PCP finance.

lawred2 · 16-09-2016 11:47AM

grogi wrote: »

No, it is not.

The deposit is formed from the difference between the value of the car you are returning (or how much the dealer wants to pay for it) and the money you still owe (also called Guaranteed Future Value).

actually rethinking this - the car surely serves as the vast majority of the next deposit surely provided you've stuck to all the T&Cs??

After 3 years say - your initial deposit + finance payments will probably equate to about 2/3 equity in the car.

The GFV is usually 1/3 of sale price judging by the brochures I saw...

So that roughly leaves you with a third for a deposit give or take a few thousand..

I haven't given this much thought so I've probably got that wrong

grogi · 16-09-2016 11:53AM

lawred2 wrote: »

actually rethinking this - the car surely serves as the vast majority of the next deposit surely provided you've stuck to all the T&Cs??

After 3 years say - your initial deposit + finance payments will probably equate to about 2/3 equity in the car.

The GFV is usually 1/3 of sale price judging by the brochures I saw...

So that roughly leaves you with a third for a deposit give or take a few thousand..

I haven't given this much thought so I've probably got that wrong

In the typical scenario, the payments are calculated to give you a minimal deposit after three years.

€30k car now, after three years: market value €16k, GMFV €13k... That will give €3k of equity at the end of the PCP that can be used as a deposit for next finance deal.

Toyotafanboi · 16-09-2016 11:56AM

lawred2 wrote: »

The GFV is usually 1/3 of sale price judging by the brochures I saw...

So that roughly leaves you with a third for a deposit give or take a few thousand..

The thing is you don't own that final GMFV 1/3 to use as a deposit.

What you can use as a deposit is any positive equity between the GMFV and the cars actual value in 3 years time.

lawred2 · 16-09-2016 12:04PM

Toyotafanboi wrote: »

The thing is you don't own that final GMFV 1/3 to use as a deposit.

What you can use as a deposit is any positive equity between the GMFV and the cars actual value in 3 years time.

well no - I was thinking

equity less GFMV should equal a third

but apparently that's not likely

lawred2 · 16-09-2016 12:05PM

grogi wrote: »

In the typical scenario, the payments are calculated to give you a minimal deposit after three years.

€30k car now, after three years: market value €16k, GMFV €13k... That will give €3k of equity at the end of the PCP that can be used as a deposit for next finance deal.

christ

I'll stick to doing what I'm doing

acronym Chilli · 16-09-2016 12:34PM

lawred2 wrote: »

well no - I was thinking

equity less GFMV should equal a third

but apparently that's not likely

Absolutely. In fact it's very unlikely in most cases, since GFMV generally is about a third of the new price of the car.
If the initial deposit is small, and repayments are large, you can structure it to make it work out a bit better though (better in the sense of more sustainable deposit to try to roll it over again with consistent monthly repayment levels).

The "guarantee" in GFMV is that IF you keep to certain conditions (mileage, condition, etc.,) around how you run the car, then they'll guarantee to take the car back from you in full and final settlement of the PCP arrangement after 3 years and let you walk away: debt-free, and car-free (and perhaps equity free). If the car is worth more on the open market, then you can pocket the difference (or put it towards a new car).
If you've exceeded mileage limits, then they could ask for extra money even at that stage to allow you to walk away (car-less)

It IS confusing in my opinon, in how it's communicated, the terminology, and how it's clarified or not (although if you see it worked out on a piece of paper or spreadsheet it's of course very straight-forward)

Soarer · 16-09-2016 02:11PM

acronym Chilli wrote: »

It IS confusing in my opinon, in how it's communicated, the terminology, and how it's clarified or not (although if you see it worked out on a piece of paper or spreadsheet it's of course very straight-forward)

Especially when you see the Renault fella on the previous page saying you only pay interest on the purchase price less GFMV.

Summer wind · 16-09-2016 02:19PM

acronym Chilli wrote: »

Absolutely. In fact it's very unlikely in most cases, since GFMV generally is about a third of the new price of the car.
If the initial deposit is small, and repayments are large, you can structure it to make it work out a bit better though (better in the sense of more sustainable deposit to try to roll it over again with consistent monthly repayment levels).

The "guarantee" in GFMV is that IF you keep to certain conditions (mileage, condition, etc.,) around how you run the car, then they'll guarantee to take the car back from you in full and final settlement of the PCP arrangement after 3 years and let you walk away: debt-free, and car-free (and perhaps equity free). If the car is worth more on the open market, then you can pocket the difference (or put it towards a new car).
If you've exceeded mileage limits, then they could ask for extra money even at that stage to allow you to walk away (car-less)

I didn't know you could pocket the difference. I thought the dealer kept all the money unless you were entering another pcp deal.

grogi · 16-09-2016 02:22PM

Summer wind wrote: »

I didn't know you could pocket the difference. I thought the dealer kept all the money unless you were entering another pcp deal.

The dealer will give you crappy enough price not to go this route anyway.

mickdw · 16-09-2016 02:31PM

Pcp isn't magic but can be a useful way to buy.
If you want to be able to roll over to a new car every 3 years without coming up with a ball of cash for deposit each time, you need to be able to afford the monthly payment when you have only put in about 15 percent deposit.
If you are happy with the monthly following a 15 percent deposit, there is an excellent chance of being able to jump into a new car again and having a 15 percent deposit from the equity in the old car.
If on the other hand, you are putting in 30 percent deposit from a car you now fully own and are just about able to afford the monthly payment, it is pretty clear that you cannot afford the car.

acronym Chilli · 16-09-2016 03:05PM

grogi wrote: »

The dealer will give you crappy enough price not to go this route anyway.

That gets to the nub of why I'm fundamentally suspicious of PCP: the transaction becomes more complex, and by default all of it is with the same counterparty: you buy car from a vendor, you buy finance from same vendor, and you sell car at end to same vendor. It makes it harder to work out where they are making the money (e.g. maybe finance is cheap @ 0%, but they make money on car by giving limited discounts).

Worst case, if you want to pocket difference at end: pay the lump sum in cash, then take the car and put it on the private market and sell for hopefully a larger amount of cash.

lawred2 · 16-09-2016 03:13PM

acronym Chilli wrote: »

That gets to the nub of why I'm fundamentally suspicious of PCP: the transaction becomes more complex, and by default all of it is with the same counterparty: you buy car from a vendor, you buy finance from same vendor, and you sell car at end to same vendor. It makes it harder to work out where they are making the money (e.g. maybe finance is cheap @ 0%, but they make money on car by giving limited discounts).

Worst case, if you want to pocket difference at end: pay the lump sum in cash, then take the car and put it on the private market and sell for hopefully a larger amount of cash.

the finance cost is definitely sunk into the car upfront... 0% interest is a marketing ploy.

All in all · 16-09-2016 03:32PM

acronym Chilli wrote: »

That gets to the nub of why I'm fundamentally suspicious of PCP: the transaction becomes more complex, and by default all of it is with the same counterparty: you buy car from a vendor, you buy finance from same vendor, and you sell car at end to same vendor. It makes it harder to work out where they are making the money (e.g. maybe finance is cheap @ 0%, but they make money on car by giving limited discounts).

Worst case, if you want to pocket difference at end: pay the lump sum in cash, then take the car and put it on the private market and sell for hopefully a larger amount of cash.

You don't need to trade the car back to the same vendor, you can go to any marque and they will settle the finance (providing the trade in value is higher than the finance outstanding).

mickdw · 16-09-2016 03:37PM

lawred2 wrote: »

the finance cost is definitely sunk into the car upfront... 0% interest is a marketing ploy.

Fair comment. There is no free money but the way vw offer it, they appear to use the zero percent as a method of pushing higher spec. Sure, they have great margin on the spec bits but comparing confortline versus highline on a vw, it seems that the distributor is at least foregoing some of the profit on the higher model by offering zero percent.

NIMAN · 16-09-2016 09:16PM

I'm thinking more about changing from my 13 to a 15, paying cash to change.

30k is a lot of money for a Golf.

vintagevrs · 16-09-2016 09:24PM

That's a smarter choice imo. The golf is due a facelift very soon so a new one now or even Jan 17 will be soon out of date as this will impact it's residuals compared with buying earlier in the model cycle. If your paying cash you are not gaining anything with the 0% interest. Only if your alternative was a 8% loan then that might make the brand new option more appealing imo.

bazz26 · 17-09-2016 01:02AM

The other thing to weigh up with waiting for the facelift model is VW may trim back on the spec. You might not get the same spec that is standard on the Highline now come Jan with the facelift.

Zurbaran · 17-09-2016 01:19AM

Can't see the current Golf losing much value or losing much spec with the face lift. It wont be much different to what's sold right now.

Giacomo McGubbin · 17-09-2016 01:22AM

Can't understand why anyone would want to pay 30k for a Golf. A small boring expensive car by today's standards.

Brian Scan · 17-09-2016 09:52AM

Giacomo McGubbin wrote: »

Audi's have been skangermobilles for quite some time.

They worked out they make a lot more money that way though.

Giacomo McGubbin wrote: »

Maybe 20 years ago, nowadays it's skangers that can manage to get a finance company to take them on for a new audi, or if they get refused persuade some other firm to finance a passat for them. Audi and VW know what they are doing though, they sell far more catering for that market than they ever did for their old demographic.

Giacomo McGubbin wrote: »

If you hold onto it for just a couple more years you'll be past the skanger phase with that age

Giacomo McGubbin wrote: »

Might be better, you don't want to look like a wanna be

Giacomo McGubbin wrote: »

Audi's once used to be subtle and have class, but didnn't sell that well.
Now they just look obnoxious, shout small mickey syndrome, and are as common as muck, making audi a fortune. Audi know their market now

Giacomo McGubbin wrote: »

Can't understand why anyone would want to pay 30k for a Golf. A small boring expensive car by today's standards.

Presumably you are more of a fan of cars from Trollhattan.

bidiots · 17-09-2016 10:22AM

Giacomo McGubbin · 17-09-2016 10:40AM

Oh dear, have I upset the VAG fanboys. Notice, no explanation of why anyone would borrow 30,000 euros for a small boring over expensive car.

Brian Scan · 17-09-2016 11:07AM

Giacomo McGubbin wrote: »

Oh dear, have I upset the VAG fanboys. Notice, no explanation of why anyone would borrow 30,000 euros for a small boring over expensive car.

I presume anyone considering doing this doesn't feel the need to explain anything to you.

markad1 · 17-09-2016 11:13AM

Giacomo McGubbin wrote: »

Oh dear, have I upset the VAG fanboys. Notice, no explanation of why anyone would borrow 30,000 euros for a small boring over expensive car.

Because it's the car I wanted with the spec I wanted....simples:)

Giacomo McGubbin · 17-09-2016 11:58AM

Brian Scan wrote: »

I presume anyone considering doing this doesn't feel the need to explain anything to you.

or rather they haven't got a credible one.

NIMAN · 17-09-2016 02:38PM

Giacomo McGubbin wrote: »

Brian Scan wrote: »

I presume anyone considering doing this doesn't feel the need to explain anything to you.

or rather they haven't got a credible one.

What car would you advise me to trade to?

jca · 17-09-2016 02:53PM

NIMAN wrote: »

What car would you advise me to trade to?

A corolla terra of course, value for money lad, value for money. Shur dem fancy alloy wheels and 'lectric windows are nothing but trouble in 15 years time. Heaven forbid you might buy a car for enjoyment...

Toyotafanboi · 17-09-2016 03:30PM

Giacomo McGubbin wrote: »

or rather they haven't got a credible one.

I shouldn't take the bait, but, with the deals VW are doing at the minute, a Highline Golf is in the same price ballpark as a Focus Titanium or an Astra SRi and the Golf is a far superior feeling car and has a better spec at that level than either of these, just as examples.

It'd be well known on here that i'm no VW fanboi and certainly not a condoner of buying a Golf as the default mid sized car, but at the moment, in that segment they are the best value for money imo.

Nonoperational · 17-09-2016 04:49PM

Toyotafanboi wrote: »

I shouldn't take the bait, but, with the deals VW are doing at the minute, a Highline Golf is in the same price ballpark as a Focus Titanium or an Astra SRi and the Golf is a far superior feeling car and has a better spec at that level than either of these, just as examples.

It'd be well known on here that i'm no VW fanboi and certainly not a condoner of buying a Golf as the default mid sized car, but at the moment, in that segment they are the best value for money imo.

:eek::eek::eek::eek:

I think I need to sit down! (Nice Golf by the way)

rob316 · 19-09-2016 05:07PM

Thanks to everyone that contributed to this thread, been very helpful reading bits of it.

2008 Picanto, ticking over fine but I will never hold onto a car coming up to 10 years old, size wise we have outgrown it too.

I think a PCP deal will suit me, money up front wise I'm cleaned out at present but I can easily make the monthly payments. I was looking at a Qashqai, scrappage of 4k for my old 2008 Picanto which is more than its worth and I have a few grand to add to that if needs be.

My question is am I better just to use the scrappage as the deposit or should I add more or does it make any difference.

What are people's experiences of PCP, have they ended the agreement in positive equity giving enough for a 10% deposit for the next car?

Also as its nearly October am I better to hold off till 17?

PCP finance.

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