PCP finance - BMW/Merc/Audi

Hi All,

So I will just quickly explain my situation and what I intend to do:

- Looking to purchase car on finance for the first time, PCP looks ideal for me, will be changing car every 2-3 years

- 30 Years old

- Disposable income (stacking up after every month for the past year or so) is well over twice the monthly cost of the deal

- No mortgage, rent or other significant expenses

- Placing the maximum deposit that is accepted, likely 20k approx

- Final (balloon) payment is understood and will not be an issue


What I do do not have however is any credit history at all, never had any form of loan, so while unblemished, it also doesn't really exist I suppose.

My question is this really, for those of you involved in, or have knowledge of, the industry, or even those among who have experience in purchasing cars on the more expensive side of things via PCP - will a lack of Credit History stand in the way here?

Worth bearing in mind, as mentioned, is that a huge portion of my income is effectively disposable, just stacking up month after month, bank statements etc would prove this if checked.

Totally understand it probably sounds like a very strange situation, but id really appreciate anybodies insight on this one.

Thanks in advance !

DaveyDave

Credit history isn't an issue. I'm 26 and never had a credit union loan, bank loan or credit card.

As long as you have savings history and payslips show you can easily afford the monthly payments then you shouldn't have any issues. I'm on PCP with VW and had no issues.

Heres Johnny

Don't put the max deposit in. If values absolutely plummet again which could happen for a multitude of reasons, brexit, poor economy, fx rates, diesel taxes....your deposit is gone. Put in a smaller deposit, leave the risk with the PCP lender. If you change in 3 years you will have to come up with same deposit again to keep your payments level.

20k will buy you a nice whack of a used German premium car, I got a 2014 530d for not much more. Top spec, 46000 miles, paid in cash, no repayments or messing.

Appreciate the input lads,

Good point on the long term implications with the max deposit, my thinking was it would help my case for approval, but if that is unlikely to be an issue then I will have another look at the balance there.

As for the 20k cars out there, you're 100% correct, but unfortunately I am stricken with a distinct lack of common sense on this car thing and I am dead set on losing as much money as possible by buying something close to new. Hugely silly, I know !

Heres Johnny

Best of luck a new car is nice but since you've never had one before (I assume since you never had a loan) and the losses on these 3 brands from new are horrendous. If the final payment is set too high you might have no deposit for next car....but once you know this work away.

You could very very easily lose 60+% of value in 3 years. 16 reg cars coming in at about 50% of new values at the moment.

What models are you looking at

MarkN

Zux wrote: »

Appreciate the input lads,

Good point on the long term implications with the max deposit, my thinking was it would help my case for approval, but if that is unlikely to be an issue then I will have another look at the balance there.

As for the 20k cars out there, you're 100% correct, but unfortunately I am stricken with a distinct lack of common sense on this car thing and I am dead set on losing as much money as possible by buying something close to new. Hugely silly, I know !

The bank own the car so once you’ve a minimum of 10% there won’t be an issue with the finance unless something very odd happens.

I’d also advise you to steer clear of putting 30% on PCP. If you want to stick max deposit down, do HP.

MarkN

MarkN wrote: »

The bank own the car so once you’ve a minimum of 10% there won’t be an issue with the finance unless something very odd happens.

I’d also advise you to steer clear of putting 30% on PCP. If you want to stick max deposit down, do HP.

Thanks for that, it makes a lot of sense, another concern I had was my gross salary being relatively low compared to the value of the car in question, but with more than what is needed for a deposit and monthly surplus being very high that shouldn't be an issue either I presume.

Effectively all they want to see is that you can make the repayments easily, whether or not it is a good idea is left to the lunatics like us I suppose.

With all the above in mind, and my intention to swap cars every 2-3 years, what are your thoughts on PCP vs HP overall?

Heres Johnny

Heres Johnny wrote: »

Best of luck a new car is nice but since you've never had one before (I assume since you never had a loan) and the losses on these 3 brands from new are horrendous. If the final payment is set too high you might have no deposit for next car....but once you know this work away.

You could very very easily lose 60+% of value in 3 years. 16 reg cars coming in at about 50% of new values at the moment.

What models are you looking at

100% ready to take the loss there, so no worries on that, probably wont be a new car, likely a year or two old if I go ahead with the below.

Currently looking at a 640D Gran Coupé as the front runner, hearing nothing but great things about them and they have already taken huge hits from list price as it stands.

bazz26

Not sure what they are like now but BMW's PCP figures were absolutely dire the last time I checked. The FGV/final balloon figures were too high and the PCP interest rates were something like 5.7%. Weak sterling attribute to lower resale values which should be considered if you plan to keep the car or change brands after 3 years.

bazz26

bazz26 wrote: »

Not sure what they are like now but BMW's PCP figures were absolutely dire the last time I checked. The FGV/final balloon figures were too high and the PCP interest rates were something like 5.7%.

To be honest I wasn't too impressed when compared to their competition either.

I was dead set on high spec E Coupé until I noticed the 640D had lost half its value in a year and was in the price range after all.

bazz26

All those cars loose big money in their early years to be honest, it's a fact of life with them. Cheap ones from the UK only compounds the fact. They are better value at 3 or 4 years old when you can buy them at a fraction of their new price. However I can appreciate the desire to own a brand new car that nobody has had before you.

bazz26

bazz26 wrote: »

All those cars loose big money in their early years to be honest, it's a fact of life with them. Cheap ones from the UK only compounds the fact. They are better value at 3 or 4 years old when you can buy them at a fraction of their new price. However I can appreciate the desire to own a brand new car that nobody has had before you.

Yea its been a really hard decision to make, still is in truth.

With the 640 some other poor chap has taken the real heavy hit on it already, which softens the blow for me.

Heres Johnny

Lovely car. Was looking myself at them up to recently but went with a 530d. Hoping to collect it tomorrow. Responsible lending practices should dictate what you can borrow and you've mentioned a relatively low income but little outgoings.

If you don't mind me asking what age are you and what's your income? Apologies but I used to be a financial advisor and my clients talking like this would worry me!! You sound young and carefree so just making sure you don't set yourself back a decade in looking for a house or anything like that.
A 2 year old 640d is still very expensive for a car and it will still depreciate like a stone even though someone else has taken the shine off it for you already.

bazz26

Yep I bought a 3 year old 530d earlier this year for low 30k which cost someone nearly 70k when new. So to be honest unless your getting a super PCP deal that makes it more attractive to buy new, I'd aim for something a bit older that has already taken a large hit on depreciation. Even with standard HP finance it might end up cheaper to buy a 1 or 2 year old example than buy new on PCP when all costs including depreciation and interest is taken into consideration. And the likes of BMW dealers will still give you a 2 year warranty on their used cars for extra peace of mind around reliability.

Heres Johnny

Heres Johnny wrote: »

Lovely car. Was looking myself at them up to recently but went with a 530d. Hoping to collect it tomorrow. Responsible lending practices should dictate what you can borrow and you've mentioned a relatively low income but little outgoings.

If you don't mind me asking what age are you and what's your income? Apologies but I used to be a financial advisor and my clients talking like this would worry me!! You sound young and carefree so just making sure you don't set yourself back a decade in looking for a house or anything like that.
A 2 year old 640d is still very expensive for a car and it will still depreciate like a stone even though someone else has taken the shine off it for you already.

No problem at all, I can imagine how worrying all this sounds to most !

I am 30y/o, house is paid off entirely, current salary is about 2500 a month, with about 2000 or so being entirely surplus. A unique situation the details of which I wouldn't go into here, but that should answer your question I hope.

bazz26

bazz26 wrote: »

Yep I bought a 3 year old 530d earlier this year for low 30k which cost someone nearly 70k when new. So to be honest unless your getting a super PCP deal that makes it more attractive to buy new, I'd aim for something a bit older that has already taken a large hit on depreciation. Even with standard HP finance it might end up cheaper to buy a 1 or 2 year old example than buy new on PCP when all costs including depreciation and interest is taken into consideration. And the likes of BMW dealers will still give you a 2 year warranty on their used cars for extra peace of mind around reliability.

Yea thats more than fair I think, I think the 640D had its facelift within the last couple of years, but I should check when that was exactly, would not be interested in the pre-facelift despite the changes being minor, I think some tech also became standard, LED headlights for example.

bazz26

I think it was late 2016 when it got it's second facelift which included LED headlights, NBT2 iDrive upgrade, etc.

bazz26

bazz26 wrote: »

I think it was late 2016 when it got it's second facelift which included LED headlights, NBT2 iDrive upgrade, etc.

Gotcha, thanks for the info, that seems in line with the cars I've seen so far, been watching them for a month or so.

Heres Johnny

Zux wrote: »

Heres Johnny wrote: »

Lovely car. Was looking myself at them up to recently but went with a 530d. Hoping to collect it tomorrow. Responsible lending practices should dictate what you can borrow and you've mentioned a relatively low income but little outgoings.

If you don't mind me asking what age are you and what's your income? Apologies but I used to be a financial advisor and my clients talking like this would worry me!! You sound young and carefree so just making sure you don't set yourself back a decade in looking for a house or anything like that.
A 2 year old 640d is still very expensive for a car and it will still depreciate like a stone even though someone else has taken the shine off it for you already.

No problem at all, I can imagine how worrying all this sounds to most !

I am 30y/o, house is paid off entirely, current salary is about 2500 a month, with about 2000 or so being entirely surplus. A unique situation the details of which I wouldn't go into here, but that should answer your question I hope.

If that's the case you have the house then fire away and good luck with whatever car you end up with. The 640d is a very nice machine indeed and I was very close to pulling the trigger on one myself although a bit older than you are looking.
Look into the lending options as regards rates and terms and if you want us to compare and advise it's usually decent advice you get here.

bazz26

Yep, good luck with it. There are some good knowledgeable BMW heads on here if you need some other info on them.

Heres Johnny

Heres Johnny wrote: »

If that's the case you have the house then fire away and good luck with whatever car you end up with. The 640d is a very nice machine indeed and I was very close to pulling the trigger on one myself although a bit older than you are looking.
Look into the lending options as regards rates and terms and if you want us to compare and advise it's usually decent advice you get here.

Much appreciated mate, at this point I am likely to wait until the new year to pull the trigger in truth.

I have been reading through the threads here, spent the afternoon reading "Where would you go next", some very useful advice to be had for sure, noticed you mention being close with the 640 I think too !

bazz26

bazz26 wrote: »

Yep, good luck with it. There are some good knowledgeable BMW heads on here if you need some other info on them.

Cheers guys, I will let you know what happens in the end regardless, appreciate the help.

draiochtanois

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draiochtanois

draiochtanois wrote: »

This post has been deleted.

I was actually wondering this, as any calculators I used seemed to have fixed (albeit unrealistic oftentimes) GMFV.

With this said, my initial thinking was to pay as much as possible up front, is this the best course of action normally?

draiochtanois

This post has been deleted.

Rx713B

The brand's in which you have listed would be considered to be in the "premium sector" therefore are also affected by premium depreciation.

Brands like this have quite a substantial amount of demonstrator responsibilities throughout the year thus driving the price of any retail stock customer bought stock down.

My advice steer clear of the new PCP with the brands you have listed and buy a Demonstrator or Pre reg that had its first years depreciation written off and stick it on Hire Purchase and extend out the term maybe 5 years should see your payments similar to what you have now. You can still change every 3 years you'll just have a settlement and not a balloon and you will have saved the first years depreciation.

If you are still set on PCP go for a VW there rates are always low and stick now more than 15% deposit in - depending on model you should be changing every 3 year for nothing and payments staying the same.

PCP is a good product once done right and in the right brand - for those brands you listed PCP is NOT a cost effective exercise.

Just my 2 cents.

draiochtanois

draiochtanois wrote: »

If it's not 0% Finance yes.

Gotcha.

Another question if anybody has experience with such, as most of you know all too well, the UK cars, particularly in this can work out cheaper with a relatively higher spec.

As this car will likely require financing, buying a UK car becomes a little more tricky, and in the case of PCP, not possible.

Are their reputable/approved dealers out there who would import a car of your choosing from the UK and sell it through themselves, on request? That is to say, not import the car and expect an extra 15-20k for their time.

Rx713B

Rx713B wrote: »

The brand's in which you have listed would be considered to be in the "premium sector" therefore are also affected by premium depreciation.

Brands like this have quite a substantial amount of demonstrator responsibilities throughout the year thus driving the price of any retail stock customer bought stock down.

My advice steer clear of the new PCP with the brands you have listed and buy a Demonstrator or Pre reg that had its first years depreciation written off and stick it on Hire Purchase and extend out the term maybe 5 years should see your payments similar to what you have now. You can still change every 3 years you'll just have a settlement and not a balloon and you will have saved the first years depreciation.

If you are still set on PCP go for a VW there rates are always low and stick now more than 15% deposit in - depending on model you should be changing every 3 year for nothing and payments staying the same.

PCP is a good product once done right and in the right brand - for those brands you listed PCP is NOT a cost effective exercise.

Just my 2 cents.

Appreciate the input, chances are I will be sticking between BMW/Merc barring somebody offering me a new Conti GT for 70k !

I had presumed I didnt have the option to pay off the HP agreements early, but having said that I have yet to look into these as yet.

Avatar MIA

Rx713B wrote: »

The brand's in which you have listed would be considered to be in the "premium sector" therefore are also affected by premium depreciation.

Brands like this have quite a substantial amount of demonstrator responsibilities throughout the year thus driving the price of any retail stock customer bought stock down.

My advice steer clear of the new PCP with the brands you have listed and buy a Demonstrator or Pre reg that had its first years depreciation written off and stick it on Hire Purchase and extend out the term maybe 5 years should see your payments similar to what you have now. You can still change every 3 years you'll just have a settlement and not a balloon and you will have saved the first years depreciation.

If you are still set on PCP go for a VW there rates are always low and stick now more than 15% deposit in - depending on model you should be changing every 3 year for nothing and payments staying the same.

PCP is a good product once done right and in the right brand - for those brands you listed PCP is NOT a cost effective exercise.

Just my 2 cents.

Solid advice in general, but ignoring the OP.

mickdw

Zux wrote: »

Gotcha.

Another question if anybody has experience with such, as most of you know all too well, the UK cars, particularly in this can work out cheaper with a relatively higher spec.

As this car will likely require financing, buying a UK car becomes a little more tricky, and in the case of PCP, not possible.

Are their reputable/approved dealers out there who would import a car of your choosing from the UK and sell it through themselves, on request? That is to say, not import the car and expect an extra 15-20k for their time.

Personal loan via bank or credit union is only option really.
To be honest, on a used car, pcp rates don't make sense at all as they will typically be at 5.9 percent upwards and on a PCP with large amount being left aside over the entire loan period, 5.9 is crippling.
You are therefore looking a Hp. Banks and car finance deals appear similar as I was looking recently so not much point in seeking out a dealer to take car in and set up finance, just arrange loan yourself and go to UK.

mickdw

mickdw wrote: »

Personal loan via bank or credit union is only option really.
To be honest, on a used car, pcp rates don't make sense at all as they will typically be at 5.9 percent upwards and on a PCP with large amount being left aside over the entire loan period, 5.9 is crippling.
You are therefore looking a Hp. Banks and car finance deals appear similar as I was looking recently so not much point in seeking out a dealer to take car in and set up finance, just arrange loan yourself and go to UK.

Yea, I suppose its worth looking into regardless, just to see what the options look like. I wonder if I would struggle more to be approved for a loan of that nature though.

Heres Johnny

Zux wrote: »

draiochtanois wrote: »

If it's not 0% Finance yes.

Gotcha.

Another question if anybody has experience with such, as most of you know all too well, the UK cars, particularly in this can work out cheaper with a relatively higher spec.

As this car will likely require financing, buying a UK car becomes a little more tricky, and in the case of PCP, not possible.

Are their reputable/approved dealers out there who would import a car of your choosing from the UK and sell it through themselves, on request? That is to say, not import the car and expect an extra 15-20k for their time.

Have a look at Charles Hurst. Not a recommendation but they are a big NI dealer that opened up in Dublin for that purpose. There are others too. Loads of stock in Ireland is now ex UK stock so there must be stuff out there where the prices are close now.

Heres Johnny

Heres Johnny wrote: »

Have a look at Charles Hurst. Not a recommendation but they are a big NI dealer that opened up in Dublin for that purpose. There are others too. Loads of stock in Ireland is now ex UK stock so there must be stuff out there where the prices are close now.

Taking a look now, thanks !

omri

Didn't BMW issue profit warning recently ? Which could meen they might be pushing for sales more than otherwise, which in turn could result in better deals... possibly.

mickdw

Zux wrote: »

Yea, I suppose its worth looking into regardless, just to see what the options look like. I wonder if I would struggle more to be approved for a loan of that nature though.

If you are on a salary paid into bank, you won't struggle.
Myself self employed, crystal clear credit history, I recently enquired about personal loan for car. They wanted 2 years personal account and 2 years business accounts. I wouldn't be giving my business accounts to anyone so I didn't go ahead.
Compare that to car finance. Told dealer my income details over the phone, name address and date of birth and he had approval in 30 mins. Just ID and household bill required.

mickdw

mickdw wrote: »

If you are on a salary paid into bank, you won't struggle.
Myself self employed, crystal clear credit history, I recently enquired about personal loan for car. They wanted 2 years personal account and 2 years business accounts. I wouldn't be giving my business accounts to anyone so I didn't go ahead.
Compare that to car finance. Told dealer my income details over the phone, name address and date of birth and he had approval in 30 mins. Just ID and household bill required.

That difference is mad, I'm certainly going to consider going the loan route for a UK car though, the potential saving on a high spec example is too tempting.

bazz26

Some banks will insist on you buying from an Irish VAT registered dealer as a condition of car finance. They won't loan you the money under a car loan to go to the UK to buy. To do that you would have to borrow it under a personal loan which usually have higher interest rates. Credit Union would be another option as they generally don't care where you buy the car from, again though their rates may not be as competitive.

And as said, forget about PCP on a used car, PCP is mainly designed to get people into a brand new car as they make money off you for the first 3 years and still have plenty of value in the car at year 3 when you hand it back or trade up to another. Offering PCP on a used car that will have a low value in another 3 years means they have to make their money through high deposit and monthly repayments in the 3 years you have it.

bazz26

bazz26 wrote: »

Some banks will insist on you buying from an Irish VAT registered dealer as a condition of car finance. They won't loan you the money under a car loan to go to the UK to buy. To do that you would have to borrow it under a personal loan which usually have higher interest rates. Credit Union would be another option as they generally don't care where you buy the car from, again though their rates may not be as competitive.

Good to know, I have just been looking at the personal loan side of things, payments even with that seem more than manageable, so if that became the only option, it remains viable.

Been browsing the UK cars just now, options like VDC and the Adaptive LED's seem so commonplace they are almost standard on the newer cars, will be hard to find an Irish car to match up it seems.

bazz26

Adaptive chassis/dampers is another worthwhile extra to look out for.

bazz26

bazz26 wrote: »

Adaptive chassis/dampers is another worthwhile extra to look out for.

Yea sorry that is the VDC - Variable Damping Control, or something.

Something which just occurred to me is that we will need to pay VAT of 21% on any car imported immediately after UK leave the EU right?

Can anybody confirm this, and the latest point at which cars can still be imported under the current circumstances?

Heres Johnny

Zux wrote: »

Something which just occurred to me is that we will need to pay VAT of 21% on any car imported immediately after UK leave the EU right?

Can anybody confirm this, and the latest point at which cars can still be imported under the current circumstances?

Well if you mean Irish VAT it is now 23%. But we don't know for sure yet if it will have to be paid or not. The poor Brits don't know if they're coming or going at the moment

James Bond Junior

Just to throw something into the ring. Herselfs PCP with BMW is up this month and she was given a cost to change of a 15% deposit on top of the trade in but her monthly payment went up by 60%. She was planning on paying the balloon either way and keeping the car but be warned, it isn't as rosey as it was sold initially.

James Bond Junior

James Bond Junior wrote: »

Just to throw something into the ring. Herselfs PCP with BMW is up this month and she was given a cost to change of a 15% deposit on top of the trade in but her monthly payment went up by 60%. She was planning on paying the balloon either way and keeping the car but be warned, it isn't as rosey as it was sold initially.

Yikes, why was it her monthly was going up so much though?

Heres Johnny

Heres Johnny wrote: »

Well if you mean Irish VAT it is now 23%. But we don't know for sure yet if it will have to be paid or not. The poor Brits don't know if they're coming or going at the moment

Yea I found out what I could for now, nothing confirmed as you say, thanks !

bazz26

Zux wrote: »

Something which just occurred to me is that we will need to pay VAT of 21% on any car imported immediately after UK leave the EU right?

Can anybody confirm this, and the latest point at which cars can still be imported under the current circumstances?

Nobody knows for sure how it's going to play out. If the Brits leave the Customs Union then anything registered there after that date could be liable to VAT if imported into an EU member state. Anything already registered now or before would already have had VAT paid in the UK as an EU member so technically should not need it to be paid again when brought into Ireland.

James Bond Junior wrote: »

Just to throw something into the ring. Herselfs PCP with BMW is up this month and she was given a cost to change of a 15% deposit on top of the trade in but her monthly payment went up by 60%. She was planning on paying the balloon either way and keeping the car but be warned, it isn't as rosey as it was sold initially.

BMW got their PCP all wrong, GFV values were too high then reducing retail prices to offset the weak sterling this year and last hit resale values of earlier cars hard. Left people with little no equity in their cars and they seemed to focus on getting first time buyers into to the brand while driving returning customers to the likes of Mercedes and Audi.

bazz26

bazz26 wrote: »

Nobody knows for sure how it's going to play out. If the Brits leave the Customs Union then anything registered there after that date could be liable to VAT if imported into an EU member state. Anything already registered now or before would already have had VAT paid in the UK as an EU member so technically should not need it to be paid again when brought into Ireland.

Ah that makes sense, so with that in mind, and forgive me if I misunderstood here, but with the 640 GC now out of production, and therefore likely all registered by the time id be pulling the trigger, I should be safe from being hit by the VAT either way, right?

bazz26

As it stands as long as the car is >6 months old and has >6000 km on the clock then it's not liable for Irish VAT.

bazz26

bazz26 wrote: »

As it stands as long as the car is >6 months old and has >6000 km on the clock then it's not liable for Irish VAT.

Understood, and hypothetically, if Brexit was the end up being the worst possible scenario from our POV, VAT would not need to be repaid on an imported UK car even after that happening, assuming it was registered when the UK was a part of the EU/Customs Union?

bazz26

That's my understanding.

mickdw

bazz26 wrote: »

BMW got their PCP all wrong, GFV values were too high then reducing retail prices to offset the weak sterling this year and last hit resale values of earlier cars hard. Left people with little no equity in their cars and they seemed to focus on getting first time buyers into to the brand while driving returning customers to the likes of Mercedes and Audi.

Exactly. They have borderline destroyed the brand. They offered cars at monthly figures that were competitive but only because they offered a GFV that left no equity at end. Lifetime customers that they had got into pcp deals were suddenly then left in a very poor situation with zero equity.
Mercedes have not tried to sell e class to the masses. They have kept GFV at a level that will provide a deposit next time and kept the entry level pricing at around 600 per month with max deposit.
If you cannot afford 600 per month you are fooling yourself buying a 5 series or an e class yet BMW had deals around 400 per month.