Are there many benefits to PCP?

bazz26

I must be getting old but those monthly figures are not far off mortgage repayments.

Allinall

https://www.boards.ie/discussion/comment/118058478#Comment_118058478

It's the €16k depreciation per year that I'd be looking at. Sounds nuts.

bazz26

I'd say in reality being an EV it probably won't loose 16k a year. You just need it to retain value more than the GMFV to have some equity in it. However putting nearly 21k deposit in at the beginning to keep the monthly repayments at just under 900 means you would have to do the same again in 3 years to go again. Crazy figures all the same but people seem to be conditioned to them these days.

UID0

https://www.boards.ie/discussion/comment/118044406#Comment_118044406

On HP, they can still hand it back. Once you have paid half of the total hire purchase agreement you can cancel it by returning the product. You may have to pay for the damage anyway, and in the case of PCP you have to pay for damages. The car is expected to be returned with normal wear and tear, not damaged.

If the gearbox needed to be rebuilt after 2 1/2 years, and the importer/dealer are unwilling to cover it as the service interval wasn't met (and depending on what you mean by "not met". Was the car ever serviced?), I would write to them outlining what has happened, and asking them what service item would have prevented a gearbox failure.

On the OP's question on benefits to PCP, most of the benefits are the dealer's. It keeps you buying from a dealer, and having to trade in your car, unless you have the cash to pay off the outstanding loan before selling the car privately. The same is true of HP. The benefit for the consumer is that (for a given interest rate), the repayments are usually lower for PCP than HP, especially if you want to make sure that you don't owe finance on the car once it has passed out of warranty. If you can get an interest rate lower than any other source of finance or lower than the interest/earnings from investing it makes sense to borrow the money.

The disadvantages are that you can't sell privately, but the dealers will take a car with outstanding finance from any brand, and will sort out settling the finance and rolling whatever is outstanding into the finance on your new car.

One thing to remember is that you shouldn't borrow to buy a car that you can't afford. There is a lump sum that is due at the end of the PCP term, and you need to plan for how that is going to be paid (i.e. from savings or refinancing). It is people who go into the arrangement without an exit plan that have problems at the end of it. Also make sure you have the right annual mileage in the agreement. The extra cost for going over the agreed mileage can be quite high. If you have the right mileage and have looked after the car properly (e.g. no dents/scratches), then if the GMFV was too high you can just hand the car back (but you have nothing to show for your money).

Buddy Bubs

https://www.boards.ie/discussion/comment/118058294#Comment_118058294

On justifying a decision, depends on what you can afford. I'm potentially going to be mortgage free next year if things work out, in that case I'd have no problem affording 850 a month on a car. My mortgage is currently 880 per month, paid in full by me.

I had 550 car payments for 3 years but it was HP and I now own it. But depreciation wasn't anything like what this will be, I was protected somewhat by current increases in value.

But even still, I've doubts if I'd sign up to 20k deposit plus 850 a month as I just don't place that kind of value in brand new cars, I know some do and that's their choice. Theres others who will pay 1500 for an iPhone every year too but I'll take whatever mid range android I can get for free through work. But I'll spend my money on other things if I feel they are worth it. Of course I'd like a mach e, but like every car, I can wait for it to be a 40k car, a 30k car, 20k car and so on..doesn't even take that long.

I've had big quotes on cars like you but have always talked myself out, I'm looking at a 30 to 35k purchase at the moment but waiting for value again.

DaveByDavid

https://www.boards.ie/discussion/comment/118058603#Comment_118058603

Yeah it's absolutely fair enough.

Im not too concerned about the payments, I can make them, but I'm not sure I really want to.

The GFV seems very low for me, althouvh understand car value could well be higher. It's a big depreciation though, almost like Ford aren't sure.

Its a lovely car but probably going to go back to the Ioniq 5 as no-one seems to have the RWD standard range available for the Mach-E.

carsfan2

Ford Ireland have made serious miscalculations with their prices for the mustang Mach e relative to the competition. The only car that is any way comparably priced to rivals is maybe the base model that gets a grant.

as for those pcp figures, I think they either have no faith in the residuals of their own product or a mistake has been made.

have they offered any discount and what’s the apr?

DaveByDavid

https://www.boards.ie/discussion/comment/118059004#Comment_118059004

APR is 2.9%.

No discount.

I've gone back to them and mentioned that a 75k etron has a GFV of 35k and 610 euro payments per month. They said they'd speak to their local area rep or something.

Maybe it's a mistake. Not sure!

carsfan2

I wouldn’t be surprised if the gfv they have given you is for the base model.

something is not correct.

lawred2

https://www.boards.ie/discussion/comment/118058294#Comment_118058294

Lol at a 70k ford

bazz26

I'd tell to go whistle Dixie. They will sell little to non of them at those prices and will be discounting them to shift them this time next year. Typical Ford Ireland. The Audi etron will have higher resale value also though probably won't have as many toys as standard.

Kia have the EV6 also which is basically the same underneath as the Ionic5:

https://www.kia.com/ie/new-cars/ev6/discover/

carsfan2

My money would go on the Hyundai or more likely Kia at this price point. The seven year warranty is a huge thing too. More kit on them too.

I passed the Ford dealer in Limerick and they had a mustang on the forecourt. It is a good looking car I’ll admit.

DaveByDavid

https://www.boards.ie/discussion/comment/118059343#Comment_118059343

Quite possibly.

I'd expect cheaper repayments on 2.9% APR I think for that priced car.

https://www.boards.ie/discussion/comment/118059357#Comment_118059357

Yeah it's probably a little expensive. I will try and look at the EV6 tomorrow in the metal to see what I think. But ultimately unless I can get a RWD standard range Mach-E (which is looking unlikely) I may just go Ioniq 5 58kw exec-plus and maybe see if chips and cars are easier to get in a few years.

https://www.boards.ie/discussion/comment/118059465#Comment_118059465

Yeah it's a lovely looking car. Obviously all personal opinion but love the inside and outside.

Nothing wrong with the Ioniq 5 (and I'm sure EV6 as well), but did love the Mach-E. Fall back plan is Ioniq 5.

Lantus

It ensures the customer will have equity relative to the market value after 3 years.

DaveByDavid

https://www.boards.ie/discussion/comment/118060691#Comment_118060691

How do you mean? Sorry - I'm a bit of a newbie when it comes to car finance!

Just been looking at 73kw Ioniq 5 again - that's 50k and has GFV of 21000.

DaveByDavid

Starting to get my head around this now. I think...

Looks mostly like either bigger payment now, or bigger payment later. Looking at Hyundai and Kia, they both offer the same APR on HP and PCP.

Am I right in saying on PCP if GFV is 20,000 and car is worth 25,000 when it comes to the end of the term then I'd get a cheque from dealer for 5,000 if I wanted to give it back and go to another dealer, or does it work differently to that?

Ioniq 5 example - 73kw Premium at 50,520 euro.

Hire Purchase - 5.9%

• Deposit - 25,000 euro
• Term - 4 years
• Monthly payments - 594 euro
• Total cost - 3,105.54

PCP - 5.9%

• Deposit - 12,500 euro
• Term - 3 years
• Monthly payments - 593 euro
• Total cost of credit - 5,336 euro
• GFV - 21,932
• (2 years = 622 euro p/month, 26,917 GFV, 3,888 credit cost which is interesting)

So PCP total credit cost is higher (could reduce it with bigger deposit), but it lets me keep options open as well. I think we're okay with 15,000km a year. We have done roughly 119,000 km in 7 years but we do no commuting anymore.

I could decide to pay the balloon payment in cash, finance it or hand the car back. Given that I'm so torn over cars right now it would be nice to have the option of changing in 3 years. Understand that circumstances can change but right now I feel okay but having the cash for the balloon payment, and if financial situation is same then as it is now then I like the idea of having a new car every few years, or at least having the option.

Let me know if I have anything wrong here, or anything else I should consider!

XsApollo

No the dealer won’t give you a cheque for 5k if you hand the car back and go to another dealer.

if you hand the car back providing all is ok with it then the GFMV will be cleared.

if you want to buy another car and trade. In that’s when you can get more for your car.

DaveByDavid

https://www.boards.ie/discussion/comment/118061624#Comment_118061624

Okay thanks, that's interesting. I guess I'd have to pay the GFV and maybe sell privately in that case.

Just a little concerned about getting locked in with one dealer/make and then wanting to switch. For example going Ioniq 5 then going Mach-E in a few years.

db

If you want to change brand at the end of the PCP you can just go to the new dealer and get the 5K equity from him as deposit on the new car.

Lantus

If the gmfv is 20k and the value 26k you might get 3k equity. The dealer needs to build in his profit margin on your trade in. It will depend on the car and market and dealer etc.

DaveByDavid

https://www.boards.ie/discussion/comment/118061638#Comment_118061638

How would that work though? New dealer would take in my car even if it's different brand?

https://www.boards.ie/discussion/comment/118061718#Comment_118061718

Okay, that makes sense. And I guess IF I stuck with same dealer I might get a bit more value by trading in and sticking with them, rather than going elsewhere as well.

-------------------------

This is what Ford said to my about the GFV being around 20k for a 68k Mach-E AWD:

"On looking at the GFV in detail I think we have it ok as its 31% of the value of the car

 I come from a finance background and that’s what most brands do in terms of GFV value, as a customer you don’t want it anymore than 31%

 The other brands in terms of the E-Tron and Ionic has a way too high GFV as its nearly 45% of the value of the car, having it that high will leave the customer in a and position in 3years time to change"

XsApollo

https://www.boards.ie/discussion/comment/118061759#Comment_118061759

The financing of pcp is the same as any other finance, you are just deffering the GFMV payment till the end.

if you go to a different dealer with your car you just trade in the car as normal they will clear your GFMV debt and whatever you have left after can be used to go towards the new car.

DaveByDavid

https://www.boards.ie/discussion/comment/118061793#Comment_118061793

Got it, thanks. Just assumed Ford would only take Ford, Kia would only take Kia etc.

bazz26

PCP finance is from a finance company that the dealer/manufacturer uses just like a HP loan. You are not locked into a particular dealer or manufacturer when it comes to trading the car at the end of the 3 years just because you have finance on it. You can go to any dealer of any brand to trade the car, they will give you a trade-in value against their new car and included in that trade-in value will be your GMFV which they would pay off with the finance company that originally gave you the PCP loan.

If you want to just keep the car beyond the 3 year PCP deal then you can refinance the GMFV amount via a normal loan. Some people do this where the PCP rate is much cheaper than a standard HP rate, for example 0% PCP for 3 years and then HP rate of 6% for the GMFV for a further 3 years rather than paying HP @ 6% for 6 years.

Just be careful with headline grabbing 0% finance rates and as some of these can be a bit misleading where the 0% is on the full retail price rather than a discounted price you would negotiate off the new car. So they would still be getting more money off you but just not labelling it as interest.

DaveByDavid

https://www.boards.ie/discussion/comment/118061962#Comment_118061962

Thanks.

I think given I'm not settled on a car, electric tech is still quite new, at least to me - I'm going to PCP just to keep my options open.

It's a little more on the credit but long term might be worth it. Just need to decide on 2 or 3 years for the Ioniq 5.

bazz26

Are they offering 2 years PCP on the Ioniq 5? Normal term would be 3 years but dealers do contact customers in year 2 with offers of changing again early especially if the car is in short supply and high demand.

Lantus

So you can sometimes get a better deal by moving. The dealer makes money from extras and servicing not really the car itself. They take a long term view.

In terms of zero PC deals it's brilliant. Huge savings and there really is no discount on any car much these days and certainly not currently. Vw tends to lead this as they have their own bank.

DaveByDavid

https://www.boards.ie/discussion/comment/118062580#Comment_118062580

There's 2 and 3 year calculators on the website but what a dealer can offer I actually haven't checked yet.

https://www.boards.ie/discussion/comment/118062723#Comment_118062723

Unfortunately for Ioniq 5 it's 5.9% for both HP and PCP.

I've seen some cheaper PCP APR rates on various cars but they all cost more to begin with.

carsfan2

https://www.boards.ie/discussion/comment/118061759#Comment_118061759

Ford are being very conservative so in protecting themselves here. If Mach E values tank and you hand it back you have made big payments and they won't lose out.

Lantus

New cars rarely have low Apr deals because demand is strong so no need to incentivise.