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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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r0qi4162fux9kg

Mentioned ages back that I planned on refinancing and keeping the car.

The process was very handy. Albeit one f**k up.
They gave me three options 1, 2 or 3 years - all at different rates.
Needed to drop into them with ID, a recent bill and sign the agreement.
That was it. Until a few weeks later, they took the balloon payment. Took a week to sort out.

Audi did mention that VW bank only look for more bank statements if you’re earning less than you stated before or if the payments are higher.

At the end of the day, it was nice experiencing buying a brand new car spec’d to my liking. The Audi options lists are like a book!.. a very expensive book...
But ultimately it’s an utter waste of money compared to what you can get in from the uk, some not even a year old.

Some PCP deals out there seem very good and can be a quick, hassle free way of getting a car.
Id suggest at least looking at what’s available second hand if looking at anything remotely on the expensive side.

SeanSouth

I cant believe it that almost everyone here has missed the point about buying a car. The main point about buying a car is the car itself and the DEPRECIATION
of that car. The depreciation or cost to you on a standard VW Passat is around 450 per month, regardless of whether your monthly payment is 200 or 550 or whether you buy the car with cash or PCP or with a loan from a bank. If you can afford to justify spending 450 per month on a depreciating motor car then go ahead, otherwise dont, everything else is just noise. If you do high mileage, your depreciation figure will be much higher.

Also i have failed to understand people who need to have a new car every three years. A huge waste of money for a bit of feel good factor. Most new cars are good for 7/8 years. Everything else seems to be an exercise in keeping up with the Jones's.

Personally, I do about 25 000 miles per year. I usually buy a good 3 year old executive car in the UK with low mileage and keep it for 2 to three. years. The depreciation usuallly works out at less than a Nissan Micra. My wife has an 11 year old car which she loves.

Ive found dealers in Ireland (in general) to be a sorry bunch. Used car prices are completely overpriced and the choice of stock is never up to scratch.

They think everyone is dumb apparently.

elbyrneo

SeanSouth wrote: »

I cant believe it that almost everyone here has missed the point about buying a car. The main point about buying a car is the car itself and the DEPRECIATION
of that car. The depreciation or cost to you on a standard VW Passat is around 450 per month, regardless of whether your monthly payment is 200 or 550 or whether you buy the car with cash or PCP or with a loan from a bank. If you can afford to justify spending 450 per month on a depreciating motor car then go ahead, otherwise dont, everything else is just noise. If you do high mileage, your depreciation figure will be much higher.

Also i have failed to understand people who need to have a new car every three years. A huge waste of money for a bit of feel good factor. Most new cars are good for 7/8 years. Everything else seems to be an exercise in keeping up with the Jones's.

Personally, I do about 25 000 miles per year. I usually buy a good 3 year old executive car in the UK with low mileage and keep it for 2 to three. years. The depreciation usuallly works out at less than a Nissan Micra. My wife has an 11 year old car which she loves.

Ive found dealers in Ireland (in general) to be a sorry bunch. Used car prices are completely overpriced and the choice of stock is never up to scratch.

They think everyone is dumb apparently.

You seem to have a bee in your bonnet about people buying new cars. I think everyone understands depreciation here. Depreciation applies to cars regardless of cash, loan, HP or PCP. Not sure why you felt the need to post here.

3 year trade in for a new car is an option with PCP. You don't have to replace. PCP actually affords some protection against dramatic depreciation, should the value of the car fall below the GFMV (the only scenario where it makes sense to walk away financially).

As to why people buy new cars, whether on PCP or not. Well maybe they just like a new car (like maybe you like branded clothes or an expensive whiskey or a foreign holiday). Maybe they can afford it regardless. Maybe they have had bad experiences with used cars, and having new cars always within a manufacturers warranty (with potentially lower insurance and tax and better fuel economy) gives a peace of mind that is worth it. Maybe they have a set monthly amount and are happy to budget for that.

So PCP is great for some, once researched and budgeted and understood properly.

mickdw

SeanSouth wrote: »

I cant believe it that almost everyone here has missed the point about buying a car. The main point about buying a car is the car itself and the DEPRECIATION
of that car. The depreciation or cost to you on a standard VW Passat is around 450 per month, regardless of whether your monthly payment is 200 or 550 or whether you buy the car with cash or PCP or with a loan from a bank. If you can afford to justify spending 450 per month on a depreciating motor car then go ahead, otherwise dont, everything else is just noise. If you do high mileage, your depreciation figure will be much higher.

Also i have failed to understand people who need to have a new car every three years. A huge waste of money for a bit of feel good factor. Most new cars are good for 7/8 years. Everything else seems to be an exercise in keeping up with the Jones's.

Personally, I do about 25 000 miles per year. I usually buy a good 3 year old executive car in the UK with low mileage and keep it for 2 to three. years. The depreciation usuallly works out at less than a Nissan Micra. My wife has an 11 year old car which she loves.

Ive found dealers in Ireland (in general) to be a sorry bunch. Used car prices are completely overpriced and the choice of stock is never up to scratch.

They think everyone is dumb apparently.

Yes a new passat would cost 450 per month or circa 5k per year for the first 3 years on average.
I think for what it is, it's reasonable value.
Now if we take a 3 year old passat run from age 3 to 6 years. That will likely lose 2.5k per year in depreciation. So 2.5k per year more expensive to have the new car in terms of depreciation.
The new car will need little bar basic servicing and tyres.
The used car will likely need major servicing and some form of repair whether it's flywheel or dpf etc. Say 500 per year costs over and above basic servicing on the new car so now the new car is only 2k more expensive than the used one per year.
Now ad in zero per cent interest on the new one versus about 650 interest yearly on a 16k used passat over 3 years.... Most people will be borrowing whether new or used.... The new car is now only 1350 more expensive than the used one yearly.
Add in the additional peace of mind of manufacturer warranty for the entire ownership of the new car and that 1350 per year starts to look like it's very reasonable.
I don't have a passat or a pcp but as long as your can afford the new car, it's not the financial lunacy some people say. It's never cheap but having some form of car is a necessity and running a new sensible car like a passat can be quite reasonable.

bazz26

SeanSouth wrote: »

I cant believe it that almost everyone here has missed the point about buying a car. The main point about buying a car is the car itself and the DEPRECIATION
of that car. The depreciation or cost to you on a standard VW Passat is around 450 per month, regardless of whether your monthly payment is 200 or 550 or whether you buy the car with cash or PCP or with a loan from a bank. If you can afford to justify spending 450 per month on a depreciating motor car then go ahead, otherwise dont, everything else is just noise. If you do high mileage, your depreciation figure will be much higher.

Also i have failed to understand people who need to have a new car every three years. A huge waste of money for a bit of feel good factor. Most new cars are good for 7/8 years. Everything else seems to be an exercise in keeping up with the Jones's.

Personally, I do about 25 000 miles per year. I usually buy a good 3 year old executive car in the UK with low mileage and keep it for 2 to three. years. The depreciation usuallly works out at less than a Nissan Micra. My wife has an 11 year old car which she loves.

Ive found dealers in Ireland (in general) to be a sorry bunch. Used car prices are completely overpriced and the choice of stock is never up to scratch.

They think everyone is dumb apparently.

People spend their money how they like, nobody is forcing you to do the same if you don't want to but then again begrudgery is a very common Irish qaulity too. And you know those two cars you and your wife drive now, somebody had to buy them when they were new too so that you can come on here to boast about how you saved money buying them second hand.

bidiots

SeanSouth wrote: »

I cant believe it that almost everyone here has missed the point about buying a car. The main point about buying a car is the car itself and the DEPRECIATION
of that car.

SeanSouth wrote: »

They think everyone is dumb apparently.

You too, going by your post.

Where do you think your 3 year old car comes from ffs?

Toyotafanboi

Had a look at trading in the Golf the other week. 162 1.6 diesel, 85k kms so has shattered the PCP mileage allowance.

Roughly speaking went in with max deposit in 162, €9k ish and have been paying €250pm since then, so again roughly speaking we are 50% of the way to owning the car having paid €14250 off the car.

Trade in value allowed was €18750, so €4500 equity which is quite good at this point IMO. To get the exact same car again continuing with PCP using just the equity as deposit was around €460 per month but the price of a comparable Golf has gone up by the guts of €3k.

DaveyDave

I have a 172 Golf. Nothing to do with keeping up with the Joneses. I've spent the last 5 years cycling to work, the last 3 which were 45km per day. I'm 26, it's nice to have a car. I get to drop the girlfriend home in the evenings, no longer have to cycle home with a large bag full of heavy shopping, can go for a drive outside Dublin with herself.

I don't understand the ignorance that comes with "I don't understand why people need a new car, it's stupid, it depreciates. I don't do it and everyone is wrong" Everything depreciates. It just so happens cars cost tens of thousands so it's a little more obvious. My new €450 phone will probably be worth about €150 in 3 years if I'm lucky. About 30%. Similar to PCP. Go figure.

Some stuff holds its value, bicycles, DJ equipment etc. Other stuff doesn't. An Xbox or PlayStation wouldn't get much after a few years.

If people didn't buy new cars you wouldn't have a second hand one to get into. It's also nice that I don't have to get a loan and be stuck with a car for 5 years at €500 a month when I can pay €300 for 3 years and easily get a new one.

mickdw

Toyotafanboi wrote: »

Had a look at trading in the Golf the other week. 162 1.6 diesel, 85k kms so has shattered the PCP mileage allowance.

Roughly speaking went in with max deposit in 162, €9k ish and have been paying €250pm since then, so again roughly speaking we are 50% of the way to owning the car having paid €14250 off the car.

Trade in value allowed was €18750, so €4500 equity which is quite good at this point IMO. To get the exact same car again continuing with PCP using just the equity as deposit was around €460 per month but the price of a comparable Golf has gone up by the guts of €3k.

You will surely only gain by keeping to end of term (unless you think the mileage is going to be too much.
Are there not contributions from vw to at least cancel out the price increase?
A golf should cost about 400 per month in depreciation for the first 3 years so Id not be inclined to pay 460 for one.

893bet

Can I buy a car on PCP and then sell (well "sign" as no money will change hands) it straight to my wife? Obviously I will responsible for the debt still.

Atlantic Dawn

893bet wrote: »

Can I buy a car on PCP and then sell (well "sign" as no money will change hands) it straight to my wife? Obviously I will responsible for the debt still.

No, ownership remains with the credit provider.

XsApollo

Well you can sign for the debt and have your wife’s name on the logbook if that’s what you mean.
Your still responsible for the debt not your wife.

All in all

893bet wrote: »

Can I buy a car on PCP and then sell (well "sign" as no money will change hands) it straight to my wife? Obviously I will responsible for the debt still.

Can be done, but will add an extra owner to car though.

Cyrus

can i ask why you would bother?

Toyotafanboi

If she's going to be the main driver, doesn't she have to be the registered owner for insurance purposes?

Cyrus

Toyotafanboi wrote: »

If she's going to be the main driver, doesn't she have to be the registered owner for insurance purposes?

no, not in my experience we share a car and change main driver each year to preserve the NCB and theres never an issue over who the registered owner is

SteelyDanJalapeno

Just to share my latest experience, my gf got a 161 Clio on PCP 2 years ago for about 16k I think.
We both travel in the same direction for work so there's really no need for 2 cars, so we talked with Renault on returning it as its hardly ever used (15000km in over 2 years), outstanding finance is about 9600.
Renault inspected it and offered 8k to take it back early, effectively she would have needed to pay about 1600 to hand it back, their reasoning which is sound imo was that they have ample stock of this model right now and they don't need it, however he did say they would be selling it for about 13500.

We've opted against returning, gonna pay off the finance myself and sell it privately.

Toyotafanboi

I'd say they were low balling you there. They aren't seeing near a mark up of 5.5k on any other 161 Clio they have on site.

SteelyDanJalapeno

Toyotafanboi wrote: »

I'd say they were low balling you there. They aren't seeing near a mark up of 5.5k on any other 161 Clio they have on site.

Yeah definitely just didnt wanna take it, but they do have Clios up at that price, an less but more mileage, same model :

http://www.kearys.ie/group/pre-owned/renault/clio/2016-black-dyn-nav---stunning-7450992.html

Toyotafanboi

I wouldn't be doubting the retail price, but you can be sure that they were bought in for much more than €8k.

Lantus

SteelyDanJalapeno wrote:

Just to share my latest experience, my gf got a 161 Clio on PCP 2 years ago for about 16k I think. We both travel in the same direction for work so there's really no need for 2 cars, so we talked with Renault on returning it as its hardly ever used (15000km in over 2 years), outstanding finance is about 9600. Renault inspected it and offered 8k to take it back early, effectively she would have needed to pay about 1600 to hand it back, their reasoning which is sound imo was that they have ample stock of this model right now and they don't need it, however he did say they would be selling it for about 13500.

Well you still need to pay any outstanding finance so say 300 per month for 6 months that's 1500 which is where they are getting that. Basically your just handing the car back. No equity which is dealer's right.

If you sell private you will need to clear the gmfv first via a loan so bear that in mind. Still better than dealers option.

SteelyDanJalapeno

Lantus wrote: »

Well you still need to pay any outstanding finance so say 300 per month for 6 months that's 1500 which is where they are getting that. Basically your just handing the car back. No equity which is dealer's right.

If you sell private you will need to clear the gmfv first via a loan so bear that in mind. Still better than dealers option.

Yeah I understand how it works, out of the 2 options of handing it back now or waiting the remaining installments, she'd be about 200 - 300 better off to hand it back now.

I wont need a loan to clear it off...., and yeah I think it's the best option even at the lowest priced its still at least 2k better than the dealers offer.

vintagevrs

I dont think you'll need a loan to try and sell it private. Put it up for sale. If a genuine seller is interested they should have no issue paying vw finance the outstanding amount and then any extra owed to you above that. If you get no interest in it at least you know you tried and go the dealer route.

893bet

XsApollo wrote: »

Well you can sign for the debt and have your wife’s name on the logbook if that’s what you mean.
Your still responsible for the debt not your wife.

If that's possible then that would be even better. Avoid the extra owner as I know some buyers value that.

893bet

Cyrus wrote: »

can i ask why you would bother?

Insurance as main driver and owner. Not sure if that actually has an impact.

(Plus I need to buy her something nice so I can keep buying shiny things for my left wrist!).

Cyrus

893bet wrote: »

Insurance as main driver and owner. Not sure if that actually has an impact.

(Plus I need to buy her something nice so I can keep buying shiny things for my left wrist!).

Insurance won't be an issue as I said above the wife and I share a car and the main driver changes each year no issue

Wrist candy is far more important!

XsApollo

893bet wrote: »

If that's possible then that would be even better. Avoid the extra owner as I know some buyers value that.

I’ve done it myself.

hoody

OH's 09 Opel Insignia needs gearbox repair, advice from garage is that they've seen a lot of serious engine problems in these (also covered in a couple of threads here) so we should consider getting something different.

Have been looking at PCP but seems like a big financial commitment vs spending €10k - €12k on a used car, combining trade in of Insignia (not sure what we'd get for that), savings and a loan, especially given we're planning to trade up to a new house in next 12 - 18 months.

Any thoughts on logic of going with a used car at this price to tide us over for 3 years or so, vs opting for the PCP? Does a PCP affect access to mortgage etc?

Also, options for good used family cars at that €10 - 12k price? Would be doing about 20k miles per year. I'm not sure what we'd be looking at if we did go down the PCP route.

Thanks all - this thread has been a big help!

KFed

P.c.p. would somewhat impact your mortgage application.

If you have a financial commitment monthly of a couple of hundred Euro a month they'll deduct that from your ability to repay a mortgage loan.

Plus, at expiry of the p.c.p. term you'll have a balloon to finance.

If you are looking to trade up in 12-18 months, I'd say financially you'd be better finding a good used car and trading outright.

Your net income then isn't dragged down by an ongoing p.c.p. commitment do the bank should be willing to lend you more.

Also, if you do p.c.p on a new car, assuming the future value in 3years is c. 50% of the new list price, you will have lost that much in depreciation in that term. If a house is your priority you may be better buying something that's already say, 3years old at 50% of the new price. Granted you have an older car, but as you can probably sell say 3 years down the line for 20% of the new price, you will have a lower total cost of ownership.

If your focus is a house, I would avoid entering into other term loans or finance, particularly on a new and heavily depreciating asset.

The bank wants your cash every month without fail so the fewer other parties taking a bite (p.c.p. or otherwise) the better comfort they have in ability to repay and the more likely the loan/bigger loan to move.

I'm sure others will be along to suggest specific models for your budget but maybe narrow it down, do you want / loathe an s.u.v.?

Do you have kids, ages, car seats required?

hoody

Thanks for the reply KFed, that's where my head is at too.

We have two under 4 so both in car seats. Would happily have an SUV but ideally something light on fuel and low maintenance too, if such a thing exists. We hadn't planned on changing so pretty out of the loop on decent used models etc