How did PCP work out in the end?

bazz26

Hold on a minute. 18k is very strong money for a 2018 Megane. Here is a 2019 for the same money - https://www.carsireland.ie/detail.php?ad_id=2629935&r=s.php%3Fm%3D72%26o%3D619%26r%3D2019%26pp%3D50%26g%3D0

There are plenty of 2018 ones for sale with reasonable mileage for 16k so your paying over the top for the car and then paying interest on that inflated price. So add that 2k onto the 1800 you are being charged in interest and now it's at 4800. And a deposit of 4700 is around 26% of 18000 which is very high if you want to go again. If you either want to go PCP again in 3 years time you will need to come up with a similar deposit again or if you decide to keep you then have to pay another 7900 at the end of the existing PCP deal. This is certainly no great deal imo

Brusna

ForestFire wrote: »

Your paying interest on the €7900 also, as technically you have borrowed this money for the 3 years, your just not paying back the full loan in 3 the years.

The GMFV (Balloon payment) is not free or frozen, only to be activated after PCP ends.

This is maybe why they have said they don't care about the annual mileage, are they trying to keep the GMFV as high as possible to make the monthly payments more attractive? Obviously they need to be careful with this also as I presume you have the same options on second hand PCP to just hand the car back at the end?

That’s not the way I see it. The €7900 is covered by the equity in the car. The car goes back to the dealer in 3 years.

yabadabado

As Bazz26 pointed out there are similar aged cars for 16k and and you have €5900 cash iirc.

Would you not price up a loan for 10k and see what you can get ,may work out better in the long run.

Heres Johnny

Brusna wrote: »

That’s not the way I see it. The €7900 is covered by the equity in the car. The car goes back to the dealer in 3 years.

That's the way it works. Common misconception but you're paying interest on everything except deposit

Cmacc4

Confused as to what to do....I have the deposit up front but just long term the lower repayments are more suitable for me at the minute, (saving for house deposit)

I get what you mean about the interest but am I not paying similar interest over 3 years with a CU loan over 5 years?

I get that the GMFV could shaft me in 3 years time but I’m prepared for that,realistically what chances are there of a 181 Megane with a very high spec depreciating to lover than the 7,950?

GustavoFring

To be in the same position in 3 years time to roll into another one the Megane will need to be worth the bones of 13k on a trade in which it won't be.

The cost of the car (deposit + payments) and walking away is nearly 12k. Personally I'd probably look towards a HP loan using your 4700 as a deposit.

adam88

Whatever about the rates and that. Look more closely at cars etc.

One thing for sure and certain is something like w skoda Octavia even 171 won’t have depreciated as much as a Megane over the same period.

Just take a look at the skodas They’re reliable, very reasonable to service and hold their value

Casati

I think I’m this case you might be as well off using your deposit to buy a car outright. Not having any car payments at all will help with mortgage. But the best used Megane you can get for 8k. Like a 181 it will be a miser in fuel, be cheap to tax and insure and they are reliable cars

CoBo55

Casati wrote: »

I think I’m this case you might be as well off using your deposit to buy a car outright. Not having any car payments at all will help with mortgage. But the best used Megane you can get for 8k. Like a 181 it will be a miser in fuel, be cheap to tax and insure and they are reliable cars

Or go for the fluence, cheap n ... Can't really say cheerful but would definitely be cheaper to run than a 07 petrol focus.

Casati

CoBo55 wrote: »

Or go for the fluence, cheap n ... Can't really say cheerful but would definitely be cheaper to run than a 07 petrol focus.

Very good car too. Here’s a 161 with decent spec being sold from a long term established trader in Dublin - asking 9k but he’d probably give you a few quid for your Focus.

https://www.donedeal.ie/cars-for-sale/2016-renault-fluence-nct-01-22-high-spec-simi-/26398149

Brusna

Heres Johnny wrote: »

That's the way it works. Common misconception but you're paying interest on everything except deposit

Fair enough, I didn’t know that.

mickdw

Brusna wrote: »

Fair enough, I didn’t know that.

Yes he is correct. The car is paid for in full day one via deposit and bank finance for the remainder.
The gfv is just an agreement that they will take the car off your hands for at least that amount at end of term with the customer carrying all the financing costs of the delayed payment.
Interest being paid on all outstanding means you need to take pcp at low to zero interest as like for like, any given rate will cost more on pcp versus straight hp due to leaving a large lump of the loan outstanding for 3 years.

Cmacc4

Getting the impression from a lot of people that this isn’t a good deal for me overall?
I’m probably being blind sighted by the low monthly repayments here am I?
Are the chances that high of there being no equity on the car in 3 years? Basically is the 7,950 unreasonable?

mickdw

Cmacc4 wrote: »

Getting the impression from a lot of people that this isn’t a good deal for me overall?
I’m probably being blind sighted by the low monthly repayments here am I?
Are the chances that high of there being no equity on the car in 3 years? Basically is the 7,950 unreasonable?

The true cost for 3 years is 200 x 36 plus the 4700 deposit. That 11900 to drive it for 3 years assuming no equity at end.
Thats a real 330 per month.
If you are happy with that, can afford to never see any of your 4700 deposit again and have a strategy for the end of the 3 years, go ahead.

Heres Johnny

Cmacc4 wrote: »

Getting the impression from a lot of people that this isn’t a good deal for me overall?
I’m probably being blind sighted by the low monthly repayments here am I?
Are the chances that high of there being no equity on the car in 3 years? Basically is the 7,950 unreasonable?

7950 is not an unreasonable valuation but I don't think it will leave much equity. Maybe 2000 at most.
Rule of thumb, half value of car will be lost in 3 years. Leaving the megane in the region of 9000.
You've to fund 9000 deprecation to keep same deposit next time. That's if 18000 is a good price now.
The monthlies are too low. I'd increase them to 250-300, or else just put 50-100 aside every month to compensate. No matter how you pay for a car, it's the depreciation you need to cover to have equity.

Brusna

Cmacc4 wrote: »

Getting the impression from a lot of people that this isn’t a good deal for me overall?
I’m probably being blind sighted by the low monthly repayments here am I?
Are the chances that high of there being no equity on the car in 3 years? Basically is the 7,950 unreasonable?

I think you will have equity in 3 years time and the 7950 is reasonable. So if it is, what will you do in 3 years time?

Cmacc4

I’m thinking of going ahead with the deal
Maybe I’m being totally naive but I can’t imagine the 181 megane depreciating totally to the 7900 mark... I’ll do a maximum of 65,000KM over the 3 years so I’d be handing back a 98,000KM car (being extreme mileage on my part) back to the garage
If I could see 1,200-1,500 equity in 3 years I’d be happy enough, I’m thinking of being pretty aggressive in my saving over the next 3 years so I’ll definitely be in a far better financial position in 3 years time. I’d be happy to roll into another contract (if part equity is there). My car is costing me 220-240 a month on petrol at the minute,on top of annual NCT,crazy tax, and wear and tear has been a disaster

Lantus

Cmacc4 wrote: »

I’m thinking of going ahead with the deal
Maybe I’m being totally naive but I can’t imagine the 181 megane depreciating totally to the 7900 mark... I’ll do a maximum of 65,000KM over the 3 years so I’d be handing back a 98,000KM car (being extreme mileage on my part) back to the garage
If I could see 1,200-1,500 equity in 3 years I’d be happy enough, I’m thinking of being pretty aggressive in my saving over the next 3 years so I’ll definitely be in a far better financial position in 3 years time. I’d be happy to roll into another contract (if part equity is there). My car is costing me 220-240 a month on petrol at the minute,on top of annual NCT,crazy tax, and wear and tear has been a disaster

Forget about monthlys and equity for a second. Look at value for money first. It's been pointed out that you may be overpaying for this car and I'd be inclined to agree. You can save a few k here and there and more if you drop a year.

Look at total cost of ownership. Never monthly payments including all interest as if you will be buying the car in its entirity. Always compare like for like.

Cmacc4

Yeah I’ve had a look at similar prices for the 181 meganes, they’ve been between 17,000-19,000 in most garages from what I’ve seen...
This car has the higher spec,same as most 19 and even 20 models, there’s a full 3 year warranty included in the package as well.
I’m starting to overthink this now...

User1998

Have you negotiated at all on the price?

shanec1928

Cmacc4 wrote: »

Yeah I’ve had a look at similar prices for the 181 meganes, they’ve been between 17,000-19,000 in most garages from what I’ve seen...
This car has the higher spec,same as most 19 and even 20 models, there’s a full 3 year warranty included in the package as well.
I’m starting to overthink this now...

You have your mind made up. There’s been several people who have said it’s not a good deal. PCP on a 3 year old car is crazy. A small loan from the likes of a credit union and you own the car outright. What are 5 year old ones of the car going for now? That’s a ball park of where your going to be and you will still owe money on the car.

Heres Johnny

If you like it and the purchsse price is right, go for it. Monthlies and gfmv are just strategy for paying for it. If you are comfortable with low monthlies eating into your deposit a bit, or a lot, when 3 years time comes around, I don't see a problem.

Brusna

Cmacc4 wrote: »

I’m thinking of going ahead with the deal
Maybe I’m being totally naive but I can’t imagine the 181 megane depreciating totally to the 7900 mark... I’ll do a maximum of 65,000KM over the 3 years so I’d be handing back a 98,000KM car (being extreme mileage on my part) back to the garage
If I could see 1,200-1,500 equity in 3 years I’d be happy enough, I’m thinking of being pretty aggressive in my saving over the next 3 years so I’ll definitely be in a far better financial position in 3 years time. I’d be happy to roll into another contract (if part equity is there). My car is costing me 220-240 a month on petrol at the minute,on top of annual NCT,crazy tax, and wear and tear has been a disaster

It looks like this may be a good deal for you as it allows you to make lower repayments at the start and then later when you are in a better position you can start paying the true cost which for this car is around €300 a month.

€300 is based on 50% depreciation and €1800 interest, (€9000 + €1800 = €10800 = 36 x €300).

The longer you stay at €200 p/m the more aggressive you will need to be later with savings in order to make up the shortfall.

Good luck with your purchase.

Bye the way as others have pointed out this deal may not be the best value for your money but I don’t think this is the right place for those comments as this thread is about pcp’s and your question was about the pcp deal.

You did say you are new to car buying so maybe it’s worth starting a thread and get the advice of the people who have experience.

SteelyDanJalapeno

PCP will affect you mortgage application, your stress test will be -200 from the get go, if I was in your position, I won't be taking on any additional debt until I got the mortgage sorted.
This car will get you from a to b just as good/bad as a well running 5 or 6 year old reliable car.
I'd buy something cheaper outright for now

DaveyDave

SteelyDanJalapeno wrote: »

PCP will affect you mortgage application, your stress test will be -200 from the get go, if I was in your position, I won't be taking on any additional debt until I got the mortgage sorted.
This car will get you from a to b just as good/bad as a well running 5 or 6 year old reliable car.
I'd buy something cheaper outright for now

A lot of people get car finance. It isn't necessarily going to have a negative impact on their mortgage depending on their income.

McCrack

SteelyDanJalapeno wrote: »

PCP will affect you mortgage application, your stress test will be -200 from the get go, if I was in your position, I won't be taking on any additional debt until I got the mortgage sorted.
This car will get you from a to b just as good/bad as a well running 5 or 6 year old reliable car.
I'd buy something cheaper outright for now

Probably the best advice here - any loans/pcp limit repayment capacity

To the OP - steer clear of it - its a lot of money you don't really have at a cost (interest and deprecation) for what is a a very mediocre car.

yabadabado

DaveyDave wrote: »

A lot of people get car finance. It isn't necessarily going to have a negative impact on their mortgage depending on their income.

I'd hazard a guess that the majority of doctors are on some sort of finance.
A loan will have an impact on a mortgage application.

ELM327

DaveyDave wrote: »

A lot of people get car finance. It isn't necessarily going to have a negative impact on their mortgage depending on their income.

It will reduce repayment capacity. Same exact effect as earning net 200 less per month

Wildly Boaring

ELM327 wrote: »

It will reduce repayment capacity. Same exact effect as earning net 200 less per month

After tax

ELM327

Yes, that's why I said net 200 instead of gross 200. So that 200pcp will actually cost you 400pcm in gross income!