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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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sheff the ref

Got a quote there on the Octavia Elegance 1.6 Diesel with leather seats.

Car on the road price: €29,227

30% Deposit value: €8768

3 year payments:
20,000km per year 0% finance - €275 per month.
30,000km per year with 3.9% finance - €300 per month
10 cent per Kilometre over the limit

Final Payment/Future guaranteed value: €10,538

Unfortunately I would not do less than 40,000km per year which is only 25,000 miles per year.

R.O.R

sheff the ref wrote: »

Certainly, 0% finance in any mans language represents a significant saving on the cost of a car.

The repayments cost of on €14,000 over three years would come to almost €1000 at 4.5%

I'm pretty sure you only get 0% finance on the list price with no discount. At standard finance rates you should be able to negotiate at least 1000 off list price on practically anything, except a Dacia.

sheff the ref

True enough, and there is room to negotiate between different Skoda garages too but I dont think I will move right now.

The last time I bought a new car there was significant variation between about 6 or 7 main dealer garages that I priced.

FGR

I'm sure it's been mentioned already but riddle me this.

Say you get a guaranteed future value which is extremely conservative (say €1000) when it turns out that your car, at pay up time, is really worth about €2000. Does that mean you have to pay a higher lump sum to keep the car or do you pay back a higher lump sum?

Kenny Logins

FGR wrote: »

I'm sure it's been mentioned already but riddle me this.

Say you get a guaranteed future value which is extremely conservative (say €1000) when it turns out that your car, at pay up time, is really worth about €2000. Does that mean you have to pay a higher lump sum to keep the car or do you pay back a higher lump sum?

The difference between what's owed and what it's worth is yours. You owe a fixed amount, generally just under 40% of the new price.

SJT1

FGR wrote: »

I'm sure it's been mentioned already but riddle me this.

Say you get a guaranteed future value which is extremely conservative (say €1000) when it turns out that your car, at pay up time, is really worth about €2000. Does that mean you have to pay a higher lump sum to keep the car or do you pay back a higher lump sum?

If you want to keep the car at the end of the contract you pay the GFV(€1000) which is agreed at the beginning of the contract, the value of your car(€2000) is irrelevant for this.

jlm29

Does anybody know what mileage limits Hyundai have on their PCP? The brochures I can find online for the i40 mention the unlimited mileage warranty, but nothing about the limits applied to pcp... I presume they're similar enough to others, at approx 100k/yr?

mickdw

jlm29 wrote: »

Does anybody know what mileage limits Hyundai have on their PCP? The brochures I can find online for the i40 mention the unlimited mileage warranty, but nothing about the limits applied to pcp... I presume they're similar enough to others, at approx 100k/yr?

100k per year. Are you joking?

jjdonegal

jlm29 wrote: »

Does anybody know what mileage limits Hyundai have on their PCP? The brochures I can find online for the i40 mention the unlimited mileage warranty, but nothing about the limits applied to pcp... I presume they're similar enough to others, at approx 100k/yr?

Doesn't it normally fall into 15, 20, 25 or 30000km a year with varying monthly payments / GMFV depending on your choice?

I'm making a guess from what I think I have heard but really not sure to be honest.

jlm29

mickdw wrote: »

100k per year. Are you joking?

Not joking, it was a typo! I meant 100k for the three year term

kitten_77

hello, in the market for a new car. Thinking of going down the PCP route.

One quick question; has anyone successfully haggled down the interest rate with dealers? The dealer I'm speaking to has two rates depending on the model of car (3.9% or 4.9%). They have provided a rationale for the difference, to do with the final value of the car (ie GFV). Does that mean the rate is non-negotiable?

I'm a farmers daughter so am well able to haggle (!) but wanted to see whether or not this is a point on which the dealers can negotiate.

Kenny Logins

I don't think you'd be haggling with the dealers on a rate, only price. Rate is set by the finance co. Increasing your deposit will reduce the total interest.

kitten_77

Kenny Logins wrote: »

I don't think you'd be haggling with the dealers on a rate, only price. Rate is set by the finance co. Increasing your deposit will reduce the total interest.

thanks for your reply

[Deleted User]

You won't haggle on price either because margins are very tight on the Leaf. The Leaf is sold at a loss to Nissan Motor Co. The genius's decided to lock themselves into a ridiculous contract with NEC who provide the battery cells.

Best you could do is try get the portable EVSE known as the "Granny cable" thrown in, or a few quid off the cost. That allows you to charge from a normal household socket via an extension lead. It could be quiet handy.

micks_address

Just a note on the mileage caps.. if you intend to keep the car at the end of the 3 years then they are not really an issue.. its only if you want hand back the car that you need to pay the excess amount

[Deleted User]

You can also flog the car if you think mileage is going to be a problem, say if after 2.5 years you thought you were going to have 15K over the limit you can upgrade to a new car and pay towards that rather than paying say 1500-2K towards excess mileage. Or as micks_address said above, if you intend keeping it, it doesn't matter.

L-M

Deleted User wrote: »

You can also flog the car if you think mileage is going to be a problem, say if after 2.5 years you thought you were going to have 15K over the limit you can upgrade to a new car and pay towards that rather than paying say 1500-2K towards excess mileage. Or as micks_address said above, if you intend keeping it, it doesn't matter.

Even if you trade it in after the 3 years and you have over 60kms on it, as long as the trade in is greater than the GFV you're not going to lose money.

They're very conservative, usually never over 40% of RRP. Look at any car 3 years old with 120,000kms on it and it's not going to be less than 40%.

[Deleted User]

Limerick man wrote: »

Even if you trade it in after the 3 years and you have over 60kms on it, as long as the trade in is greater than the GFV you're not going to lose money.

They're very conservative, usually never over 40% of RRP. Look at any car 3 years old with 120,000kms on it and it's not going to be less than 40%.

Not sure I understand this.

for instance, if I got a GFV of 11,500 Euro's with 75,000 Kms after 3 years and it's 8 cent per Km over then technically they can charge me this or it comes out of the GFV ?

L-M

That's only if you want to hand it back and walk away.

If your GFV is €10,000 euro with 60,000kms well then after three years if you want to hand the car back to the bank and walk away you can do so once the car is in good condition and road legal.

If your GFV is €10,000 and you have 70,000kms on it, with 8 cent per km excess and you want to hand the car back and walk away you will owe the bank €800 to do so (10,000x.08).

If your GFV is €10,000 and you have 120,000kms on it, but you can get €14,000 euro on a trade in, then the GFV and mileage limit is irrelevant and the €10,000 euro becomes an outstanding amount like any other loan. So you know have €4,000 equity in the vehicle. (€14,000 trade in less €10,000 GFV).

If your GFV is €10,000 and you have 200,000kms on the car and you want to keep it, then you just write a cheque to the financial institution for €10,000 and you keep the car.

If your GFV is €10,000 and you have 200,000kms on the car and you get a trade in value of €8000, well then you're just €2,000 in negative equity which you can just pass on to the next loan.

The SIMPLE rule is the "Bank" do not want the car back. They want you to either pay it off/refinance it and keep it or trade it in and go again. Pretty much 100% of people do either of the latter two.

[Deleted User]

Limerick man wrote: »

That's only if you want to hand it back and walk away.

If your GFV is €10,000 euro with 60,000kms well then after three years if you want to hand the car back to the bank and walk away you can do so once the car is in good condition and road legal.

If your GFV is €10,000 and you have 70,000kms on it, with 8 cent per km excess and you want to hand the car back and walk away you will owe the bank €800 to do so (10,000x.08).

If your GFV is €10,000 and you have 120,000kms on it, but you can get €14,000 euro on a trade in, then the GFV and mileage limit is irrelevant and the €10,000 euro becomes an outstanding amount like any other loan. So you know have €4,000 equity in the vehicle. (€14,000 trade in less €10,000 GFV).

If your GFV is €10,000 and you have 200,000kms on the car and you want to keep it, then you just write a cheque to the financial institution for €10,000 and you keep the car.

If your GFV is €10,000 and you have 200,000kms on the car and you get a trade in value of €8000, well then you're just €2,000 in negative equity which you can just pass on to the next loan.

The SIMPLE rule is the "Bank" do not want the car back. They want you to either pay it off/refinance it and keep it or trade it in and go again. Pretty much 100% of people do either of the latter two.

So If my GFV is calculated as being 11,500 in 3 years with 75,000 Kms and I have 120,000 Kms could the garage turn around and say "that's 3,600 Euro's you owe us" ?

Sure I get it that the garage could say, I'll give you 13,000 Trade in, but how likely are they to do this ?

I remember BMW saying they would charge for every single Km over on the I3 leading me to believe that I'd have a bill at the end or they would deduct this from the GFV ?

I know if I keep the car then the mileage doesn't matter but for instance if I wanted to buy the car and had more miles does this come out of the GFV meaning I would have less balloon to pay at the end ?

sunnysoutheast

Deleted User wrote: »

So If my GFV is calculated as being 11,500 in 3 years with 75,000 Kms and I have 120,000 Kms could the garage turn around and say "that's 3,600 Euro's you owe us" ?

Sure I get it that the garage could say, I'll give you 13,000 Trade in, but how likely are they to do this ?

I remember BMW saying they would charge for every single Km over on the I3 leading me to believe that I'd have a bill at the end or they would deduct this from the GFV ?

I know if I keep the car then the mileage doesn't matter but for instance if I wanted to buy the car and had more miles does this come out of the GFV meaning I would have less balloon to pay at the end ?

No the balloon payment is fixed at the start of the agreement. The easiest way to think of it is that a proportion of the loan you use to buy the car is on interest-only terms until the end of the agreement. You can then settle the outstanding amount by handing the car back (where the excess mileage charges may apply) or by paying the balloon amount via cash, loan or trade-in(where the excess mileage charges are irrelevant). With the first option any equity in the vehicle above the MFV is lost, with the latter it is yours.

Some years ago I took out a 3 year PCP on a Golf as the monthly payments were good but it had a low mileage limit of 10k miles. After 2 1/2 years it was at >70k and I traded it for a Passat. I simply paid the early settlement amount to the finance company and that was it.

I thought with these new-fangled electric vehicles that there wasn't an option to buy the car as they wanted them back to scrap them, not sure though. A friend of ours is looking at an i3 so I'll ask him!

[Deleted User]

sunnysoutheast wrote: »

No the balloon payment is fixed at the start of the agreement. The easiest way to think of it is that a proportion of the loan you use to buy the car is on interest-only terms until the end of the agreement. You can then settle the outstanding amount by handing the car back (where the excess mileage charges may apply) or by paying the balloon amount via cash, loan or trade-in(where the excess mileage charges are irrelevant). With the first option any equity in the vehicle above the MFV is lost, with the latter it is yours.

Some years ago I took out a 3 year PCP on a Golf as the monthly payments were good but it had a low mileage limit of 10k miles. After 2 1/2 years it was at >70k and I traded it for a Passat. I simply paid the early settlement amount to the finance company and that was it.

So If I get a brand new car again in 2.5-3 years and I'm, say, 20-30k Kms over it doesn't matter ? they won't charge me excess or give me a lower GFV or am I getting confused with the GFV . The GFV being the balloon and the equity in the car if going to a new contract ?

sunnysoutheast wrote: »

I thought with these new-fangled electric vehicles that there wasn't an option to buy the car as they wanted them back to scrap them, not sure though. A friend of ours is looking at an i3 so I'll ask him!

No not at all, there is no reason a leccy car can't go 30 years on the electrics/motor etc, only thing to wear out really are the usual, pads, disks, 12v battery, wheel hub/motor bearings, suspension etc.

If the Prius is anything to go by then the electronics have been proven, there were some issues with the MK I Leaf that were corrected.

The battery in the Leaf will still be useful for someone that drives up to 40-50 miles a day in 10-15 years time (average mileage driver), it may loose 30% of it's original capacity. There may be the option to buy a newer better battery in the years to come, who knows .

The BMW I3 has a completely different battery and so does the E-Golf and Kia Soul all 3 cars have completely different battery, so too has the Renault Zoe so it could very well be that the rest of the batteries last the life of the car. The Model S with it's 85 Kwh battery will last the life of the car because it't so big that it will still be highly useful in 10-15 years even with a 30% reduction in capacity.

The I3/Model S battery is thermally controlled which will always help, As ev batteries increase in capacity there will be far less stresses on the battery.

The Leaf was a first Gen EV designed in 2009 with the best available technology at the time, and sacrifices had to be made and already there have been significant advances in the technology it's just cost is the main factor.

The Audi R8 E-Tron will have a 95 Kwh battery which is about 10 Kwh more than the Model S in a much smaller chassis, this is a major achievement if true and what the technology is I have no clue, possibly lithium air.

One thing is for sure electrics will improve greatly in the next 3-8 years.

I must say it's a great thing being off petrol and diesel and despite having to currently fast charge for 30 mins daily over lunch I wouldn't go back I love driving it so much. Work will be installing a charge point in the coming months.

You did have to bring up leccy cars didn't you ?

L-M

The only time the mileage limit comes into effect is if you're handing the car back to the bank/dealer/whom ever has underwritten the gfv and walking away from it.

If you're trading or selling the car the gfv is just an outstanding balance.

[Deleted User]

Right, lets see if I got this.

1 GFV matters if you want to buy the car at the end of the contract ? This is your balloon ?

2 The GFV is equity in the car if any going forward to a new contract ?

3 Excess mileage will be charged if you hand the car back ?

3 Excess mileage will be deducted from the GFV if going forward to a new PCP contract ?

I'm not really sure how the excess mileage works now, if I go to a new PCP in 2.5-3 years and have 50,000 Kms over, that devalues the car and someone's got to pay, me ? @ 0.8 C per Km that would amount to 4 K ?

mickdw

[Deleted User] wrote: »

Right, lets see if I got this.

1 GFV matters if you want to buy the car at the end of the contract ? This is your balloon ?

2 The GFV is equity in the car if any going forward to a new contract ?

3 Excess mileage will be charged if you hand the car back ?

3 Excess mileage will be deducted from the GFV if going forward to a new PCP contract ?

I'm not really sure how the excess mileage works now, if I go to a new PCP in 2.5-3 years and have 50,000 Kms over, that devalues the car and someone's got to pay, me ? @ 0.8 C per Km that would amount to 4 K ?

Still not got it.
You are correct on point 1 but Gfv is the outstanding balance owed and as such is important in all circumstances.
Wrong on point 2. The equity in the car is the actual value at year 3 minus the fixed gfv that you owe.
Yes, excess mileage will be charged as a direct further cost to you if you hand back the car. That would be a silly option to take as you would be giving away any equity in the car and also paying them for excess mileage.

With the excess mileage you mention, if you hand back the car, the dealer will say fine. The car covers the remainder owed(GFV) but you need to pay them 4k as you have gone over the agreed mileage.
If you go in with the same car and the same excess mileage and want to buy it outright, you write a cheque for gfv and car is yours. Dealer doesn't give a damn what condition or mileage is on it as he is then finished with it.
If you go in and want to trade up, dealer will offer a price on the car. Is then up to you to see how you like that price. It will likely cover the outstanding amount you owe plus give you a small amount towards the next car.

L-M

To keep your payments the same in year four on the new vehicle the trick is to not put in as much of a deposit day one.

If you put in 8 grand as a deposit now, chances are you're not going to have 8 grand equity the second time round so naturally your monthly payment in going to increase.

I think PCP is a brilliant idea for anyone who changes their car on a 3 year cycle.

[Deleted User]

Limerick man wrote: »

To keep your payments the same in year four on the new vehicle the trick is to not put in as much of a deposit day one.

If you put in 8 grand as a deposit now, chances are you're not going to have 8 grand equity the second time round so naturally your monthly payment in going to increase.

I think PCP is a brilliant idea for anyone who changes their car on a 3 year cycle.

Yeah I'm not a fan of putting large amounts of cash on a car, I just used the 5 K from the Prius.

So if I were to go much over the mileage I could just decide to get a new car after 2.5 years and put the money I would have been hit by excess mileage towards the deposit on the new car ?

Or maybe I have enough equity in the car to give me some kind of deposit, maybe the GFV could be more than 11.5K if the garage wants me to buy a new car bad enough they could decide to give me more for the car ?

L-M

Okay you're still missing out.

The excess mileage thing only becomes an issue if your mileage is astronomical and the value of the car is going to be less than the gfv or if you want to literally hand the car and keys back and walk away and never see it or the garage again (Ie. If you were leaving the country etc.)

Every other instance it's going to be what your car is worth vs. The gfv. Your gfv effectively becomes a balloon.

wandatowell

Quick question, if you have the cash can you pay the balloon payment with the deposit at the start of the finance agreement?

mickdw

wandatowell wrote: »

Quick question, if you have the cash can you pay the balloon payment with the deposit at the start of the finance agreement?

Its not a pcp them, it is effectively a traditional finance agreement then where you would be paying maybe 50 percent up front and the remainder over 3 years, owning the car outright at the end.
That type of deal suits people who have an expensive trade in. The dealer offer these finance deals too at better rates than banks