First time PCP buyer - Am I missing something?

Splinters

Hi folks, Im interested in getting a Kia EV9 in the next few months. I've test driven one and am happy this is the car for me. Its pricey but in the limited options for an electric 3 row 7 seater SUV I'm happy that this is the right option for my needs.

Having spoke to Kia about options for HP finance and PCP it looks like PCP may suit me better. Realistically I would plan to own the car for a long time so at the end of the 3 year PCP Im be looking to keep the car. Honestly with an investment like that I'd be looking to get best part of 10 years out of it. My current car was pretty high end when it was bought and is now 10 years old and has served me very well so Im happy with this kind of rotation of cars. Also worth a mention I'd likely be doing a bit above the 20,000km allowance per year, most likely in the 30k mark. I dont think thats too relevant when it comes to me chosing to stick with the car.

Quick overview of PCP plan.

New car value - approx 87k

Trade in value for my current car - 15k

PCP payments of approx 1000 per month for 3 years with a final payment of 36000.

My question is really about the options for when the 3 year PCP term finishes. I always avoided PCP because of the final balloon payment. In this case the GMFV have me on that car after the 3 year term would be about 36,000, which seems fair. The bit I didnt expect (this is probably common knowlege) Kia advised that if I wanted to keep the car then I could simple switch the remaining baloon payment to a HP finance agreement and pay it off over 3 or 4 years. So it would be just like paying the car off over 6 or 7 years.

I understand the way PCP works is Im technically leasing the car for the first 3 years, which is fine. Im just wondering am I missing anything when it coems to turning the final baloon payment into another finance agreement? Is there some way this might backfire or any pitfalls I should consider?

Splinters

Also apologies for all the typos. Note to self, proof read before posting.

mcburns07

No your understanding is correct, you also have the option of financing with any other bank if they are offering better rates at the time.

Splinters

Thats great to hear. Is refinancing the final balloon payment common? Its not an area I know much about, just never heard that being mentioned before.

mickdw

Your figures suggest ZERO percent finance. Is this the case? If not, there will be many thousands added to the figures and interest stings hard on pcp.

The refinancing certainly won't be at zero percent so that need looking at.

I guess you need to be sure you will qualify for the refinance so as not to be snookered at the 3 year stage.

A longer term hp deal from day one might make more sense if there is interest on the pcp.

If pcp is at zero percent, its ok but It's alot of money for a kia, even if it's a massive one.

mcburns07

Pretty common I would have thought, some people like to change frequently but with price rises in recent years it seems like more people stick with what they have for a few more years after the initial term. My wife has refinanced her last two cars after the initial 3 years was up.

The car makers typically offer a better rate than the banks. Out of interest could you not look do a longer HP agreement from the start with Kia or would the monthlies be too high?

Splinters

Im not really concerned with it being "a lot of money for a Kia". Theres not a cheaper electric 3 row 7 seater available with the same specs and features so by that merit Im happy its a fair price. Also that standard of car with a different brand slapped on it would easily send the price north of 100k so I'm more than happy its Kia who brought that car to the market and not somebody else.

Regarding the figures above, the PCP figures are definitely correct but you are absolutely right on the refinancing of final amount, I've no doubt there would be interest on that. The nice thing with that, as already pointed out is I wouldnt be tied to one lender. I'd be able to shop around for the best rate to finance that off. I wouldnt be too worried about qualifying for that finance. Of course I don't have a crystal ball but I can't see that being an issue.

Splinters

https://www.boards.ie/discussion/comment/123087124#Comment_123087124

Yep the monthlies do come out quite a bit more going the HP route from the start. Thats over a shorter term though so thats to be expected. The most they would quote for on the HP was 5 years but splitting it into PCP for the first 3 and then HP for the remaining 3 or 4 gives me the option to pay it off over a longer term. If I was able to get 10 years out of the car (maybe optimistic with an EV but I'll give it a shot) but payments over 6 - 7 years then that would still leave me with a nice 3 or 4 year stretch at the end of payment free motoring.

mcburns07

if you can stomach the higher monthlies it would probably be worth your while going HP. 1.9% is a lot lower than any bank is going to offer you, Kia themselves might do 5-6% or something like that if you refinance in 3 years. Do the maths but I would expect HP at 1.9% over 5 years is going to work out cheaper than 3 years PCP at 0% and 3 years HP at 5-6%.

Splinters

I'd say you're right, it likely would work out cheaper overall but I've a few other things lined up in the coming years and want to make sure Im not commiting to anything that would put me under pressure. A slightly higher overall price to extend the term by a year or two is perfectly fine.

Splinters

Whats interesting is the Kia Ireland finance calculator does list HP for 6 years as an option. In the Kia dealership they said 5 years was the maximum term. Going with 6 years HP still keeps the payments a touch over 1000 which would be very manageable. I may call a different Kia dealership and see. I would have assumed any main dealer would have offered the same finance options but perhaps it can vary. Possibly the lady I spoke to was mistaken on that one too.

mickdw

https://www.boards.ie/discussion/comment/123087246#Comment_123087246

Looks Like you are set to go so.

The only thing I would add is that 1000 per month is all well and good when you are driving around a new car. Not so nice paying 1000 per month when the car is 6 year old and 180000km on the clock.

Good advice is to save a few quid on top of the pcp amount so that you pay down the balloon abit at year 3 making the refinancing shorter or lower payments.

JVince

https://www.boards.ie/discussion/comment/123087221#Comment_123087221

I don't think it would.

Might be very similar, but I suspect 1.9% would work out a little higher on interest cost as it applies to the reducing from €72k whereas the 5% would apply to a reducing from 36k.

The difference either way would be negligible. I'd go for the PCP as it gives an option to return, even if you have no intention.

Splinters

A fair point but I'd be happy enough making that commitment for 6 - 7 years. I did much the same with my current car 10 years back. It was ball park of 850 a month for 6 years and I had no issue there. Of course its been nice the past 4 years of not having any motor payments but that can't last forever. Plus my circumstances have changed too so I can't be clinging onto my sexy German bachelor mobile when I have a family and young kids now 😂

The other way I look at it, Im lucky to work in a role that gives fairly reasonable pay increases year on year. Of course not a guarantee and I wouldnt be banking on it. It does seem fairly realistic that my takehome pay in 3 - 4 years will have risen to cover most of that car payment anyway, leaving me in much the same position as I am in now, without any car payments. I'm definitely not banking on that though, just my own little way of justifying it to myself.

Cheers for the advice all, definitely helped but my mimnd at ease.

Splinters

https://www.boards.ie/discussion/comment/123087305#Comment_123087305

Thats a fair point I hadnt thought of. I really dont see myself wanting to go again on the PCP but who knows what will happen in that time. If the overall finance over a 6 year range was similar why not leave myself open to changing things mid way in. For all I know there could be an updated model of the same car that massively improves range or some other feature Id benefit from. Good call!!

Buddy Bubs

https://www.boards.ie/discussion/comment/123087281#Comment_123087281

That was my initial thoughts, paying big money from your salary every month for a car that you've had for years, may be showing signs of age and wear, novelty worn off, fancy a change and yiuve spotted something new and shiny on the market etc would be tough.

That's where the temptation to roll into another pcp contract comes in.

Not to sound harsh OP but I'd be looking to do a stress test on yourself here, hearing of 6 year HP deals and refinancing for 7 years total means you are stretching yourself a lot.

Id be looking to see if you could bring some cash to the deal so maybe a 30k deposit including your car or whatever the max deposit on a pcp is, and then see if you can afford repayments on a 4 or max 5 year HP deal per month

If the answer is still no or don't have 15k cash to bring deposit up to 30k I'd start thinking an 87k car is maybe out of your price range. Which it is for most, huge amount of money. I love the kia ev9 but it's always going to be niche enough given the size and i predict it will sink like a stone in value.

If you can do it, then you could think about proceeding.

I just bought a car at 0% finance and the max HP period allowed was 4 years, brings the monthly payment pretty high but manageable and car will be paid off in what I consider reasonable time frame.

Don't underestimate the pain of 1000 a month in years 5, 6, 7

Splinters

https://www.boards.ie/discussion/comment/123087424#Comment_123087424

I do appreciate you're trying to help but I assure you 1000 a month for 6 years is not going to put me under any pressure. Read my previous comments where I mentioned I've been through a 6 year, 850 a month cycle on my current car and my income was considerably less when I took that on. I dont want to be crass and go into too much details on my finances but theres no worries there. The only reason I wouldnt consider adding a larger sum or paying it off quicker is that I have other priorities coming up that I also want to include in the budget and be comfortable with. I assure you, budgets and stress tests have already been done and confirmed. I appreciate the advice though.

kirving

https://www.boards.ie/discussion/comment/123087179#Comment_123087179

Not to be a badge snob, and it really depends what you value in a car, but Kia make a bigger net profit than Mercedes or BMW.

Not to say that the EV9 is a bad car or anything - but do remember that if you keep the EV9 for 10 years, it's unlikely to age as well as you previous car in terms of fit and finish, and it'll be out of warranty.

I'd be recommending to plan for 3 years, and see what the value is looking like then, because it might be worth your while trading it in, allowing Kia to re-warranty it as Certified Pre-Owned, and sell it on again. Nothing against electric cars, but the value does drop off more steeply as you approach the battery warranty.

Buddy Bubs

https://www.boards.ie/discussion/comment/123087471#Comment_123087471

If that's the case and you've done your sums and are still happy, I say go ahead so and the ev9 is a cracker of a car to go for.

It's just that as a first time pcp user, they can make cars appear more affordable than they are and people jump into them and run into big trouble at that 3 year decision point.

User1998

Isn’t there a 7 seat Model Y coming soon for close to half the price of an EV9?

weatherbyfoxer

Was in a similar situation to yourself last summer,bought a new diesel vw tigan over 5 years hp.Every garage we looked at cars in was pushing a pcp on us.Thing I didn't like is the ballon payment and no availability of lower interest on it.

Have you compared the HP cost with the pcp + intreast of the ballon payment over the same amount of months?.When we did the maths on both the HP was cheaper and the low intreast was available on the whole sum.

If you planning on keeping the car more than 3 years there is no point in my eyes in going pcp.If going for a ev type if I'd be planning on changing it regularly as have been told by alot of garages that they don't want to take them as trade once the mileage gets up on them.At 30,000km your doing and the 10 years you plan on keeping it I think you could be left with a problem.Ask the kia dealer how many km the battery will last and what is the replacement cost..Will it last 300K kilometres?

bazz26

Each to their own but the thoughts of paying a grand every month for 3 years and then having to pay a lump sum of 36k or refinance it for another number of years just seems nuts to me.

Splinters

https://www.boards.ie/discussion/comment/123087612#Comment_123087612

I wouldnt touch a Tesla. Nothing against the cars, probably sounds silly to some but any association with Musk would genuinely take away from my enjoyment of the car.

Splinters

https://www.boards.ie/discussion/comment/123087558#Comment_123087558

Honestly the badge on the car makes zero difference to me. It probably would have when I was younger but Im far more interested in the features of the car, the practicality etc. Thats where the actual value is for me.

Theres no doubt the finish isnt quite as plush as my current BMW but its still very very nice. Theres a big push on eco friendly and recycled materials, which I wouldnt be too pushed about but in realisty they do look and feel a lot higher standard and harder wearing that a lot of cars I've sat in. Whether it lasts 10 years, I've no idea. Its too new a car for anyone to know for certain but after test driving one and giving it a pretty thorough look I'd be steering on the side of optimism.

In terms of its final value after 10 years. Honestly if I've owned a car that long and its been a hassle free enjoyable experience I wouldnt feel the car owed me anything at that point. Even my current car, was similar value to the EV9 when I bought it and had a plan to keep it roughly 10 years, which I have. Perhaps I've been lucky or perhaps because Im probably a boring/sensible driver the car has really given me zero issues and zero expense other than the usualy servicing and tyres. I had written off any value after 10 years so the fact that I could even get 15k trade in, (probably more for a private sale if I had the patience) is just a bonus.

Splinters

https://www.boards.ie/discussion/comment/123087958#Comment_123087958

As you said, each to their own. This is the car I want and thats how much it costs. If it was available for less I wouldnt complain but Im able to pay that without putting myself under any pressure so I'm happy its the right decision for me. Really the only questions I had were around the HP vs PCP options which I've got some great advice on here so its much appreciated.

ELM327

https://www.boards.ie/discussion/comment/123087612#Comment_123087612

The model Y is a full size class smaller than the EV9. You can't have legs if you sit the third row of the Y. The Model Y and Mercedes EQB "7 seats" are for a max of 5, or 5 + luggage, or 4 + 3 small kids. Not 7.

We had a model X seven seater and even that isnt great in the third row for adults. I have an XC90 7 seater which is similarly sized to the kia and these two are the proper size for 7 full sized people and some luggage. I test drove the EV9 when it came out but I think it's overpriced. I paid 75k for the model X and wouldn't dream of paying that or more for a kia. No offense, it's a lovely car, but I think it will depreciate very very quickly and then reach a real point of its actual value (50-65k)

ELM327

https://www.boards.ie/discussion/comment/123088486#Comment_123088486

Well said. If it's what you want and can afford the repayments (and know that all premium priced new cars depreciate horrendously), then go for it and feck the begrudgers 😂

R.O.R

If you could stand to look at the outside of it, the Maxus Mifa 9 is available now, or will be very soon.

A colleague was over in Maxus earlier this week, and while he agrees that the outside is hideous, apparently the interior is very good and high quality.

https://saicmaxus.ie/our-range/mifa-9/

2 Seats in the front and 2 seats in the 2nd row, with the 3 seats across the back - makes getting in to the very back row much easier than with 3 in the 2nd row and 2 in the back row.

CramCycle

https://www.boards.ie/discussion/comment/123089378#Comment_123089378

Am I reading it wrong or is that not more than the EV9, as the price advertised says ex VAT?

R.O.R

https://www.boards.ie/discussion/comment/123089452#Comment_123089452

Website says ex. VAT, but I've got a starting price of €79,950 inc. VAT & VRT for the 90kWh Elite model.

Luxury Spec model is €88,950 and the Premium is €98,500.

Entry level is a bit cheaper than the €83ish the Op mentioned, but not by a lot. I'd probably stick with the EV9, but it may be worth a look at the Mifa 9 as an option for a full EV, spacious, 7 seater.

Splinters

That Mifa 9 does look incredible as far as functionality and spec goes. I'm just not sure I could live with the looks. I know the EV9 probably isn't to everyone's taste but I do actually like the look and styling. That Mifa 9 though, that'd be a tough pill to swallow even if everything else on it was top notch.