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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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marc1

Deleted User wrote: »

Pcp means you pay the depreciation.

I really think you need to keep depreciation separate from the financing plan you opt for. I understand (and agree with you) that there is massive depreciation on a new car for the first 3 years. Yet many people buy new cars.

PCP does not affect depreciation. Your car will depreciate no matter what way you pay for it. It doesn't matter if you buy it with cash upfront, you get a loan from your credit usion, or you disn a PCP contract. It will depreciate.

IF (and only in this scenario) you want to buy a new car and keep it for at least 3 years - then PCP is one of many options. I believe that is is a relatively good option because of the low interest rates.

If you are planning to buy a new car and keep it for more then 3 years, PCP is still a good option - you will still make a saving on the interest by saving up the end balloon payment...

[Deleted User]

marc1 wrote: »

I really think you need to keep depreciation separate from the financing plan you opt for. I understand (and agree with you) that there is massive depreciation on a new car for the first 3 years. Yet many people buy new cars.

PCP does not affect depreciation. Your car will depreciate no matter what way you pay for it. It doesn't matter if you buy it with cash upfront, you get a loan from your credit usion, or you disn a PCP contract. It will depreciate.

IF (and only in this scenario) you want to buy a new car and keep it for at least 3 years - then PCP is one of many options. I believe that is is a relatively good option because of the low interest rates.

If you are planning to buy a new car and keep it for more then 3 years, PCP is still a good option - you will still make a saving on the interest by saving up the end balloon payment...

Yes on the interest the savings can be good, afaik you pay interest only on the money borrowed and not on the full amount as in a normal finance ?

So what you're really paying for in a pcp is the depreciation + interest.

I still don't see much over the gfv in a car ?

TBH I'd hate having to park a mile from another car also and being worried about every scratch, especially over 25K miles a year.

bs2014

I thin PCP has its upsides and downsides, one thing I wonder and maybe someone could enlighten me.

Say I buy an e.g a golf on PCP, pay my deposit of for arguments sake €4000 and all the monthly payments. Then at the end of the say 2 years I decide I want a new golf. Does one have to pay the deposit again or just pay the monthly payments on the new vehicle.

The downside I can see, is one becomes locked into a certain make of car as if they decide to change vehicle, they won't get the initial say €4000 they put on the table originally.

Any experts on this?

marc1

I think PCP contracts are only available over 3 years.

It is very likely that you will not have to pay another deposit - but but you can if you want to reduce your monthly payments.

Keep in mind that there are 4 values that are important, of which you can influence 2:
Deposit - minimum 10%, maximum 30%. You decide. Higer deposit means lower monthly repayments.
Guaranteed future value (GVF)- Your final payment. This is fixed by VW bank for each model. Usually between 35% - 40%.
Interest rate - fixed by VW Bank.
Monthly repayments: (Value of car + interest - Deposit - GFV)/36

A 25k Golf TDI has a GFV of 8400 EUR.
A 3 year old Golf TDI would be worth about 13,000 EUR in 3 year? So you have "equity" in the car of 4,600 which would be used as your next deposit. Keep in mind that VW also decides what your car is actually worth after the 3 years and the 13k was just a guess...
You are not locked in to that garage or manufacturer. You do have the option to sell it privately or even to another garage and pay off the 8400 EUR you still owe VW bank.

If you decided to get a new Golf and you did NOT want to add any of your own cash, just the 4,600, the repayments for a new PCP would be 361.20 a month for the same 25k golf.

(http://www.volkswagen.ie/en/sales/finance/pcp-finance-calculator.html)

Hope that makes sense!

[Deleted User]

Thanks marc1 that's about the best explanation of pcp I've heard yet!

So you actually don't need a deposit for a new car at the end of the pcp. This I didn't know, but obviously your next monthly payments would be higher.

For me doing high mileage would it actually make sense considering my pm payments will be probably a lot higher considering I'd have more depreciation, a lot more ?

marc1

Mad_Lad - The fact that you don't need an additional deposit for a new car after 3 years with that particular example is related to the high residual value of the Golf TDI and the strangely low GFV that VW put on this car.

For some cars the GFV is higher and the value you get for the car after 3 years lower... which means that you might have to put in a little extra to get back the minimum 10% deposit required. Again with the example above you are nearly at 20% deposit, which is pretty good!!

With PCP the garage give you 3 options after the 3 years:
1) Hand back the keys - This is NOT a good option for you as you do high mileage. I think they charge you extra for every km done over 15k km or 20k km a year... Can't find the exact details on the Irish site. In the UK it is 6p per mile. You also loose any "equity". So in general this is a bad option.
2) Pay the GFV and the car is yours. This is a good option if you have saved for this payment during the 3 years.
3) Get a new car under PCP - Going back to the example above: If you do high mileage the car will obviously be worth less. So you might not get 13k back for your car, but maybe you only get 11.5k. That would leave you with "equity" of about 3000 EUR. Still enough (12%) not to put in any additional cash upfront, but your monthly payments would go up to 405 EUR a month. Of course you could decide to put in some cash to get those payments down...

What you are doing is betting on the future REAL value of the car and that being higher the the future GUARANTEED value. :-) The more miles you do the lower the difference between the two is.

[Deleted User]

So do you think PCP would suit me, I'd still benefit from reduced interest ?

I worked out that if driving a leccy over the Prius over 20K a year I'd save 9800 over the 3 years over fuel, maintenance and motor tax. I pay only 350 insurance so I doubt that would go down.

So Another way of looking at it is, if I drive a Leaf (or VW Golf EV due in the spring) then I have a 270 PM saving over the Prius @60 mpg, it will cost me just about 270 pm in fuel alone. (and all this is in a 60 mpg car !!! )

So putting 200 PM is 50 a week and not a lot really to pay for a brand new car, even if it is an ev.

Only problem is the E-Golf is likely to cost north of 30,000 Euro's about 3k more than the highest spec leaf,

But 50 a week is not a lot when you add it up, and going on PCP means that I can hop into a new EV as technology improves again within the 3 years or a new model comes out effecting depreciation even more.

Now the problem is I'm caught in the trap of being in contracts, 3 months here 6 there etc such is life in I.T atm. So no finance is going to touch me, even if I have a permanent job in x amount of time I'd probably have to be in that job x amount of time ?

DO my sums add up or am I missing something ?

TBi

I'm not sure a leaf would be a great idea, if you get a call out when it isn't fully charged what do you do? What if some annoying kid had unplugged you during the night?

You'd be better off keeping your own car until the range is extended further on the leaf. Also save money every month until then to have a nice big deposit and even lower repayments

EDIT: I know this isn't a Leaf discussion so I'll assume you've already taken the above into consideration and leave further discussion on leaf out of the thread

marc1

Sorry, can't help with the comparison to the EV cars - I know very little about them... Price, range, battery life & replacement costs (I think some brands make you rent a battery and replace it every few years?), actual service costs, reliability, depreciation, resale value, changes in tax policies, price to charge the car, etc... I would just be speculating... :-)

If your brother is happy to change his car ever 3 years instead of every 2 years, then PCP is definitely a good (if not the best) option, as long as the PCP interest rates are considerably lower then the HP rates. i.e. 1.9% PCP vs 5.9% HP. When you get a quote of them, the A4 print-out you get should have a "cost of credit" line on it, so you can compare.

Keep in mind that this looks like only 4% difference. In effect your interest rates are nearly 70% lower! As interest is compounded (you pay interest on your interest) the savings in interest payment are more then 70%, which could easily be well over 1000 EUR over 3 years.

About 3 months before the end of the contract start asking around and see what garage gives you the best value for the car you want to trade in.

For you doing 20k-25k miles a year on a PCP - be sure you read the fine print on the excess mileage costs... But again they will of course not apply if you decide to buy out on the contract with the balloon payment in the end.

I also just had a look at the Audi website. Looks like the best rate Audi is offering on PCP is 4.9%. Not great and barely better then standard HP. VW was running a campaign before Christmas where the rate on the Golf was 1.9% and on a new Passat Ed. R it was 0.9%!

[Deleted User]

TBi wrote: »

I'm not sure a leaf would be a great idea, if you get a call out when it isn't fully charged what do you do? What if some annoying kid had unplugged you during the night?

You'd be better off keeping your own car until the range is extended further on the leaf. Also save money every month until then to have a nice big deposit and even lower repayments

EDIT: I know this isn't a Leaf discussion so I'll assume you've already taken the above into consideration and leave further discussion on leaf out of the thread

Indeed I've though about all the above,

The range isn't a problem for me to do 25,000 + miles a year, however I haven't a hope in hell getting any form of loan finance while on contract.

But you're right about call out, this is something I'll know more about after a few weeks. I doubt I'll be sent too far from location.

I already have the deposit sitting in the bank gaining interest !

I just would never commit to a 3 year finance without proper guarantees, even if they gave me the money.

Not trying to turn this into a leccy discussion what so ever. But it just so happens that even though I'm not saving on buying the leccy (at my mileage)it means I save much more than the average driver on fuel even at 60 mpg, maintenance etc which I can dump off the loan instead.

All this means I can have a new leccy for 200 pm compared to paying a normal car and fuel, maintenance etc that adds to over 700+ pm when you add it all up. (based on my mileage)

By going the PCP route means that I'm protected from battery degradation for which ( only to me) would matter after 100,000 miles, (or 5 years) and it would allow me to hop into the MK II Leaf with more range for the same money.

Of course keeping the Prius means I actually save 200 PM to add to the Deposit for when the time comes, for the moment I'm thinking out loud and making sure I've all the facts on pcp.

[Deleted User]

marc1 wrote: »

Sorry, can't help with the comparison to the EV cars - I know very little about them... Price, range, battery life & replacement costs (I think some brands make you rent a battery and replace it every few years?), actual service costs, reliability, depreciation, resale value, changes in tax policies, price to charge the car, etc... I would just be speculating... :-)

You can't rent the battery in the leaf in Ireland, it isn't necessary for new purchases and recent reports suggest it will have 80% capacity left after 100,000 miles.

The Renault zoe is still not available in Ireland for unknown reasons. Probably due to the fact you got to rent the battery. And Irish people are obseed with owning everything.

Replacement is not allowed, instead Nissan "repair" the battery if it falls below 70% back to 70% or just above. 70% being determined by the industry to be end of life. In 5 years time you may very well have a replacement option, but the car will be so cheap in 8 years that even if it had 50 mile range it would be an insanly cheap car to own. most will be 2nd run a bouts. And so the battery will live on.

Aout 50 Euro's is worth about 2,000 miles in an e.v. at night rate electric, excluding the (for now) free electricity. 100 a year or less for a "inspection not service" as there is no engine to maintain,

Roughly 2.70 per 100 miles, or about 540 per 20,000 miles. based on an EPA calculated average of 30 Kwh/100 miles.and 9c/Kwh night rate (excluding free public charging)

marc1 wrote: »

If your brother is happy to change his car ever 3 years instead of every 2 years, then PCP is definitely a good (if not the best) option, as long as the PCP interest rates are considerably lower then the HP rates. i.e. 1.9% PCP vs 5.9% HP. When you get a quote of them, the A4 print-out you get should have a "cost of credit" line on it, so you can compare.

Yep he's difinitely thinking about it.

marc1 wrote: »

For you doing 20k-25k miles a year on a PCP - be sure you read the fine print on the excess mileage costs... But again they will of course not apply if you decide to buy out on the contract with the balloon payment in the end.

So basically the pcp would allow for say 15,000 kms a year and I'd be charged excess mileage from the very start of the contract ? or would they just give me a lower gfv at the start of the contract ?

So if the interest was low enough would I just be better to pay off a loan on HP ?

BMJD

What is the charge for going over 15,000 km per year?

marc1

Deleted User wrote: »

So basically the pcp would allow for say 15,000 kms a year and I'd be charged excess mileage from the very start of the contract ? or would they just give me a lower gfv at the start of the contract ?

So if the interest was low enough would I just be better to pay off a loan on HP ?

I think you can not choose how many km you want to drive a year in Ireland. My girlfriend bought an Up! recently on PCP and just checked. The limit was 20,000 km a year. Possible that limited is higher for diesel then for petrol car?

The excess mileage fees only applies after the 3 years if you are handing back the car and do not get a new one, which is by far the worst option of the three. Financially you would be better off selling it privately and paying of the ballon payment.

And if you pay of the balloon payment, they don't care anyway as they got their money and the car is yours. Doesn't matter for them if is has 10k miles or 100k miles on the clock.

If you want to get a new car in 3 years time, your car will be valued to determine how much "equity" above the GFV is left. Of course a car with 20k miles will be worth more then a car with 75k miles. So no need to apply a excess milage charges.

In terms of where you would be better off - depends on the interest rate. Dealers and VW bank will make the PCP more attractive because they want to see you again in 3 years!

BMJD wrote: »

What is the charge for going over 15,000 km per year?

Sorry it is 20k km a year in Ireland (at least for the VW Up!). Don't know what the charge is, but as explained above, this will just apply if you hand back the car at the end of the contract. They charge 6p / mile in the UK. So 300 GBP per 5,000 miles. Roughly equivalent would be 4c/km or 200 EUR for 5,000km. Might be more expensive in Ireland though... don't know!

[Deleted User]

marc1 wrote: »

In terms of where you would be better off - depends on the interest rate. Dealers and VW bank will make the PCP more attractive because they want to see you again in 3 years!

Sorry it is 20k km a year in Ireland (at least for the VW Up!). Don't know what the charge is, but as explained above, this will just apply if you hand back the car at the end of the contract. They charge 6p / mile in the UK. So 300 GBP per 5,000 miles. Roughly equivalent would be 4c/km or 200 EUR for 5,000km. Might be more expensive in Ireland though... don't know!

In other words, you can be damn sure the dealers/finance company win all the time no matter what !

Seems a lot more complicated now, I thought you go in give the yearly mileage and the gfv would be calculated accordingly.

I would guesstimate that a 3 year old leaf with 75K miles 25 K new would be worth in or around 8-11K ?

I see a 3 year old Nissan Note on Carzone for almost 12K with 50 K miles so will possibly get 9-10 K as a trade in.

I suppose the point I'm making is that with HP you'll pay more but in the end you'll have a trade in and won't have to come up with a big deposit as likely you would with a high mileage pcp and you won't be as worried about a dent or scratch, after all, anything can happen in 70,000 miles.

marc1

When you say they always win, yes they have to make a profit, otherwise why would they bother building cars. :-)

You will also have a trade-in at the end of the PCP - just you don't own it fully :-)

To counteract and for peace of mind do the following:

Get the dealer to give you a HP and a PCP quote with the same initial deposit over the same time period.
Check that the total cost of credit is lower on the PCP then the HP. This should definitely be the case, but make sure!
When you are budgeting for the car ownership, just assume that you have to make the same monthly repayments that you would on HP.
Open a new saving account.
Sign up for PCP - pay VW bank the monthly PCP rates and put the difference between the HP and the PCP in the savings account.

After 3 years pay the balloon payment with the savings and keep the car. You don't even have to talk to anyone. The last direct debit will be for the balloon payment amount. Noone will care about what happened to the car in the last 3 years. On a monthly basis you essentially paid the HP rate - and you will also have a nice little sum left in the savings account!

[Deleted User]

marc1 wrote: »

When you say they always win, yes they have to make a profit, otherwise why would they bother building cars. :-)

You will also have a trade-in at the end of the PCP - just you don't own it fully :-)

To counteract and for peace of mind do the following:

Get the dealer to give you a HP and a PCP quote with the same initial deposit over the same time period.
Check that the total cost of credit is lower on the PCP then the HP. This should definitely be the case, but make sure!
When you are budgeting for the car ownership, just assume that you have to make the same monthly repayments that you would on HP.
Open a new saving account.
Sign up for PCP - pay VW bank the monthly PCP rates and put the difference between the HP and the PCP in the savings account.

After 3 years pay the balloon payment with the savings and keep the car. You don't even have to talk to anyone. The last direct debit will be for the balloon payment amount. Noone will care about what happened to the car in the last 3 years. On a monthly basis you essentially paid the HP rate - and you will also have a nice little sum left in the savings account!

Sounds good, only would I loose a lot more paying the excess ?

Gumbo

Mad Lad, what's the cheapest way to get into an EV at the moment?

[Deleted User]

kceire wrote: »

Mad Lad, what's the cheapest way to get into an EV at the moment?

Probably one from the U.K, 12,000 - travel, and evse (charger) install. And a lot of planning to get home.

If you're planning on going that route go to the Irish ev owners page on facebook, someone will sort you out with the tags for the chargers and maybe can advise you on the best route home.

But 12-12,500 Euro's should get you a Leaf with 3,000-45,000 miles.

You get the portable 10 amp charger that can plug into a normal 3 pin plug but not the type II cable to plug into the public (non fast chargers) but again you can ask over on the facebook page about where to get the type II cable.

Gumbo

Deleted User wrote: »

Probably one from the U.K, 12,000 - travel, and evse (charger) install. And a lot of planning to get home.

If you're planning on going that route go to the Irish ev owners page on facebook, someone will sort you out with the tags for the chargers and maybe can advise you on the best route home.

But 12-12,500 Euro's should get you a Leaf with 3,000-45,000 miles.

You get the portable 10 amp charger that can plug into a normal 3 pin plug but not the type II cable to plug into the public (non fast chargers) but again you can ask over on the facebook page about where to get the type II cable.

Would that be buying from an EV forum or from the general car sites?
Any other option other than the leaf?

[Deleted User]

kceire wrote: »

Would that be buying from an EV forum or from the general car sites?
Any other option other than the leaf?

No not forum, check out autotrader U.K and put in postcode BS32 4NF and select distance, nationwide.

I'm not sure I'd be the best to advise you on buying a car in the U.K as I've no experience but if you start a new thread I'm sure you'll get plenty of advice.

The Leaf is currently the "only" half affordable EV you can buy either new or 2nd hand.

The Renault Zoe is not available in Ireland yet for unknown reasons.

Gumbo

Deleted User wrote: »

No not forum, check out autotrader U.K and put in postcode BS32 4NF and select distance, nationwide.

I'm not sure I'd be the best to advise you on buying a car in the U.K as I've no experience but if you start a new thread I'm sure you'll get plenty of advice.

The Leaf is currently the "only" half affordable EV you can buy either new or 2nd hand.

The Renault Zoe is not available in Ireland yet for unknown reasons.

I've no problem on the buying front, Ireland or the UK, I've done it many times and well aware of the procedure.

It's the EV that has be threw. What's the standard. What comes with the car. I don't want to spend X on a car to find out that X + 100 could of got me a better Y version if you get me.

http://cars.donedeal.ie/cars-for-sale/nissan-leaf/6008349

[Deleted User]

kceire wrote: »

I've no problem on the buying front, Ireland or the UK, I've done it many times and well aware of the procedure.

It's the EV that has be threw. What's the standard. What comes with the car. I don't want to spend X on a car to find out that X + 100 could of got me a better Y version if you get me.

The Leaf is a pretty high spec car and was available in only one (but very high spec)trim from 2011 when It came out to the MK 1.5 from about the summer 2013.

marc1

Deleted User wrote: »

Sounds good, only would I loose a lot more paying the excess ?

The excess mileage? You won't have to pay anything if you pay the balloon payment at the end. The excess only applies of you hand the car back without getting a new one. No one really does that other then companies.

[Deleted User]

marc1 wrote: »

The excess mileage? You won't have to pay anything if you pay the balloon payment at the end. The excess only applies of you hand the car back without getting a new one. No one really does that other then companies.

But surely the higher the mileage I do the more depreciation I pay because pcp means you pay the depreciation ?

So maybe I don't pay the excess but the depreciation ?

I must admit it's taking a while for this pcp to sink in, good thing I'm not an accountant !

noelf

I saw a zoe in a Renault garage in newry a few months back. Went in for a gander dealer had it about 6 months absolutely no interest was shown for it he though he would be stuck with it...

noelf

The 1.9 rate on the golf is supposed to be till the end of march that's what I'm going with plus free servicing till 45000 km

[Deleted User]

noelf wrote: »

I saw a zoe in a Renault garage in newry a few months back. Went in for a gander dealer had it about 6 months absolutely no interest was shown for it he though he would be stuck with it...

The Zoe is a perfect car as a run a bout and it's way nicer looking than the Chevy spark and the leaf but it doesn't offer any major advantages over the Leaf, it might be pretty poky to 30 mph but power would drop after this pretty rapidly I'd say. 14 second 0-100 kph wouldn't interest me in the slightest. The Spark EV has a 7.0 second 0-100 kph the same as the 150 (180) ? hp diesel Golf. For a fraction of the price to buy and less than a fraction of the price to run.

The zoe with battery rental works out a bit cheaper in total than the diesel clio, based on a real 50 mpg (per thank) so anyone getting less than this which will be the case driving around city and towns as was the intended purpose of the Zoe in the first place.

Most people driving a diesel clio in towns and cities will most likely be in the low 40's mpg and so the Zoe would automatically work out cheaper than the Diesel clio. But based on 50 mpg per tank or below the Zoe wins.

The range isn't going to be much over the Leaf which is much bigger and IMO nicer inside with more poke.

The Zoe has the most advanced charger of any EV in the world, including the tesla. It will work at all ac public chargers at 22 kw limited only by the public charger. it can charge at up to 44 kw.

In other words a full charge from zoe takes 2 hrs from empty compared to 8 for the Leaf MK 1 and 4 hrs for the leaf MK 1.5 132 reg. only with (optional) 6.6 kw charger.

I don't know if there are any fast 44 kw ac chargers for Zoe yet ? the Leaf charges in 30 mins 0-80%. And 20 mins for the Spark ev for a 0-80% charge.7

I would imagine people are scared of battery rental and so opt for the traditional safe known method of travel, I'd personally be more than willing to rent a car or borrow for the rare time a battery electric car would not meet my needs, then again we got the prius and most likely will have it for years yet.

September1

Deleted User wrote: »

In other words, you can be damn sure the dealers/finance company win all the time no matter what !

No, they might lose money on those deals. It is unlikely, but certainly not risk free for finance companies.

[Deleted User]

September1 wrote: »

No, they might lose money on those deals. It is unlikely, but certainly not risk free for finance companies.

You mean if someone walks away at the end ?

marc1

Deleted User wrote: »

But surely the higher the mileage I do the more depreciation I pay because pcp means you pay the depreciation ?

So maybe I don't pay the excess but the depreciation ?

I must admit it's taking a while for this pcp to sink in, good thing I'm not an accountant !

PCP does NOT mean you pay for depreciation. They are two completely separate concepts.

If you trade your car in for a new car on PCP, the value of the car you are trading in will be estimated by the garage to determine the amount you have for the next deposit. Yes, you will get a little less back for your car if you do more miles, but this should be minimal if you do a normal amount of miles a year.