No PCP on new diesel.

_Brian

Was in pricing a new Kuga yesterday in the main dealer and the sales guy wouldn’t quote me for a PCP deal on a diesel.

He said there was no idea where the value of diesels would be in three years due to hybrid and electric developments.

I was quite taken back, he said it was becoming common among dealers.

We do maybe 30-33k km a year and tow regularly so we warrant buying diesel.

Was no mention in Seat/Skoda dealers.

Dia1988

WOW, that is interesting!

Did you try another Ford dealer?

colm_mcm

So are they doing PCP on Mondeos?

_Brian

He just said Diesels... No reason to beleive it was just the Kuga..

Didnt try another dealer as I pass this one all the time, next dealer is 40Km out of my way..
I might ring though for the interest..

Dia1988

I suspect that's waffle from that sales guy.
Cavanaghs in Cork even have their own PCP calculator online that will quote a PCP on a Kuga.

https://cavanaghs.com/pcp-calculator/

Heres Johnny

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

I think diesels will be like they were before, just for high mileage drivers like sales reps.

Petrol for the rest.
Hybrids and electric eventually.

Lantus

Heres Johnny wrote:

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

Surely no loan product is appropriate if there value might drop so much?

And its nothing to with a good deed. It's because they feel they can't make money from them on the current gmfv. They could reduce it to compensate which helps with people handing back keys. If a customer buys outright after 3 years or trades back up there is no loss to the dealer.

Atlantic Dawn

The same dealers would flog people cars requiring Ad Blue topups to people doing 5k miles a year and not even mention it to them, they are worrying now because the financial backers are going to lose their bollix on PCP and rightfully so on the criteria they used to give loans to people who shouldn't have been lent the price of a tank of fuel. Once there's no idiotic government bailout in our basket case country I couldn't give a flying F.

Zonda999

Heres Johnny wrote: »

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

I think diesels will be like they were before, just for high mileage drivers like sales reps.

Petrol for the rest.
Hybrids and electric eventually.

This isn't quite the case with PCP though, with PCP, the buyer knows what the GFMV is, and have certainty over it. They do not need to go through with the PCP if they do not like the GFMV they have been quoted prior to purchase.

Fair enough comment if applied to any other method of purchase other than PCP, if the future residual hit on diesels really will be as bad as some would have you believe.

DaveyDave

If the value of the cars was to drop then worst case scenario surely you'd just end up with the minimum value and no equity? Unless of course there's feck all equity in them at the moment.

Nonoperational

DaveyDave wrote: »

If the value of the cars was to drop then worst case scenario surely you'd just end up with the minimum value and no equity?

Yep.

Lantus

DaveyDave wrote:

If the value of the cars was to drop then worst case scenario surely you'd just end up with the minimum value and no equity? Unless of course there's feck all equity in them at the moment.

When you say end up with the gmfv. That's the debt you haven't paid yet. It's not as if the gmfv is an asset.

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.

The lower the gmfv generally the better for the consumer.

Doddles88

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.




In that case you should just hand the car back and the next day go down and buy it for 5k

CeilingFly

Lantus wrote: »

When you say end up with the gmfv. That's the debt you haven't paid yet. It's not as if the gmfv is an asset.

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.

The lower the gmfv generally the better for the consumer.

"gmfv" = GUARANTEED future minimum value. The dealer would take the loss not the customer.

micar

Heres Johnny wrote: »

I applaud the garage for that. If diesels are in fact in trouble in particular segments then they're doing customers a good deed by not letting them pcp them.

I think diesels will be like they were before, just for high mileage drivers like sales reps.

Petrol for the rest.
Hybrids and electric eventually.

Totally agree.

In recent years people were duped into buying diesel when a petrol would have been a better choice.

As a person who drives about 10km per annum, I'd ever consider a diesel.

What annoys me is that I want to replace my car but there is a serious under supply of decent petrol cars. My real only option is to purchase from UK or NI which has its own risks.

Matt406

That’s interesting – I’ve been pricing diesel 7 seaters all on PCP finance over the last few weeks and no dealer has raised any concerns regarding PCP deals on diesel and GFV’s. Makes – VW/Skoda/Ford/Kia/Peugeot & Renault

If there’s doubt over the value of diesels in 3 years’ time is it not best to set a higher “GFV” now, so that if values do fall substantially the dealer/manufacturer takes more of the hit!

Lantus

Matt406 wrote:

If there’s doubt over the value of diesels in 3 years’ time is it not best to set a higher “GFV†now, so that if values do fall substantially the dealer/manufacturer takes more of the hit!

Lower gmfv! The dealer will want more of the car paid off. They won't be taking the hit for you. Look at the Nissan leaf where the gmfv is around 30% compared the more typical 45%.

In reality there would have to be a fairly big discrepancy between the real world value and gmfv for it to warrant handing the car back. Several thousand at least which doesn't seem likely.

KevinCavan

As another poster alluded to here, this pcp lending could be the next bubble to burst. The final balloon payments will be too much for many in a few years and their cars could be worth so little that handing back the keys might not be an option. Never before has the car industry been so unpredictable, with manufacturers likely to cease diesel car production altogether, think Volvo and Toyota.

Matt406

Lantus wrote: »

Lower gmfv! The dealer will want more of the car paid off. They won't be taking the hit for you. Look at the Nissan leaf where the gmfv is around 30% compared the more typical 45%.

In reality there would have to be a fairly big discrepancy between the real world value and gmfv for it to warrant handing the car back. Several thousand at least which doesn't seem likely.

Just to clarify – if I take 2 cars, A & B
Both have a list price of approx. €37,000.
I put in 20% deposit on both, car A has a GFV set by the manufacturer/dealer of €12,000 while car B has a GFV set at €14,500. Car B with a GFV of €14,500 has lower monthly repayments and in 3 years’ time has the manufacturer/dealer having more “skin in the game” when it comes to resale values - if diesel values plummet! Car B offers me €2,500 more protection from falling diesel values!

Lantus

Matt406 wrote:

Just to clarify – if I take 2 cars, A & B Both have a list price of approx. €37,000. I put in 20% deposit on both, car A has a GFV set by the manufacturer/dealer of €12,000 while car B has a GFV set at €14,500. Car B with a GFV of €14,500 has lower monthly repayments and in 3 years’ time has the manufacturer/dealer having more “skin in the game†when it comes to resale values - if diesel values plummet! Car B offers me €2,500 more protection from falling diesel values!

Well consumers don't set gmfv values but in your example trading in a car with 14.5k of debt would provide zero deposit into the next deal if resale values are low. The consumer would require at least 10% again to start off. The 14.5k of gmfv could be 25k but the consumer still needs 10% deposit.

The dealer will take the hit alright as it needs to settle the finance. Its unlikely that the market will plummet unless the price of diesel doubles overnight. The industry will want a smooth transition and grants and subsidies will provide a buffer.

If values do fall then car a with 12.5k gmfv has a slightly better chance of some equity? Better for the consumer. Surely that is your primary concern?

RedorDead

Renaults PCP model is all backed by the dealer in that the dealer guarantees the GMFV (guaranteed minimum future value) and the liability is on their books. So if the dealer guarantees your Kuga is say worth 15k after 3 years and is actually only worth 12k - the 3k hit goes to the dealer.

OP - might be no harm going to manufacturer back PCP models such as VW Bank (Audi, Seat, Skoda + VW) and BMW if you're still interested in a similar model. These brands are all still backing diesel and will quote and honour a diesel on PCP.

Or maybe just look at another Renault dealer - sounds like you picked a plum.

Mooooo

RedorDead wrote: »

Renaults PCP model is all backed by the dealer in that the dealer guarantees the GMFV (guaranteed minimum future value) and the liability is on their books. So if the dealer guarantees your Kuga is say worth 15k after 3 years and is actually only worth 12k - the 3k hit goes to the dealer.

OP - might be no harm going to manufacturer back PCP models such as VW Bank (Audi, Seat, Skoda + VW) and BMW if you're still interested in a similar model. These brands are all still backing diesel and will quote and honour a diesel on PCP.

Or maybe just look at another Renault dealer - sounds like you picked a plum.

Kuga is Ford. If keeping the car may be as well off to use standard finance unless pcp is at or close to 0% as interest is being charged and payed for on the whole amount while the capital isn't being paid off

Lantus

RedorDead wrote:

Renaults PCP model is all backed by the dealer in that the dealer guarantees the GMFV (guaranteed minimum future value) and the liability is on their books. So if the dealer guarantees your Kuga is say worth 15k after 3 years and is actually only worth 12k - the 3k hit goes to the dealer.

Yes but the customer has zero equity moving into a new deal so its a double hit. The phrase guaranteed value is a little misleading. It's the bit of the car you haven't paid for. Fixed outstanding debt might be a better way to describe it? Your fixed outstanding debt won't change regardless of any change in car values.

In a rising market your fixed outstanding debt will help provide more equity as the gap between this and actual values widens.

In a falling market both dealer and consumer lose out as outlined above.

Even if the dealer took a 10k hit its of no benefit or concern to the customer. You will still need liquid cash to start a new pcp deal of at least 10%.

A lower gmfv helps protect against this fall. But it increases the monthly payments making these deals less affordable so a double edged sword.

CeilingFly

Just realised why the OP was refused - mileage is too high.

30-33,000 km leading to 100,000km after 3 years will be above most pcp mileage limits.

Allowing for overspill, the OP may be closer to 35k km a year and most pcp's are calculated at 15-20,000km a year with a 6c surcharge over that.

so after 3 years a further 3k would come off the GFMV.

On that mileage, best to look at the lowest possible apr over 5 years straight lease

Lantus

CeilingFly wrote:

On that mileage, best to look at the lowest possible apr over 5 years straight lease

Good point.

Some marks will quote but the best outcome would be to buy outright. So 3 years payments plus 1 to 3 years additional payments subject to financing arrangements.

If the op can save extra over the first 3 years they can cannabilise the gmfv debt from day 1.

_Brian

CeilingFly wrote: »

Just realised why the OP was refused - mileage is too high.

30-33,000 km leading to 100,000km after 3 years will be above most pcp mileage limits.

Allowing for overspill, the OP may be closer to 35k km a year and most pcp's are calculated at 15-20,000km a year with a 6c surcharge over that.

so after 3 years a further 3k would come off the GFMV.

On that mileage, best to look at the lowest possible apr over 5 years straight lease

Nope.
We never got as far as the mileage conversation at all.

Blazer

Lantus wrote: »

When you say end up with the gmfv. That's the debt you haven't paid yet. It's not as if the gmfv is an asset.

If the gmfv was 10k and the real world price dropped to 5k you'd still owe 10k.

The lower the gmfv generally the better for the consumer.

You should really stay out of this post as it’s obvious you haven’t a clue about it

Lantus

Blazer wrote:

You should really stay out of this post as it’s obvious you haven’t a clue about it

Any specific issue you want to discuss? Or just one line snide comments?

Blazer

Lantus wrote: »

Any specific issue you want to discuss? Or just one line snide comments?

Well go ahead and research GMFV first and then come back to me.

here's a nice handy link for you

https://www.icalculator.info/terminology/GMFV-final-payment.html

Lantus

Blazer wrote:

here's a nice handy link for you

Blazer wrote:

Well go ahead and research GMFV first and then come back to me.

Thanks, it's a little badly written in parts ( a few key sentences missing) but no different to anything I've stated unless you want to make a specific point?

kdevitt

I’m just over two years into a PCP on a BMW and discovered last week that I already have zero equity in it. Interestingly, both dealers I spoke to are trying to push traditional HP deals now.

Keys will be handed back at the end of the agreement and I’ll pick up a used UK car i’m guessing.

Lantus

kdevitt wrote:

Keys will be handed back at the end of the agreement and I’ll pick up a used UK car i’m guessing.

I would look at all your options. You could keep the car and pay off the gmfv. Why wouldn't you keep it? You have paid off half.

You could hand back but penalty clauses on mileage may be applied so check if this will apply to you.

You could buy a 2nd hand car as well. I would cost it up.

kdevitt

Lantus wrote: »

I would look at all your options. You could keep the car and pay off the gmfv. Why wouldn't you keep it? You have paid off half.

You could hand back but penalty clauses on mileage may be applied so check if this will apply to you.

You could buy a 2nd hand car as well. I would cost it up.

I have costed it - it will be worth less than the GMFV once the finance is up. I could potentially pay it off and sell it straight away, but that introduces a lot of hassle for 1k or 2k. Mileage is going to be nowhere close to my limit either, so have no concerns on penalties.

Main point I was making was the reluctance of two separate garages to push a PCP package - in both cases they were pretty adamant that buyers should never expect any equity at the end of the 3 years - and that HP packages were more suitable.

Lantus

kdevitt wrote:

Main point I was making was the reluctance of two separate garages to push a PCP package - in both cases they were pretty adamant that buyers should never expect any equity at the end of the 3 years - and that HP packages were more suitable.

Just because its worth less than the gmfv doesn't make it unsuitable to keep. If its in good condition and meets your needs.

Bmw has suffered more than most because the gmfv was slightly higher and UK bmws are comparatively cheap to import eroding any equity.

PCP is under increasing pressure on all fronts and its not clear where the market will go. Cheaper cars will probably perform better, say up to 30k as they generally more affordable and can realise lower gmfv to help protect equity and are less likley to be imported from the UK. But its less certain and I'd expect some changes.

It's a huge challenge for the car industry as nearly all new car sales are on pcp...

joebloggs32

Nearing the end of a Pcp deal too. Was in chatting the garage about my options. Looking at a diesel Renault kadjar. Salesman was definitely pushing the HP route this time whereas 3 years ago it wasn't even mentioned.
I'm not really bothered either way. Have saved up the GMFV to make the final payment on a fluence if I decide to keep it. Will only change if they offer me some decent equity. The GMFV is 8.5k and he was willing to give me 5k off the kadjar

joebloggs32

Nearing the end of a Pcp deal too. Was in chatting the garage about my options. Looking at a diesel Renault kadjar. Salesman was definitely pushing the HP route this time whereas 3 years ago it wasn't even mentioned.
I'm not really bothered either way. Have saved up the GMFV to make the final payment on a fluence if I decide to keep it. Will only change if they offer me some decent equity. The GMFV is 8.5k and he was willing to give me 5k off the kadjar

bazz26

The problem with BMW PCP is that they set the GMFV too high leaving buyers with little or no equity. They focused on attractive low monthly payments in order to draw in new customers but when those customers come back to go again they are in for a nasty shock.

Lantus

joebloggs32 wrote:

Nearing the end of a Pcp deal too. Was in chatting the garage about my options. Looking at a diesel Renault kadjar. Salesman was definitely pushing the HP route this time whereas 3 years ago it wasn't even mentioned. I'm not really bothered either way. Have saved up the GMFV to make the final payment on a fluence if I decide to keep it. Will only change if they offer me some decent equity. The GMFV is 8.5k and he was willing to give me 5k off the kadjar

Balance cleared and 5k deposit on a kadjar seems good. A 28k car so 17ish percent deposit.

Blazer

Lantus wrote: »

Thanks, it's a little badly written in parts ( a few key sentences missing) but no different to anything I've stated unless you want to make a specific point?

Ok will give you that..however its not a debt he owes. He can easily walk away from it.
Its tradeoff for most people..high GMFV value with low monthly repayments or low GFMV value with high monthly repayments.
As you said the more you can repay monthly the better for you in the long term.

Lantus

Blazer wrote:

Ok will give you that..however its not a debt he owes. He can easily walk away from it. Its tradeoff for most people..high GMFV value with low monthly repayments or low GFMV value with high monthly repayments. As you said the more you can repay monthly the better for you in the long term.

It's debt until you make one of the 3 choices. One of these is hand back the car plus any penalties that may be applied. The asset returned clears the finance debt against it. So the big tradeoff for walking away is no more car.

Its a good option to have in an uncertain market but if you feel you have to do this rather than pay off the gmfv then affordability was most certainly an issue from day 1.

You don't even have an old car to trade in for the next deal in that case. It will be 100% credit. Hardly great for the consumer.

joebloggs32

Lantus wrote: »

Balance cleared and 5k deposit on a kadjar seems good. A 28k car so 17ish percent deposit.

Yeah not a bad offer. Renault also giving 1.2% finance currently also as opposed to 2.9 % on my last deal and the garage has always looked after us well. The last time they gave me 10 k on a 5 year old fluence that I bought back in 2010 under the government scrappage scheme. I had only paid 17 k for it new. The current fluence is a higher spec limited edition that was 23k.

kdevitt

Lantus wrote: »

Its a good option to have in an uncertain market but if you feel you have to do this rather than pay off the gmfv then affordability was most certainly an issue from day 1.

You don't even have an old car to trade in for the next deal in that case. It will be 100% credit. Hardly great for the consumer.

Unless the car has equity at the end of the period, there’s no difference between the two. The GFMV may technically be debt, but it’s fully collateralised so it’s virtually zero risk unless you’ve blasted the mileage limit or are returning the car in a heap. I don’t see how affordability comes into it?

And if you have the cash to clear the GFMV you also have the cash to go again on a different deal - be it PCP or traditional car finance.

Lantus

kdevitt wrote:

And if you have the cash to clear the GFMV you also have the cash to go again on a different deal - be it PCP or traditional car finance.

That's the point. Most people will probably not have the cash to clear the gmfv. It will be further loan products over 1 to 4 years?

If you have been able to save which is great then yes there are more options moving forwards for another car be it new or not. If you don't have any mileage penalties and its zero equity or anither car is comparatively cheaper then go for it.

As with everything it's never an issue if you have the cash.

kdevitt

Lantus wrote: »

That's the point. Most people will probably not have the cash to clear the gmfv. It will be further loan products over 1 to 4 years?
.

I think that’s the expectation for most people with a PCP though? I don’t know anyone who entered one of these deals and wanted to pay the balloon at the end. It’s not an effective way to finance a car you want to own outright. You pay for the depreciation over three years and then flip into a new financing deal for a different car at the end of the period or walk away. Ideally you have equity at that stage and require a top up, or you’re in my boat and need to cover the full deposit yourself.

grogi

Lantus wrote: »

I would look at all your options. You could keep the car and pay off the gmfv. Why wouldn't you keep it? You have paid off half.

Because you can buy similar one for less than GMFV?

grogi

kdevitt wrote: »

And if you have the cash to clear the GFMV you also have the cash to go again on a different deal - be it PCP or traditional car finance.

And how many times can you repeat the cycle before the cash runs out?

kdevitt

grogi wrote: »

And how many times can you repeat the cycle before the cash runs out?

Well I’m guessing that there will be a steep drop off in PCP financing when people find themselves unable to repeat the cycle even once, either because they can’t afford the amount of deposit required to allow for the smaller monthly payments on a new car, or that the amount they can afford per month won’t cover the car they want because their deposit is too low.

Lantus

kdevitt wrote:

Well I’m guessing that there will be a steep drop off in PCP financing when people find themselves unable to repeat the cycle even once, either because they can’t afford the amount of deposit required to allow for the smaller monthly payments on a new car, or that the amount they can afford per month won’t cover the car they want because their deposit is too low.

Agreed, If you want to have a cash deposit ready at the end of 3 years assuming your equity is zero then the minimum for say a 30k car will be 3000eu. That's 84eu a month you need to save for 36 months on top of your monthly payment. Quite an amount for most unless you cut your cloth to suit the car bought.

For those who made a high deposit to get the lowest monthly they absolutely should be able to save from day 1 for future deposits or gmfv payment part or full. This is because there monthly will never be as small again unless they drop the equivalent deposit the next time. If you can't afford pcp beyond a 15% deposit you really need a solid exit plan because after 3 years your costs will be higher. Even lower deposits will see increases in monthlys.

_Brian

Sooooo
We're really wondering what is going on with the new Co2 testing..



Seat arent shipping any more new Ateca's until the current testing is completed, so to buy a new one you have to choose from what is in the country at the moment, no SE AWD models, just Excellence AWD


Same with Dacia, combination of new model coming and Co2 they have x stock on the system and thats it. The duster wasnt really a contender (more a complete outsider) but I was curious to test one out but among other problems it doesnt have the towing capacity we need..


The Co2 testing is why the ford dealer wasnt interested in PCP as he was so unsure of future values of diesels..


Anyway, we're not stuck, I'm put off investing in a new diesel at the moment if there is a possibility of big changes in 2019 post this current testing..


I think we'll shelve going for a new motor and look towards a 3YO motor again.. It will make it very hard to get what we want but time will tell.

JoeA3

_Brian wrote: »

Sooooo
We're really wondering what is going on with the new Co2 testing..



Seat arent shipping any more new Ateca's until the current testing is completed, so to buy a new one you have to choose from what is in the country at the moment, no SE AWD models, just Excellence AWD


Same with Dacia, combination of new model coming and Co2 they have x stock on the system and thats it. The duster wasnt really a contender (more a complete outsider) but I was curious to test one out but among other problems it doesnt have the towing capacity we need..


The Co2 testing is why the ford dealer wasnt interested in PCP as he was so unsure of future values of diesels..


Anyway, we're not stuck, I'm put off investing in a new diesel at the moment if there is a possibility of big changes in 2019 post this current testing..


I think we'll shelve going for a new motor and look towards a 3YO motor again.. It will make it very hard to get what we want but time will tell.

Its not just diesels. It's hard to order any new VAG (petrol or diesel) at the moment due to this emissions (WLTP) thing. Very little can be factory ordered. Probably similar situation with other marques too.

Nika Bolokov

A GMFV is not equity, or an asset.


It is a liability,


If you hand over 20k and get 10k in the end through GMFV, you have lost 10k and have a residual 10k left.


Equity is an excess over what you paid, an asset which can be used as collateral.


I wonder about the risk in these deals, could theoretically the debt be sold to a vulture fund mid way if things are going pear shaped with no obligation on them to give you anything ?