PCP - GFV if rolling over (Seat)

jleavy046

Hello,
I'm really sorry as I'm sure this has been answered before but I just can't find a clear answer on this myself.

Looking to purchase a nearly new Seat.

Dealer offering 9k trade in on my current 142 seat car.

The car I'm looking at is 23,950.
The max deposit I can put down on this pcp is €7, 185 (30%). So I get cash back as part of this arrangement (ie €9000-€7185). Yay!!

PCP finance amount will be €16,765.
Repayments are around 217 per month for 36 months.
Interest rate is 2.9% Apr.
GFV is €10,053.

I've done the figures and overall, when I exit at the end of the 3 years the finance would have cost me €1,033 total.

In effect I understand I'm only deferring the lump sum payment until the end of the 3 years. I understand that after I make the final lump sum payment I keep the car and job done. I won't care about how many miles I have or any wear and tear etc..

That's my default plan with this pcp. I will exit and own the car outright. I'm using the pcp to, in effect, 'park' the balloon payment until the end of the deal and get cheap finance on a smaller amount. Clearly, if I miss a payment I'm in trouble and I don't own the car till the end.


However, my question is, if at the end of the pcp deal the dealer phones me up saying he feels the car is in good condition, under milage etc... Let's say the dealer says the car is worth 13k at the end of the deal.

Am I correct in saying that full 13k can be used as a deposit on the next pcp deal? But, wait - you can only put down 30% deposit, so do I get cash back again or what?

Or is it only the 3k over and above the GFV that I can use as a deposit on the next deal? The GFV that was 'parked' from this car is 'parked' again?

Obviously, at the end of the 3 years, should an offer be made it will all become clear, I'm just curious. I 'assume' dealers want to keep you 'hooked' so they want you to go again, which currently isn't my plan.

J.

Jimmy.

There is only one winner with pcp.

MarkN

Well you could use your cash back from this deal to put away and have for the balloon for starters.

To have true equity going into another car you need to have your GFV PLUS the deposit you initially put in and THEN whatever is left in the market value of the car is what you have as a bigger deposit to reduce repayments on the next car.

If you don’t have any further equity after your GFV and deposit amount then your repayments could in theory stay the same best case scenario but if something like even the price of the new model has gone up then that eats into your deposit too.

I’d be wary of any deal promising cash back in 3 years time, if you put in 30% you are extremely likely to have to add a further sizeable deposit to the next car to keep the repayments anywhere near what they are. This is clear when you go back to the GFV + deposit amount + money left over example.

jleavy046

MarkN wrote: »

Well you could use your cash back from this deal to put away and have for the balloon for starters.

Sorry, yes, I should have mentioned that I will have a term savings account maturing around 2 months before this PCP would end, hence why I am considering this. Sorry, I should have mentioned this.

MarkN wrote: »

To have true equity going into another car you need to have your GFV PLUS the deposit you initially put in and THEN whatever is left in the market value of the car is what you have as a bigger deposit to reduce repayments on the next car.

This I'm a little lost on, but I'll re-read after a nights sleep if that's okay and maybe revert.

MarkN wrote: »

If you don’t have any further equity after your GFV and deposit amount then your repayments could in theory stay the same best case scenario but if something like even the price of the new model has gone up then that eats into your deposit too.

I’d be wary of any deal promising cash back in 3 years time, if you put in 30% you are extremely likely to have to add a further sizeable deposit to the next car to keep the repayments anywhere near what they are. This is clear when you go back to the GFV + deposit amount + money left over example.

Okay, I'll re-read read all the above in the morning as I'm not sure it's sinking into my brain at this moment.

I was only curious anyway so THANK YOU for the information and time.

J

Lantus

Your gmfv is all outstanding debt so someone needs to pay it. Either you pay it when you buy the car or the dealer pays it if you roll over.

The general idea is that the car is worth say 15k which would give 5 k equity minus the dealers profit in selling on so realisticly 2.5k.

In your case you are right to plan to keep. Equity in pcp is under severe pressure and not guaranteed at all. You have invested a huge sum up front.

You mention savings. You should ideally with such a low monthly of 217 be able to save the entire 10k gmfv in 3 years and own outright.

650Ginge

jleavy046 wrote: »

Hello,
I'm really sorry as I'm sure this has been answered before but I just can't find a clear answer on this myself.

Looking to purchase a nearly new Seat.

Dealer offering 9k trade in on my current 142 seat car.

The car I'm looking at is 23,950.
The max deposit I can put down on this pcp is €7, 185 (30%). So I get cash back as part of this arrangement (ie €9000-€7185). Yay!!

PCP finance amount will be €16,765.
Repayments are around 217 per month for 36 months.
Interest rate is 2.9% Apr.
GFV is €10,053.

I've done the figures and overall, when I exit at the end of the 3 years the finance would have cost me €1,033 total.

In effect I understand I'm only deferring the lump sum payment until the end of the 3 years. I understand that after I make the final lump sum payment I keep the car and job done. I won't care about how many miles I have or any wear and tear etc..

That's my default plan with this pcp. I will exit and own the car outright. I'm using the pcp to, in effect, 'park' the balloon payment until the end of the deal and get cheap finance on a smaller amount. Clearly, if I miss a payment I'm in trouble and I don't own the car till the end.


However, my question is, if at the end of the pcp deal the dealer phones me up saying he feels the car is in good condition, under milage etc... Let's say the dealer says the car is worth 13k at the end of the deal.

Am I correct in saying that full 13k can be used as a deposit on the next pcp deal? But, wait - you can only put down 30% deposit, so do I get cash back again or what?

Or is it only the 3k over and above the GFV that I can use as a deposit on the next deal? The GFV that was 'parked' from this car is 'parked' again?

Obviously, at the end of the 3 years, should an offer be made it will all become clear, I'm just curious. I 'assume' dealers want to keep you 'hooked' so they want you to go again, which currently isn't my plan.

J.

Let's step back at see if any of this makes sense on your current deal.

So the 142 Seat you have now...what did you pay for that new and how much interest did you pay.

What's the Gmfv on it (the 142)? We know the trade value is 9k?

ShadowHearth

Jimmy. wrote: »

There is only one winner with pcp.

Actually, two winners, if both parties know what they are doing and both parties happy with agreement.
Whole "Pcp is devils minion! Think of children!!!!" Is getting old. Its form of finance, which suits some people and doesn't others, like any product in the market.


Op, just to make it sweet and short.

Im the end of 3 years, you have option:

To pay off 10k yourself. You have 3 years to save that.
Refinance it with garage again. Usually you will get better apr, then bank would give you. Nothing stops you to pay 5k off baloon yourself and refinance the rest too.
To trade in for next car. If your balloon payment is 10k and dealers offering you 13k, then it means 10k will go to cover 10k you own and 3k towards deposit on your next car.

LaLa2004

Is this a very complicated way of borrowing €8000? €24000-€16000
Could you borrow it another way and not be committed to a pop for, at least, the next 3 years?

jleavy046

Thanks all. The hamster in my brain has been fed and I'm now clear with the options.

I was forgetting the fact that I had not yet, at the end of the 3 years, paid the 10k. So the dealer says the car is worth 15k, so really I only have 5k to 'play' with as opposed to right now I have 9k to play with. I bought this car outright in 2015 (nearly new).

My plan remains, not to rollover. Use the car, pay the 10k at the end when my savings mature. The car will cost me in total just over 1k in interest.

Obviously its better to pay for the car upfront, no finance or hassle but I think I'm going into this arrangement armed with all the information I need.

I really can see how people can get caught out by PCP, but that's a discussion for another day.

jleavy046

LaLa2004 wrote: »

Is this a very complicated way of borrowing €8000? €24000-€16000
Could you borrow it another way and not be committed to a pop for, at least, the next 3 years?

I'm not sure I follow your maths above - but that's just me.

In short thought, you are right. It is a complex way of borrowing. In my situation I feel I'm borrowing €16,795 over 3 years at 2.9% APR which is giving me monthly repayments of 217€ per month for 3 years and a baloon payment of 10k at the end. But I've looked at other loans and interest rates and I don't see any that low.

This allows me to keep saving monthly, separately, wait for my other savings to mature and then exit the pcp cleanly.

I'm open to other options.

J

ShadowHearth

jleavy046 wrote: »

Thanks all. The hamster in my brain has been fed and I'm now clear with the options.

I was forgetting the fact that I had not yet, at the end of the 3 years, paid the 10k. So the dealer says the car is worth 15k, so really I only have 5k to 'play' with as opposed to right now I have 9k to play with. I bought this car outright in 2015 (nearly new).

My plan remains, not to rollover. Use the car, pay the 10k at the end when my savings mature. The car will cost me in total just over 1k in interest.

Obviously its better to pay for the car upfront, no finance or hassle but I think I'm going into this arrangement armed with all the information I need.

I really can see how people can get caught out by PCP, but that's a discussion for another day.

Op, you did the smart thing by actually doing maths and asking questions. Its more then average new car buyer does. Most of them just see low monthly payments and go bananas out of excitement. Forgetting about future and baloon payment.

Jist to gove you example. I bought new 2017 Seat too. It was 24.5k
Deposit: 6k
Monthly: 272eu
Baloon: 8.5k
Now I got zero % apr.

I have car for a year and a half/ish and my plan was to buy it out. So I since I sat in to my car I started putting away 50eu every week in to separate savings account. I got pay raise during that time and now I am putting away 70eu per week. The plan is/was to have baloon payment by the end of 3 years covered.
At this moment I have already 4.6k in that account and it will be 10k by the time 3 years are up.

By doing this pcp deal I got brand new car and payed feck all to bank for it. Not even documentation fees. And if I want I will have it payed off in 3 years with zero given to bank. At the same time I put myself in good position if I want to change car again instead of buying it off. I got enough capital to add to more deposit and left over is a start for next pcp baloon.

Asi said, pcp is a product. In my case it works perfectly.

I hope it helps op for you to decide.

jleavy046

ShadowHearth wrote: »

Op, you did the smart thing by actually doing maths and asking questions. Its more then average new car buyer does. Most of them just see low monthly payments and go bananas out of excitement. Forgetting about future and baloon payment.

Jist to gove you example. I bought new 2017 Seat too. It was 24.5k
Deposit: 6k
Monthly: 272eu
Baloon: 8.5k
Now I got zero % apr.

I have car for a year and a half/ish and my plan was to buy it out. So I since I sat in to my car I started putting away 50eu every week in to separate savings account. I got pay raise during that time and now I am putting away 70eu per week. The plan is/was to have baloon payment by the end of 3 years covered.
At this moment I have already 4.6k in that account and it will be 10k by the time 3 years are up.

By doing this pcp deal I got brand new car and payed feck all to bank for it. Not even documentation fees. And if I want I will have it payed off in 3 years with zero given to bank. At the same time I put myself in good position if I want to change car again instead of buying it off. I got enough capital to add to more deposit and left over is a start for next pcp baloon.

Asi said, pcp is a product. In my case it works perfectly.

I hope it helps op for you to decide.

Cheers