New car - haggling, PCP & HP

I'm not sure there is much scope for discounts in the current market as brand new cars are in short supply and have very long delivery times due to the chip shortage and Covid. If you are lucky to find on in stock then the way demand is, dealers probably don't need to offer much in the way of discount because they know it will sell either way. In saying that if you don't ask then you will never get so shop around as many dealers as you can for the best price. If you are flexible enough to take a car in stock then that might help. If you want to order something with options from the factory then you could be waiting 6 or 9 months for it depending on the model which means prices could be increasing again over what they cost today.

Regarding finance, if PCP rate is @ 1.9% v HP @ 5.9% then it's a no brainer to go with PCP. Better to get a lower rate for 3 years and then a higher HP rate for the balloon payment rather than 5.9% over 4 years. You could always stick a few quid away in a deposit account to help pay off some of the balloon payment in 3 years time also to reduce the amount you need to HP again. Do some maths on both methods is the best advise.

That's if the e10,600 doesn't have to be borrowed

Not much room for haggling on new cars. The only negotiation would be in your trade in

If you can afford the higher payment take the pcp and save the difference each month to get 6k over 3 years. This leaves 4k to pay after 3 years which you can finance from VW and pay at most a few hundred euro interest over 1 year to pay off at roughly 364 a month. Saving 1500 euro overall.

Try to squeeze a service out of them. VW group used to do buy 3 get 4th free. Better than than the service plan they foist on you.

It's unlikely you would take that much off the top price plus the cost of interest on the loan you would have to repay on the full amount.

Garage gets a commission for selling a pcp deal. Plus the car market is really under pressure and they don't need to discount. Multiple buyers for fewer and fewer cars. The Ukraine won't make better any time soon.

So they will have priced in a much higher level of defaults than the banks, and customers are paying for that in the overall rates charged.

If they're not doing the same level of affordability checks, of course they are going to end up with higher default levels.

With a bank loan there is no balloon payment. You pay for the car, no messing about.

Yes but alot of banks are giving out unsecured loans for cars. PCP with deposit up front has the finance companies ass covered big-time and they likely have preferential arrangement with supplying dealers also for any repossessed cars so they can easily deal with a percentage of non performing without it having to hit the interest rate.

The deals on offer beat the banks whichever way you look at it.

You would imagine zero percent finance is just adding thousands onto the sale price day one to cover it but I've seen a good haggler go into vw with option to pay cash via his a personal loan or PCP and after trying different dealers with each option, PCP was cheaper after a counting for discounts, interest etc.

In the current climate, cash buyer doesn't have the same power as it used to. A shortage of used cars due to Brexit and shortage of new cars duel to part shortages has changed the landscape and made it a seller's market. I've actually read that some dealers prefer customers with a trade in now over a customer buying with no trade in as dealers have a shortage of used cars on their forecourt and can get top dollar for them. Dealers are giving very little discount off new cars either as they don't have to try selling them. Any new car in stock now has plenty of suiters willing to buy it. It's gone like the housing market during the Celtic Tiger.

And the same banks giving out regular finance are giving out PCP finance through dealerships too. Some of the big car manufacturers even have their own banks to deal with financing. For example all the Volkswagen/Audi group dealers use VW Bank. Access to money is cheaper for them keeping it in house and gives them more flexibility around lending rates too. The like of Toyota, Ford, etc use BOI, AIB, etc.

PCP finance is not governed under the same regulations as other lending products here yet so that's why the lending criteria is not as strict. However I think there is currently plans by the Central Bank to change it but have no clue when that will happen.