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PCP finance.

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Comments

  • #1922
    maidhc
    Registered Users, Registered Users 2 Posts: 7,734 ✭✭✭maidhc


    Lantus wrote: »
    So how did the dealer explain this?

    As the main deposit is 10% did they indicate that an additional 6pc would be needed to roll over?

    What was your reaction? (I'd blow a fuse...) And if you don't mind what make and model is this?

    Why blow a fuse? If you actually do the sums this is how things calculate. You can't have a €30,000 car for €300pm. If you simply take the lifespan of a car as 7 years (not unreasonable imo given Revenue rules), the capital cost is €360pm forgetting the cost of credit.


  • #1923
    Cyrus
    Registered Users, Registered Users 2 Posts: 20,932 ✭✭✭✭Cyrus


    dil999 wrote: »
    As I mentioned before, I think the A5 has higher residual %s than a standard family car. Also with a 50K Merc the dealer has a tonne of margin to play with. So your deposit was probably a mixture of excess value of trade in and discount.

    My own experiece of trading in a 151, 30K common or garden family car was a 15K trade in (real trade in value) vs 13.7K left to pay off, so I had 1.3K to add to my deposit. That 1.3K is approx 4% of the value of the car. If anyone is thinking 10% to 15% they will be sorely dissapointed at the end of their term.

    i think you over estimate the margin on new cars for dealers, and i have some pretty reliable information on that front.

    i take your point re the a5 versus say a mondeo but i can only put forward my recent experience.


  • #1924
    dil999
    Registered Users, Registered Users 2 Posts: 672 ✭✭✭dil999


    Lantus wrote: »
    So how did the dealer explain this?

    As the main deposit is 10% did they indicate that an additional 6pc would be needed to roll over?

    What was your reaction? (I'd blow a fuse...) And if you don't mind what make and model is this?

    I changed from a Mondeo to a Passat. The trade in value was exactly the same with the ford dealer for a new Mondeo, It was more or less what I was expecting.

    Wrt PCP the concept of roll over is meaningless. The loan is the loan and has to be paid off. The trade value of the car is the trade value of the car and you won't get a penny more for it. You are starting again with a new loan for a new car.

    You may get a trade in higher than the GMFV, you may not. You may sell the car for for more than your GMFV, you may not. The only thing you are guaranteed is that the maximum you will have to pay at the end is the GMFV.


  • #1925
    dil999
    Registered Users, Registered Users 2 Posts: 672 ✭✭✭dil999


    Cyrus wrote: »
    i think you over estimate the margin on new cars for dealers, and i have some pretty reliable information on that front.

    i take your point re the a5 versus say a mondeo but i can only put forward my recent experience.

    There is the dealers margin, and then there is the list price vs the recommended selling price. The latter is generally 5% to 10% and with some brands it can be more. I don't have experience buying Mercs but perhaps the list versus recommended is at the lower end for the luxury brands.


  • #1926
    vintagevrs
    Registered Users, Registered Users 2 Posts: 3,398 ✭✭✭vintagevrs


    dil999 wrote: »

    Wrt PCP the concept of roll over is meaningless. The loan is the loan and has to be paid off. The trade value of the car is the trade value of the car and you won't get a penny more for it. You are starting again with a new loan for a new car.


    Well said


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  • #1927
    MidMan25
    Closed Accounts Posts: 1,027 ✭✭✭MidMan25


    I find it hard to see dealers ending up in a situation where people are coming back to them at the end of the 3 years and they are having to tell them that they'll need to find 10% deposit (2 - 3k for the average family car) as they don't have any equity in their own. This scenario would make a new car a much harder sale and would lead to more people just refinancing the remainder which is not good for the manufacturer or dealer.
    Having said that, if someone offered me 10% equity when I trade in my car next year, i'd bite their hand off!


  • #1928
    maidhc
    Registered Users, Registered Users 2 Posts: 7,734 ✭✭✭maidhc


    MidMan25 wrote: »
    I find it hard to see dealers ending up in a situation where people are coming back to them at the end of the 3 years and they are having to tell them that they'll need to find 10% deposit (2 - 3k for the average family car) as they don't have any equity in their own. This scenario would make a new car a much harder sale and would lead to more people just refinancing the remainder which is not good for the manufacturer or dealer.
    Having said that, if someone offered me 10% equity when I trade in my car next year, i'd bite their hand off!

    Manufacturers will just need to discount. Not really a sustainable solution for anyone as is is just a vicious cycle.

    The discounts are flying already. I got a 10% or so discount on a 172 Astra. The dealer we bought from was honest enough to say it was a discount and we were getting about €800 for the trade in. The other tried to convince us he was giving 4K for an 06 Astra that had 300k on the clock, no NCT and a failed ABS unit.

    Expand the figures to Mercedes money and you see what is happening!


  • #1929
    Lantus
    Registered Users, Registered Users 2 Posts: 3,027 ✭✭✭Lantus


    Duffryman wrote:
    Think we'll go see about a test drive.....

    MidMan25 wrote:
    I find it hard to see dealers ending up in a situation where people are coming back to them at the end of the 3 years and they are having to tell them that they'll need to find 10% deposit (2 - 3k for the average family car) as they don't have any equity in their own. This scenario would make a new car a much harder sale and would lead to more people just refinancing the remainder which is not good for the manufacturer or dealer. Having said that, if someone offered me 10% equity when I trade in my car next year, i'd bite their hand off!


    Agreed, I'd just refinance for 3 years and then trade in the car after that. I don't have magic cash in addition to the car. Even if people ventured back into a new car that's a 50% drop in new car sales.

    We had no issue with Mrs lantus car in Jan. Just started a new deal with slightly higher monthlys reflecting a very slight increase in car price and a slightly higher deposit initially. (18 to 20pc from memory.)

    She wants to keep car anyway which is fine and I am not fussed either way.


  • #1930
    mickdw
    Registered Users, Registered Users 2 Posts: 23,917 ✭✭✭✭mickdw


    dil999 wrote: »

    My own experiece of trading in a 151, 30K common or garden family car was a 15K trade in (real trade in value) vs 13.7K left to pay off, so I had 1.3K to add to my deposit. That 1.3K is approx 4% of the value of the car. If anyone is thinking 10% to 15% they will be sorely dissapointed at the end of their term.
    You traded in early. That makes little sense. That has to be costing you additional money plus a mondeo was never going to be a winner in terms of retained value.
    Id wager if you keep your passat 3 years, you will have more than 1.3k equity. If on the other hand you sell after 18 months, you probsbly wont break even.


  • #1931
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    mickdw wrote: »
    You traded in early. That makes little sense. That has to be costing you additional money plus a mondeo was never going to be a winner in terms of retained value.
    Id wager if you keep your passat 3 years, you will have more than 1.3k equity. If on the other hand you sell after 18 months, you probsbly wont break even.

    Not necessarily. I think trading in early makes sense if you do more mileage. I plan to trade after 2 years. My PCP is on second hand 2 year old car.


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  • #1932
    dil999
    Registered Users, Registered Users 2 Posts: 672 ✭✭✭dil999


    mickdw wrote: »
    You traded in early. That makes little sense. That has to be costing you additional money plus a mondeo was never going to be a winner in terms of retained value.
    Id wager if you keep your passat 3 years, you will have more than 1.3k equity. If on the other hand you sell after 18 months, you probsbly wont break even.

    Thats a myth. Mondeo's residual % are slightly higher than the equivalent Passat. I'll take your wager and double you.
    I did extensive research into the trade in values before I changed, including with some friends in the trade, I am more than confident that I hit the sweet spot in terms of trade in.
    I know that residuals are a little higher in Ireland, but here's a link to WV's UK fleet management site where they compare cost of ownership of different brands. Compare the Passat residuals vs Mondeo residuals

    http://www.volkswagencomparison.co.uk/private-customer?kee=530691


  • #1933
    lcstress2012
    Registered Users, Registered Users 2 Posts: 609 ✭✭✭lcstress2012


    Quick question about pcp. I have a 171 Ford Fiesta on pcp at the end of the 36 months the guaranteed minimum future value (gmfv) of the car is €7,000. If I want to keep the car do I have to pay if the gmfv in full or can I pay it by the month ?


  • #1934
    Cyrus
    Registered Users, Registered Users 2 Posts: 20,932 ✭✭✭✭Cyrus


    lcstress2012 wrote: »
    Quick question about pcp. I have a 171 Ford Fiesta on pcp at the end of the 36 months the guaranteed minimum future value (gmfv) of the car is €7,000. If I want to keep the car do I have to pay if the gmfv in full or can I pay it by the month ?

    you would have to refinance it with someone,

    dealer will do it for you im sure, but check around for the best interest rate


  • #1935
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    lcstress2012 wrote: »
    Quick question about pcp. I have a 171 Ford Fiesta on pcp at the end of the 36 months the guaranteed minimum future value (gmfv) of the car is €7,000. If I want to keep the car do I have to pay if the gmfv in full or can I pay it by the month ?

    You can finance it with credit union or bank. Which ever suits you better.


  • #1936
    jca
    Closed Accounts Posts: 8,585 ✭✭✭jca


    lcstress2012 wrote: »
    Quick question about pcp. I have a 171 Ford Fiesta on pcp at the end of the 36 months the guaranteed minimum future value (gmfv) of the car is €7,000. If I want to keep the car do I have to pay if the gmfv in full or can I pay it by the month ?

    Surely you should have researched this before entering the deal, but to answer your question, yes you can re-finance the outstanding amount, the interest rates can be higher so make sure to ask as you might get better rates from other lenders.


  • #1937
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    jca wrote: »
    Surely you should have researched this before entering the deal, but to answer your question, yes you can re-finance the outstanding amount, the interest rates can be higher so make sure to ask as you might get better rates from other lenders.

    You are correct here. It should be researched. However it is also another example that salesmen do not provide full information on how PCP works.

    In example, I was told that I can do top up to balloon payment during 3 year contract. When I rang VW bank they told me that they used to do that but not anymore. I let the salesman know about it. I would expect they would be up to date with the lending terms and conditions.


  • #1938
    mickdw
    Registered Users, Registered Users 2 Posts: 23,917 ✭✭✭✭mickdw


    dil999 wrote: »
    Thats a myth. Mondeo's residual % are slightly higher than the equivalent Passat. I'll take your wager and double you.
    I did extensive research into the trade in values before I changed, including with some friends in the trade, I am more than confident that I hit the sweet spot in terms of trade in.
    I know that residuals are a little higher in Ireland, but here's a link to WV's UK fleet management site where they compare cost of ownership of different brands. Compare the Passat residuals vs Mondeo residuals

    http://www.volkswagencomparison.co.uk/private-customer?kee=530691

    Whats all this uk stuff. This is Ireland.
    So you dont believe your passat will be worth more than 1300 above gfv at 3 years old? Do you do huge mileage or do you destroy your cars?
    Im talking trade in offer against a new vw, not price within the trade!
    Trading early might seem like a good idea but alot of people dont realise that they are after throwing their deposit away over 2 years instead of 3 years by going back early. It can make sense if there is good equity over and above amount owed being offered or if your model is soon to be obsolete but in the case of little equity being available, trading in early is lunacy.


  • #1939
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    mickdw wrote: »
    Whats all this uk stuff. This is Ireland.
    So you dont believe your passat will be worth more than 1300 above gfv at 3 years old? Do you do huge mileage or do you destroy your cars?
    Im talking trade in offer against a new vw, not price within the trade!
    Trading early might seem like a good idea but alot of people dont realise that they are after throwing their deposit away over 2 years instead of 3 years by going back early. It can make sense if there is good equity over and above amount owed being offered or if your model is soon to be obsolete but in the case of little equity being available, trading in early is lunacy.

    New deposit should be smaller if you trade earlier. 2 year old car would be worth more than 3 years old. Have a look at this post. Guy traded 151 A6 for 171 A6 with higher spec paying 1250e.


  • #1940
    maidhc
    Registered Users, Registered Users 2 Posts: 7,734 ✭✭✭maidhc


    artheb wrote: »
    New deposit should be smaller if you trade earlier. 2 year old car would be worth more than 3 years old. Have a look at this post. Guy traded 151 A6 for 171 A6 with higher spec paying 1250e.

    Sweet mother of Jesus. He also commited to at least a year and a half of payments, maybe 10k or more.

    The aim should be to not have a monthly repayment!


  • #1941
    morrga
    Registered Users, Registered Users 2 Posts: 553 ✭✭✭morrga


    PCP is disguised as a rental scheme designed to provide repeat business every 3 years. Over 15 years you could have 5 cars and never owned it once yet made a repayment every month for 180 months.

    Get a credit union loan and at least have the option of owning it outright.

    Second hand market is going to be a dream for buyers in 2/3 years as the first batch of cars come on to the market.


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  • #1942
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    maidhc wrote: »
    Sweet mother of Jesus. He also commited to at least a year and a half of payments, maybe 10k or more.

    The aim should be to not have a monthly repayment!

    Sorry if I missed the point but are we not talking about PCP rollover? I am talking about moving from one PCP to another PCP with as little new deposit as possible. What are you talking about?


  • #1943
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    morrga wrote: »
    PCP is disguised as a rental scheme designed to provide repeat business every 3 years. Over 15 years you could have 5 cars and never owned it once yet made a repayment every month for 180 months.

    Get a credit union loan and at least have the option of owning it outright.

    Second hand market is going to be a dream for buyers in 2/3 years as the first batch of cars come on to the market.

    First batch of the cars have already hit the market.


  • #1944
    Cyrus
    Registered Users, Registered Users 2 Posts: 20,932 ✭✭✭✭Cyrus


    maidhc wrote: »
    Sweet mother of Jesus. He also commited to at least a year and a half of payments, maybe 10k or more.

    The aim should be to not have a monthly repayment!

    did he not get a brand new car?


  • #1945
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    Cyrus wrote: »
    did he not get a brand new car?

    He did.


  • #1946
    Cyrus
    Registered Users, Registered Users 2 Posts: 20,932 ✭✭✭✭Cyrus


    morrga wrote: »
    PCP is disguised as a rental scheme designed to provide repeat business every 3 years. Over 15 years you could have 5 cars and never owned it once yet made a repayment every month for 180 months.

    Get a credit union loan and at least have the option of owning it outright.

    Second hand market is going to be a dream for buyers in 2/3 years as the first batch of cars come on to the market.

    so you rent a car for 15 years, over the 15 years you have 5 new cars, all covered by warranty, potentially never have to buy a set of tyres or have any unforeseen expense

    no one is saying its the cheapest way of doing it, buts convenient.

    if you want to be pragmatic everyone should be buying from the luxobarges thread (which is where id go if i needed a second car)


  • #1947
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    Cyrus wrote: »
    so you rent a car for 15 years, over the 15 years you have 5 new cars, all covered by warranty, potentially never have to buy a set of tyres or have any unforeseen expense

    no one is saying its the cheapest way of doing it, buts convenient.

    if you want to be pragmatic everyone should be buying from the luxobarges thread (which is where id go if i needed a second car)

    Exactly! That's why I think it is suitable for those who need reliability. I dont mind paying for using the car. I do mind paying for repairing it.


  • #1948
    R.O.R
    Registered Users, Registered Users 2 Posts: 12,732 ✭✭✭✭R.O.R


    maidhc wrote: »
    The aim should be to not have a monthly repayment!

    Why?


  • #1949
    maidhc
    Registered Users, Registered Users 2 Posts: 7,734 ✭✭✭maidhc


    Cyrus wrote: »
    so you rent a car for 15 years, over the 15 years you have 5 new cars, all covered by warranty, potentially never have to buy a set of tyres or have any unforeseen expense

    Woe betide droppping €800 on a set of tyres?

    At the end of 15 years you have dropped probably €120k with nothing to show for it. My father has an 02 Avensis from new, in 15 years it has cost €25k plus the odd set of tyres, oils and a second hand gearbox. I'm not saying driving a 15 year old Avensis is for everyone, but pcp shouldn't be sold as a CHEAP way to own a car.

    Incidentally the cheapest way to run a car I think is to buy new or very fresh for cash, maintain it well, and run it into retirement.
    R.O.R wrote: »
    Why?

    Maybe old fashioned, but I personally prefer to own my car outright. I'm all for borrowing for commercial reasons, and have a few business loans for buildings etc, but I'll pass on something as frivolous as a car. It is only a step away from buying a new washing machine on the drip...


  • #1950
    Cyrus
    Registered Users, Registered Users 2 Posts: 20,932 ✭✭✭✭Cyrus


    maidhc wrote: »
    Woe betide droppping €800 on a set of tyres?

    At the end of 15 years you have dropped probably €120k with nothing to show for it. My father has an 02 Avensis from new, in 15 years it has cost €25k plus the odd set of tyres, oils and a second hand gearbox. I'm not saying driving a 15 year old Avensis is for everyone, but pcp shouldn't be sold as a CHEAP way to own a car.

    Incidentally the cheapest way to run a car I think is to buy new or very fresh for cash, maintain it well, and run it into retirement.



    Maybe old fashioned, but I personally prefer to own my car outright. I'm all for borrowing for commercial reasons, and have a few business loans for buildings etc, but I'll pass on something as frivolous as a car. It is only a step away from buying a new washing machine on the drip...

    I wouldn’t want to drive an avensis for 15 years personally

    Who said it’s cheap ? Anyone that thinks buying a new car is cheap is mad

    But your argument isn’t against pcp it’s against buying new cars and the frivolity of it (in your mind )

    I’ve run plenty of old cars generally performance ones so things like tyres and servicing meant they cost 2-3k a year to run besides the expensive insurance tax and fuel costs and I’ll do it again but in our current situation where we have one car pcp makes sense for us


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  • #1951
    artheb
    Registered Users, Registered Users 2 Posts: 106 ✭✭artheb


    maidhc wrote: »
    Woe betide droppping €800 on a set of tyres?

    Incidentally the cheapest way to run a car I think is to buy new or very fresh for cash, maintain it well, and run it into retirement.

    .

    Maybe you are one of those who have 30k laying around to be thrown on the car which will drop 50% of it's value within 3 years. That is ok. However not everyone can do that or does not want to do that or both. 0% APR is just build for that purpose. You can own the new car and paying for it as you use with 0% APR.

    Maybe you are old fashioned. It is just a matter of time when you will see more goods sold as a service. You don't buy mobile phone, you don't buy skybox, you can have cloud storage instead of home server. You don't need to buy servers, you rent them either on premise or in the cloud.

    Car is a service and that's why you have leasing for the companies. Since leasing is not allowed to private customers in Ireland they built PCP. Again I am not trying to convince you to PCP. I am just trying to show you a trend.


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