Best way out of a PCP

I don't think renting a new car every 3 years suits them, I think they don't want to face refinancing the balloon at 8% or more and Irish people have a strange obsession of showing off their new car that they don't own.

The logic being, "why pay 25K Balloon when I can put that towards a new car for 3 more years ?" Crazy !

"enough value to pay the balloon and pay the deposit" ? the only thing that pays the balloon is your bank account if you want to own the car, you won't have a deposit for another car, on 3 PCP I didn't.

Balloon is 11k simply because you're paying for the majority of the car, over the 3 years, you get nothing for nothing. 11 K is what the finance company have calculated will be the minimum the car will be worth after 3 years and the agreed mileage, it doesn't mean you get money when you trade in.

And you're doubling the quoted mileage because the dealer put down you're doing less mileage in order to keep your monthly payments lower.

You're in for a rude awakening.

A low balloon simply means that you've paid the majority of the loan due to higher monthly payments which defeats what PCP is supposed to be. PCP is designed so you buy a much more expensive car due to low monthly payments with a high balloon as the stick that beats you into signing a new contract.

Low balloon only means the dealer and manufacturer have determined the value of the car will be lower due to higher than expected depreciation meaning you pay for that not them.

PCP means you pay the calculated depreciation + interest if any + deposit.

You get nothing for nothing.

You don't get it, how do you think the GFMV is 11 K ? You think the finance company are going to give you money ?

The 11 K you were quoted is because the finance company has determined your car will be worth 11k and are making you pay for that with higher monthly payments and doing double the mileage than the quoted will only end up making it less valuable.

I've been there 3 times lad , I know the score. Not once had I anything over the GFMV.

You don't get it because if you did you realise that the GFMV is low because you'll have paid most of the cost of the car and any "equity" in the car above that is because you've paid that in higher monthly payments.

The finance company have calculated that the car will probably depreciate a lot and are making you pay for it and anything you might get above that is a bonus for you that you've already paid, I don't need to show you 222 models for 11k.

ok so we know cars are expensive and some people dislike pcp as they perceive poor value but somewhere in this the dealers and finance companies are creaming it or do owners achieve more than minimum values ?

An example.

Was at a Hyundai dealer shopping for a 22 reg i30 1.0, he would not budge off €26k cash.

Ultimately the lad bought a 22 Kia Ceed 1.0 from a Kia dealer for €21500 cash, about 34% ish Dep maybe less if negotiating a decent discount on a new one at full list.

List new is around €31500, €30000 should be the magic number new or thereabouts and if achieved that 3 year old car depreciated by 28%, there were 7 of this model for sale in the country when we were looking so they are selling.

So from any experienced pcp buyers where in your view would that leave the guy that bought that car new in 2022 on PCP, would he have achieved more than the agreed value ?

Historically 50% dep over 3 years was expected, in the real world that depends in our current market as we found on make, mileage and condition and from shopping around 3 year old cars are routinely being sold for 30% off the cash price of a ‘25 reg new model exception maybe for ev’s

I've also used PCP on 3 cars, I had 4k equity in a Seat Leon FR and 3.5k on a golf.

3rd car is our current car an ID3 that we fully paid off the balloon on as we were happy to keep it, also probably had no equity but I didn't even check as we still love it and it has saved us over 10k in fuel the past 4 years.

Just because you've had bad experiences with PCP doesn't mean it's some big scam, all 3 of mine were 0% apr so we were able to hold off depleting our savings and use it our house upgrades on solar and insulation instead.

You're really not giving people enough credit if you think they're not able to add 3 numbers together

@8-10 and @SteelyDanJalapeno no lads the problem is you just don’t get it!!!!! It’s a scam and only for PCP ye would have only been able to afford a 20 yr old fiesta!!

I am sure they are some out there that don’t understand it. But the same people will struggle with all things financial. I would view PCP the same as HP over 6 years which is what it ends up being if you want to clear the payment at the end but don’t have the cash to do so.

Ultimately buying a depreciating asset on credit is terrible financial decision anyway. Even on 0 percent.

Forget about deposits, GMFV, equity, hand back options, buy out options, trade up options

The depreciation on the car plus your financing and running costs are what a car costs you. The rest is just noise and distraction, no matter what marketing and acronyms are used.

You know the “score” eh? Not once?

I and friends and family have availed of PCP on numerous occasions. It’s worked out absolutely fine. I’ve never not had some equity in the end. On a few occasions I’ve had very healthy equity. There’s no big conspiracy, I think most people are capable of understanding that it’s just a slightly different way of financing a car.

You got burned on an EV and you never tire of telling us. Your experience does not reflect the experience of most buyers, if it did, the product wouldn’t be availed of. It honestly reads like you don’t “know the score” at all.

I never said brand new car!

Mine was just over 3 years old when I got it on PCP, not exactly old but avoided the massive immediate depreciation that happens

It's a good option if you want to spend money, sure. 😉

You have to spend money on something. You got burnt and still went ahead and locked in your loss by handing back the car. Your loss isn't everyone else's problem

"More affordable than buying outright upfront or on a 5/6 year loan/hp"

Affordable "means" you don't need credit.

5 or 6 year car payments are nuts anyway but most people will have to go that route to own the car at some point on PCP or they can hand the car and buy back a much older car but then the neighbours and friends think they might be too poor and can't show people that living within their means is far better than showing off Debt so they will be in a long many year cycle of monthly payments.

PCP works for me as I get a car allowance through work that covers a good bit of the payment. To me makes more sense than paying BIK to the government each month on a company car I will never own.

When I choose PCP ( have done both HP and PCP) i always put money aside for the final balloon payment so I have a choice to keep the car/ trade in for a new one. Last car turned out to be a lemon....traded it in and used some of the balloon payment saved towards deposit of the new car. I also make sure I have 6 months worth of payments saved in the event I lost my job before the half way rule came into play.

If your smart about it PCP can work well. But appreciate many never intend to pay that balloon payment which will catch up with them eventually.