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PCP finance.

[Deleted User]

Ok so after a while of my brother and I trying to figure out the benefits of PCP we can't find any.

He's looking at getting a new Audi and we've been looking into pcp, he changes every 2 years or so and might have 15 k miles maximum on the clock so we thought pcp might suit him better.

You got to come up with a large deposit if you don't have a trade in and while your monthly payments appear low when you add in the fact you need a new deposit for the new pcp after 3 years your 300 a month pcp suddenly turns into 600+ pm.

So what's the benefit over hp or bank loan ?

The only hing with hp or loan is you pay the full interest where as pcp yup don't ?

Either way I see little benefit on a normal loan and trade in and re finance after 3 years or so. Only thing is VW bank has much lower interest than any other bank or finance.

For me doing 20-25 k miles a year pcp would leave me with not much on the gfv.

It seems to me that people could get caught out at the end because you can be damn sure you won't have much over the gfv to use as a deposit.

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Needles73

MuddyDog wrote: »

I phrased my question poorly, it was the equity I was getting at! Zurbaran has explained it perfectly.

Ah ok, yes that makes sense. , yes is my thoughts

MuddyDog

Needles73 wrote: »

. I would suggest if this is your understanding PCP may not be for you....you would owe 35k not have 35k equity.......

I phrased my question poorly, it was the equity I was getting at! Zurbaran has explained it perfectly.

Needles73

MuddyDog wrote: »

What would happen in this scenario:

Car bought for 80k
Deposit of 24,800 (31% which is the max)
GMFV of 35k.

I pay the monthly installments whatever they may be and after 3 years I just have to pay 35k to own the car outright. Instead of paying the 35k say there is a car in the dealers with a price of 35k. Can I just hand my car in and take full ownership of the 35k car?

. I would suggest if this is your understanding PCP may not be for you....you would owe 35k not have 35k equity.......you then purchase the 35k car and owe 70k ? Maybe your not clear or I'm missing something

Zurbaran

MuddyDog wrote: »

What would happen in this scenario:

Car bought for 80k
Deposit of 24,800 (31% which is the max)
GMFV of 35k.

I pay the monthly installments whatever they may be and after 3 years I just have to pay 35k to own the car outright. Instead of paying the 35k say there is a car in the dealers with a price of 35k. Can I just hand my car in and take full ownership of the 35k car?

You owe them 35k so that is the amount you have to pay back. This is done by paying 35k or handing the car back (if the car is only worth the gmfv after 3 years you were a silly boy to begin with).It's the reason people keep bringing up the importance of equity. Equity is the amount on top of gmfv. So if you could get 36k for your above example you would have 1k equity to put into a new car deposit etc.

MuddyDog

What would happen in this scenario:

Car bought for 80k
Deposit of 24,800 (31% which is the max)
GMFV of 35k.

I pay the monthly installments whatever they may be and after 3 years I just have to pay 35k to own the car outright. Instead of paying the 35k say there is a car in the dealers with a price of 35k. Can I just hand my car in and take full ownership of the 35k car?

26000 Elephants

^ top advise. :cool:

Lantus

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

Your initial deposit is very high. Probably the highest allowable. Ask the dealer what the expected equity will be after 3 years. Its probably 2-4k (I don't know) That means to keep your monthly repayments the same after 3 years you will need the difference between your initial deposit and the equity. So 4.5 to 6.5k.

Put in the deposit based on expected equity to match. After 3 years your payments will be very similar. If they are unaffordable and you are unable to raise a new deposit you will likely end up losing the car after 3 years.

30k for that salary seems bonkers.

Get a decent 2nd hand car imho. When you have a family and know your life won't be changing then a PCP deal will make more sense. Boring predictability over many years is the mainstay if family life.

Drummerboy08

mickdw wrote: »

Are you seeing cars coming in at 3 years. I believe vw are working out at about 15 percent to 20 percent equity.
How are audi looking?
Bmw?

Take a look at the amount of 131 BMW 3 series on carzone at the moment, and see if that answers your question... Very little equity in them and many have just handed them back and switched brands.

There should be around 15-20% equity with any VW Bank agreement, maybe more if you push hard with a few dealers when it comes time to change.

noelf

737max wrote: »

You could get an early Cooper Sport for half your deposit which would deliver much the same experience.

My son got this for €8750 only 80000 km ..

737max

You could get an early Cooper Sport for half your deposit which would deliver much the same experience.

Soarer

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

Of course it's doable. I personally think you'd be mental though!

Why don't you do this?
You have €8500 saved.
Spend that on a secondhand car.
Save the €289 per month, giving you €3500 this time next year.
Come next year, if you fancy a change, you'll have a car that's lost very little in depreciation and €3500 to trade up with.
If you don't fancy a change, keep the car and keep saving.

The point is, you're always in charge.
You decide if you want to keep or change the car.
You decide if you want to put 30,000 kms or 3,000 kms annually on it.
You decide if you want to get a dent repaired as you're not worried about your GFV.

I've made oodles of stupid mistakes that I'm still paying for. You're in a position where you can buy a decent car, for cash, and stay out of debt. And yet you're looking to voluntarily get into debt for a car? Madness.

mickdw

Drummerboy08 wrote: »

GFV has been tradionally high with BMW Finance, leaving very little equity after 3 years. APR can also be a fair touch higher compared to the competition.

Are you seeing cars coming in at 3 years. I believe vw are working out at about 15 percent to 20 percent equity.
How are audi looking?
Bmw?

Drummerboy08

GFV has been tradionally high with BMW Finance, leaving very little equity after 3 years. APR can also be a fair touch higher compared to the competition.

air

There's a big difference between being able to afford something and it being a good idea. PCP (and any other type of finance to be fair) allow people to buy cars they wouldn't otherwise to be afford.
None the less, spending such a high proportion of your discretionary income on a car (over and above a basic model) is pretty silly.
Have you any plans to buy your own home, get married, travel, start a pension or anything else?
I'm all for nice cars but I couldn't justify that type of expense on that salary. Each to their own.

Jack lemmon

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

Your taking home 2k a month? If you don't have other large outgoings then I can't see how you couldn't afford it. It all depends on what you want to spend your money on. It'll be very difficult for you to save for a house deposit, but maybe you don't intend on moving outta home, only you can know that.

If I were you I'd pay a smaller deposit(15%) and larger monthlys. That way you've a very likely chance of having the same deposit in the equity of the car at the end of the 3years.

FrontDoor

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

Unless you are some sort of apprentice about to become qualified or chartered, then not for me.

dissed doc

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

€29k = €24452/year net. €73356 over 36 months net earned.

With the downpayment and monthly payments you will have paid €18904 after 36 months. There will be a balance of e.g., €13k to clear (e.g., with 3-4% interest) = around €32500 (I am guessing around €2k in interest).

So you will spend around 44% of your net income for the next 3 years, to own this car. Excluding running costs. That will be around €2-3k/year with insurance, tax, petrol, maintenance. Adding in €9k over 3 years means you will spend an astonishing 56.5% of your net income on the car to own after 36 months.

MY feeling is that you should spend no more than 10% of your net on a car. Budget around €7500 max excluding running costs over 36 months and you will be a lot better off IMHO.

bazz26

Heat_Wave wrote: »

May I ask why?

I have the deposit saved up, and I live at home, so no rent. My concern is what will happen in 3years time.

What age are you? How long do you plan to live at home? Things can indeed change very quickly - get married, children, need to rent in the short term or save up to buy a house.

conzy

Heat_Wave wrote: »

May I ask why?

I have the deposit saved up, and I live at home, so no rent. My concern is what will happen in 3years time.

Let's assume the GFV will be about 10k you will need to refinance that or save it. Let's say you only have 2-3k of equity at the end. Now you trade and go again. Your monthly repayments will increase a lot.

3 years is a long way off but you don't want to snooker yourself or signup to something unsustainable. Will you still be living at home in 3 years or potentially paying considerable rent? etc etc

Heat_Wave

air wrote: »

Insanity

May I ask why?

I have the deposit saved up, and I live at home, so no rent. My concern is what will happen in 3years time.

air

Heat_Wave wrote: »

Price of the car - €30,500 ... a salary of €29,000

Insanity

Heat_Wave

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

Drummerboy08

What you have to remember is that there is still massive shortage of used vehicles still.

It'll probably be 2018 before this starts returning to normal levels . New car sales will level off because certain people who are buying new cars at the moment we're originally in the used car market.

FrontDoor

opinionated3 wrote: »

As regards the whole pcp phenomenon that's currently going on here in this country, I'm of the opinion that there may be serious problems down the line when the 3 year term comes to a conclusion and people have to make their choice. ...finance the balance, hand the keys back and walk away or upgrade to the newer model (which i imagine is what most buyers would like to do and what the dealers would also like them to do). However the problem i think that is going to rear it's ugly head is when the dealer tells the buyer there isn't enough sufficient equity in the trade in to clear the balance AND provide a suitable deposit for the new car that will keep the monthly repayment at a similar rate to what they have been paying all along.
For example the highest selling car at the moment is the hyundai tucson. I would reckon a significant amount were sold on hyundai pcp. In 3 years time dealers will be swamped with 161 tucsons on their forecourts. They will use this excuse to drive down the value of the trade in therefore resulting in a higher than expected deposit required to upgrade to the 191 reg.
I gave a lot of thought to buying a 162 (vw golf) but i could only realistically afford it via pcp. It's the thoughts of dealing with the deposit conundrum in 3 years time that has put me off.

There is no such thing as a free lunch.

A lot of what you describe will depend on broader economic factors. If employment keeps increasing and less graduates leave relative to the last 8 years, then there will be a strong market for these cars.

If something like Brexit causes a big issue, then demand will drop.

opinionated3

As regards the whole pcp phenomenon that's currently going on here in this country, I'm of the opinion that there may be serious problems down the line when the 3 year term comes to a conclusion and people have to make their choice. ...finance the balance, hand the keys back and walk away or upgrade to the newer model (which i imagine is what most buyers would like to do and what the dealers would also like them to do). However the problem i think that is going to rear it's ugly head is when the dealer tells the buyer there isn't enough sufficient equity in the trade in to clear the balance AND provide a suitable deposit for the new car that will keep the monthly repayment at a similar rate to what they have been paying all along.
For example the highest selling car at the moment is the hyundai tucson. I would reckon a significant amount were sold on hyundai pcp. In 3 years time dealers will be swamped with 161 tucsons on their forecourts. They will use this excuse to drive down the value of the trade in therefore resulting in a higher than expected deposit required to upgrade to the 191 reg.
I gave a lot of thought to buying a 162 (vw golf) but i could only realistically afford it via pcp. It's the thoughts of dealing with the deposit conundrum in 3 years time that has put me off.

Drummerboy08

Fiskar wrote: »

I looked into it last year, PCP is not available to non resident persons. I would imagine you need to have a UK social security number for credit checking. if you find a way please do let me know.

The finance company won't allow you to permanently export the vehicle while it it is still on a PCP agreement, so no its not possible.

OmegaRed

VW are now doing free insurance when you PCP finance a new VW Polo or UP Criteria apply:

http://ext.volkswagen.ie/en/162-polo-and-up.html

http://www.volkswagenbank.ie/content/sites/vwcorporate/volkswagenbank_ie/en/home/ourproducts/Drivers_Qualifying_Criteria.html

OmegaRed

tomaso11 wrote: »

Is PCP an option for someone who runs a taxi? was talking about it with a friend who owns one and was looking to change, he thinks is not an option if he wants to use it as a taxi

There are mileage restrictions on PCP financed cars if you intend on handing it back before or after 3 years. You'll have to pay more for each km you are over. The limit is like 10,000/15,000 km per year. Wouldn't make sense for a taxi unless you decided you'll have the car for more than 3 years, can afford the repayments and the balloon payment at the end....

Fiskar

Heat_Wave wrote: »

Would it be cheaper to order a car in the UK and go PCP on it, rather than here?

Can you even go the PCP route overseas?

I looked into it last year, PCP is not available to non resident persons. I would imagine you need to have a UK social security number for credit checking. if you find a way please do let me know.

tomaso11

Is PCP an option for someone who runs a taxi? was talking about it with a friend who owns one and was looking to change, he thinks is not an option if he wants to use it as a taxi