PCP finance.

air · 10-07-2016 01:00PM

Heat_Wave wrote: »

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

Insanity

Heat_Wave · 10-07-2016 01:47PM

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.

conzy · 10-07-2016 01:57PM

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

bazz26 · 10-07-2016 02:29PM

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.

dissed doc · 10-07-2016 02:51PM

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.

FrontDoor · 10-07-2016 03:10PM

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.

Jack lemmon · 10-07-2016 05:27PM

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.

air · 10-07-2016 06:24PM

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.

Drummerboy08 · 10-07-2016 08:18PM

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.

mickdw · 11-07-2016 10:38AM

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?

Soarer · 11-07-2016 12:54PM

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.

737max · 11-07-2016 01:29PM

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

noelf · 11-07-2016 04:04PM

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 ..

Drummerboy08 · 11-07-2016 06:35PM

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.

Lantus · 12-07-2016 07:11AM

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.

26000 Elephants · 12-07-2016 11:13AM

^ top advise. :cool:

MuddyDog · 12-07-2016 07:53PM

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?

Zurbaran · 12-07-2016 08:01PM

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.

Needles73 · 12-07-2016 08:10PM

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

MuddyDog · 12-07-2016 08:12PM

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 · 12-07-2016 08:13PM

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

Lantus · 12-07-2016 08:53PM

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?

One thing to note about handing a car back is that you probably want to be inside your mileage limits as the finance company may apply charges compared to you getting a new car.

opinionated3 · 12-07-2016 09:25PM

The more that i have read through this topic the more I'm agreeing with the OP.....can't see the big benefits in the long term with pcp....even for someone like me that does little mileage. ...

bidiots · 12-07-2016 09:30PM

opinionated3 wrote: »

The more that i have read through this topic the more I'm agreeing with the OP.....can't see the big benefits in the long term with pcp....even for someone like me that does little mileage. ...

It's just a different version of hire purchase, a different angle on owning a new car. I'm confused by the confusion.

Zurbaran · 12-07-2016 10:50PM

It works in three scenarios in my opinion.

1, You go in at around 20% deposit as this will mean you have enough for a deposit on a new one after the contract. Get the quote at around 20% and if you can't handle the monthly's? You can't afford the car.

2, Go the full 30% but save on top of the monthlys so you can make the deposit 3 years away.

3, Again go with the 30% but this time re-finance at the end and keep the car for another three or so years.

spuddy · 13-07-2016 12:51AM

opinionated3 wrote: »

The more that i have read through this topic the more I'm agreeing with the OP.....

To my eyes, a PCP is essentially a loan to pay for a car's cost of depreciation, with interest & fees on top. At the end of the term, if you're "lucky", you may have over-paid enough to have a contribution towards doing it all over again. Amazing.

grogi · 13-07-2016 01:04AM

spuddy wrote: »

To my eyes, a PCP is essentially a loan to pay for a car's cost of depreciation, with interest & fees on top. At the end of the term, if you're "lucky", you may have over-paid enough to have a contribution towards doing it all over again. Amazing.

Yes - but you pay interest on the depreciation and GMFV together.

26000 Elephants · 13-07-2016 01:13AM

grogi wrote: »

Yes - but you pay interest on the depreciation and GMFV together.

Yup, thats the catch. You only pay pack the depreciation part - but you pay interest on *both*

spuddy · 13-07-2016 01:34AM

26000 Elephants wrote: »

Yup, thats the catch. You only pay pack the depreciation part - but you pay interest on *both*

I think the 'catch' is being persuaded to take out this type of finance in the first place, as you own nothing at the end of the term. The fact that you're paying interest on the double for the privilege adds insult to injury.

mickdw · 13-07-2016 09:32AM

spuddy wrote: »

I think the 'catch' is being persuaded to take out this type of finance in the first place, as you own nothing at the end of the term. The fact that you're paying interest on the double for the privilege adds insult to injury.

You are paying interest on all the money you have been loaned so it's hardly a catch. The manufacturer had to be paid for the entire car not just the first 3 years depreciation.

PCP finance.

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