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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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Shedite27

Shane732 wrote: »

Shedite27 wrote: »

I had a sales agent argue this logic with me so did the maths.

I had €4k trade in value, and €4k cash to put towards my new car. Was going to be €250 repayments for 3 years.

She was recommending I put a less deposit (€4k) and increased repayment, but my repayments were subject to 2.9% APR.

The other €4k I was going to put towards the car, was now going to be a loan at 2.9% (so paid more than €4k.

At the end of 3 years, I will have paid less to Peugeot, and we will have the same equity (Value-GMFV).

Basically your saying that you're paying interest on the 2.9%?

Correct. Whichever way the sales agent cut it, I either paid 4K extra now, or 4K + 2.9% in repayments

jimmycrackcorm

grogi wrote:

For instance, on a car worth â‚¬30000, 3 years contract with APR 2.9%, GMFV â‚¬15000 - if you put down â‚¬10000 deposit, you pay â‚¬1550 interest - if you put down â‚¬1000 deposit, you pay â‚¬1915 interest

This didn't make sense to me so I put your figures into a pcp calculator and indeed I got the same interest figures.

However what was different was the monthly payments for each, 186 vs 456.

mickdw

Shedite27 wrote: »

I had a sales agent argue this logic with me so did the maths.

I had €4k trade in value, and €4k cash to put towards my new car. Was going to be €250 repayments for 3 years.

She was recommending I put a less deposit (€4k) and increased repayment, but my repayments were subject to 2.9% APR.

The other €4k I was going to put towards the car, was now going to be a loan at 2.9% (so paid more than €4k.

At the end of 3 years, I will have paid less to Peugeot, and we will have the same equity (Value-GMFV).

Yes you are correct that you pay less due to a lower amount to be financed by putting in as much deposit as you can however my point was more related to the ongoing ability of your average buyer to get into a new deal every 3 years.
What too many people tend to do is use their valuable trade which they own outright at start of first pcp to put in 30% deposit. They then stretch themselves to the max monthly they can afford therefore getting into the most expensive car possible. All is good until end of year 3 where they suddenly have only a fraction of the 30% deposit that they had the first time and now are looking at a huge monthly to get into same type of car again. To ensure people dont go down that road, stress testing any deal using 10 to 15% deposit is a very good idea - If you can afford the repayments based on the small deposit, you can afford the car and you can likely afford to replace it every 3 years. If you can only just scrape the repayments with 30% deposit gone in, you cannot afford the car really and will not be able to replace it.
In addition, if one is to avail of zero percent finance, it makes further sense to keep your cash and put in a lower deposit.

grogi

jimmycrackcorm wrote: »

This didn't make sense to me so I put your figures into a pcp calculator and indeed I got the same interest figures.

However what was different was the monthly payments for each, 186 vs 456.

Hardly surprising as you would put €9000 more upfront in the first case, right?

ctlsleh

These 0% PCP deals from Volkswagen are pretty good value right? You can finance the majority of the cars value by placing a minimum 10% on the deposit and have 0% finance for 3 years on basically about half the cars value and then buy at the GMFV at a normal bank rate.......

Am I missing anything...?

colm_mcm

Nope, that's it in a nutshell.

youcancallmeal

colm_mcm wrote: »

Nope, that's it in a nutshell.

Is there only certain models which have 0% pcp finance deals? When you go onto the VW Ireland to configure a model the resulting finance options only show the normal 5.9% apr? I guess you probably need to go into a show room to get a proper quote

Toyotafanboi

Yes, with most models you have to buy a "highline" (top spec) to get 0%, the lower the spec the higher the APR. Trendline is usually the lowest spec @ 5.9% and there are a few specs in the middle, comfortline, R-line etc.

mickdw

The vw website generally shows the correct rates for each model but when you configure a car, it's not right. Zero percent on a highline passat for example.
There is also a VW contribution on some models to help with deposit.
Pcp with zero interest is really a no brainer as long as you can actually afford the car.

SteelyDanJalapeno

Hi All,

I got a Seat Leon FR about 13 months ago on PCP for about 27k, at the time I was in 2 minds about getting an electric car but there was no options available that suited me with range anxiety etc. However the Hyundai Ioniq (28k) now boasts 200km range and I think that this suits me ideally.

I don't know where I now stand with my current PCP deal thou, do I need to see out my 3 years on the Leon or is there anyway I can trade the Leon against the Ioniq and move the finance? I've had the Leon independently valued at 24k trade in value if that makes any difference.

jca

TiltedBrain wrote: »

Hi All,

I got a Seat Leon FR about 13 months ago on PCP for about 27k, at the time I was in 2 minds about getting an electric car but there was no options available that suited me with range anxiety etc. However the Hyundai Ioniq (28k) now boasts 200km range and I think that this suits me ideally.

I don't know where I now stand with my current PCP deal thou, do I need to see out my 3 years on the Leon or is there anyway I can trade the Leon against the Ioniq and move the finance? I've had the Leon independently valued at 24k trade in value if that makes any difference.

What do you plan to do at the end of the three years with the Ioniq? With highish depreciation around the Hyundai name and the added depreciation that electric cars have at the moment I'd be worried about being in negative equity come trade in time.

grogi

jca wrote: »

What do you plan to do at the end of the three years with the Ioniq? With highish depreciation around the Hyundai name and the added depreciation that electric cars have at the moment I'd be worried about being in negative equity come trade in time.

If there is negative equity, just hand it back and wave to the salesman.

Jobs OXO

grogi wrote: »

If there is negative equity, just hand it back and wave to the salesman.

There will never ever be negative equity. The second hand value will always be more that the balloon payment.

Whether there is enough equity to cover a deposit at the same repayment amount for another new car is another question.

ELM327

jca wrote: »

What do you plan to do at the end of the three years with the Ioniq? With highish depreciation around the Hyundai name and the added depreciation that electric cars have at the moment I'd be worried about being in negative equity come trade in time.

Where do you see this?
Current second hand EV values are very strong.
I could sell mine now (after ~9 months of ownership) for what I paid for it.

grogi

ELM327 wrote: »

Where do you see this?
Current second hand EV values are very strong.
I could sell mine now (after ~9 months of ownership) for what I paid for it.

Did you buy new?

EV have very steep depreciation at the begining - as the new technology is constantly coming out pressuring the older cars down. But once they get 3 yrs old and cost in €8-12k territory and the cars are good enough, there is hardly any further depreciation.

ELM327

grogi wrote: »

Did you buy new?

EV have very steep depreciation at the begining - as the new technology is constantly coming out. But once they get 3 yrs old and cost in €8-12k territory, there is hardly any further depreciation.

No I bought at 2 years old for 12k

My exact model (2014, SVE,6.6 charger) are being listed now at 13-13.5-14 on donedeal. 9 months after my purchase I could potentially sell without loss. Crazy for a 2/3 year old car.

Anyone buying brand new will always lose money.

jameshayes

TiltedBrain wrote: »

Hi All,

I got a Seat Leon FR about 13 months ago on PCP for about 27k, at the time I was in 2 minds about getting an electric car but there was no options available that suited me with range anxiety etc. However the Hyundai Ioniq (28k) now boasts 200km range and I think that this suits me ideally.

I don't know where I now stand with my current PCP deal thou, do I need to see out my 3 years on the Leon or is there anyway I can trade the Leon against the Ioniq and move the finance? I've had the Leon independently valued at 24k trade in value if that makes any difference.

You can action the 'voluntary termination' clause on your Leon, means you can walk away after 1/2 of the PCP term has passed (you'll either have to pay the extra 5 months or wait it out).. not the best idea financially but it might suit you. All you need to do is ring seat, ask for the VT form and send it back, they will arrange a person to come inspect the car and take it back.

ELM327

OSI wrote: »

So not really relevant to someone looking to buy a new Ioniq on finance then?

Relevant as far as the expected 3 years valuation/depreciation anyway.

jca

ELM327 wrote: »

No I bought at 2 years old for 12k

My exact model (2014, SVE,6.6 charger) are being listed now at 13-13.5-14 on donedeal. 9 months after my purchase I could potentially sell without loss. Crazy for a 2/3 year old car.

Anyone buying brand new will always lose money.

Listed but not selling, anyone with 2 brain cells wanting a 2 year old leaf is going to the UK

ELM327

jca wrote: »

Listed but not selling, anyone with 2 brain cells wanting a 2 year old leaf is going to the UK

Yes, however the supply of ex lease leafs (which was keeping the supply high and price low) in the UK has ended. The UK are seeing price stability. The days of £6k (non flex) leafs in the UK is over for now.

grogi

jca wrote: »

Listed but not selling, anyone with 2 brain cells wanting a 2 year old leaf is going to the UK

Not anymore. That's why we see the price increase here as well.

mickdw

jameshayes wrote: »

You can action the 'voluntary termination' clause on your Leon, means you can walk away after 1/2 of the PCP term has passed (you'll either have to pay the extra 5 months or wait it out).. not the best idea financially but it might suit you. All you need to do is ring seat, ask for the VT form and send it back, they will arrange a person to come inspect the car and take it back.

You can but depending on how much you paid up front, you may have some bit of equity in the Leon. Get settlement figure and if that figure is let than trade in value, you are winning versus just handing it back. You are still losing out though as you will be taking all the first year high depreciation hit so whereas if you see out the 3 years you will likely have 15 percent deposit via equity in this car, at this stage you will have very little.

cros13

OSI wrote: »

So not really relevant to someone looking to buy a new Ioniq on finance then?

Actually. Used Ioniqs are currently selling for ~€1-2k more than new... because there's an EU-wide shortage of stock not expected to ease until into 2018.

EV values are creeping up from the bottom of the market. So few cars were sold new that there is high demand chasing those cars in the used market as awareness of EVs grows. Prices were partially kept in check by a lot of UK cars coming off lease over the past 18 months but they are drying up now.

grogi

cros13 wrote: »

Actually. Used Ioniqs are currently selling for ~€1-2k more than new... because there's an EU-wide shortage of stock not expected to ease until into 2018.

But that's far from normal as well. Supply issues will get eventually resolved and the resale prices will plummet.

Irish Gunner

Question about PCP finance that may have been answered but cannot trawl through the thread

We are in the market for a new car and either looking at a Seat Ateca (about €25k+) or the Skoda Karoq(no price cost yet). We are trading in a Golf 08 GT Sports with 50k on it and a 05 Honda 1.5 with close to 200k. So we don’t know how much we can get or how much extra we can afford to put in, until we see trade in value. However Miss Gunner does a lot of miles for work while I don’t. We are both in full time employment and not going to stretch the budget but want to keep payments steady if possible so we can budget. Also we would like to keep the car for a bit so questions:

Is the only option to have the car for 3 years ?

After 3 years do we have to put in another 10% deposit to upgrade?

Does the payment increase/ decrease if in first year we don’t do high mileage but second year yes (as miss gunner will go back to work)?

Trying to decide what is better in the long run and if it’s a case of putting more money in to get a Credit Union or Bank loan this is an option, with the fact that the cars will be ours. What are the other things to watch out for in the small print of a PCP

Anything else I need to consider?

JoeA3

Irish Gunner wrote: »

Is the only option to have the car for 3 years?

You can keep the car for however long you like.
If after the 3 year period you are happy to keep the car, then you just pay off (or re-finance) the GMFV figure. In that scenario it doesn't matter a fiddlers what mileage you have on the car. The dealer won't care! Mileage you've clocked up is only a concern if you are trading up to a new model and they are determining the trade in value of your car. Whatever amount that trade in value is over and above the GMFV is your deposit (or part deposit) for the new car. Higher mileage / rougher condition inevitably means this amount will be lower.

Conversely, you could decide to change the car sooner than 3 years. In that case, the dealer will get the final settlement figure for your car. What they consider the car is worth to them as a trade in minus that settlement figure is your equity (deposit for next car).

veryangryman

Hey

Approaching the back end of my PCP deal and going to buy the car.

How do you pay? Do you need to visit the garage or can they just call ya and do the payment over the phone?

Lantus

veryangryman wrote:

How do you pay? Do you need to visit the garage or can they just call ya and do the payment over the phone?

Well you should call them. I would imagine they would be happy to offer their finance but you should also look at other options. Cash, credit union loan, bank loan etc. You will need to go in as with any other large financial transaction at some point.

bazz26

veryangryman wrote: »

Hey

Approaching the back end of my PCP deal and going to buy the car.

How do you pay? Do you need to visit the garage or can they just call ya and do the payment over the phone?

The dealer should be able to get you a settlement fee from the finance company, when you do this you should automatically receive a letter of the same from the finance company. You just pay the finance company the settlement figure. Just get them to issue you a settlement letter afterwards stating the finance is settled no longer have an interest in the vehicle.

DaveyDave

Hi all,

I'm sure this has been answered in some form but I don't know where to start in this thread. With a €6,500 deposit on a Golf Highline I was looking at payments of €372 but with haggling I got it down to €322. The deposit is fairly high, I think it was 22%.

I've read people saying if you put in 25-30% you're in for a shock when swapping to a new car, why is this? The minimum value is the same isn't it? Therefore if the car is in good condition the excess should be the same and can be used as a deposit for the next car?

I can afford to lower my deposit and pay closer to €400 if needed, I just want to put myself in the best position to get a new car in 3 years. I'll most likely be going for the 150bhp Golf, which isn't too much more expensive than the 110bhp I'm getting. I'm just a bit confused about why 25-30% deposit now is bad for your deposit on the next car?