry to highlight this but that isn't always true. If the equity left after the GFV is achieved is the same or more than your initial deposit then your repayments should in theory stay the same or go down - assuming the price of the car/model hasn't gone up in the 3 years (if you were going for same model).

This holds true where you have good 2nd hand values that remain stable. But where those prices fall the equity is eroded. The dealer now needs to sell that car for less so he makes sure he recovers by offering less equity ( your profit) to cover his costs.

PCP finance is being restructured so you buy off more in the first 3 years. Sometimes 60 to 65% and sometimes more. Diesel gmfvs are going to be dropped in the next few years especially to reflect future changes in this market.

It's a cheap way to buy a new car with low to zero interest rates but not as cheap to get a new one every 3 years as the market slides. You might not see the costs but the consumer will pay.

ForestFire

spelling

Lantus wrote: »

It's a cheap way to buy a new car with low to zero interest rates but not as cheap to get a new one every 3 years as the market slides. You might not see the costs but the consumer will pay.

But this is not limited to PCP. If the market slides, then everyone suffers.

Anyone who bought new will be affected the same, whether they used PCP, HP, Personnel loan, Cash.

The value of there asset has dropped more than expected.

Anyone who bought 1/2/3 year old cars will also be affected, although not to the same degree, as if there are cheaper 3 year old cars available the price for the 6 year old cars will also drop

The effect will be less the older the car when bought.

Maybe the best option coming off a 3 year PCP is to buy a bigger 3 year old car (Also PCP return) at a good price?? (but if everyone does this then the demand and prices will go back up again:rolleyes:...forget i suggest that:))

MarkN

ShadowHearth wrote: »

In perfect world - yes. Thing is, we dont live in one and you should be prepared and plan ahead. If you went in to pcp in to last 2 years and expected to have enough equality left for next trade in then you had your head burried in sand. There were articles and discussion everywhere about second hand car values falling on its arse. Those people did not do their homework before signing on a quite a big financial decision.

Totally agree but just wanted to clarify as this thread has had nearly 30,000 views so every piece of info regarding PCP that readers can learn might help those looking at taking one out.

ShadowHearth

MarkN wrote: »

Totally agree but just wanted to clarify as this thread has had nearly 30,000 views so every piece of info regarding PCP that readers can learn might help those looking at taking one out.

Its good if there are so many views, so it means at least some people doing their research.

Thing is, I can already see this year and next year a ton of threads like: "scumbag dealer lied to me", "I dont have money for balloon payment, its dealers fault!", "I cant afford to go to next pcp ir buy out my pcp car! Its governments fault!!!"

mickdw

Lantus wrote: »

This holds true where you have good 2nd hand values that remain stable. But where those prices fall the equity is eroded. The dealer now needs to sell that car for less so he makes sure he recovers by offering less equity ( your profit) to cover his costs.

PCP finance is being restructured so you buy off more in the first 3 years. Sometimes 60 to 65% and sometimes more. Diesel gmfvs are going to be dropped in the next few years especially to reflect future changes in this market.

It's a cheap way to buy a new car with low to zero interest rates but not as cheap to get a new one every 3 years as the market slides. You might not see the costs but the consumer will pay.

People who went into pcp with minimum deposit are very likely to be able to jump into next car without further deposit or monthly increases.
People who went in with 30 percent deposit will need cash injection to maintain monthly.
People who barely afforded their pcp after putting in 30 percent by way of trade in are the danger category imo. They may have have a 10k car to trade and typically would have taken finance for maybe 15k to buy a 25k car. Suddenly their 10k trade in gives them max deposit on a 35k car and repayments similar to 25k car for 3 years. At end of term, the reality hits. They no longer have a fully owned trade in and the equity might be only 10 percent so kinda snookered. They would have to go down to a far cheaper car given lack of deposit. Ive seen it loads of times. Chap buys 3 to 4 year old cars all his life. He suddenly turns up in a new 3 series. A few years later you see him going around in a 1500 quid car.

monkeysnapper

awec wrote: »

Am I the only one who thinks someone earning ~35k a year spending ~27k on a car over 3 years before the costs of driving are even factored in is absolutely insane?

.

Now you said it.....

I bought a 9 year old car that looked like brand new, had 80k miles , full service history .

I put a deposit of 2000 down on it and got to keep car with no repayments ....

3 years later I'm still driving that same car , just keep servicing it on time or earlier ...

My neighbor earns way less than me and has a 25k car in drive , he told me he pays 350 a month....I think I'd cry ...every month ...

Toyotafanboi

monkeysnapper wrote: »

Now you said it.....

I bought a 9 year old car that looked like brand new, had 80k miles , full service history .

I put a deposit of 2000 down on it and got to keep car with no repayments ....

3 years later I'm still driving that same car , just keep servicing it on time or earlier ...

My neighbor earns way less than me and has a 25k car in drive , he told me he pays 350 a month....I think I'd cry ...every month ...

As is often said, someone has to buy it new so you can buy it second hand.

He may earn less than you but if he can afford 350 a month and is enjoying the new car then more power to him.

happywithlife

Dakota Dan wrote: »

Surely she knew how far away her work was when buying the car.

She's a young teacher so quite possible on a contract. When that ended she had to look for a new job and it was much further away than her old one. Having said that apparently they're crying out for teachers at primary so I wonder could she not have moved closer to home? Unless this new job is a permanent contract? In which case she could consider moving to lessen the commute? Or she may look for another job next summer closer to home

ShadowHearth

monkeysnapper wrote: »

Now you said it.....

I bought a 9 year old car that looked like brand new, had 80k miles , full service history .

I put a deposit of 2000 down on it and got to keep car with no repayments ....

3 years later I'm still driving that same car , just keep servicing it on time or earlier ...

My neighbor earns way less than me and has a 25k car in drive , he told me he pays 350 a month....I think I'd cry ...every month ...

What you spend money on, what you put up your arse and where you stick your gentleman sausage is personal business.

Some people like to spend their money on cars, drugs, alcohol, holidays, food, hookers etc.
So if someone wants a new car and can afford it, no matter how much he earns then more power to them.

How much you earn per year is not indication if can you afford new car or not. There are people earning 50k a year and I wouldn't trust them with Dacia on finance.

ShadowHearth

ShadowHearth wrote: »

There are people earning 50k a year and I wouldn't trust them with Dacia on finance.

Steady now, no need to curse

givyjoe

ShadowHearth wrote: »

What you spend money on, what you put up your arse and where you stick your gentleman sausage is personal business.

Some people like to spend their money on cars, drugs, alcohol, holidays, food, hookers etc.
So if someone wants a new car and can afford it, no matter how much he earns then more power to them.

How much you earn per year is not indication if can you afford new car or not. There are people earning 50k a year and I wouldn't trust them with Dacia on finance.

Eh, what? Of course it is.. that's how finance is supposed to work.. on your ability to pay back the loan, i.e. afford it.

Cyclepath

mickdw wrote: »

People who went into pcp with minimum deposit are very likely to be able to jump into next car without further deposit or monthly increases.
People who went in with 30 percent deposit will need cash injection to maintain monthly.
People who barely afforded their pcp after putting in 30 percent by way of trade in are the danger category imo. They may have have a 10k car to trade and typically would have taken finance for maybe 15k to buy a 25k car. Suddenly their 10k trade in gives them max deposit on a 35k car and repayments similar to 25k car for 3 years. At end of term, the reality hits. They no longer have a fully owned trade in and the equity might be only 10 percent so kinda snookered. They would have to go down to a far cheaper car given lack of deposit. Ive seen it loads of times. Chap buys 3 to 4 year old cars all his life. He suddenly turns up in a new 3 series. A few years later you see him going around in a 1500 quid car.

Can someone please explain the logic of the above to me? As far as I'm aware, the amount of the deposit you pay alters your monthly payment, not your GFMV. Why is paying a smaller deposit better?

For example, I can walk into Toyota, put down the minimum deposit of €1,816.50 on a 25K Auris Hybrid, pay €416.81 per month for 36 months and end up with a GFMV of €11,158.50.

If I walk in there with a 30% deposit, say €7,510.00, my monthly payment is now €249.14 and my GFMV is still €11,158.50.

So in month 37 my options are the exactly the same. The only difference is that I've been paying €167.67 less per month, helping me manage my finances and live a little better.

Either way, I now have a three year old Toyota Auris Hybrid worth maybe 17K to the garage. So, my new car deposit is 17K less the GFMV, i.e. €5841.50

So regardless of whether I paid a large or small deposit, I'm in the same position. I just paid less per month by paying a large deposit. In fact you could argue that if I'd been smart, I could have saved the difference in a credit union account to help with financing the next car and earn interest in the meantime.

ShadowHearth

givyjoe wrote: »

Eh, what? Of course it is.. that's how finance is supposed to work.. on your ability to pay back the loan, i.e. afford it.

Person A: makes 30k a year, is good with money, his rent is not high, has no children, does not spend every saturday smashed in a pub.

Person B: makes 50k, lives in Dublin and rents, has 2 kids, uses money gun, instead of wallet as its more convenient, smokes, newest iphone as soon as its released, takeaways.


In the end person A has more disposable income to afford monthly repayments on a car.
Of course there is a limit what car can you take on. You need that rare skill of common sense though.

Jobs OXO

Cyclepath wrote: »

Can someone please explain the logic of the above to me? As far as I'm aware, the amount of the deposit you pay alters your monthly payment, not your GFMV. Why is paying a smaller deposit better?

For example, I can walk into Toyota, put down the minimum deposit of €1,816.50 on a 25K Auris Hybrid, pay €416.81 per month for 36 months and end up with a GFMV of €11,158.50.

If I walk in there with a 30% deposit, say €7,510.00, my monthly payment is now €249.14 and my GFMV is still €11,158.50.

So in month 37 my options are the exactly the same. The only difference is that I've been paying €167.67 less per month, helping me manage my finances and live a little better.

Either way, I now have a three year old Toyota Auris Hybrid worth maybe 17K to the garage. So, my new car deposit is 17K less the GFMV, i.e. €5841.50

So regardless of whether I paid a large or small deposit, I'm in the same position. I just paid less per month by paying a large deposit. In fact you could argue that if I'd been smart, I could have saved the difference in a credit union account to help with financing the next car and earn interest in the meantime.

As long as you saved the diff and didn't get "used" to the lower car payment.