Pay off car or refinance pcp

lcstress2012 · 21-06-2019 10:51am #1

I have a pcp ending the end of the year and want to keep it. My options are to either pay it off (I have the cash) or to refinance it. I hate loads of direct debits so I might just pay it off with the savings I have made up.

Anyone been in this situation what have you done ?

Lantus · 21-06-2019 11:47am

lcstress2012 wrote: »

I have a pcp ending the end of the year and want to keep it. My options are to either pay it off (I have the cash) or to refinance it. I hate loads of direct debits so I might just pay it off with the savings I have made up.

Anyone been in this situation what have you done ?

People do either or if they can. It's a balance of keeping your savings and paying the dd or using your cash savings and having a dd to replace them now they are spent.

ShadowHearth · 21-06-2019 4:34pm

It's up to you. Everyone have their own way of dealing with money.
PCP spoiled me. It gives me flexibility to pay low monthlies and put away money each week to separate account for when 3 years come.
My plan was to collect enough for balloon, but two years in, I have almost full sum for balloon, but not sure if I just pay it off or use some of it to roll over to another car and keep the rest as starting point for another balloon.
Usually dealers give very good apr for refinance, but problem is, you have to take at least 5k.
The option that you might be handy for you too, is that you can use only half of saved up money and refinance the rest. That way you won't pay too much apr, but you will have a bit of cash "resting" on your account for any repairs or services. Usually it's 3 years warranty and pcp is for 3 years too. So having 3 year old car and a few quid on account is not a bad idea in my books.

MarkN · 21-06-2019 9:39pm

You’re talking about PCP here as if it’s property investment or at the very minimum, stocks and shares.

If you have a lump sum and want to pay it off, pay it off. Setting aside money each month for balloons when you could be putting it into a pension or whatever is a mad way of convincing yourself that you’re being penny wise.

ShadowHearth · 22-06-2019 1:59pm

MarkN wrote: »

You’re talking about PCP here as if it’s property investment or at the very minimum, stocks and shares.

If you have a lump sum and want to pay it off, pay it off. Setting aside money each month for balloons when you could be putting it into a pension or whatever is a mad way of convincing yourself that you’re being penny wise.

Ah sure, it's better just to wait 2 years 11 months and then go: oh ****, I need to come up with 10k for balloon. I take any of my financial actions seriously and plan for them. Including PCP. Maybe if people in this country would take their finances more serious, we wouldn't have that mortgage and bank crash?
Are we Americans now? 10k eu investment? Are you having a laugh? Unless you invest it in drugs, I can't see it bringing you solid money.
Pension? Yeah, good idea, but who said anyone will survive until 70. I prefer to live a bit now, while I can move and my body actually works. That does not mean I don't have savings or living pay check to pay check.

If you think saving money in advance for balloon payment/upgrade is stupid, then I really hope you are minority.

Gael23 · 22-06-2019 5:41pm

If you have the cash they use it. The interest you pay on finance will be much higher than what you will earn keeping the cash in the bank.

DaveyDave · 23-06-2019 2:58pm

If you have the cash then I'd pay it off. No more interest to pay and no more direct debits coming out.

mickdw · 23-06-2019 3:08pm

MarkN wrote: »

You’re talking about PCP here as if it’s property investment or at the very minimum, stocks and shares.

If you have a lump sum and want to pay it off, pay it off. Setting aside money each month for balloons when you could be putting it into a pension or whatever is a mad way of convincing yourself that you’re being penny wise.

I couldnt agree with you here Mark. If someone can truly afford their new car, they can afford sticking a few quid aside to cover paying for it at end of term. That fund will also cover any unexpected poor trade in should they wish to upgrade so very prudent I would say.
Pensions are great but I know a few too many people who maxed out pension payments as a tax efficiency strategy and found themselves completely snookered when recession came and unable to get their hands on any of their money.

Miike · 23-06-2019 4:12pm

MarkN wrote: »

You’re talking about PCP here as if it’s property investment or at the very minimum, stocks and shares.

If you have a lump sum and want to pay it off, pay it off. Setting aside money each month for balloons when you could be putting it into a pension or whatever is a mad way of convincing yourself that you’re being penny wise.

I haven't had a laugh like that in a while, thanks.

Often 0%pcp, low monthly, sticking away a few quid each month for balloon is a sound strategy for people who want to buy a new car and intend on keeping it. Why doesn't he just buy a 2nd hand high nelly and stick the lot into a pension while he's at is sure. At least he'll have an additional .001% of a cent a week when retirement comes around.

Use the cash op.

23-06-2019 4:16pm

ShadowHearth wrote: »

...... Maybe if people in this country would take their finances more serious, we wouldn't have that mortgage and bank crash?
......

Lol....you know where the airport is if we are beneath you

23-06-2019 4:17pm

mickdw wrote: »

....
Pensions are great but I know a few too many people who maxed out pension payments as a tax efficiency strategy and found themselves completely snookered when recession came and unable to get their hands on any of their money.

They'd have been aware of that when they put the money in, to be fair.

James Bond Junior · 23-06-2019 4:22pm

Pay it off, we paid our balloon off in full and sold the car a few months later got €5k more than the balloon.

James Bond Junior · 23-06-2019 4:23pm

Augeo wrote: »

Lol....you know where the airport is if we are beneath you

He is more Irish than most of us! LOL! Coming over here taking arr jabs and wimmin.

23-06-2019 4:25pm

He made a sweeping statement about Irish folk.
Totally unnecessary but if that's how he rolls I'm pointing out he can fook off anytime that suits him.

ShadowHearth · 23-06-2019 5:57pm

Augeo wrote: »

He made a sweeping statement about Irish folk.
Totally unnecessary but if that's how he rolls I'm pointing out he can fook off anytime that suits him.

I talked about people in general, not Irish people, but okay. I live here for over 14 years. Payed tax, always had a job, have Irish misses and Irish step daughter, who is now 100% my daughter. I need to take out Irish passport, and I can, just need to get finger out.
I am pretty sure I contributed to Irish sociaty enough, to not be told to **** off on a boat. And when I say people in here, I mean people in general, as I count myself as one of them.
You have hang ups with foreigners taking your jobs and women? Well I took both of them and made myself a lovely life. So "2 fingers up" m8, have a nice life.

mickdw · 23-06-2019 5:57pm

Augeo wrote: »

mickdw wrote: »

....
Pensions are great but I know a few too many people who maxed out pension payments as a tax efficiency strategy and found themselves completely snookered when recession came and unable to get their hands on any of their money.

They'd have been aware of that when they put the money in, to be fair.

Not to go too far off topic here but yes they would have been aware but all financial advisors would have been pushing the no brainer angle as basically the tax system meant you were doubling up your investment. Nobody foresaw the collapse though and even those who didn't lose all their pension in the collapse couldn't get access to much needed funds to pay the mortgage etc.

DaveyDave · 23-06-2019 6:05pm

Augeo wrote: »

He made a sweeping statement about Irish folk.
Totally unnecessary but if that's how he rolls I'm pointing out he can fook off anytime that suits him.

To be fair a lot of people are stupid with money in this country. There isn't many people I know who have savings. I'm sure this isn't specific to Ireland though but there's plenty of posts on here where people say they can't afford repairs on their car (like the i30 thread, that's a €10,000 car and doesn't have a few hundred for brakes)

Whether it's a friend on low 20k salary, low 30k salary, they're all spend spend spend. Takeaways, package holidays etc then give out when the car tax is due and how they'll be broke for the month the day after getting paid or how they're paying €20 a week off a new washing machine.

I don't think putting money in a pension now makes a difference, if he pays it off now he'll have plenty for a pension when he's not paying for the car every month.

Maybe OP doesn't want to save for a pension now. Maybe he has contributions or is earning a cushy salary and can do pension on top of it all. Everyone's different.

lcstress2012 · 23-06-2019 7:33pm

DaveyDave wrote: »

To be fair a lot of people are stupid with money in this country. There isn't many people I know who have savings. I'm sure this isn't specific to Ireland though but there's plenty of posts on here where people say they can't afford repairs on their car (like the i30 thread, that's a €10,000 car and doesn't have a few hundred for brakes)

Whether it's a friend on low 20k salary, low 30k salary, they're all spend spend spend. Takeaways, package holidays etc then give out when the car tax is due and how they'll be broke for the month the day after getting paid or how they're paying €20 a week off a new washing machine.

I don't think putting money in a pension now makes a difference, if he pays it off now he'll have plenty for a pension when he's not paying for the car every month.

Maybe OP doesn't want to save for a pension now. Maybe he has contributions or is earning a cushy salary and can do pension on top of it all. Everyone's different.

I work in the airport and paying into a workplace pension I’m sure not 25 so that’s a good enough start in my mind.

Gael23 · 23-06-2019 7:49pm

After you use your savings to pay it off, you can always set aside what you were paying on the pcp every month to replenish your savings,

23-06-2019 9:35pm

mickdw wrote: »

Not to go too far off topic here but yes they would have been aware but all financial advisors would have been pushing the no brainer angle as basically the tax system meant you were doubling up your investment. Nobody foresaw the collapse though and even those who didn't lose all their pension in the collapse couldn't get access to much needed funds to pay the mortgage etc.

No one with a diversified fund lost all their pension in the collapse. The markets recovered in 3 to 4 years iirc.

Not being able to access your pension to pay the mortgage is unfortunate if youre up the creek but that's how pensions are.

If you lose you're job/income 95%+ of folk are fooked after a month or two.

A decent QFA will advice having the emergency fund too so your spiel above about all advisors isn't accurate IMO.... Many and most but not all.

Like anything one should diversify their savings too...save some, pension some and pay off loan some.

lcstress2012 · 24-06-2019 5:37pm

A question for anyone here. My gmfv is €7500. Would I be able to pay say €5000 to the finance company now and then the car would nearly be mine once I pay off the full figure ?

bazz26 · 24-06-2019 7:55pm

If you want to keep the car then you pay the GMFV in full on the day it's due which at the end of year 3.

MarkN · 25-06-2019 9:52am

Miike wrote: »

I haven't had a laugh like that in a while, thanks.

Often 0%pcp, low monthly, sticking away a few quid each month for balloon is a sound strategy for people who want to buy a new car and intend on keeping it. Why doesn't he just buy a 2nd hand high nelly and stick the lot into a pension while he's at is sure. At least he'll have an additional .001% of a cent a week when retirement comes around.

Use the cash op.

Majority of PCP isn’t 0%.

Don’t really understand the smart arse reply. I said if you want to pay it off, pay it off.

My main point here is there’s no cars on PCP that are making people money.

Paying monthly for a car and using additional money to also save for year three is all well and good, I’d say the average person on an average wage doing this will be leaving themselves for little else at the end of each month.

Maybe I’m at a different point in my life to you where I can just see better things for the spare cash.

James Bond Junior · 25-06-2019 10:02am

MarkN wrote: »

Majority of PCP isn’t 0%.

Don’t really understand the smart arse reply. I said if you want to pay it off, pay it off.

My main point here is there’s no cars on PCP that are making people money.

Paying monthly for a car and using additional money to also save for year three is all well and good, I’d say the average person on an average wage doing this will be leaving themselves for little else at the end of each month.

Maybe I’m at a different point in my life to you where I can just see better things for the spare cash.

I think that is a bit condescending, we had one car on PCP and a bangernomics beside it on the drive. Balloon payment was paid off in full and the car sold on for a third more than the balloon 6 months later to upgrade. We were never stretched at the end of the month and we earn "average" wages. Everybody's circumstances are different.

MarkN · 25-06-2019 10:22am

Again, I don’t understand how it is condescending JBJ.

If anything, what I am saying is I don’t feel the average person is being represensted by the idea that it’s good to effectively have two car loans. One for the bank and one for the balloon, also for the bank. That’s not real life for a lot of people.

We’re car people so we’re a bit more passionate about the whole thing but I just personally don’t see the point in putting hard saved money into cars. I’m not an anti PCP person either, it is for a lot of people and I totally see why.

What I’m saying is, save money to pay off your mortgage early, that’s a good use of extra cash. Having two drains on income, I don’t see it.

Just my opinion.

25-06-2019 11:02am

MarkN wrote: »

......... what I am saying is I don’t feel the average person is being represensted by the idea that it’s good to effectively have two car loans. One for the bank and one for the balloon, also for the bank. That’s not real life for a lot of people........................

What I’m saying is, save money to pay off your mortgage early, that’s a good use of extra cash. Having two drains on income, I don’t see it.

................

I get you 100% and I agree.

Pensions and mortgages aren't on loads of people's radar unfortunately.
A car on PCP very much is.

We've folk with a car on PCP swaggering around like a dog with two l@ngers as they've spare cash to save for the balloon payment but they sneer at pensions and you can be almost sure they don't have a mortgage.

James Bond Junior · 25-06-2019 11:22am

MarkN wrote: »

Again, I don’t understand how it is condescending JBJ.

If anything, what I am saying is I don’t feel the average person is being represensted by the idea that it’s good to effectively have two car loans. One for the bank and one for the balloon, also for the bank. That’s not real life for a lot of people.

We’re car people so we’re a bit more passionate about the whole thing but I just personally don’t see the point in putting hard saved money into cars. I’m not an anti PCP person either, it is for a lot of people and I totally see why.

What I’m saying is, save money to pay off your mortgage early, that’s a good use of extra cash. Having two drains on income, I don’t see it.

Just my opinion.

OK I took you up the wrong way clearly. A CU loan for the balloon if you want to keep the car can make sense too. I have a friend who hates anything on finance and actually has a sense of superiority over people who finance but has al load of savings sitting in his current account doing nothing. That isn't a financial good move either.

I moved from one side to the other and back to the idea of finance again. I'd rather finance something like a car and leave my savings intact to pursue other avenues such as topping up my pension or investments. My car being a fixed monthly cost appeals to me more than blowing all of my savings but then again that isn't a hard or fast rule either. I will quite likely buy my next car for cash but that will be be more to do with circumstances than anything else. And btw I have a mortgage and an aggressive AVC plan too! LOL!

MarkN · 25-06-2019 11:50am

I don’t want to derail the thread anyway, I really am not Mr Prudent, I’ve spent money on car loans that would make grown men weep, I suppose I’m at the other side now where I just look back and don’t have regrets but would think twice now about huge monthly outgoings on cars.

Not aimed at anyone in here but there’s so much confusion with PCP that if I see someone trying to make sense of it being ‘free money’ I get nervous.

Pay off car or refinance pcp

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