PCP vs HP vs Personal Loan

dingbat

Hi. When it comes to the Guaranteed Future Value of a PCP, is there currently any value at the moment in locking that GFV in when it comes to EVs (and future EV developments)? Or would inflation nuke it anyway?

Or should I stop overthinking it and just get a personal loan to finance the thing?

Kramer

A personal loan at the lowest APR you can get, would be my suggestion. Some credit unions are offering 3.95% on car loans/eco loans etc.

I think EV residuals will stay high for quite a few years to come.

liamog

Future Value is a just an agreed balloon payment at the end of the loan period. You agree to a price at the end of three years. If the car is worth more you pay the figure and keep the car, if it's worth less just hand it back and walk away from the car.

The whole point of the GFV is share the depreciation risk between the finance house and the customer, however the finance houses know what they are doing so you can bet the GFV will usually be about 10% below the expected market value of the car so that you "coincidently" end up with enough money to place a deposit on a brand new car instead.

dingbat

https://www.boards.ie/discussion/comment/119396118#Comment_119396118

Yeah best I can get is 5.9%. No credit unions near me are offering anything like 3.95%.

kuang1

My credit union's best rate at the moment is 7.9%.

Whenever my car arrives I'll pay as big a chunk as I can up front and probably go with dealership financing for the rest.

Bioscaller

https://www.boards.ie/discussion/comment/119396118#Comment_119396118

Not a chance mate. 3.95% is a Cuckooland figure. Best personal loans atm. in Ireland range from 5.9% - 6.1% unless you swindle the lender in getting a home improvement loan for 4.9% but with proof of paperwork etc. nearly impossible.

browne_rob5

https://www.boards.ie/discussion/comment/119402338#Comment_119402338

https://ballinasloecreditunion.ie/recharge-loans/

They exist alright but only a handful of credit unions offering them when I checked and none where I live or work so was not eligible.

Avant at 5.9% was the best I could find and went with them. Very quick process with them.

Kramer

KramerJul 27, 2022

A personal loan at the lowest APR you can get, would be my suggestion. Some credit unions are offering 3.95% on car loans/eco loans etc.

There are a few doing the 3.95% alright - worth checking if there's one near where you live or work.

www.affinitycu.ie

https://www.blessingtoncu.ie/calculator.asp?sf=3

fafy

Many credit unions offer members who have loans, an interest rebate at the end of the year, amount varies, but it all helps.

I have not had a loan for years with them, but they were doing 25 % ish rebates of the interest paid for the financial year, maybe it has changed.

In addition, with Credit union loans, you can pay more, on an ad hoc basis, and shorten the loan, reduce the interest, without any paperwork, emails or phonecalls etc.

You can do this with a bank as well, but it appears to be easier with a CU, as you just walk in and pay extra.

mickdw

I used avant too at 5.9 percent which beat everyone else and painless process too.

My local credit union were 8.9 while also holding 25 percent of loan amount on deposit.

DaveyDave

I'm assuming since you're talking about HP or a personal loan you'll be keeping the car for 5+ years?

Each loan suits people better depending on their needs. If you're just keeping the car then go with whatever loan is cheapest.

I financed my Golf at 0% on PCP and refinanced the GFV at 5.9% for 2 years, this was paid off early when €4,000 was left. HP would have been 5.9% for the full 5 years and any personal loans I was looking at at the time were 6.9% so PCP + refinance was cheapest.

Speaking from experience with VW Bank, on PCP if you're refinancing the final balloon payment you can pay a lump sum towards it. Say you throw €50 a month into savings that's €1,850 off the final payment so less interest again.

The GFV is just the loan amount left. If you're keeping that car it doesn't matter, if you're trading in then hopefully you have good equity as the car will most likely be worth more.

Chad Groomer

https://www.boards.ie/discussion/comment/119406169#Comment_119406169

Very informative and useful information! Thanks a lot, DaveyDave 🙏

mickdw

https://www.boards.ie/discussion/comment/119739730#Comment_119739730

You just get settlement figure from the finance company. On zero percent deals it's just the outstanding amount.

With interest, I'm sure there is a saving in paying off early.

Chad Groomer

https://www.boards.ie/discussion/comment/119406169#Comment_119406169

I have re-read the comment once again and outlined some points. Thanks for being helpful 🙏

UPD: today I spoke with my fellow banker and he said that nowadays everage borrowers have huge financial problems which make them unable to pay off their loans. Very often car loans turn into dead debts to a bank. So now they (I mean bankers) prefer to sell them to maximize money return.

pah

What are the chances of seeing zero percent pcp deals again?

...Ghost...

https://www.boards.ie/discussion/comment/119853913#Comment_119853913

They will be seen again, but not while demand is outstripping supply. The last 0% deal was on the Leaf. It was an empty gesture for those with delayed orders, because the price increase will be 2-3k or more by the time the cars are delivered. Someone on the Leaf thread already confirmed they were charged more for the car on delivery.

Jackben75

interest rates are too high as are the price of cars. I was nearly pulling the trigger on an Ioniq or EV6 but then i came to my senses. If you can, sit tight for 6 - 12 months, the cost and rates will come down as cars won't be shifting. Don't be a mug (easy to do with temptation!)

...Ghost...

https://www.boards.ie/discussion/comment/119854204#Comment_119854204

Probably wise words if you don't need to buy a car in the next 6-12 months. I needed to upgrade to a bigger battery for my commute and the thought of putting petrol/diesel into a carry over car was very unappealing. Very happy I pulled the trigger and went with HP at 4.95%.

I think the high prices and higher interest rates are here to stay for a lot longer than a year. My crystal ball says so.

mickdw

The arse is about to fall out of everything.

High end stuff should get a reality check in the next year.

Supply is still so poor though that prices will be stronger than they should be even if fewer are buying cars.