PCP finance.

Soarer · 14-07-2016 11:16AM

EndaHonesty wrote: »

You have posted many long-winded and silly posts about this subject, each one shows you have no understanding of PCP finance, Loan Interest, Second-hand Car Residuals and indeed buying cars in general.

Well done on making that assessment. Obviously interpretation is one of the few things you know everything about.

EndaHonesty wrote: »

100k kms is 60,000 miles.
The general consensus on this forum is low miles are bad for a diesel car.
20,000 mile per year is nothing for a diesel car and yet you think one would be penalised by €5,000 for having this mileage.
Ridiculous.

FYI, 100k kms is actually over 62k miles.

You reckon my figure of a €5,000 penalty for such high mileage is "ridiculous", and yet Kia will penalise someone €7,400 on their PCP plan for the same indiscretion? Maybe I should've rounded up, and that's what you're annoyed about?

EndaHonesty wrote: »

You have described PCP finance as an "interest only loan".
Ridiculous.

No I didn't. I asked "If I borrow €20k over 3 years, pay monthly repayments, and in 3 years still have to give back €20k, what else is it only interest only? "

Can you tell me what other term can be used to describe the above?

EndaHonesty wrote: »

You seem to think that the only cars that suffer depreciation are PCP financed cars.
Ridiculous.

Excellent deduction. I didn't even know that's what I was thinking.

EndaHonesty wrote: »

You think that a residual value of 55% after 3 years is impossible.
Ridiculous.

I reckon you're giving me too much credit for all the thinking I'm doing.

EndaHonesty wrote: »

You don't understand PCP finance, you should stop posting your misguided and uniformed rubbish in a thread that is specifically about PCP finance.

I understand it just fine.

What I don't understand is why people do it.
Or maybe more precisely, don't understand how people are so entrenched in their own viewpoint, they can't/won't see the other point of view.

You obviously think it's a good idea, so more power to you. But don't be poo-pooing people that don't think it's a good idea, or question the PCP concept, or, God forbid, actually not understand it as well as you.

opinionated3 · 14-07-2016 11:21AM

Buddy of mine was interested in buying a new high spec tuscon. He wasn't sure if he wanted a regular bank loan or to go down the pcp route as he likes to change cars every 3 to 4 years. His local hyundai salesman advised that the most deposit he should put down would be at 20%. (That's assuming he wished to have enough equity in 3 years to upgrade to the new model). I wonder if most salesmen are giving the same advise to prospective new car buyers that are thinking of pcp?

Soarer · 14-07-2016 11:27AM

dissed doc wrote: »

PCP is a pretty decent way to buy a nice new car, for those that can afford it but without making huge monthly finance payments or spending loads of cash savings. With interest so low, sometimes 0%, it makes a lot of sense.

But that's the crux of the matter.

Obviously everyone isn't as clued in as Mr. Enda, and so sign up for these things without reading through the small print.
They see the headline figure and are blinded by that.
They pay their deposit, pay the monthly repayments, and then in 3 years' time realise they still have to stump up another €10k+ at the end...which they haven't been saving for as they thought the GMFV was equity they can use against the next car!
Or they missed a service, so they're penalised.
Or they're gone over the mileage, so they're penalised.
Or someone crashes into them, the car is repaired, but they're penalised because the car is worth less now.

I'm sure, in an ideal world, PCP, especially at 0%, makes a lot of sense for some people. But to my mind, there are far too many factors to be considered that can potentially cause you grief.

dissed doc wrote: »

Maybe there are people who think they can own a 35K car by paying 10K + 36 payments of 250 each or something but that is just being an idiot.

Too bloody right there are.

It wasn't that long ago that people remortgaged their houses to buy a car because it was "cheap money".

Soarer · 14-07-2016 11:30AM

opinionated3 wrote: »

Buddy of mine was interested in buying a new high spec tuscon. He wasn't sure if he wanted a regular bank loan or to go down the pcp route as he likes to change cars every 3 to 4 years. His local hyundai salesman advised that the most deposit he should put down would be at 20%. (That's assuming he wished to have enough equity in 3 years to upgrade to the new model). I wonder if most salesmen are giving the same advise to prospective new car buyers that are thinking of pcp?

Is he going to want another Hyundai?

A regular bank loan gives you a lot more freedom than a PCP arrangement.

Crocked · 14-07-2016 12:06PM

Why anyone would decide to pay cash in full upfront or pay a higher interest rate to their bank instead of a 0% PCP rate is baffling.

Do people honestly think the car companies are out to get you by giving you a loan at no or negligible interest.

It's not a scam, there's no hidden costs. It's very easy to compare the total cost of credit for a PCP deal and a traditional bank loan.

Crocked · 14-07-2016 12:08PM

Soarer wrote: »

Is he going to want another Hyundai?

A regular bank loan gives you a lot more freedom than a PCP arrangement.

No it doesn't, Where or what brand you buy next is irrelevant to the PCP agreement.

EndaHonesty · 14-07-2016 12:20PM

Crocked wrote: »

No it doesn't, Where or what brand you buy next is irrelevant to the PCP agreement.

Another two for the list;

Soarer thinks you are tied to a particular brand when you take out a PCP.
Ridiculous.

Soarer thinks a bank loan has more freedom than a PCP.
Ridiculous.

Jack lemmon · 14-07-2016 12:41PM

EndaHonesty wrote: »

Another two for the list;

Soarer thinks you are tied to a particular brand when you take out a PCP.
Ridiculous.

Soarer thinks a bank loan has more freedom than a PCP.
Ridiculous.

It's infuriating to read all these misinformed comments. I suggest ppl go read a pcp contract as I have to see the true facts and make their own mind up. It's all written in black and white and all above board. Its the cheapest way to finance a new car once you can afford to pay a smaller deposit and higher monthlys as there would be at least 15% equity in the car after 3yrs for the next deposit.

grogi · 14-07-2016 12:53PM

Jack lemmon wrote: »

It's infuriating to read all these misinformed comments. I suggest ppl go read a pcp contract as I have to see the true facts and make their own mind up. It's all written in black and white and all above board. Its the cheapest way to finance a new car once you can afford to pay a smaller deposit and higher monthlys as there would be at least 15% equity in the car after 3yrs for the next deposit.

Once you read it, understand it and analyse the implications - sure, make the decision. If you can afford a car - a PCP is a great way of not spending everything at the beginning. If I had cash and wanted to buy a car, I could spend that cash to overpay my mortgage and be better off for instance.

But there are risks with it, especially for people to whom this is the only way to get a new car. What happens when the car is totalled? Or when the market gets much cheaper (the second hand market is very expensive now - but with more and more people buying new cars today, the supply base will be much bigger in a few years).

PCP is not built to give away cars. It is designed to appear more affordable than it actually is (look, a new car for only €69/week!).

Majority does not understand the risks - that's the human nature, people tend to hope the bad does not happen. But they sometimes happen and hurt big time...

Jack lemmon · 14-07-2016 01:00PM

grogi wrote: »

Once you read it, understand it and analyse the implications - sure, make the decision. If you can afford a car - a PCP is a great way of not spending everything at the beginning. If I had cash and wanted to buy a car, I could spend that cash to overpay my mortgage and be better off for instance.

But there are risks with it, especially for people to whom this is the only way to get a new car. What happens when the car is totalled? Or when the market gets much cheaper (the second hand market is very expensive now - but with more and more people buying new cars today, the supply base will be much bigger in a few years).

PCP is not built to give away cars. It is designed to appear more affordable than it actually is (look, a new car for only €69/week!).

Majority does not understand the risks - that's the human nature, people tend to hope the bad does not happen. But they sometimes happen and hurt big time...

Yes if you pay the max deposit and have low monthlys then there's no way you'll get 30% equity after 3 yrs and will have to back the deposit to keep the payments the same.
If it wasn't as viable at the end of the term as you've predicted then I'd just finance the final payment and continue owning the car I know has been cared for correctly.

EndaHonesty · 14-07-2016 01:53PM

grogi wrote: »

But there are risks with it, especially for people to whom this is the only way to get a new car. What happens when the car is totalled? Or when the market gets much cheaper (the second hand market is very expensive now - but with more and more people buying new cars today, the supply base will be much bigger in a few years).

The risks are the same for whatever method you use to buy the car.

Why do you think there is a difference because one has used PCP?

opinionated3 · 14-07-2016 01:55PM

Soarer wrote: »

Is he going to want another Hyundai?

A regular bank loan gives you a lot more freedom than a PCP arrangement.

For a finish he just went with a regular bank loan. What swayed it for him was the penalties for excess mileage. And to answer your question; more than likely. ....this is his 3rd new hyundai....he's happy out with them

Soarer · 14-07-2016 02:26PM

opinionated3 wrote: »

For a finish he just went with a regular bank loan. What swayed it for him was the penalties for excess mileage. And to answer your question; more than likely. ....this is his 3rd new hyundai....he's happy out with them

What??

You mean someone bought a car NOT using PCP????

There must be something wrong with your friend. I'd cut him loose straight away. Can't be associating with dem types!

Congrats to your friend btw.

@Enda: That's the extra "freedom" I was talking about with a bank loan. Not financial freedom. Toenails.

fits · 14-07-2016 02:33PM

We were looking at the PCP option recently. For the vehicle I looked at I was being quoted 5.9 % interest. The cost of credit was adding up to something like 5000 euro over the three year term, and then you would have to probably refinance(and pay more interest on the balance) or enter into another deal where you are also paying interest and never actually own anything at the end of it. So while the monthly repayments were affordable enough, the whole thing was masking massive interest payments, in my opinion.

It might be a worthwhile option if the interest rate is low, and you are happy to change after three years (who knows what deal will be available then). I thought hire purchase would be a better option for us. But eventually we just decided to buy an older car outright and not be worrying about interest payments or financing.

SK1979 · 14-07-2016 09:12PM

Does anyone know whether its possible to change the debiting bank account for a PCP loan?

I'm currently paying back a PCP loan to Volkswagen bank but like to change it so that the repayments come out of someones elses account.

Does anyone know if this is possible?

Thanks in advance.

Lantus · 15-07-2016 12:08AM

PCP is just one option and one possible way to purchase a car. It won't suit everyone and no one would expect it to.

Loans from banks and credit unions and regular car finance are all perfectly valid options.

You also need to factor in the car, and the financial ability of the purchaser.

PCP is a little like most mobile phone purchases. You enter a 2 + year contract making regular payments on a new expensive phone. After the contract term your encouraged to upgrade to another new phone. No one blinks an eye at that.

I got my new skoda at zero interest and traded in my old and becoming very expensive 15 year old car to get the minimum deposit possible. I pay 230 a month for total security, lower fuel, tax and insurance and pure comfort and indulgence. I spend 2+ hours a day driving so its worth it.

If I was going 2nd hand which I investigated thoroughly I would of had 12k loan and the total cost over 3 years was much more. Also the 2nd hand market is dire with limited choice and poor value for money to match. When you factor in 3 years depreciation I'm back to owning an old car worth very little with the risk of expensive mechanical issues, higher insurance and tax and fuel bills.

So look at the whole picture, come at from every single and compare all your costs to see what suits you best.

jca · 15-07-2016 10:59AM

Lantus wrote: »

PCP is just one option and one possible way to purchase a car. It won't suit everyone and no one would expect it to.

Loans from banks and credit unions and regular car finance are all perfectly valid options.

You also need to factor in the car, and the financial ability of the purchaser.

PCP is a little like most mobile phone purchases. You enter a 2 + year contract making regular payments on a new expensive phone. After the contract term your encouraged to upgrade to another new phone. No one blinks an eye at that.

I got my new skoda at zero interest and traded in my old and becoming very expensive 15 year old car to get the minimum deposit possible. I pay 230 a month for total security, lower fuel, tax and insurance and pure comfort and indulgence. I spend 2+ hours a day driving so its worth it.

If I was going 2nd hand which I investigated thoroughly I would of had 12k loan and the total cost over 3 years was much more. Also the 2nd hand market is dire with limited choice and poor value for money to match. When you factor in 3 years depreciation I'm back to owning an old car worth very little with the risk of expensive mechanical issues, higher insurance and tax and fuel bills.

So look at the whole picture, come at from every single and compare all your costs to see what suits you best.

At least with a mobile phone contract at the end of two years you don't have a huge balloon payment waiting for you. Also there's plenty of equity in a two year old good brand phone.

EndaHonesty · 15-07-2016 11:15AM

jca wrote: »

Also there's plenty of equity in a two year old good brand phone.

:rolleyes:

All in all · 15-07-2016 01:57PM

Lantus wrote: »

PCP is just one option and one possible way to purchase a car. It won't suit everyone and no one would expect it to.

Loans from banks and credit unions and regular car finance are all perfectly valid options.

You also need to factor in the car, and the financial ability of the purchaser.

PCP is a little like most mobile phone purchases. You enter a 2 + year contract making regular payments on a new expensive phone. After the contract term your encouraged to upgrade to another new phone. No one blinks an eye at that.

I got my new skoda at zero interest and traded in my old and becoming very expensive 15 year old car to get the minimum deposit possible. I pay 230 a month for total security, lower fuel, tax and insurance and pure comfort and indulgence. I spend 2+ hours a day driving so its worth it.

If I was going 2nd hand which I investigated thoroughly I would of had 12k loan and the total cost over 3 years was much more. Also the 2nd hand market is dire with limited choice and poor value for money to match. When you factor in 3 years depreciation I'm back to owning an old car worth very little with the risk of expensive mechanical issues, higher insurance and tax and fuel bills.

So look at the whole picture, come at from every single and compare all your costs to see what suits you best.

The difference with your €12k second hand car is at the end of 3 years you have an asset - worth possibly €5-7k.

At the end of your 3 years PCP you don't have a lot and have another decision to make - sign up to a further contract and another 3 year commitment, finance/pay the balance or return the car.

But agreed, people need to make up there own minds and decide what is best for them.

dissed doc · 15-07-2016 08:07PM

All in all wrote: »

The difference with your €12k second hand car is at the end of 3 years you have an asset - worth possibly €5-7k.

At the end of your 3 years PCP you don't have a lot and have another decision to make - sign up to a further contract and another 3 year commitment, finance/pay the balance or return the car.

But agreed, people need to make up there own minds and decide what is best for them.

The issue I think is people thinking that they can get something for nothing.

If you can afford to pay max 12k for a car over three years and want own at three years, then buy a 12k car. Don't buy a 35k car.

The three years is of no consequence. You can change your car whenever you want. If you want to get rid of it (and pay for the privilege) it is an easy way for people who like to have "new"-ish cars to keep up to date.

If you have only paid 20k of a 35k car in three years, well, you don't own it or have an asset because you still haven't paid for it!!

If you want to own the car completely at 12 months, pay all 12k for the 12k car, or pay 35k for the 35k car.

If you want a 35k car and want to own it in three years, you need to pay 35k!!!

Lantus · 15-07-2016 08:43PM

I think of a car as a commodity rather than an asset. Even if a borrow 12k to buy a car and pay back 13 say inc interest and my car is worth 5 k after 3 years and my loan is paid off I have two choices.

Keep my now 8 year old + car and hope it keeps going and start saving for a new one and make monthly payments or trade it in for a new one and get back into debt.

Also 13k over 3 years is 360 a month so quite a repayment. You could drive a new car for less money and cover fuel and tax for that. How is that a bad deal?

But not all PCP deals are equal. I have a good value car well within my means.I have friends who have bought expensive cars with huge loans over 5 years with huge repayments and sunk thousands in as deposit. They wanted to because they loved the car but people can justify anything if they really want it. Cars and phones are prime examples. The normal gauge of value vs practicality doesn't always apply.

cuterob · 16-07-2016 05:35AM

I'm thinking of going PCP on a new car for myself and the missus, I can cycle to work but she needs something for the 15 min spin up to work, public transport is useless for her route, it'll prob do one motorway a week (1 hour trip each way). have an 02 almera to trade in,

At the moment what are the best PCP deals for a hatchback that is 1.0l-1.2l engine, polo, fabia, clio? i see a few are doing 0% interest until 31st july

Any help much appreciated

GavMan · 16-07-2016 10:00AM

cuterob wrote: »

I'm thinking of going PCP on a new car for myself and the missus, I can cycle to work but she needs something for the 15 min spin up to work, public transport is useless for her route, it'll prob do one motorway a week (1 hour trip each way). have an 02 almera to trade in,

At the moment what are the best PCP deals for a hatchback that is 1.0l-1.2l engine, polo, fabia, clio? i see a few are doing 0% interest until 31st july

Any help much appreciated

You wont get a much better deal than 0%

Do some research and see if those models are likely to launch new designs soon. That will affect the resale value in 3 years

jca · 16-07-2016 03:31PM

cuterob wrote: »

I'm thinking of going PCP on a new car for myself and the missus, I can cycle to work but she needs something for the 15 min spin up to work, public transport is useless for her route, it'll prob do one motorway a week (1 hour trip each way). have an 02 almera to trade in,

At the moment what are the best PCP deals for a hatchback that is 1.0l-1.2l engine, polo, fabia, clio? i see a few are doing 0% interest until 31st july

Any help much appreciated

There's a new 1.2 three cylinder TSI being launched by Skoda very soon, it might be worth waiting to see what cars they put it in.

Lantus · 16-07-2016 08:45PM

cuterob wrote: »

I'm thinking of going PCP on a new car for myself and the missus, I can cycle to work but she needs something for the 15 min spin up to work, public transport is useless for her route, it'll prob do one motorway a week (1 hour trip each way). have an 02 almera to trade in,

At the moment what are the best PCP deals for a hatchback that is 1.0l-1.2l engine, polo, fabia, clio? i see a few are doing 0% interest until 31st july

Any help much appreciated

For such small amount if driving a std loan and second hand may be better. Break out excel and crunch the numbers.

Ultimately if you can afford a new car and want one (who wouldn't?) Then it makes good sense.

With such minimal motorway driving the 1.2 engine isn't essential but it may be desirable.

Skoda and vw use the same engines and a myriad of other common parts. Your getting a different shell and a better internal finish in the vw.

Interest rates are often zero. No harm in taking 3 or 4 for a good spin one Saturday morning.

grogi · 16-07-2016 09:45PM

OSI wrote: »

If the car is 40k and you pay 10k deposit with a 20k GMFV, you are borrowing 30k, paying payments on 10k and interest on the 30k, and left with 20k to pay at the end.

True... However many marketing materials claim otherwise...

This graphics suggests that you're financing only the part that's remaining after taking GFV and deposit... We all know, after sixtish pages, that's the lie...

Soarer · 18-07-2016 11:29AM

grogi wrote: »

True... However many marketing materials claim otherwise...

This graphics suggests that you're financing only the part that's remaining after taking GFV and deposit... We all know, after sixtish pages, that's the lie...

That's what I was trying to ask/say earlier.

Also heard an "expert" mention it on Matt Cooper(?) last week. ie. you finance the difference between (price - deposit) - GMFV.

Soarer · 18-07-2016 11:31AM

cuterob wrote: »

I'm thinking of going PCP on a new car for myself and the missus, I can cycle to work but she needs something for the 15 min spin up to work, public transport is useless for her route, it'll prob do one motorway a week (1 hour trip each way). have an 02 almera to trade in,

At the moment what are the best PCP deals for a hatchback that is 1.0l-1.2l engine, polo, fabia, clio? i see a few are doing 0% interest until 31st july

Any help much appreciated

You can get 0% finance. On the flip side, Nissan will give you €4k trade in on your Almera. So you'll have to do the maths.

drkdrk · 25-07-2016 03:58PM

I'm about a year into a year into a 3 year PCP agreement. No longer need the car.
(yes, i rushed into it and probably shouldn't have went the pcp route)
Is there any way out at this early stage? I don't mind taking a small hit financially if it's necessary. Is there a professional i should talk to?
Or am i stuck with the 3 year commitment?
Thanks for any advice

Drummerboy08 · 25-07-2016 06:25PM

Call the company who it's through and get a settlement figure.

Call the garage you bought it from and ask if they'll buy it back.

If the figure they offer is higher than the settlement, happy days.

If it's lower, either sell it privately for more or take the hit.

PCP finance.

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