Returning a PCP car

Dakota Dan · 10-01-2018 04:35PM

retalivity wrote: »

Isnt one of the options at the end of a pcp contract to just hand the keys back, instead of a final balloon payment? Im in a pcp agreement, 3 yrs up end of march. Options available to me are
1) final lump sum payment 2) structure final payment over 2 yrs 3) use gfmv (or better) as a deposit towards a 181 and a new pcp contract. Or 4) hand back the keys and walk away with no car.
So sticking it out for another 18mths would mean handing it back for nothing instead of handing it back for an 11k penalty now? Is that an option here?

But she's gone over her mileage allowance which will mean penaltys.

Dakota Dan · 10-01-2018 07:00PM

Danbo! wrote: »

My point was that even though the salesman knew I was only using the pcp for convenience, he still put on the big show of “brand new car for flip all, you’d be stupid not to” etc.. I could imagine many people who cannot afford the car to be blinded by the low deposit and the heavy focus the salesman puts on repeating “only €xxx per month”

The easiest way to know the wind out of his sails would be to tell him cut the sales crap and ask him the total cost of the car including trade in and interest.

10-01-2018 07:27PM

munchkin_utd wrote: »

givyjoe , from what i gather, with BMW the minimum guaranteed final value is guaranteed and once the car is in good condition and not over mileage you can throw the keys back with only an admin fee.
https://www.bmw.ie/en/topics/owners/for-owners/bmw-financial-services/financing-your-bmw/bmw-select--pcp--finance.html

I've heard a lot of bad press about PCPs but honestly I dont get the problem.
You pay a deposit (or not as the case may be) , pay an amount per month, and throw back the car at the end of the period.
Wheres the scam ?

In England, many people have experienced reduced estimates of their car after the term _ some dealers are assessing the car with a fine tooth comb and deducting value for the smallest of issues.

Dakota Dan · 10-01-2018 07:30PM

rustynutz wrote: »

Her name is on the logbook, its hers to sell. The only problem she may have is the new owner may look for proof she has paid off remaining finance.

Same as selling your own house (rather than your neighbours) with an outstanding mortgage on it, people do it every day of the week.

If she sells the car with finance owed doesn't that mean that the new owner is liable to pay the outstanding finance?

Dakota Dan · 10-01-2018 07:37PM

frozenfrozen wrote: »

she's a primary school teacher on 35k

There must be something else going on with her budgeting but the thread has gone though that already

You're probably right though that they have just given her a 'go away' quote of 11k and handing the car back

She doesn't teach maths, that's for sure.

Dakota Dan · 10-01-2018 07:40PM

ForestFire wrote: »

Call the Guard's, someone sold a Car they did not own as were only renting:eek::D

Only joking, but good to see confirmation that at least this is a possible solution from exiting a PCP early.

Did you need to get any prior agreement from Car dealer/ Finance company?
Was there any penalties for paying back early?

THey paid off the balance first, did you miss that part?

James Bond Junior · 10-01-2018 07:49PM

35k gross is the key figure here, not 35k net. Affordable for her in theory but with the travel costs it puts it into a different league. I know of a teacher (not me) on similar money with an similiar PCP and they can well afford it. When we don't know the extra expenditure it's hard to judge.

When I first started teaching I wasn't earning much more (new v old entry payscales) and I could afford my first car loan at roughly the same amount as this girls PCP. I paid rent in a houseshare, went out 2/3 times a week and generally lived life as a young person not long out of college does. However I lived near enough school to walk if I wished so a tank of fuel could last weeks. It's all relative to peoples expenditure at the end of the day.

bazz26 · 10-01-2018 09:38PM

Dakota Dan wrote: »

If she sells the car with finance owed doesn't that mean that the new owner is liable to pay the outstanding finance?

No, it means the car is still the property of the finance company and they can repossess it.

awec · 10-01-2018 09:43PM

Pelvis wrote: »

Her salary is high enough, the problem is her commute is essentially doubling her costs.

Disagree.

Spending 25% of your gross annual salary on a car for three years, before you put a badge in the windscreen or a drop of fuel in the tank is crazy.

ForestFire · 11-01-2018 12:28AM

Dakota Dan wrote: »

THey paid off the balance first, did you miss that part?

Posters said selling was not possible to sell a car on finance, period.

It is possible, that was my point, and no you don't have to pay the balance first.... yes you have to get agreement (As one poster confirmed they done), or you get a bridging loan to pay balance, sell car and repay loan (As another poster done).

There are options to do this and its not a crime or fraud as some said...

mickdw · 11-01-2018 01:45AM

awec wrote: »

Disagree.

Spending 25% of your gross annual salary on a car for three years, before you put a badge in the windscreen or a drop of fuel in the tank is crazy.

Where you getting 25 of salary from.
The car is realiatically costing 3840 per year in repayments and abput 1k per year into deposit assuming 3k deposit and zero equity at end.
In normal circumstances, even with increased mileage you should have a car worth the gfv at the end. So about 5k per year. I think that is steep for a mini but not a crazy amount of money to keep a new easy to run warrantied car.

Guy:Incognito · 11-01-2018 02:38AM

ForestFire wrote: »

Posters said selling was not possible to sell a car on finance, period.
..

You're not selling a car that's on finance, you're selling a car you've just bought for cash. Try to keep up......

awec · 11-01-2018 11:38AM

mickdw wrote: »

Where you getting 25 of salary from.
The car is realiatically costing 3840 per year in repayments and abput 1k per year into deposit assuming 3k deposit and zero equity at end.
In normal circumstances, even with increased mileage you should have a car worth the gfv at the end. So about 5k per year. I think that is steep for a mini but not a crazy amount of money to keep a new easy to run warrantied car.

The car she bought is worth 27k.

No matter what way you do it, when you buy a 27k car you're going to pay 27k for it. PCP has an element of kicking the can down the road a bit with the fancy salesman talk that makes it seem like the car costs less because a lot of the cost is loaded at the end of the term.

It is pretty straightforward. Take the value of the car, divide it by the number of months you want to pay it back. Can you afford to pay this amount? If not, you can't afford the car. Ignoring the balloon payment at the end is just bad practice.

Guaranteed Future Value must be one of the most misleading terms in the retail business.

ForestFire · 11-01-2018 11:39AM

Guy:Incognito wrote: »

You're not selling a car that's on finance, you're selling a car you've just bought for cash. Try to keep up......

I think this is a bit pedantic,

People said it was not possible to sell a car mid PCP or on finance. They did not give any options or steps how you can do this, and pratically said it was impossible and not leagal as the car is not yours.

It's not impossible, you just need to follow a simple process.

How is saying otherwise helping the op by removing valid options to their issue.

mickdw · 11-01-2018 11:54AM

awec wrote: »

The car she bought is worth 27k.

No matter what way you do it, when you buy a 27k car you're going to pay 27k for it. PCP has an element of kicking the can down the road a bit with the fancy salesman talk that makes it seem like the car costs less because a lot of the cost is loaded at the end of the term.

It is pretty straightforward. Take the value of the car, divide it by the number of months you want to pay it back. Can you afford to pay this amount? If not, you can't afford the car. Ignoring the balloon payment at the end is just bad practice.

Guaranteed Future Value must be one of the most misleading terms in the retail business.

The mistake you are making is that she is not attempting to pay for the car over 3 years. If you want to work the true figures for the entire car, you should divide by 6 years and add alittle more interest because the vast majority on pcp who buy the car at the end will refinance the final payment, ok so 27k. Add anofher 3k interest to refinance the final payment thats now a 30k car paid for in full over 6 years. Again 5k per year. To buy a new car outright over 3 years from a small deposit position day one is going to be too expensive for 90 percent of car buyers. Before pcp many would have been taking 5 year hp. The pcp is similar just lets people cash out at three year stage because thats what suits dealers best in terms of sales.
So pcp and walking away at year 3 should cost cifca 5k per year to use the car. Pcp with buying outright will cost circa 5k per year for 6 years with ownership at end.

awec · 11-01-2018 12:12PM

mickdw wrote: »

The mistake you are making is that she is not attempting to pay for the car over 3 years. If you want to work the true figures for the entire car, you should divide by 6 years and add alittle more interest because the vast majority on pcp who buy the car at the end will refinance the final payment, ok so 27k. Add anofher 3k interest to refinance the final payment thats now a 30k car paid for in full over 6 years. Again 5k per year. To buy a new car outright over 3 years from a small deposit position day one is going to be too expensive for 90 percent of car buyers. Before pcp many would have been taking 5 year hp. The pcp is similar just lets people cash out at three year stage because thats what suits dealers best in terms of sales.
So pcp and walking away at year 3 should cost cifca 5k per year to use the car. Pcp with buying outright will cost circa 5k per year for 6 years with ownership at end.

6 years is far too long to be paying off a depreciating asset like a car.

If you get to balloon payment time, having paid for the car for three years and you realise you have to refinance for another 3 years this must surely set off alarm bells?

Stretching out the loan term as long as possible does not mean it magically becomes affordable.

mickdw · 11-01-2018 12:20PM

awec wrote: »

6 years is far too long to be paying off a depreciating asset like a car.

If you get to balloon payment time, having paid for the car for three years and you realise you have to refinance for another 3 years this must surely set off alarm bells?

Stretching out the loan term as long as possible does not mean it magically becomes affordable.

That is the reality of it. It is not true to say that she was trying to pay off a 27k car in 3 years.
She should have been aware that this is the reality she was facing.
Certainly in my own situation, were i to go pcp route, I would be uncomfortable with having that 3 year deadline wherr i would have to act. I much rather take out finance over whatever term and then hold the car for whatever length suits best financially.
Pcp works brilliantly for the dealers as most people when faced with financing the baloon or financing a new car will go for the new car.

ForestFire · 11-01-2018 12:29PM

mickdw wrote: »

That is the reality of it. It is not true to say that she was trying to pay off a 27k car in 3 years.
She should have been aware that this is the reality she was facing.
Certainly in my own situation, were i to go pcp route, I would be uncomfortable with having that 3 year deadline wherr i would have to act. I much rather take out finance over whatever term and then hold the car for whatever length suits best financially.
Pcp works brilliantly for the dealers as most people when faced with financing the baloon or financing a new car will go for the new car.

But why take finance for a car load at 7.5% (Best I could get 2 years ago), when I could get PCP finance at 3.9%, 1.9% or what i got in the end was 0% from Skoda?

You cannot beat 0% finance.

As I said previously, this does not mean you do not check that you can afford the total cost of the car in the first place.

And also you are aware and have a plan for the end of the PCP term, which could include saving, refinancing at Credit union, Upgrading to new PCP etc.

Added:-
I certainly wont be going into the dealer on the last day of my PCB and saying.... oh crap I need 10K to keep the car..... what can you do for me!!

I have already checked the liquidity after 2years with last service
I will be checking the private resale prices
I will be check trade in offers from all garages (not just Skoda)
I will be checking available interest rates, terms and monthly payments if I do keep the car and refinance over another 2-3years

All at least 6 months berfore PCP ends

awec · 11-01-2018 12:33PM

mickdw wrote: »

That is the reality of it. It is not true to say that she was trying to pay off a 27k car in 3 years.
She should have been aware that this is the reality she was facing.
Certainly in my own situation, were i to go pcp route, I would be uncomfortable with having that 3 year deadline wherr i would have to act. I much rather take out finance over whatever term and then hold the car for whatever length suits best financially.
Pcp works brilliantly for the dealers as most people when faced with financing the baloon or financing a new car will go for the new car.

Yea that makes sense from a dealers point of view.

If you're the sort of person who always wants to be paying for a car it must suit well. Otherwise the way it is structured makes it very easy to get sucked into a never-ending vortex of debt that is very difficult to get out of if you're not the sort of person who is good at managing money.

There is too much of an element of kicking the can down the road when it comes to the balloon payment. It's too easy to think "I'll deal with that in 3 years time" and this is where the problems arise.

givyjoe · 11-01-2018 12:35PM

mickdw wrote: »

That is the reality of it. It is not true to say that she was trying to pay off a 27k car in 3 years.
She should have been aware that this is the reality she was facing.
Certainly in my own situation, were i to go pcp route, I would be uncomfortable with having that 3 year deadline wherr i would have to act. I much rather take out finance over whatever term and then hold the car for whatever length suits best financially.
Pcp works brilliantly for the dealers as most people when faced with financing the baloon or financing a new car will go for the new car.

You're completely discounting the fact that dealers, in the vast majority. do not spell things out in black and white as people have here. If they did, PCP would most certainly not be as popular as it is. In fact they often 'cleverly' deflect away from that very fact... you're paying us 27k one way or another... that damn Guaranteed Minimum Future Value term being one of the main tools.

Danjamin1 · 11-01-2018 12:50PM

In fairness if anyone is going in to buy a car without having given thought to how they are financing it then it's on them. I'm on a PCP deal as it works well for what I want but I researched every last thing about it before I went in to the dealers. I agree dealers aren't always that clear or up front with the ins & outs of the arrangement but if it looks too good to be true then it probably is. If anyone honestly thinks they can buy a new €27k car and only pay €300 a month for 3 year to pay it back then they need to go back to school. This doesn't seem to be what the OP is saying though, it's more the running costs of the car due to the distance from the workplace that seems to be the problem rather than the price of the car.

ShadowHearth · 11-01-2018 01:33PM

Kailee Muscular Shrapnel wrote: »

The advice of sucking it up and refinancing the baloon at the end makes sense. Just make sure the car is serviced properly. Agree with asking for a raise in work.

On a general note, this is going to happen a lot. PCP really only suits people who do small milage and like new cars. You are also using your equity or deposit to make the repayment smaller rather than as a asset for the next car. Seems to me a lot of people who want or need a new car do big milage. There is a PCP bubble and its going to pop soon.....bring on the cheap second hand cars.

I actually dont agree that pcp only for people who do low millage. I already did 15k km in half year on mine.
The issue is not millage, issue is common sense and lack of planning.
Pcp was cheapest way to finance a car for me due to 0% apr and very good trade in.
Here comes planning and common sense: I am putting away 50eu each week to separate account that will cover the balloon in the end if I decide to buy it out. If not, I will still have 8k+ to toy around with idea of taking out another car. No surprises.

Ops gf did not planned or though about the future. Never did maths or had some savings for worst case scenario to cover payments for at least some amount of time.
I will agree with people here that it sounds mad to give car back and 11k on top of it. It does not sound right. Best solution right now is to suck it up and pay it off until 3 year term is finished and work the issue from there. If ops gf smart, she will already start putting away money for when time comes.

awec · 11-01-2018 01:39PM

ShadowHearth wrote: »

I actually dont agree that pcp only for people who do low millage. I already did 15k km in half year on mine.
The issue is not millage, issue is common sense and lack of planning.
Pcp was cheapest way to finance a car for me due to 0% apr and very good trade in.
Here comes planning and common sense: I am putting away 50eu each week to separate account that will cover the balloon in the end if I decide to buy it out. If not, I will still have 8k+ to toy around with idea of taking out another car. No surprises.

Ops gf did not planned or though about the future. Never did maths or had some savings for worst case scenario to cover payments for at least some amount of time.
I will agree with people here that it sounds mad to give car back and 11k on top of it. It does not sound right. Best solution right now is to suck it up and pay it off until 3 year term is finished and work the issue from there. If ops gf smart, she will already start putting away money for when time comes.

Yes, this is the smart way to do it if you go the PCP route.

In fairness it's not the dealers job to give you financial advice, but PCP does a great job of obfuscating the real cost of buying the car which is why it is much easier to market cars using it.

If you go into it with your eyes open and have crunched all the numbers you can work it well, but many don't. Then they realise in 3 years time that they're fed up paying for a car but they don't actually have any choice but to continue, either to finance their balloon payment or renew their PCP.

MarkN · 11-01-2018 01:42PM

ShadowHearth wrote: »

I am putting away 50eu each week to separate account that will cover the balloon in the end if I decide to buy it out. If not, I will still have 8k+ to toy around with idea of taking out another car. No surprises.

Just out of curiosity, would you not have saved money per month just doing HP then, seeing as you're also putting away 200 quid a month for what is basically another car repayment?

ShadowHearth · 11-01-2018 01:45PM

MarkN wrote: »

Just out of curiosity, would you not have saved money per month just doing HP then, seeing as you're also putting away 200 quid a month for what is basically another car repayment?

Hp was 5.9% on top of car cost. So why would I pay bank a few grand for nothing?
In this case I am paying zero to bank and if I want to I can pay off car in 3 years, not 5.
At the same time in 3 years I can take a loan for 4k eu and pay the rest with small loan, keeping another 4k in my bank account as savings for rainy day. 8% apr on 4k is a lot less then 6% on 21k+++.

emeldc · 11-01-2018 01:50PM

ShadowHearth wrote: »

Hp was 5.9% on top of car cost. So why would I pay bank a few grand for nothing?
In this case I am paying zero to bank and if I want to I can pay off car in 3 years, not 5.
At the same time in 3 years I can take a loan for 4k eu and pay the rest with small loan, keeping another 4k in my bank account as savings for rainy day. 8% apr on 4k is a lot less then 6% on 21k+++.

Did you fess up that you were doing 30k km's p/a. And if so did it have a bearing on your monthly repayment or your balloon payment.

Lux23 · 11-01-2018 01:50PM

happywithlife wrote: »

I emboldened the bit about the gf shouldn't have been allowed to take out the contract. That grates on my nerves as she wasn't forced to. It's typical attitude of a certain generation where they want everything and want it now. There is such a thing as personal responsibility.
I am not lucky. I have been in tough s****y financial circumstances . My husband was in a similar situation but with a HP agreement he decided on a whim to hand back the car without realising he was liable for a minimum payment. He - we as a couple- had to pay without having the use of a car which is why I urged the op to look at making cutbacks to try and hold onto the car

While I understand your point, I don't agree that the dealer or financial institutions underwriting these products are blameless either. And the CCPC seems to have their doubts too.

https://www.ccpc.ie/business/ccpc-launches-study-pcp-car-finance-market/

BillyBobBS · 11-01-2018 01:52PM

happywithlife wrote: »

I emboldened the bit about the gf shouldn't have been allowed to take out the contract. That grates on my nerves as she wasn't forced to. It's typical attitude of a certain generation where they want everything and want it now. There is such a thing as personal responsibility.
I am not lucky. I have been in tough s****y financial circumstances . My husband was in a similar situation but with a HP agreement he decided on a whim to hand back the car without realising he was liable for a minimum payment. He - we as a couple- had to pay without having the use of a car which is why I urged the op to look at making cutbacks to try and hold onto the car

Did your husband cut back on his grooming or is it okay to just make that assumption when it comes to women?

Pelvis · 11-01-2018 01:57PM

awec wrote: »

Disagree.

Spending 25% of your gross annual salary on a car for three years, before you put a badge in the windscreen or a drop of fuel in the tank is crazy.

Well an argument can be made that spending 25k+ on a new car is crazy regardless of your salary. I personally don't "get it", and couldn't see myself ever buying a new car unless my salary was running into 6 figures. I realise this wouldn't be a view held by the majority in this forum though.

ShadowHearth · 11-01-2018 02:03PM

emeldc wrote: »

Did you fess up that you were doing 30k km's p/a. And if so did it have a bearing on your monthly repayment or your balloon payment.

It has no bearing on my monthly payments or balloon. It will be same. It will have only any kind of bearing if I decide to put the keys on the table and walk away after 3 years.
If I decide to trade in for another new car, then it depends from a dealer. If he wants your business, they dont even look at millage.

Returning a PCP car

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