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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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Villain

He didn't mention the half rule either which given the scenario he paints is very apt

Soarer

sheff the ref wrote: »

PCP definitely has its advantages.

My car was 20,000 or so new and I have 3 years on 0% finance. I think there is €6500 owed at the end of the three years. I will be keeping it as my mileage is too high

You wont get many 3 year old cars of any size for €6500

You should probably know how much is owing at the end of 3 years.

ShadowHearth

Soarer wrote: »

You should probably know how much is owing at the end of 3 years.

That's one thing is unclear for me as it's now mixed information.

If igo pcp, even do whole calculator thing. They show price, let's say, 8K eu left. So it's 100% what you own on that car and is up to you what to do with it? Or dealer can put some bull**** charges on top of it?

vintagevrs

The balloon payment or what the call GFMV in PCP contracts is the outstanding amount owed. Pay it and the car is yours. Nothing hidden - millage, condition etc make no difference at all here.

mickdw

ShadowHearth wrote: »

That's one thing is unclear for me as it's now mixed information.

If igo pcp, even do whole calculator thing. They show price, let's say, 8K eu left. So it's 100% what you own on that car and is up to you what to do with it? Or dealer can put some bull**** charges on top of it?

Think about it logically. You have paid for all the car bar 8k at the end of the term. If you pay that 8k, you own it. The car can have 200k miles and be missing 2 wheels. nobody cares- is your car.
Option 2 is to trade against a new car. dealer will offer trade in price. Anything over and above the gfv who form deposit on next car. Condition and mileage will clearly effect the trade in offer in this case just as it would taking in any car. It is possible that a car in poor condition may not even cover the gfv in an extreme case.
Option 3 is to hand back keys and walk away. If car is damaged or has high miles, there may be charges applied.

Paulzx

NIMAN wrote: »

Charlie Weston......the master of the bleeding obvious.

I often listen to him on Matt Coopers Last Word, as I know as much about finance as he does, for a man that does it for a living. And didn't he get some award recently too? Some people are easily impressed.

So it's not only me then!!!!

Every 6 months he gets a 4 page spread in the Indo telling people how to save money with their personal finances and he trots out that nugget of wisdom to "shop around" for the best deal.

I don't know how he gets away with it

jimmycrackcorm

NIMAN wrote:

Charlie Weston......the master of the bleeding obvious.

Not even that! He compared pcp's to sub prime lending with absolutely no understanding what sub prime lending is.

Pcp: buyer only gets car having shelled out a deposit plus then paying an affordable monthly rate.

Whereas from wiki... In finance,Â subprime lendingÂ (also referred to as near-prime, non-prime, and second-chanceÂ lending) means makingÂ loansÂ to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc.

Incompetent reporting, traditional hp in comparison is closer to sub prime than a pcp, given the more potentially difficult monthly repayments.

ShadowHearth

mickdw wrote: »

Think about it logically. You have paid for all the car bar 8k at the end of the term. If you pay that 8k, you own it. The car can have 200k miles and be missing 2 wheels. nobody cares- is your car.
Option 2 is to trade against a new car. dealer will offer trade in price. Anything over and above the gfv who form deposit on next car. Condition and mileage will clearly effect the trade in offer in this case just as it would taking in any car. It is possible that a car in poor condition may not even cover the gfv in an extreme case.
Option 3 is to hand back keys and walk away. If car is damaged or has high miles, there may be charges applied.

Thx, I done my research a lot about it and that was the conclusion I came in, but during last few weeks in other threads people put some weird things about paying off balloon payment.
If its still the same figure you signed for after paying zero apr and using scrapage deal, then it's as good as ever.

I think a lot of people overlook last option. Yes, financially it looks worst and a real kick in the teeth of you need to give away car and walk away. Thing is, it is an option for people who will have a financial struggle for one reason or other. If shot went south after 3 years, then you can just throw keys and walk away. In hp you will suffer all 5 years. We had threads here before about hp loop hole, where you could just turn in car after half term and walk away. Some people did it as it was best financial choice. Cut your losses and move on without any debt.

Soarer

So "shef the ref" above would've been given a GMFV of €6,500 when he signed the PCP agreement?

Seems very low doesn't it? Especially at 0%.

Villain

ShadowHearth wrote: »

I think a lot of people overlook last option. Yes, financially it looks worst and a real kick in the teeth of you need to give away car and walk away. Thing is, it is an option for people who will have a financial struggle for one reason or other. If shot went south after 3 years, then you can just throw keys and walk away. In hp you will suffer all 5 years. We had threads here before about hp loop hole, where you could just turn in car after half term and walk away. Some people did it as it was best financial choice. Cut your losses and move on without any debt.

Well in HP or PCP once you have paid back half the value including interest you can walk away and hand the car back to bank.

.G.

Interested in getting a new car this year, however not brand new. I'd imagine there'll be alot of 141's arriving back from pcp's over the coming months. Is pcp finance possible/worth it on a 3 year old car?

The_Honeybadger

jimmycrackcorm wrote: »

Not even that! He compared pcp's to sub prime lending with absolutely no understanding what sub prime lending is.

Pcp: buyer only gets car having shelled out a deposit plus then paying an affordable monthly rate.

Whereas from wiki... In finance,Â subprime lendingÂ (also referred to as near-prime, non-prime, and second-chanceÂ lending) means makingÂ loansÂ to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc.

Incompetent reporting, traditional hp in comparison is closer to sub prime than a pcp, given the more potentially difficult monthly repayments.

In fairness to him I don't think he was saying that they are the same thing. He was saying that the PCP could cause a crisis on the same scale as sub-prime lending. I don't have any figures on it so can't agree or disagree.

I often hear him on the last word on my way home. His analysis is often very basic, I agree, and I'd rarely learn anything I didn't already know from his piece. It's probably targeted at people with very limited knowledge on the subject. People who are a bit more savvy will likely have done their own research on the subject anyway.

mickdw

superg wrote: »

Interested in getting a new car this year, however not brand new. I'd imagine there'll be alot of 141's arriving back from pcp's over the coming months. Is pcp finance possible/worth it on a 3 year old car?

It's possible but I'd imagine in most cases it might be more sensible to do traditional finance on something 3 years old. Payments should not be massive unless it's pretty special car. imo 6 years old is too old to have money outstanding on a car.
I think a useful product for the motor trade could be zero deposit pcp on used stock. So as an example, a new passat might be 350 per month with 10k deposit on pcp.
If they could offer 3 year old with zero deposit at under 300 per month it might be a runner. when you go back at 6 years old, you wouldn't need any equity to do the same deal again.

bazz26

superg wrote: »

Interested in getting a new car this year, however not brand new. I'd imagine there'll be alot of 141's arriving back from pcp's over the coming months. Is pcp finance possible/worth it on a 3 year old car?

Problem with doing PCP on a 3 year old car is that there is still a balloon payment when the PCP term matures when the car is 6 years old. While the balloon payment may not be very high at that stage, you maybe required to put in a sizable deposit on day 1 to keep monthly repayments respectable. Also if you decide to hand the car back at year 3 and take out another car on PCP then you may be required to put a substantial deposit up front again to keep repayments close to what you were paying before. Your 6 year old car may not have enough value in it either to put towards that deposit if you want to go again. In this case it might make more sense to go PCP on a brand new car imo but you would need to do some maths.

.G.

mickdw wrote: »

It's possible but I'd imagine in most cases it might be more sensible to do traditional finance on something 3 years old. Payments should not be massive unless it's pretty special car. imo 6 years old is too old to have money outstanding on a car.
I think a useful product for the motor trade could be zero deposit pcp on used stock. So as an example, a new passat might be 350 per month with 10k deposit on pcp.
If they could offer 3 year old with zero deposit at under 300 per month it might be a runner. when you go back at 6 years old, you wouldn't need any equity to do the same deal again.

bazz26 wrote: »

Problem with doing PCP on a 3 year old car is that there is still a balloon payment when the PCP term matures when the car is 6 years old. While the balloon payment may not be very high at that stage, you maybe required to put in a sizable deposit on day 1 to keep monthly repayments respectable. Also if you decide to hand the car back at year 3 and take out another car on PCP then you may be required to put a substantial deposit up front again to keep repayments close to what you were paying before. Your 6 year old car may not have enough value in it either to put towards that deposit if you want to go again. In this case it might make more sense to go PCP on a brand new car imo but you would need to do some maths.

Makes sense. Cheers lads.

sheff the ref

I can quote the exact figure if I root out my paperwork but it is in or around 6500.

From memory, my deal was based on three portions that were similar enough amounts

1.The trade in value of my old car
2.The amount paid over three years
3.The remaining sum owed on the car

Give or take a few quid, you are talking 6500 to 6700 each portion

Soarer wrote: »

So "shef the ref" above would've been given a GMFV of €6,500 when he signed the PCP agreement?

Seems very low doesn't it? Especially at 0%.

368100

superg wrote: »

Interested in getting a new car this year, however not brand new. I'd imagine there'll be alot of 141's arriving back from pcp's over the coming months. Is pcp finance possible/worth it on a 3 year old car?

I've just bought a 152 Mercedes on pcp....Mercedes star finance (boi finance) won't do it but this is with first auto finance, arranged through merc dealer and at same rate as Mercedes star finance

26000 Elephants

368100 wrote: »

I've just bought a 152 Mercedes on pcp....Mercedes star finance (boi finance) won't do it but this is with first auto finance, arranged through merc dealer and at same rate as Mercedes star finance

Sounds great - would you mind giving an indication of the deal?

368100

26000 Elephants wrote: »

Sounds great - would you mind giving an indication of the deal?

Figures?

€36k less €10k trade in so €26k......Gfmv €11k

37 monthly payments of €480.....5.9% Apr

26000 Elephants

total cost of finance for a 152 merc - €2700 (excl. the deposit of course) - not bad.
Well wear.

368100

26000 Elephants wrote: »

total cost of finance for a 152 merc - €2700 (excl. the deposit of course) - not bad.
Well wear.

Thanks....did a bit of haggling on the trade and got a lot more than I thought I would so very happy, collecting next week

.G.

Thanks for the info. I'm still having a think and doing some maths. There seems to be very little in the way of 141 or 151s that I'd be interested in if carzone is anything to go by, I want a family saloon but everybody appears to be buying diesel over the last number of years and I want petrol so my choice is limited all of which is pushing more towards the idea of a new one on PCP.

I'd really rather not though! Bought my current car at 3 years old and have it 7 years, another 3 or 2 year old car for a lot less money than a new one would be ideal.

mickdw

superg wrote: »

Thanks for the info. I'm still having a think and doing some maths. There seems to be very little in the way of 141 or 151s that I'd be interested in if carzone is anything to go by, I want a family saloon but everybody appears to be buying diesel over the last number of years and I want petrol so my choice is limited all of which is pushing more towards the idea of a new one on PCP.

I'd really rather not though! Bought my current car at 3 years old and have it 7 years, another 3 or 2 year old car for a lot less money than a new one would be ideal.

Should be slightly more petrols around in the 1 year old bracket than around in 2014. You have the petrol versions of current passat and A4. Also current mercedes C Class, CLA etc seem to be selling reasonably well in petrol.

368100

superg wrote: »

Thanks for the info. I'm still having a think and doing some maths. There seems to be very little in the way of 141 or 151s that I'd be interested in if carzone is anything to go by, I want a family saloon but everybody appears to be buying diesel over the last number of years and I want petrol so my choice is limited all of which is pushing more towards the idea of a new one on PCP.

I'd really rather not though! Bought my current car at 3 years old and have it 7 years, another 3 or 2 year old car for a lot less money than a new one would be ideal.

I originally went in for New but they couldn't give me the spec that I wanted and had this coming in as a trade in. Id have the same reservation about brand new sonny mind is eased a bit about the initial hit to the value.

You're right about petrol though....I've bought diesel this time but will prob switch back to petrol next time as they efficiency and running costs get closer to diesel and with all the bad press lately there's more and more switching back to petrol so will be more fresh used ones in a year or two

ctlsleh

Jaguar offering a 4,000 contribution with 5.9% APR or 2.9% for the term (37 months).

Which is the better option if I have a 26k trade in aganst a 56K car..... prior to any negotiation......?

mickdw

do you mean to buy outright , not a PCP?
also what are the options - do you mean you get 5.9 percent if you take the dealer contribution or 2.9 percent if you don't?

vintagevrs

Borrowing 30k at 5.9% costs €2,731.65.

Borrowing 30k at 2.9% costs€1,342.14

So I would say dealer contribution with higher interest is the way to go

ctlsleh

Yes, PCP...... ITs either or........either the 4K contribution but 5.9% APR or no contribution and 2.9% APR.......I think the 4 K upfront is a better deal,,,,,,,?

ctlsleh

vintagevrs wrote: »

Borrowing 30k at 5.9% costs €2,731.65.

Borrowing 30k at 2.9% costs€1,342.14

So I would say dealer contribution with higher interest is the way to go

Yes, that was my thinking too

mickdw

I doubt you can pay 26k deposit on a PCP on a 56k car.

what is the gfv cause the more that is left outstanding til the end, the more interest you will pay.

On straight forward hire purchase, the 5.9 rate while borrowing 4k less due to contribution would certainly be the best but I will run rough figures if you give pcp details re deposit and gfv