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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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Lantus

CIP4 wrote:

Out of curiosity what happens if your trade in is worth more than the 30% maximum deposit lets just say by 5K. Will there garage just give you back the excess and let you go ahead with a PCP deal with a 30% deposit ? But if they do does this put you in a bad position in terms of trade in value as in will they deliberately offer you less because they don't want to give you back money. As I know in the past garages in general don't want to give you back money but maybe in this scenario its different.

What is the deposit ratio for your car? Beyond 30pc your at a tipping point where traditional finance may be more beneficial. Look at the interest rates and see what works out best.

CIP4

Lantus wrote: »

What is the deposit ratio for your car? Beyond 30pc your at a tipping point where traditional finance may be more beneficial. Look at the interest rates and see what works out best.

I haven’t looked at any specific cars so not sure more of just a general question. But you are right in my case HP would probably make more sense with a high deposit.

CIP4

OSI wrote: »

They'll require a letter from your employer stating your a permanent employee. If you're still on probation you won't get finance.

When I got HP last year with VW bank I filled out the paper work and the only thing they came back to me looking for was 3 months of up to date statements sent them off and got approved. No pay slips or contract or letter from my employer actually back then I was probably still on probation. So I wouldn’t say there is a hard and fast rule on it.

arleitiss

Is used car PCP a thing? I keep seeing ads for pre-owned PCP deals from Audi, do people really go for those? It seems stupid to be paying for a 3 year old car for 3 years.

vandriver

arleitiss wrote: »

Is used car PCP a thing? I keep seeing ads for pre-owned PCP deals from Audi, do people really go for those? It seems stupid to be paying for a 3 year old car for 3 years.

Any more stupid than spending approx 60% of your disposable income on a new car?

mickdw

CIP4 wrote: »

Out of curiosity what happens if your trade in is worth more than the 30% maximum deposit lets just say by 5K. Will there garage just give you back the excess and let you go ahead with a PCP deal with a 30% deposit ? But if they do does this put you in a bad position in terms of trade in value as in will they deliberately offer you less because they don't want to give you back money. As I know in the past garages in general don't want to give you back money but maybe in this scenario its different.

They happily give a cheque back with any money over and above although it would be up to you to make sure you are getting suitable value much like trading in in any other scenario.
As long as you realise that you won't have 30 percent deposit in the car the next time round for another pcp, all is good.

twin_beacon

Augeo wrote: »

I dunno, summarises PCP nicely IMO ......

The deposit. ..........The bigger the deposit, the less you’ll have to pay each month.

The monthly payment. You’re essentially paying off the car’s depreciation here – not its value...........

The balloon payment. Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up.

This is not what the balloon payment is, and its where most of the confusion is. The balloon payment is the remaining finance that owed on the car, that needs to be paid off before the PCP contracted for that car can be ended.

Example, I enter into a PCP contract for a car worth €30k, if over the course of the 3 years, my monthly payments and initial deposit amounts to 66% of the value of the car, the GFMV (balloon payment) after 3 years will be the remaining third, €10k. That figure won't change, however its not what the car is worth, its the outstanding value of the car.

If you want to trade in your pcp car, and get a new one with your current pcp car as a trade in, then the value of your current car, minus the GFMV is your deposit.

[Deleted User]

twin_beacon wrote: »

This is not what the balloon payment is, and its where most of the confusion is. The balloon payment is the remaining finance that owed on the car, that needs to be paid off before the PCP contracted for that car can be ended.

Example, I enter into a PCP contract for a car worth €30k, if over the course of the 3 years, my monthly payments and initial deposit amounts to 66% of the value of the car, the GFMV (balloon payment) after 3 years will be the remaining third, €10k. That figure won't change, however its not what the car is worth, its the outstanding value of the car.

If you want to trade in your pcp car, and get a new one with your current pcp car as a trade in, then the value of your current car, minus the GFMV is your deposit.

lol, balloon payment is self explanatory.
The speel you quoted is "Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up", not at all incorrect.

It's the minimum they reckon the car will be worth when the PCP is up.

Like, GFMV stands for ?????

acronym Chilli

Augeo wrote: »

lol, balloon payment is self explanatory.
The speel you quoted is "Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up", not at all incorrect.

It's the minimum they reckon the car will be worth when the PCP is up.

Like, GFMV stands for ?????

That's probably the thinking, but there's assumptions there.

Two things are categorical:

It is the outstanding finance at the end of the 3 year process, so it's the amount you need to pay to clear the finance and drive away debt free.
It is the minimum amount they will take off the outstanding finance at the end if you hand back the car instead (subject to specific conditions on mileage/wear-and-tear/maintenance/etc.,)

The second of those indicates that they probably think the car will have a value in and around that at the end. It's like committing to buying the car back for a particular minimum price in 3 years. However, I'd need to look some more at the details and overall business model and incentives to work out if anything confounds that line of reasoning.

Thinking through outcomes:

Say the cars all tend to be worth a good bit more than GFMV at the end, then you've got lots of equity, and you've overpaid the depreciation (i.e. front-loaded... you've not lost anything). Probably you can actually afford a better car than you thought.
Say it's the other way and they trade at and below GFMV: no equity, means cars have depreciated more quickly, probably means that more should go for 3 year used cars.

[Deleted User]

arleitiss wrote: »

Is used car PCP a thing? I keep seeing ads for pre-owned PCP deals from Audi, do people really go for those? It seems stupid to be paying for a 3 year old car for 3 years.

Most people can't afford a 3 year old car outright, sure many are still over 20k so I'd rather be paying a 3 year low interest pcp for 3 years than a normal high rate loan.

Also nothing stopping you reading up before 3 years.

KFed

Has anyone got concrete examples on a pcp on a 3year old car?

If theyre offering 3y pcp on a 3year old, after that is up, what sort of gfmv are they offering? Im guessing brands like audi, that presumably so not retail 6yo stock on their main dealer network, are going to fairly low ball that gfmv to ensure the cars dont come back, or, have some other onerous return conditions?

Ive always thought the main draw of pcp on new was to keep monthly repayments low with the baloon on the back end and possibly a high (up to 30%?) deposit on the front end.

If youre financing a 3yo, im guessing volkswagen bank is not going to take any risk on 6yo stock coming back so are the deposits up front allowed to be larger (say 50% of the retail on the car) in order to force the gfmv down farther?

At 6yo most cars are almost guaranteed to be old model and 'high' mileage and woukd have to be sold on into the trade if they were to come back to audi.

Are they happy enough to do this if the buyers come back and take another 3yo on pcp? Woukd be interested to see an example to know what the customer buying the 3yo is repaying over their term and what sort of cost to change theyd be looking at to repeat the deal in 3y time...

Could be a very smart deal in fairness for the punter buying the 3yo on pcp. Conceivably they could get a current model, low mileage, good condition warrantied main dealer car, run it for 3y after someone else has taken the biggest hit on depreciation, have 3 light years maintenance wise and then move it on knowing at the outset definitively what it stands to lose them in that time...

It has its advantages to be fair.

It all depends on what the pcp is available on at that vintage and what the numbers are mind.

They could be shafting you on gfmv either, but youd know that in advance to be fair!

mickdw

Duplicate post

mickdw

I enquired about a 3 to 4 year old audi a7 from main dealer.
In my opinion, the used car pcp did not work.
I intended to hp the car over 5 years with about 30 percent deposit upfront.
Dealer made that deal so bad with crap finance rates that it was not a runner so I looked at the pcp option. Again the rate was not great and they would only do it for a 2 year pcp. Looking at the deal in front of me, I felt I would be putting in 8 to 10k deposit and paying maybe 400 per month for 2 years and I figured there was a good chance I'd get little or nothing back at end of term in terms of equity in car and I didn't fancy having to pay about 15k to buy out a 6 year old audi at end of term.
I think getting a slightly used car that is a fresh model and got at a very low rate would be the sweet spot.
It's also worth saying that while many of the independant trade now offer PCP, the rates are anywhere from 5.9 to 8.9 for people with good credit history making those terrible deals.

carsfan2

mickdw wrote: »

I enquired about a 3 to 4 year old audi a7 from main dealer.
In my opinion, the used car pcp did not work.
I intended to hp the car over 5 years with about 30 percent deposit upfront.
Dealer made that deal so bad with crap finance rates that it was not a runner so I looked at the pcp option. Again the rate was not great and they would only do it for a 2 year pcp. Looking at the deal in front of me, I felt I would be putting in 8 to 10k deposit and paying maybe 400 per month for 2 years and I figured there was a good chance I'd get little or nothing back at end of term in terms of equity in car and I didn't fancy having to pay about 15k to buy out a 6 year old audi at end of term.
I think getting a slightly used car that is a fresh model and got at a very low rate would be the sweet spot.
It's also worth saying that while many of the independant trade now offer PCP, the rates are anywhere from 5.9 to 8.9 for people with good credit history making those terrible deals.

Thought Audi offer 2.9% on used pcp?

mickdw

So did I.
Well they do if you do it on their terms. Had to be under 2 years old to get the best rate.
Had to be hp over 4 years to get 3.9
5.9 on 5 year hp.
Pcp only allowed over a 2 year term due to age of car. I can't remember the rate they offered but it wasn't great.
It was almost like they did everything they could to make it hard to buy the car and that was me walking in without a trade in.
This is the saga of the 24 month pcp. They emailed on a PCP quote as I didn't hang around which clearly said 36 x monthly payments. When I did my own figures it was way off. I was over paying by about 5 or 6k.
When they rang to follow up, told salesman they either made a mistake or were charging 10 percent interest. Finance guy calls and tells me I wouldn't be able to calculate a pcp and that it is quite complex and you have to account for gfv etc. I confirmed that I was happy with my calculations. He again stressed that it's complex. Only after I firmly told him his figures were wrong did he say this is obviously a 24 month deal. Note their quote clearly detailed 36 x monthly.
24 month hadn't been mentioned until that point.

carsfan2

That is a poor experience alright.
Maybe they are more focused on getting new deals for 181? Although a sale is a sale.
A one year old car at 2.9 could be good deal but when I see one year old Audi’s for sale in Audi garages they are priced too close to a new car to make sense.

[Deleted User]

mickdw wrote: »

I enquired about a 3 to 4 year old audi a7 from main dealer.
In my opinion, the used car pcp did not work. .................

I suppose the Q7 depreciation curve is quite steep, market for a 6 year old Q7 is tiny to be fair so it'd be hard for the pcp to be anything but unattractive as GFMV will be low and the depreciation high.

carsfan2

Anybody know if BMW do pcp on nearly new cars i.e. less than a year old?
Can't see anything on their website .
thanks.

XsApollo

Yea they do.

sheff the ref

Seat Ireland are offering certain models at 0% VAT this weekend for Black Friday

I am currently on 0% finance with PCP with a Seat Ibiza. The Seat Leon is the only suitable model on 0% VAT. I am 18 months into my PCP with almost 80,000km and had intended buying out the car anyway after 3 years. I am unsure if the new car would be 172 or 181 but I presume it would be 172 Old Model.

To get a new car I wouldnt get 0% PCP finance as well as 0% VAT but I would get 3.9% PCP finance. Will enquire more tomorrow but I think that 0% VAT is a great deal in any mans language. However I hadn't really budgeted for change at the moment. Sometimes though you have to step back and consider your options.

Casati

sheff the ref wrote: »

Seat Ireland are offering certain models at 0% VAT this weekend for Black Friday

I am currently on 0% finance with PCP with a Seat Ibiza. The Seat Leon is the only suitable model on 0% VAT. I am 18 months into my PCP with almost 80,000km and had intended buying out the car anyway after 3 years. I am unsure if the new car would be 172 or 181 but I presume it would be 172 Old Model.

To get a new car I wouldnt get 0% PCP finance as well as 0% VAT but I would get 3.9% PCP finance. Will enquire more tomorrow but I think that 0% VAT is a great deal in any mans language. However I hadn't really budgeted for change at the moment. Sometimes though you have to step back and consider your options.

You've a 161 Ibiza with 80k on the clock to trade in? I'd say you'll need to prepared for a big shock - better to keep it as your on 0% finance unless its really too small for you?

copacetic

Is there any real options for a newish car except import or pcp?

I’m looking to change at the moment from a high spec 9 year old car and am being offered frankly incredible deals on high spec 181 Audi’s and Bmw. Massively inflated trade in values, loads of extra packs giving 10k or so of options and reasonable pcp deals.

On 3 year old cars, trade in is less than 50% but pcp is very affordable. Lose out on all the extra goodies though. However cars are about 20% over priced relative to imports (and some of them are imports!)

Most sensible thing seems to be selling car privately or at auction and going to uk, however the new car deals are very tempting. Am I missing something?

Interesting aside, I’m open to Petrol as diesel I believe will be out of vogue in 3 years. However the pcp deals are not a runner on petrol, same spec is roughly 2-3k cheaper in petrol. Gmfv is way down though so payments shoot up.

mickdw

Well if you are prepared to back your own hunch re diesel being out of vogue in 3 years, the petrol car could be the winner. The lower gfv while causing higher payments now could mean you do well at the end if petrol is in favour at that stage.
If you plan on buying out the car at the end, the petrol car will cost you less - that is a certainty.
I don't know what kind of deals you are getting but I've not seen any great offers from bmw or audi. I know they are offering a trade in for older diesels etc but most seem to up the interest rate when availing of such deals.

carsfan2

Please share what deals you have been offered on 181 pcp on Audi and Bmw.
I haven’t managed to do well.

copacetic

carsfan2 wrote: »

Please share what deals you have been offered on 181 pcp on Audi and Bmw.
I haven’t managed to do well.

I think the big difference to you guys is the trade in value, they are offering double to almost triple what they will offer against a 3 year old car. (Which is roughly auction price)

However this is on a nearly 10year old big engine car and I concentrated on audi

The other big difference on the brand new cars is the discount or else the included packs for low cost. So I estimate between the two you are getting a 15k to 18k discount on a 70k spec car.

These good deals would be why a 2-3 year old trade in value would be decimated I guess.

I’ve been agonising over it over night and came close to justifying it, but the offers of only auction value against a 3 year old car have made me see sense. They are charging 6-10k more than a landed UK 3 year old car.

Basically a pcp on a 3 year old is very low payments but at the end of it might still owe 15k. Importing with a loan is only slightly dearer a month and no outstanding cost in 3 year. More hassle but a no brainer (putting current car to auction)

carsfan2

I know the Audi a6 is coming with a lot of extras at the moment but that is because it is old design and a new model will be released in 2018.
Are you saying the dealers are offering you three times what your older car is actually worth as trade in to get you to sign up for pcp on a new car?

KFed

Can you give the figures on the bmw new v 3yo deal?

Makes sense a6 run out model having free extras thrown in to clear out the old stock. The g30 is a brand new model though, not sure why theyd be throwing in any free or heavily discounted extras?

Was looking at a dublin bmw dealer stock list. The asking on nearly new f10's (162) seems very strong. Low 40k asking for 162 m sport 520d.

In practice, are they discounting much off the asking on f10's? Havent pulled examples but woukd imagine for an f10 at least, if you can sell your own, uk import is the way to go financially by a material distance.

mickdw

They wouldn't be giving 3 times the true value of the trade in. Depending on value of trade in, they could well be giving 3 times the very poor offer given against a used car. So poor offer could be 3k with true value of 6k for example.
With diesel scrappage and available discount being thrown into trade in offer, they could be offering 9k for the trade in.
The interest rate would be my concern.
Are they changing the interest rate when offering the diesel scrappage?

copacetic

mickdw wrote: »

They wouldn't be giving 3 times the true value of the trade in. Depending on value of trade in, they could well be giving 3 times the very poor offer given against a used car. So poor offer could be 3k with true value of 6k for example.
With diesel scrappage and available discount being thrown into trade in offer, they could be offering 9k for the trade in.
The interest rate would be my concern.
Are they changing the interest rate when offering the diesel scrappage?

No need to guess I said in my post they offered auction value against a second hand car and double to triple that against a new one. Of course auction value == very poor offer to most people, but it's a reasonable way of comparing prices and it's what they will do with my car straight away, so it's likely to be actually what they will get for it. No mention of diesel scrappage, whether it's included or not without scrapping the car I don't know.

carsfan2

I’ve contacted 3 Bmw dealers about 171 5 series and can’t get a straight answer as to what apr they charge.
Anybody know?
I’m guessing it’s high.. so they aren’t forthcoming.