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How did PCP work out in the end?

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  • Registered Users Posts: 6,229 ✭✭✭DaveyDave


    Don't banks get interest on money that people have sitting there?


  • Registered Users Posts: 2,655 ✭✭✭draiochtanois


    This post has been deleted.


  • Registered Users Posts: 28,807 ✭✭✭✭AndrewJRenko


    This post has been deleted.
    That's true, but the money still costs.

    If they can sell 50k cars without having to subsidise the finance cost, they could make even more money!

    Maybe the best measure would be to go in as a cash buyer with no finance cost, and see if you get a lower price than the PCP buyer. If so, that would suggest that the cost of finance is built into the non-discount list price paid by the PCP buyer.


  • Registered Users Posts: 23,332 ✭✭✭✭mickdw


    That's true, but the money still costs.

    If they can sell 50k cars without having to subsidise the finance cost, they could make even more money!

    Maybe the best measure would be to go in as a cash buyer with no finance cost, and see if you get a lower price than the PCP buyer. If so, that would suggest that the cost of finance is built into the non-discount list price paid by the PCP buyer.

    I figure you will get about 2k off a Passat as a straight sale cash buyer.
    With the zero percent vw bank finance, you will pay retail but they are offering 1 to 2k contribution if you take finance so while no doubt they are building in some bit of the finance costs, it's still far ahead of any other financing method in my opinion.
    I believe offering the best rates on high spec cars also helps them make money as the extras are where the money is and I'd say they are selling 10 x the numbers of highline models since offering finance in this manner.


  • Registered Users Posts: 3,532 ✭✭✭carsfan2


    That's true, but the money still costs.

    If they can sell 50k cars without having to subsidise the finance cost, they could make even more money!

    Maybe the best measure would be to go in as a cash buyer with no finance cost, and see if you get a lower price than the PCP buyer. If so, that would suggest that the cost of finance is built into the non-discount list price paid by the PCP buyer.

    Whether you buy for cash or go pcp makes little difference to the dealer.
    It is possible to negotiate the discount before discussing how you pay for it.
    The dealer gets paid in full regardless as pcp is with the finance company not the dealer. In fact it can now be advantageous to the price to take finance as sometimes there are contributions from the manufacturers contingent on a finance deal.
    The dealer gets a payment from the finance side too if you take it and I have heard of dealer offering a little more off from this to seal a deal.


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  • Registered Users Posts: 3,027 ✭✭✭Lantus


    carsfan2 wrote:
    Whether you buy for cash or go pcp makes little difference to the dealer. It is possible to negotiate the discount before discussing how you pay for it. The dealer gets paid in full regardless as pcp is with the finance company not the dealer. In fact it can now be advantageous to the price to take finance as sometimes there are contributions from the manufacturers contingent on a finance deal. The dealer gets a payment from the finance side too if you take it and I have heard of dealer offering a little more off from this to seal a deal.


    The pcp finance would be hugely advantageous to any manufacturer. Slow steady payments over time become normalised to humans. We are less likely to seek change and just as likely to accept a small increase for a new car. Look at any other payment structures where existing customers get the worst deal. They are the least likely to want to change so the easiest to manipulate.


  • Closed Accounts Posts: 1,115 ✭✭✭asteroids over berlin


    somewhat unrelated but releated - doing a deal today on a VW - nice enough experience, however as some may know, if you go with VW finance, you get 1500k deduction. So there we were merrily doing the sums and pcp and then i ask about the 1500 deduction and i get a hesitant reply, oh that is included in the trade in valuation!

    I was already low balled on the actual trade in value and i wasn't going to buy the car without a revised offer, what a piss take - buyer beware!!


  • Closed Accounts Posts: 7,967 ✭✭✭Synode


    somewhat unrelated but releated - doing a deal today on a VW - nice enough experience, however as some may know, if you go with VW finance, you get 1500k deduction. So there we were merrily doing the sums and pcp and then i ask about the 1500 deduction and i get a hesitant reply, oh that is included in the trade in valuation!

    I was already low balled on the actual trade in value and i wasn't going to buy the car without a revised offer, what a piss take - buyer beware!!

    Where did you hear about a 1,500 reduction if go for VW finance?


  • Closed Accounts Posts: 1,115 ✭✭✭asteroids over berlin


    Synode wrote: »
    Where did you hear about a 1,500 reduction if go for VW finance?

    www.volkswagen.ie - offers section


  • Registered Users Posts: 23,332 ✭✭✭✭mickdw


    www.volkswagen.ie - offers section

    As ever, you need to know what you consider an acceptable trade in offer and judge it from there.
    Considering they already build 2k into passat pricing when comparing straight sale dens versus trade in, the price offered for your car would want to be very very strong to consider the 1500 also allowed there.


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  • Registered Users Posts: 51,190 ✭✭✭✭bazz26


    Best thing to do is negotiate how much it's costing first, then discuss how its paid for, ie PCP.


  • Closed Accounts Posts: 1,115 ✭✭✭asteroids over berlin


    bazz26 wrote: »
    Best thing to do is negotiate how much it's costing first, then discuss how its paid for, ie PCP.
    this is what i tried to do!!
    I rang another dealer today and he immediately mentioned the 1500 offer and offered a far more realistic trade in price, hopefully we will do business


  • Registered Users Posts: 201 ✭✭dinevalesco


    Hi guys, quick query:

    My 3 year PCP is up in March and I’m looking to change car brands.

    Basically I currently have a Skoda Octavia and want to switch to a new Toyota Corolla Hybrid.

    How do I go about doing that? Do I pay my settlement (GMFV) to them and then begin negotiations with trade-in values etc?

    Thanks.


  • Banned (with Prison Access) Posts: 134 ✭✭Frank Castle


    Hi guys, quick query:

    My 3 year PCP is up in March and I’m looking to change car brands.

    Basically I currently have a Skoda Octavia and want to switch to a new Toyota Corolla Hybrid.

    How do I go about doing that? Do I pay my settlement (GMFV) to them and then begin negotiations with trade-in values etc?

    Thanks.

    No need, you can go straight to Toyota and they will deal with it all from there for you.

    You can of course pay the GMFV and trade the car to Toyota, but its easier if you go straight to Toyota tell them what is left on the PCP and let them take it over from there.

    * One note: if you are a city driver then Hybrid is great. If you spend most of your time on motorways or going over 80kph, then you wont see the benefit from hybrid as you will burn through the electric charge too fast.

    Its not that a Hybrid won't work but Hybrid excels in sub 80kph environments.
    I'd recommend going full electric if you spend all your time at high speeds (petrol or diesel if you don't care about the environment)


  • Registered Users Posts: 201 ✭✭dinevalesco


    Cheers Frank, I really appreciate you getting back to me, and, on a side note, really looking forward to seeing you in Season 2 of The Punisher.

    So, my GMFV is €10k.

    What happens when I go to Toyota? Will they need me to give them €10k before any negotiations begin with trade in etc or will they just build it into my future repayments?


  • Registered Users Posts: 201 ✭✭dinevalesco


    Worth noting:

    My commute definitely suits a Hybrid. It’s in Stop/Starty traffic; 75% of the time driving sub-60kmph.


  • Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    Am I correct in thinking (probably not) that the GMFV is the value for the Garage rather than the person taking the car.

    And what sounded like being a positive for the driver "guaranteed"+"value" was just good PR.


  • Registered Users Posts: 757 ✭✭✭DriveSkill


    Cheers Frank, I really appreciate you getting back to me, and, on a side note, really looking forward to seeing you in Season 2 of The Punisher.

    So, my GMFV is €10k.

    What happens when I go to Toyota? Will they need me to give them €10k before any negotiations begin with trade in etc or will they just build it into my future repayments?


    The GMFV is the amount you still owe Skoda at the end so what will happen is Toyota will value your car at say €13K, well then €10K of that goes back to Skoda so you have €3K left as your trade-in value against the new Toyota.


  • Registered Users Posts: 201 ✭✭dinevalesco


    Can I ask you one thing DriveSkill?

    How is it that I can benefit from something that is not mine? As in, the €10k is not mine – it’s just in the value of the car.

    Or am I being a bit naieve?


  • Registered Users Posts: 3,461 ✭✭✭vandriver


    Can I ask you one thing DriveSkill?

    How is it that I can benefit from something that is not mine? As in, the €10k is not mine – it’s just in the value of the car.

    Or am I being a bit naieve?
    You can only benefit from the difference between your cars value and the GMFV.


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  • Registered Users Posts: 404 ✭✭ml100


    The problem with this VW 0% apr is that they have increased the price of their new cars to pay for it, so a cash buyer is at a disadvantaged now as they are trying to negotiate a cash discount on a car that is overpriced by 2-3k to pay for finance that most people are taking out, a comfort line diesel golf is nearly 5K more than it was 3-4 years ago, ok it has more spec and the government increased vrt by 1%, but 5K!


  • Registered Users Posts: 21,246 ✭✭✭✭Water John


    Depends on how you feel about selling etc. but you may do better, by a few €K by selling your own car and buying your new car on a straight deal.
    As an example, was recently discussing a trade in, GMFV was €12K. Trade in price offered was €17K but the resale car value was €19.5/20K.
    Secondly some dealers would have a straightdeal/cash discount on a sale, maybe €1K. So there is €3/4K easily made or lost.

    The other offer on a new car I had was a 5 year HP deal, I was putting in some cash. About the same as the PCP but no need to refinance after 3 years. Owned after 5 years.


  • Registered Users Posts: 51,190 ✭✭✭✭bazz26


    I find it a bit worrying that some people who are looking to go into another PCP deal still don't understand the ins and outs of it.


  • Banned (with Prison Access) Posts: 134 ✭✭Frank Castle


    Cheers Frank, I really appreciate you getting back to me, and, on a side note, really looking forward to seeing you in Season 2 of The Punisher.

    So, my GMFV is €10k.

    What happens when I go to Toyota? Will they need me to give them €10k before any negotiations begin with trade in etc or will they just build it into my future repayments?

    Toyota will deal with that final 10k.

    in other words, if your car is worth 30k, then over the last 3 years you have paid off 20k (this is where the GMFV of 10K comes from).
    But your car may have a market value of 15k. so taking the 10 you still owe away leaves 5k equity.

    Toyota will take your car, pay off the 10k and leave you with that equity to go towards your new car.

    Remember your finance deal is with the the bank who supplied it not the car dealership. So all Toyota will be doing is paying off that last 10k to the bank, leaving you with the equity.

    I advise shopping around different toyota garages. I got a better deal from Mazda in tullamore than I could from mazda in galway, limerick or donegal. It is worth the effort to call and get some quotes as you can save a lot.


  • Banned (with Prison Access) Posts: 134 ✭✭Frank Castle


    Avatar MIA wrote: »
    Am I correct in thinking (probably not) that the GMFV is the value for the Garage rather than the person taking the car.

    And what sounded like being a positive for the driver "guaranteed"+"value" was just good PR.

    GMFV is the guaranteed minimum future value.
    In other words they guarantee the car will be worth at least this amount (provided you stick to the terms). So that if you choose you can hand the car back and walk away.

    When pcp first came they set a gfv that was too close to market value, but nowadays they over estimate by a good amount so you can be sure the car will be worth that amount.

    You then just pay off the difference from the car price minus the GMFV and this equates your monthly payments.

    Provided you stick to the terms, or don't go way over them then you will have equity in the car as the market value will always be more than the GMFV.

    The difference in the GMFV and the market value is what is used for the deposit of your next car (if you choose that route).

    For example my last car GMFV was 10k but market value was 17k when I traded it in. I put that 7k towards my current car.

    EG @ 0% interest:

    Car worth 30K
    Deposit 8K
    GMFV 10k

    30K minus 8K = 22K minus 10K =12k
    12K divided by 36 months = €333

    after 3 years market value 15K
    15K minus GMFV 10k = 5K equity

    Options:
    Hand car back - take 5K cash
    Trade in - use 5k as deposit towards next car
    Keep car - Pay off 10k in a lump sum (or take that last 10k out as a HP and pay off the car over X years)

    * NOTE your PCP finance is with a bank not with a garage, you can take your PCP car to any other dealer and trade in. the same as above applies = The GMFV will be paid out of the market value of the car, the equity will be yours to keep/use as a deposit.

    ** NOTE Dealers greatly over estimate GMFV now; Unless you do some serious damage to the car you will not owe any additional money if you choose to hand it back. But should you do this damage somehow, then you will still owe the difference before being able to walk away: E.G. GMFV 10K - market value due to condition of car 7K - You must pay the 3K before being able to walk away (or pay all 10K and keep the car).


  • Registered Users Posts: 3,532 ✭✭✭carsfan2


    GMFV is the guaranteed minimum future value.
    In other words they guarantee the car will be worth at least this amount (provided you stick to the terms). So that if you choose you can hand the car back and walk away.

    When pcp first came they set a gfv that was too close to market value, but nowadays they over estimate by a good amount so you can be sure the car will be worth that amount.

    You then just pay off the difference from the car price minus the GMFV and this equates your monthly payments.

    Provided you stick to the terms, or don't go way over them then you will have equity in the car as the market value will always be more than the GMFV.

    The difference in the GMFV and the market value is what is used for the deposit of your next car (if you choose that route).

    For example my last car GMFV was 10k but market value was 17k when I traded it in. I put that 7k towards my current car.

    EG @ 0% interest:

    Car worth 30K
    Deposit 8K
    GMFV 10k

    30K minus 8K = 22K minus 10K =12k
    12K divided by 36 months = €333

    after 3 years market value 15K
    15K minus GMFV 10k = 5K equity

    Options:
    Hand car back - take 5K cash
    Trade in - use 5k as deposit towards next car
    Keep car - Pay off 10k in a lump sum (or take that last 10k out as a HP and pay off the car over X years)

    * NOTE your PCP finance is with a bank not with a garage, you can take your PCP car to any other dealer and trade in. the same as above applies = The GMFV will be paid out of the market value of the car, the equity will be yours to keep/use as a deposit.

    ** NOTE Dealers greatly over estimate GMFV now; Unless you do some serious damage to the car you will not owe any additional money if you choose to hand it back. But should you do this damage somehow, then you will still owe the difference before being able to walk away: E.G. GMFV 10K - market value due to condition of car 7K - You must pay the 3K before being able to walk away (or pay all 10K and keep the car).

    If you hand the car back you don’t get the equity!
    You walk away with nothing.


  • Banned (with Prison Access) Posts: 134 ✭✭Frank Castle


    carsfan2 wrote: »
    If you hand the car back you don’t get the equity!
    You walk away with nothing.

    No you get the equity, I know from experience. As in, I was given a cheque for the equity amount!

    If you have handed a car back and the dealer you gave it to didn't give you the equity then you have been bloody stupid. They have already made their profit on the sale and you are handing them extra profit for no reason.

    Note: depending on the dealer, you do get dealers market value doing this, as in if the market value is 17k. then the dealers value is around 15K. You will get 5K instead of 7k. (When I did this the dealer gave me full market value equity, but not all will do this i imagine)


  • Registered Users Posts: 23,332 ✭✭✭✭mickdw


    To be fair, you were very lucky to get full market value in such a situation. The dealer was under no obligation to do that and while you were free to go anywhere and try to sell it to any dealer, Im thinking would find that any random trader would offer a very poor figure if offered your cash for cash.


  • Registered Users Posts: 7,430 ✭✭✭JoeA3


    No you get the equity, I know from experience. As in, I was given a cheque for the equity amount!

    If you have handed a car back and the dealer you gave it to didn't give you the equity then you have been bloody stupid. They have already made their profit on the sale and you are handing them extra profit for no reason.

    Note: depending on the dealer, you do get dealers market value doing this, as in if the market value is 17k. then the dealers value is around 15K. You will get 5K instead of 7k. (When I did this the dealer gave me full market value equity, but not all will do this i imagine)

    Technically, you didn't hand the car back, the dealer bought the car back off you. You were relatively fortunate, as many dealers won't be interested in doing this. I did similar myself this time last year. Dealer bought the car back, cleared the balance of the PCP and I walked away with a cheque.


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  • Registered Users Posts: 14,332 ✭✭✭✭jimmycrackcorm


    How is it that I can benefit from something that is not mine? As in, the €10k is not mine – it’s just in the value of the car.

    The car is worth more than 10k. The extra amount can be yours if you planned to hold on to the car.
    The toyota dealer will handkerchief everything for you. You don't have to be concerned other than what your new payment figures will be
    Or am I being a bit naieve?

    No pcp is structured to be confusing


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