nav[aria-label="Primary Navigation"] { padding: 0; & ul { list-style: none; width: 100%; display: flex; flex-direction: row; justify-content: start; align-items: start; gap: 30px; padding: 0; & li { margin: 0; } & ul li { list-style: none; } } }

Child Item

Best way out of a PCP

xabi

we have a car on PCP that will be surplus to requirements in a few months and I want to get out of the PCP and get rid of the car. It’s a 232 Qashqai with about 20k left on the loan, car was bought in Jan 24. I don’t mind keeping it until the end of the term if that makes most sense. Any other options?

Find more posts tagged with

Quick Links

Comments

Nigzcurran

You can hand it back after 18 months iirc

fits

yes the half rule. https://www.ccpc.ie/consumers/money/debt/problems-making-car-repayments/

It will be written into your pcp finance agreement. Read it.

GerardKeating

https://www.boards.ie/discussion/2058406096/best-way-out-of-a-pcp

Once the term ends, you can hand it back. I assume it's a 3 year PCP, so that's two more years of payments.

You can normally get a quote to end it early.

digital_d

I’ve looked at this a couple of times.

Contact your finance provider for a settlement quote, see if you can sell it on for at least that.

For ease, I’ve sold back to the dealer I bought from before but with quite a varience in value over a couple of months (higher value second time around than first)

xabi

thanks, will look into half rule.

xabi

https://www.boards.ie/discussion/comment/123353556#Comment_123353556

is it easy to sell a car with finance owing, assume dealer is best, can’t imagine getting close to what it’s worth from them.

digital_d

Indeed,

It’s the easy rather than best way, I guess it depends if the loss in value is less than the remaining PCP payments.

If selling Private having the settlement figure is important too, then the buyer can split the payment accordingly

TheShow

Get a settlement quote, sell privately. And pocket the difference if there's equity. Don't go back to dealer after 3 years, that's the worst option.

User1998

Very difficult to sell a 2 year old car privately. Especially one with finance owed on it. You can’t take trade ins, offer warranty or finance, so that rules out most buyers

mk7r

Need to clear the finance first and then sell it, unless it's to a trader who will directly settle with the finance company

[Deleted User]

https://www.boards.ie/discussion/2058406096/best-way-out-of-a-pcp

As Fits suggested, use the half rule, if you got half the loan paid back you are 100% legally entitled to hand the car back with absolutely no financial repercussions.

I handed back my last car and will never go on PCP again, absolutely ridiculous way to buy cars.

eastie17

I can’t figure out if it is or not, it certainly crystallises the depreciation. I’m just over 2 years into one and when I add up the monthly payments and the trade and deposit it’s fecken eye watering. But it’s still value of the car paid over x period of time. If I bought and borrowed the money I’d have higher payments and would own the car when i paid all of that off. I can own this car if i pay the final payment

I think buying a new car is the issue, complete mugs game, 30% depreciation year one. I presume the reason we can’t get useful personal lease plans like in the UK or US is because in Ireland the consumer or taxpayer must be absolutely ridden at every turn

pale rider

https://www.boards.ie/discussion/comment/123364323#Comment_123364323

what cars lose 30% in the first year ?

Assume average cars not those costing over say 70k ?

User1998

https://www.boards.ie/discussion/comment/123364481#Comment_123364481

Eh, almost all of them? If you want to be really precise its more like 20% year 1, 17.5% year 2, and 12.5% year 3. But overall most cars will loose 50% or more in the first 3 years. Anything less than that is a bonus

daheff

https://www.boards.ie/discussion/comment/123364266#Comment_123364266

whats ridiculous about a PCP? Its just a loan to buy the car. roughly speaking you pay a third deposit, a third over 3 years and then either borrow the remain third, or trade in the car at the end.

Otherwise you end up paying 2 thirds over 3 years on a loan/HP deal.

[Deleted User]

https://www.boards.ie/discussion/comment/123364783#Comment_123364783

Nothing wrong at all with PCP, It's a very clever scheme to get people to spend a huge amount more for cars than they would via HP.

If HP costs 1200 a month for the same car over 3 years vs 550-600 a month, that is bound to attract a lot more people into buying new cars every 3 years while fooling themselves that the balloon can be avoided, it can for so long but PCP really is the real "Never Never" call it what you want if PCP wasn't there most people wouldn't spend a fraction what they are these days on new cars.

One of the main papers published that around 84% of all new VWs bought in 2022 If I remember correctly , were financed on PCP. The same is probably true for the majority of new cars sold today because the cost of cars now is insane.

Some clever tricks manufacturers have pulled the last number of years

Make cars look like SUV by making them taller and fitting large body kits

Make cars bigger and bigger and charge more and more

Load cars with tech, the more the better

We can charge what we like because they will pay on PCP and think they can afford it and they'll keep coming back to avoid the balloon payment.

So, from a manufacturers point of view and the finance companies, dealers etc, absolutely nothing wrong with PCP.

McGrath5

https://www.boards.ie/discussion/comment/123364323#Comment_123364323

As a matter of interest what did you buy?

I have a couple of friends that bought new cars during covid at inflated prices, they're seriously regretting it now. One guy reckons the car is worth less than what's left on the loan.

There was a thread here a few months back with someone paying over €1k per month for a BMW that's now worth less than the loan balance.

bazz26

I'd only use the half way rule as a last resort. I'd imagine the car is still worth a bit more than the 20k balloon payment. Take to the dealer you bought it from to see if they will make an offer to buy it back from you, check with other dealers also to make sure your getting a reasonable offer. They may offer you more than 20k which means you would pocket the difference. If the offers are less than the 20k final payment and you don't want to try selling it privately for a bit more then consider handing it back at the end of the term.

pale rider

the poster mentioned 30% dep in year one. I’m curious what cars drop by that much. I accept 20% for trading in on most cars and indeed have changed family cars many times after a year for significantly less than 20% selling privately and buying straight new.

I’m hoping to do the same with my own current 251 car in Nov this year, wife’s car won’t be changed ..I think.

User1998

https://www.boards.ie/discussion/comment/123365340#Comment_123365340

I already answered your question? You can read more here if you don’t believe me..

https://www.whatcar.com/best/the-10-fastest-depreciating-cars/n17027

https://www.whatcar.com/best/the-10-slowest-depreciating-cars/n17098

Bass Reeves

https://www.boards.ie/discussion/comment/123364783#Comment_123364783

ThThe problem with PCP's is you are probably financing a car you really cannot afford. When the economy is syrongbits great. Cars usually retain a higher value than the balloon payment especially when the economy is strong.

Balloon payments are structured at present to protect car dealers. From 2008 on dealers got caught many went bust because balloon payments were too high and deposits too small to reflect the new residual values. Even though PCP's are financed separately to the dealership in general in early 2008 dealers traded in cars at or above balloon payments and found they could not shift second hand stock. Now with significant deposits and miniscule balloon payments both finance houses and Var dealerships are covered.

The misconception about PCP'S is what you posted above 1/3 deposit/ 1/3 repayed and 1/3 balloon. However in reality you are financing the balloon payment as well. You are paying interest to cover the interest on that balloon payment. As well you are betting that there will be significant residual value left in the car to fund the balloon payment

The catch will be in an economic downturn where the residual value of the car is not sufficient to make the balloon payment and fund most or all of the deposit.

blackbox

https://www.boards.ie/discussion/comment/123365504#Comment_123365504

I don't claim to know a lot about PCP, but if the car is worth less than the balloon payment, can't you just hand it back to the dealer at no cost to the customer? Isn't it called GMFV?

Bass Reeves

https://www.boards.ie/discussion/comment/123365580#Comment_123365580

Yes you can however now you have to fund a deposit for your next car unless you take out a personal loan. The present system.is structured so dealers will never get caught with a car worth less than the balloon payment. Your car woukld need to devalue by 60+%.

However most buyers are dependent on residual value to cover the balloon payment and deposit or most of itanyway. If it dose not you have to fund a significant part of tge deposit.

For example if the residual value is only 15k, tge balloon payment is 10k say and you are buying a 30k car you now have to fund 5k for the deposit and the payments ate based on a 10k loan and 10k balloon payment interest

Jakey Rolling

https://www.boards.ie/discussion/comment/123365580#Comment_123365580

So you'd have made 3 year's payments with nothing to show for it at the end?Seems like a bum deal.

Cyrus

https://www.boards.ie/discussion/comment/123366177#Comment_123366177

Buying a new car is a bum deal but someone has to do it.

pale rider

https://www.boards.ie/discussion/comment/123365438#Comment_123365438

Sorry no, your helpful links are referring to 3 year ownership in the UK, I didn’t ask about that at all, it’s not that I don’t believe you it’s that I wasn’t asking that question.

3 year numbers in the UK may or may not be similar to here, I’m interested in the view put forward that cars lose 30% in their first year, which cars if any lose that.

first year depreciation only is my interest following another posters claim above and if there are examples of particular mainstream cars losing 30%.

clearly cars depreciate, some faster than others, but 30% after 12 months surely seems very poor indeed if accurate.

[Deleted User]

https://www.boards.ie/discussion/comment/123364323#Comment_123364323

Buying new cars, especially today at massively inflated prices is definitely a mugs game, all the money 20K or more handed straight over to the Government is enough alone to make me finally cop on and stop loosing tonnes of money on cars.

And it's because of PCP why manufacturers have cars priced so high is because all people think about is the monthly payment. If you get 5 cars on PCP then this means the manufacturer has got full payment off the finance company and the dealer gets their cut, it's win win for them and a huge loss of you no matter what way you look at it because they know all people care about is the cost per month and they will keep coming back to avoid the balloon.

I intend to keep this car a while , I bought it 2nd hand , around 11 K less than new price with low mileage.

The next car I will pay a lot less. I got a cracking car for my Sister for 10 K and it would have done me just fine, she loves it, it was in mint condition, well looked after and a pity I didn't see it but I got my car a couple of months before.

People really underestimate the money lost on cars including fuel, maintenance, tax, insurance, if I could we'd just have 1 car as I got the motorbike which costs pittance vs car but I'm still a taxi service for the kids and have to drive to the Work site in Dublin, I'd do it on the bike if it was half the distance and I don't fancy going on the M50.

I lost around 50 % on my last car after 2.5 years and around 70,000 Kms. Never again.

While yes, as you said, you could pay for your car with HP over 3 years and pay around twice the money per month and own it, but the thing is that most people wouldn't be able to afford this which is why to go with PCP in the first place and which is why they're spending money they never would have before on cars and why Manufacturers have greatly increased the price of the cars by offering SUV and tonnes of tech, they know people don't care @xxx a month.

[Deleted User]

https://www.boards.ie/discussion/comment/123365036#Comment_123365036

The Half rule was the last resort for me, basically, at the time no one would take it as trade in being electric + 2.5 years old and what I was offered for it was just a disgrace so I called up VW finance and asked to return it under the half rule and they were nice as pie, couldn't fault them.

[Deleted User]

https://www.boards.ie/discussion/comment/123365504#Comment_123365504

Finance "is" for people who can't afford cars be it HP, bank loan or PCP, if someone has to ask how much deposit and how much per month , then they can't afford the car. We have got into a culture of debt here in Ireland like never before, people spending more and more on cars because of the cheap monthly payments on PCP and it's becoming the norm.

A lot of people and dealers just don't understand PCP properly and some dealers often put down someone is doing way less mileage than they are to keep the monthly payments even lower, the price of that is you pay come trade in and have a higher balloon at the end.

Another piece of advice for people is that if you hand the car back after the contract you will have to pay the agreed per Km charge, usually around 8 cent, but if you hand the car back using the half rule then you do not pay this excess mileage, I avoided this when I handed my car back.

There are many who don't realise that the cheap interest PCP 0-4% can be as much as 10% to refinance that balloon.

[Deleted User]

I think the regulator should treat PCP like mortgage where you have to have a certain amount of money in the bank before you take out PCP loan, they're handing it out like smarties with no proper credit checks apart from the basic where you failed to pay back a previous loan.

The same should apply for any car loan really, you can only borrow x amount based what you have in the bank.

The Government are making a mint off all the new cars so they wouldn't care anyway.