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PCP Details

[Deleted User]

Hi all,

Bought an EV and PCP amount was 42000. Noticed my statement they have added interest and showing opening balance as 42000 plus 5k as interest.

I cannot get my head around how can they show opening balance as 47k? Interest is 5k over next 40 months. They are reducing EMI from 47k and after 8 months I'm around 42k in outstanding which should have been opening balance. Rate of interest is 4.99%

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Clo-Clo

https://www.boards.ie/discussion/comment/121791487#Comment_121791487

Just thinking about this, if you have 0% PCP is it best just to pay the minimum deposit and holding the money yourself?

mickdw

If on zero percent, it has no bearing on overall cost which way you go in terms of deposit so yes better keep your money and go small deposit.

.....Assuming the zero percent is legit and you are not over paying to get on the zero percent deal.

Soarer

https://www.boards.ie/discussion/comment/121817477#Comment_121817477

That's what we think anyway.

Everything going to plan, it'll be the same amount of money whether you pay at the start or the end. But why should they have our money before they need it?!

Clo-Clo

https://www.boards.ie/discussion/comment/121818042#Comment_121818042

Plus if you stick the money into a 6/12 month saving via Raisin you will earn a few quid on interest and help pay off the car :-)

staples7

https://www.boards.ie/discussion/comment/121788955#Comment_121788955

Not a great analogy, at the end of your mortgage are you left with 3 options, go again, pay a large lump sum to stay in your house or hand the keys in. I don't think so.

I wouldn't touch a PCP with a barge poll (0% or not). Its basically weighted like a trap to keep you in PCP for good.

Anyone that can't afford the car would be much better off clearing existing debt or investing/saving so that you can afford it. Like it or not thats good advice, its not what people want to hear but hey....

mickdw

https://www.boards.ie/discussion/comment/121831164#Comment_121831164

I would make one point after reading your post.

You make valid points in general but pcp on zero percent really can be an excellent way to buy a car provided that person buys the car they can afford.

So a person buys a new golf every few years. Now they decide to buy a new golf on zero percent pcp. Nothing at all wrong with that as they can afford it regardless.

The issue is when your long time golf buyer gets talked into buying a mire expensive car because the monthly may be low on 1st pcp due to their fully owned trade in. These are the people that get into bother.

...Ghost...

https://www.boards.ie/discussion/comment/121831164#Comment_121831164

At the end of a mortgage, of course you can go again. Sell the old house and buy a newer, maybe larger with good energy rating in a different area. Use the proceeds of the old house plus a mortgage to buy the new one. Or you could stay and build an extension or renovate the old house, borrowing money for the work. Or you might be divorced and need to buy out the OH after the kids move out 🤣.

Maybe I could be more specific and bring shared equity mortgages into the conversation. Same idea and closer to PCP without the buy or return at the end option. The repayments are affordable to the person(s) buying the home. At the end, if they want to own the home outright, they need to buy the outstanding equity and that will almost certainly involve credit and affordable repayments.

All the semantics aside, I stand by what I said about repayments. If they are affordable, then you can afford to buy the car, albeit usually at a cost of credit premium. The balloon payment at the end is the same deal. If the person hasn’t included this in their overall repayments cost, then they will extend the repayment term by another couple of years.

If I was doing PCP, I would only do it if it was cheaper than HP, or a straight loan. I would look at the monthly repayments and then take the final payment and divide that by the number of payments to find the monthly amount I would need to set aside in a separate account to pay it off at the end. This would be my true repayment cost per month, because I wouldn’t want to pay over 7 or 8 years when I could pay over 5.

Some prefer to change every couple of years and PCP suits them.