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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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[Deleted User]

sheff the ref wrote: »

I bought a 161 Ibiza Diesel on 0% PCP in March 16. I think my final lump sum is due to be around €6700. I don't intend upgrading and instead plan on paying off in instalments over the next couple of years and owning my car as you wont get many 3 year old cars for €6700. Besides, my mileage is very big. €125K or so at the moment and still not 3 years old. When I own my car in a couple of years time, I will then look at options.

I am interested in your post from the point of view of an extra fiver a month. Assuming you have a similar enough deal to mine, I presume the final lump sum on the 191 will increase significantly?

I've been thinking about pcp but have been put off due to the fact I'd have reasonable mileage and don't believe I'd have equity if I wanted a new deal without a new deposit.

But when I look at examples like yours I think I might be looking at it in the wrong way. You basically got a super cheap loan for a few years and you'll probably pay the remainder with a standard bank loan. Nothing wrong with that, even if it was at 4% unless I'm misunderstanding something

[Deleted User]

Casati wrote: »

I bought a new diesel for 40k this year and the risk is big that it won’t be worth much in two .......I hope we will be all in ev’s with ranges and prices similar to diesels now but I can’t see it in the next 10 years+

I bought a new ish diesel for not quite 40k earlier in the year but doing 25k miles per annum with quite a few 250km trips a month diesel was the only option for me as I need significant load space too. I plan on keeping it 5 to 8 years + maybe.
All that accepted I don't think residuals will plummet at all. If anything there's a slowdown in EV uptake.

DaveyDave

People who do bigger mileage seem to do well trading in after 2 years instead of 3. Could be worth a look at in the future if you decide to go down the PCP route again.

Gael23

At the end of a PCP can you use the GMFV towards a HP or do you’d need to either buy the car or go into a new PCP contract?

Ryath

Gael23 wrote: »

At the end of a PCP can you use the GMFV towards a HP or do you’d need to either buy the car or go into a new PCP contract?

The GMFV is what you still owe on the car at the end of the term, I don't know why so many people seem to think it's what the car is worth to them. Hopefully at the end of the 3 years the car is worth more than this and if you trade the difference is your deposit on a new car.

Your options are
1 Hand the car back excess millage charge and condition of car will come into play than. You may still have to pay some extra money if the dealer deems the car to be worth less.

2 Pay the GMFV so you own the car out right a lot of the pcp providers will let you refinance the outstanding balance if you want or need to.

3 Trade the car in, dealer will clear the outstanding GMFV and any extra is your new deposit. You can enter HP agreement instead of a PCP if you want. APR rates are much higher though on HP so it may still be better value to go pcp and put extra aside every month to pay the GMFV at the end of the new term if you wish to own the car outright at the end.

You aren't tied to the dealer/brand you original pcp with and you can change at any time before the end of the 3 years. People doing high mileage will often change after 2

sheff the ref

Deleted User wrote: »

I've been thinking about pcp but have been put off due to the fact I'd have reasonable mileage and don't believe I'd have equity if I wanted a new deal without a new deposit.

But when I look at examples like yours I think I might be looking at it in the wrong way. You basically got a super cheap loan for a few years and you'll probably pay the remainder with a standard bank loan. Nothing wrong with that, even if it was at 4% unless I'm misunderstanding something

Correct. That was my approach but it wouldnt have worked for a more expensive type of car. It worked for me as basically the deal was roughly in three thirds,

1.A third for the trade in, and the car I traded was paid for
2.A third in payments at 0% which cost me nothing
3.A third in the final sum

I never really intended upgrading after three years as I knew my mileage would be way too high

My intention is to pay for the car over the next couple of years and then maybe start over again, depending on what I get for a trade in.

Gael23

Ryath wrote: »

The GMFV is what you still owe on the car at the end of the term, I don't know why so many people seem to think it's what the car is worth to them. Hopefully at the end of the 3 years the car is worth more than this and if you trade the difference is your deposit on a new car.
/QUOTE]

I get that but do you not have equity in the car, i.e trade value less GMFV?

mickdw

You hopefully will have some equity.
That depends on markets etc. The hard facts are that you owe the gfv at end of them . Vw deals appear to finish up with 15 to 20 percent of original car value in equity unless you are going back in with an old model. while bmw appear to leave people with little. For example trading in an a 2015 or 16 5 series that is now the old model will not produce a favourable result.

ofcork

Thinking of going down the pcp route in jan on a corolla saloon have a 12 avensis diesel like to go back to petrol.

lcstress2012

I’m into my third year in January on my 171 Ford Fiesta and I think I’m going to just pay off the car(refinance the gmfv) as I don’t want to go into another pcp again. It means after I pay it off I’ll have more money in the bank to save as opposed to 300 odd euro coming out every month.
Anyone ever refinance with theirs ?

i57dwun4yb1pt8

lcstress2012 wrote: »

I’m into my third year in January on my 171 Ford Fiesta and I think I’m going to just pay off the car(refinance the gmfv) as I don’t want to go into another pcp again. It means after I pay it off I’ll have more money in the bank to save as opposed to 300 odd euro coming out every month.
Anyone ever refinance with theirs ?

no cos they will double the percentage interest mostly .

Wildly Boaring

lcstress2012 wrote: »

I’m into my third year in January on my 171 Ford Fiesta and I think I’m going to just pay off the car(refinance the gmfv) as I don’t want to go into another pcp again. It means after I pay it off I’ll have more money in the bank to save as opposed to 300 odd euro coming out every month.
Anyone ever refinance with theirs ?

If gmfv is low you'll pay it over 2 or 3 years and own the car. However you will not have the 300 extra a month. Presumably when the car gets a certain mileage or age you'll want another car. You need to save 200 or so a month to finance this. Also older car probably means a bit more upkeep.

Basically I will be doing same as you in 3 years as my wife will be doing 12 to 15k km annually. Buy car outright and keep till 10 years old with low mileage.

But if you do say 30 or 40k a year you wont want to be keeping a fiesta that long.

lcstress2012

Wildly Boaring wrote: »

If gmfv is low you'll pay it over 2 or 3 years and own the car. However you will not have the 300 extra a month. Presumably when the car gets a certain mileage or age you'll want another car. You need to save 200 or so a month to finance this. Also older car probably means a bit more upkeep.

Basically I will be doing same as you in 3 years as my wife will be doing 12 to 15k km annually. Buy car outright and keep till 10 years old with low mileage.

But if you do say 30 or 40k a year you wont want to be keeping a fiesta that long.

I only do about 15 k to 20k a year if even so no point really getting a new car in my mind.

ShadowHearth

lcstress2012 wrote: »

I’m into my third year in January on my 171 Ford Fiesta and I think I’m going to just pay off the car(refinance the gmfv) as I don’t want to go into another pcp again. It means after I pay it off I’ll have more money in the bank to save as opposed to 300 odd euro coming out every month.
Anyone ever refinance with theirs ?

I know with VW bank you can refinance no problem and will get 5.5% apr, which is better then you would get from any bank or credit union, which would be at 9-10%.
The minimum you have to take is 5k.

sillysocks

ShadowHearth wrote: »

I know with VW bank you can refinance no problem and will get 5.5% apr, which is better then you would get from any bank or credit union, which would be at 9-10%.
The minimum you have to take is 5k.

Do you know what term they do this over?

Casati

sillysocks wrote: »

Do you know what term they do this over?

5.5% is good

I was offered only 6.9% by Skoda this year, over 2 or 3 years. Basically the three year option ended up with payments similar to my pcp payment so I stupidly decided to roll it over and get a new car that I really didn’t need!

[Deleted User]

Casati wrote: »

.....decided to roll it over and get a new car that I really didn’t need!

That's why dealers love PCP

ShadowHearth

sillysocks wrote: »

Do you know what term they do this over?

You choose yourself I guess. The only limit they told me, that minimum is 5k. No one said that you cant give, let say, 4k of your own and refinance the rest.

Funny thing is, when I asked about with Seat, they told me 5.5%, but looks like it increased it according to other poster? Still cheaper then any other finance forms.

Thats why always say with pcp: set up a saving account just for that freedom when 3 years pass. Even if you wont have full sun to cover it, it will make it so much easier and make your own position stronger.

Casati

ShadowHearth wrote: »

You choose yourself I guess. The only limit they told me, that minimum is 5k. No one said that you cant give, let say, 4k of your own and refinance the rest.

Funny thing is, when I asked about with Seat, they told me 5.5%, but looks like it increased it according to other poster? Still cheaper then any other finance forms.

Thats why always say with pcp: set up a saving account just for that freedom when 3 years pass. Even if you wont have full sun to cover it, it will make it so much easier and make your own position stronger.

It’s v possible you got offered 5.5%, I’ve heard of them offering 3.9% with Skoda but just not for my car

who_ru

lcstress2012 wrote: »

I’m into my third year in January on my 171 Ford Fiesta and I think I’m going to just pay off the car(refinance the gmfv) as I don’t want to go into another pcp again. It means after I pay it off I’ll have more money in the bank to save as opposed to 300 odd euro coming out every month.
Anyone ever refinance with theirs ?

Shop around. I have a 171 seat on PCP and vw bank and they told me they would refinance at the end of 3 years if I wanted to keep the car. At a lower rate than high street banks as well. Think 3% was the figure.

Bards

who_ru wrote: »

Shop around. I have a 171 seat on PCP and vw bank and they told me they would refinance at the end of 3 years if I wanted to keep the car. At a lower rate than high street banks as well. Think 3% was the figure.

Over what period?

Bards

who_ru wrote: »

Shop around. I have a 171 seat on PCP and vw bank and they told me they would refinance at the end of 3 years if I wanted to keep the car. At a lower rate than high street banks as well. Think 3% was the figure.

Over what period?

Bards

who_ru wrote: »

Shop around. I have a 171 seat on PCP and vw bank and they told me they would refinance at the end of 3 years if I wanted to keep the car. At a lower rate than high street banks as well. Think 3% was the figure.

Over what period?

sheff the ref

Wildly Boaring wrote: »

If gmfv is low you'll pay it over 2 or 3 years and own the car. However you will not have the 300 extra a month. Presumably when the car gets a certain mileage or age you'll want another car. You need to save 200 or so a month to finance this. Also older car probably means a bit more upkeep.

Basically I will be doing same as you in 3 years as my wife will be doing 12 to 15k km annually. Buy car outright and keep till 10 years old with low mileage.

But if you do say 30 or 40k a year you wont want to be keeping a fiesta that long.

A year or two driving without repayments, is still a year or two without repayments. Granted there will be timing belts, clutch, brakes, wishbones, NCT work etc. to be done depending on mileage.

You would sometimes wonder at times are you better off putting the money into repayments on a new car or take your chances on the repairs on an older car that you have owned since the start?

[Deleted User]

sheff the ref wrote: »

...
You would sometimes wonder at times are you better off putting the money into repayments on a new car or take your chances on the repairs on an older car that you have owned since the start?

Unless you are doing astronomical mileage it's cheaper to run a 4 to 6 year old car than 0 to 3 year old car as the depreciation is higher on the new car.

There's not huge money in the difference though on cars that are 30k ish new so it depends what one means by better off

My folks had a car for 17 years I think that needed nothing aside from routine servicing (got a battery alright once).... they did tiny mileage though. Financially running that was much cheaper then changing a new car every 3 years.

sheff the ref

High mileage. Car that would be €20,000 new

There are a few factors. A set of new tyres. 3 years free servicing etc.

Augeo wrote: »

Unless you are doing astronomical mileage it's cheaper to run a 4 to 6 year old car than 0 to 3 year old car as the depreciation is higher on the new car.

There's not huge money in the difference though on cars that are 30k ish new so it depends what one means by better off

My folks had a car for 17 years I think that needed nothing aside from routine servicing (got a battery alright once).... they did tiny mileage though. Financially running that was much cheaper then changing a new car every 3 years.

[Deleted User]

sheff the ref wrote: »

High mileage. Car that would be €20,000 new

There are a few factors. A set of new tyres. 3 years free servicing etc.

You don't get much new car for 20k that's fit for high mileage use imo if you value comfort.
You're looking at fiat tipo stuff at best in that price range new ?
Generally 3 year free service packages are based on you doing low enough mileage too.

sheff the ref

Augeo wrote: »

You don't get much new car for 20k that's fit for high mileage use imo if you value comfort.
You're looking at fiat tipo stuff at best in that price range new ?
Generally 3 year free service packages are based on you doing low enough mileage too.

Did 230,000km on a new Toyota Yaris 1.4 diesel before trading after 5 years for a new Seat Ibiza 1.4 diesel.

Dont know anything about the Fiat Tipo but Fiat Cars were never thought much of back through the years

MuddyDog

What's the deal with paying off PCP early? Say for example I have 12 monthly payments left of 400 per month and 13k GMFV at the end. So in effect thats 17,800 still owed. If I contact the dealer and tell them I want to pay it off now do I have to pay exactly that amount or will I get to pay less?

mickdw

In a zero percent deal, it would be exactly that amount.
If there is interest in your finance deal, you might save some so it could amount to slightly less than the total of repayments plus gfv.