PCP finance.

0ph0rce0

I can't figure this out myself. I have heard people saying you need the deposit again in three years?

So i buy a car (not correct numbers just example)

€30,000 OTR
Deposit: €8,000
Monthly: €400

After 3 years car is worth €12,000

Does the €12,000 cover the next deposit in three years?

sheff the ref

While PCP deals are based on 3 year terms, has anyone changed every year or every two years while on PCP???

ajamesr

sheff the ref wrote: »

While PCP deals are based on 3 year terms, has anyone changed every year or every two years while on PCP???

In a few months I'll be two years in and I'm thinking of trading up. I'm waiting to see what I'll get offered on the trade in. I rang the VW Bank to check my current amount outstanding and so I know now what I need to get offered on the trade in for it to be worth my while.
Cars like mine are available at dealers for about 22500 at the moment, and I would need to be getting around 20500 on the trade in for me to have the deposit I originally started with. Not sure if dealer will go that high? But then again car is mint with nothing to do put take it of me and put on forecourt. Even still has 1 year Mau Warranty left on it. And I'll have it serviced on service deal before trading in.

Could be that most the depreciation takes place in 1st 2 years and maybe the 3rd year is where you get equity coming back your way.
Anyway its due a service in next week or two and I'll get it valued with view to trading in. Will see then how things break down.

sheff the ref

Would imagine it would be easier get a deal in Year 2 than Year 3, never car, lower mileage, remaining guarantee etc.

ajamesr wrote: »

In a few months I'll be two years in and I'm thinking of trading up. I'm waiting to see what I'll get offered on the trade in. I rang the VW Bank to check my current amount outstanding and so I know now what I need to get offered on the trade in for it to be worth my while.
Cars like mine are available at dealers for about 22500 at the moment, and I would need to be getting around 20500 on the trade in for me to have the deposit I originally started with. Not sure if dealer will go that high? But then again car is mint with nothing to do put take it of me and put on forecourt. Even still has 1 year Mau Warranty left on it. And I'll have it serviced on service deal before trading in.

Could be that most the depreciation takes place in 1st 2 years and maybe the 3rd year is where you get equity coming back your way.
Anyway its due a service in next week or two and I'll get it valued with view to trading in. Will see then how things break down.

kerosene

is it possible to use the scrappage allowance deal as a deposit for pcp? When the 3 year term is up, is the outstanding payment for full ownership due in a lump sum or can a further finance agreement be reached?

Lantus

If the manufacturer is offering scrappage then it can be used as the deposit. Nissan being the obvious offer out there for 4 k.

ajamesr

So I got a dealer to give me trade in price - it was nearly reasonable. Similar cars are tipping 22,950 on the Main Dealers website - good few around 22,500 and 21,900 for much higher mileage examples.
I appreciate that they won't sell for that, dealers probably allowing room for negotiation with buyer, but still have to think they'll be looking to take at least 21,800 for the one listed 22,950.
I got offered 19,000 for mine on trade in, which still has 1 year Manu Warranty left. I felt this was at least 500 too low, and I was expecting to get maybe 20,000 from the dealer - I mean if he shifts mine for 21,500, thats not bad for a straight forward turnaround for them.

But then I asked to negotiate the MRSP on the new car I was interested in. He was almost insulted, said he had allowed all his margin on the trade in and the MRSP was the MRSP thats its, no discount.

So no value on trade in if thats the attitude. And I'd imagine when the 3 years PCP is up they will feel they have you over more of a barrel because you are now under pressure to make a decision.
I reckon I'll look into selling privately, get my 20,000, clear the finance take my balance and go in with no trade in to get % of MRSP.
Having spent some time looking around I think 5% of MRSP is very achievable.

micks_address

ajamesr wrote: »

So I got a dealer to give me trade in price - it was nearly reasonable. Similar cars are tipping 22,950 on the Main Dealers website - good few around 22,500 and 21,900 for much higher mileage examples.
I appreciate that they won't sell for that, dealers probably allowing room for negotiation with buyer, but still have to think they'll be looking to take at least 21,800 for the one listed 22,950.
I got offered 19,000 for mine on trade in, which still has 1 year Manu Warranty left. I felt this was at least 500 too low, and I was expecting to get maybe 20,000 from the dealer - I mean if he shifts mine for 21,500, thats not bad for a straight forward turnaround for them.

But then I asked to negotiate the MRSP on the new car I was interested in. He was almost insulted, said he had allowed all his margin on the trade in and the MRSP was the MRSP thats its, no discount.

So no value on trade in if thats the attitude. And I'd imagine when the 3 years PCP is up they will feel they have you over more of a barrel because you are now under pressure to make a decision.
I reckon I'll look into selling privately, get my 20,000, clear the finance take my balance and go in with no trade in to get % of MRSP.
Having spent some time looking around I think 5% of MRSP is very achievable.

Yeah so I contacted my dealer yesterday. I've 15 months left to run on my pcp.. If I bought a car worth 49k he was giving me 6k equity for my own once finance cleared.. 4k if I bought a car worth 35k..id assume I'll be looking at something like 4k equity next year if I decide to go pcp again.. Basing that on having cleared more of the finance by the time we get there.

I'll have to look at prices and check what my car would be worth on the market.

If I went for the same deal again I'd say my monthly payment would increase unless I go for a lower mileage allowance...

Millem

ajamesr wrote: »

So I got a dealer to give me trade in price - it was nearly reasonable. Similar cars are tipping 22,950 on the Main Dealers website - good few around 22,500 and 21,900 for much higher mileage examples.
I appreciate that they won't sell for that, dealers probably allowing room for negotiation with buyer, but still have to think they'll be looking to take at least 21,800 for the one listed 22,950.
I got offered 19,000 for mine on trade in, which still has 1 year Manu Warranty left. I felt this was at least 500 too low, and I was expecting to get maybe 20,000 from the dealer - I mean if he shifts mine for 21,500, thats not bad for a straight forward turnaround for them.

But then I asked to negotiate the MRSP on the new car I was interested in. He was almost insulted, said he had allowed all his margin on the trade in and the MRSP was the MRSP thats its, no discount.

So no value on trade in if thats the attitude. And I'd imagine when the 3 years PCP is up they will feel they have you over more of a barrel because you are now under pressure to make a decision.
I reckon I'll look into selling privately, get my 20,000, clear the finance take my balance and go in with no trade in to get % of MRSP.
Having spent some time looking around I think 5% of MRSP is very achievable.

Can you sell it privately before paying off the finance? I assumed you would have to pay off finance first then sell privately?

ajamesr

I think strictly speaking you can "Arrange" a sale, pay the finance then confirm the sale. But as long as you are honest with the buyer and structure it in such a way that they are sure the finance is paid, then there is no problem. Bank just want the balance and buyer just wants the car.
I know of one case where the buyer just contacted the finance company directly and settled the balance then paid the seller the remainder of the agreed sale amount. Essentially thats all the dealer is doing when you trade in. They settle balance with finance company and then put rest of balance towards your next deposit.

sheff the ref

If you have a 142 car, would it be worth moving now and going for a PCP on a 162 rather than waiting for the third year

micks_address wrote: »

Yeah so I contacted my dealer yesterday. I've 15 months left to run on my pcp.. If I bought a car worth 49k he was giving me 6k equity for my own once finance cleared.. 4k if I bought a car worth 35k..id assume I'll be looking at something like 4k equity next year if I decide to go pcp again.. Basing that on having cleared more of the finance by the time we get there.

I'll have to look at prices and check what my car would be worth on the market.

If I went for the same deal again I'd say my monthly payment would increase unless I go for a lower mileage allowance...

mickdw

sheff the ref wrote: »

If you have a 142 car, would it be worth moving now and going for a PCP on a 162 rather than waiting for the third year

I think you are getting the worst deal ever with that particular timing. The trade tend to value 141 and 142 the same so you are loosing out by buying the car late in the year in 2014 and throwing money away again by buying late in 2016. I'd wait for a 171 reg anyway. Possibly an idea might be to finish the 3 years then buy a 171 plate when the 172 is available. That car would be worth more or less the same at end of term as a 172 and you will get a few thousand off purchase.

sheff the ref

A lot of these cars have a 2-3 month wait anyway

mickdw wrote: »

I think you are getting the worst deal ever with that particular timing. The trade tend to value 141 and 142 the same so you are loosing out by buying the car late in the year in 2014 and throwing money away again by buying late in 2016. I'd wait for a 171 reg anyway. Possibly an idea might be to finish the 3 years then buy a 171 plate when the 172 is available. That car would be worth more or less the same at end of term as a 172 and you will get a few thousand off purchase.

micks_address

mickdw wrote: »

I think you are getting the worst deal ever with that particular timing. The trade tend to value 141 and 142 the same so you are loosing out by buying the car late in the year in 2014 and throwing money away again by buying late in 2016. I'd wait for a 171 reg anyway. Possibly an idea might be to finish the 3 years then buy a 171 plate when the 172 is available. That car would be worth more or less the same at end of term as a 172 and you will get a few thousand off purchase.

I think I'll hold on till end on year three and see.. If I want to stick with Honda the new civic should be around a couple of months at that stage.. My current civic tourer even though was mid spec, I've pretty much turned it into a top spec with high end double din unit, leather upholstery with heated seats and auto dimming mirror (which Honda said couldn't be done) ive a few other nice touch like ambient foot well lighting, steel pedal covers, custom steel foot rest plate.. I doubt I'd see the value in the additions back in a trade.. Trading for a 162 tourer would be pointless as would be very much like for like.. I'm currently on 1.6 diesel.. The mpg is phenomenal but I'd like more power (currently 120bhp) I'd also like an auto box.. And I'm leaning back towards petrol..

Here's a 131 civic with similar mileage to what I'll have next year.. Spec not as good as mine but probably ball park price i could expect in a trade next year.

17500

http://m.carzone.ie/used-cars/Honda/Civic-I-DTEC-SE/201114563053020600

Cheers,
Mick

jj90120

I'm just nearing the end of a 3 year term and a bit disappointed with the dealer offer,
Originally
21000 OTR
3000 deposit
8200 GFV
350 monthly repayment
Mileage allowance 30000 km per annum.

I've been offered 10500 as trade in against a new car (21000OTR) so left with 2300 of equity and without further deposit monthly repayment jumps to 409.

I'd prefer to change to a better quality car so not inclined to stick with the same manufacturer.

21000 OTR
3000 deposit
8200 GFV
350 monthly repayment...........

That's €15600 (repayments and deposit) it's cost you to drive the car for 3 years, certainly an example where a loan over 5 years might have been a better option.

mickdw

Augeo wrote: »

21000 OTR
3000 deposit
8200 GFV
350 monthly repayment...........

That's €15600 (repayments and deposit) it's cost you to drive the car for 3 years, certainly an example where a loan over 5 years might have been a better option.

Well if they put 3k down originally and the car is worth 2300 more than is owed on it, the true cost over the 3 year is the repayments plus 700 unless they were to hand the car back but that would be idiotic.

mickdw

jj90120 wrote: »

I'm just nearing the end of a 3 year term and a bit disappointed with the dealer offer,
Originally
21000 OTR
3000 deposit
8200 GFV
350 monthly repayment
Mileage allowance 30000 km per annum.

I've been offered 10500 as trade in against a new car (21000OTR) so left with 2300 of equity and without further deposit monthly repayment jumps to 409.

I'd prefer to change to a better quality car so not inclined to stick with the same manufacturer.

There is something else changing besides the deposit belong 700 less than last time. That smaller deposit would only lead to a small increase monthly - 20 quid plus interest so there is something else. Is the gfv significantly less on the new deal or is the interest rate significantly different or what?

jj90120

mickdw wrote: »

There is something else changing besides the deposit belong 700 less than last time. That smaller deposit would only lead to a small increase monthly - 20 quid plus interest so there is something else. Is the gfv significantly less on the new deal or is the interest rate significantly different or what?

very similar terms again, 6.9% apr and similar gfv with the same 30k km pa.
I'm going to shop around, good to learn from this thread about not being tied to the same make.

mickdw

jj90120 wrote: »

very similar terms again, 6.9% apr and similar gfv with the same 30k km pa.
I'm going to shop around, good to learn from this thread about not being tied to the same make.

Seriously, the figures don't add up from what you tell us. Either you are making a mistake in the figures you have reproduced here or the dealer is making a mistake. Why pay €59 extra × 36 months to make up only a 700 shortfall?
That extra payment amounts to 2124.

mickdw

mickdw wrote: »

Well if they put 3k down originally and the car is worth 2300 more than is owed on it, the true cost over the 3 year is the repayments plus 700 unless they were to hand the car back but that would be idiotic.

Indeed it would. My point was that over 3 years they've thrown €15600 at a €21K car, a loan would have been preferrable imo. Especially considering there's mention of no cash to add to equity.

mickdw

grogi wrote: »

Cost was 13300.
Cost of depreciation alone is 10500

Cost of financing alone then is 2800.

Now take the average outstanding finance of 13100 over 3 years and interest 6.9%... 2711.... Adds up for me....

Yes agree total cost 13300 going by valuation put on car at end of this term
yes agree depreciation is 10500.
yes agree cost of financing to end of year 3 is 2800.
I don't understand where you are going with the last bit.

jj90120

Augeo wrote: »

Indeed it would. My point was that over 3 years they've thrown €15600 at a €21K car, a loan would have been preferrable imo. Especially considering there's mention of no cash to add to equity.

Haven't even told you the best bit yet, its a 4wd Dacia Duster.

I didn't want to buy with a loan at the start because I didn't know how quality would be in the long term. Initial deposit and monthly repayments suited my circumstances at the time.
However for these monthly figures I could get something better from a different manufacturer.

grogi

mickdw wrote: »

Yes agree total cost 13300 going by valuation put on car at end of this term
yes agree depreciation is 10500.
yes agree cost of financing to end of year 3 is 2800.
I don't understand where you are going with the last bit.

I really don't know what I wanted to show there... Nevertheless, the new deal seems off to me:

With the given parameters:
* €21000 OTRP
* €2300 deposit
* €8200 GFV
* 6.9% interest

The monthly payment should be €371. Nowhere close to the mentioned €409!

sheff the ref

Would subbing in €700 to give a €3000 deposit again allow you to retain the same repayments

Otherwise chase lower interest deals

jj90120 wrote: »

I'm just nearing the end of a 3 year term and a bit disappointed with the dealer offer,
Originally
21000 OTR
3000 deposit
8200 GFV
350 monthly repayment
Mileage allowance 30000 km per annum.

I've been offered 10500 as trade in against a new car (21000OTR) so left with 2300 of equity and without further deposit monthly repayment jumps to 409.

I'd prefer to change to a better quality car so not inclined to stick with the same manufacturer.

grogi

jj90120 wrote: »

Haven't even told you the best bit yet, its a 4wd Dacia Duster.

I didn't want to buy with a loan at the start because I didn't know how quality would be in the long term. Initial deposit and monthly repayments suited my circumstances at the time.
However for these monthly figures I could get something better from a different manufacturer.

IMHO 6.9% is extortion...

jj90120

jj90120 wrote: »

Haven't even told you the best bit yet, its a 4wd Dacia Duster..........

Quite sellable to be fair, there's a market there for them

Ryath

jj90120 wrote: »

very similar terms again, 6.9% apr and similar gfv with the same 30k km pa.
I'm going to shop around, good to learn from this thread about not being tied to the same make.

Skoda are doing 0% finance on the Yeti

Skoda site is not working properly at the minute so can't link to the finance calculator. On the road rrp of the entry level Active 2.0tdi 4wd is €28600 €27000 is definitely achievable maybe even €26600 going on prices we got for the Octavia. As I said can't use calculator at minute but repayments would be about €390-395 a month with minimum 10% deposit. Far better putting the €2800 interest to a better car when you can get it on 0% finance makes up to half the cost of going up to the yeti from the duster.

ajamesr

So I have contacted 2 different dealers now and neither were willing to offer any discount of the MRSP if I was trading a car in. Both basically said they are giving all their margin on the trade in value - which is not all that great an offer in the first place. Seems to me its just pure greed. They want to make a bundle on the trade-in and at the same time make a killing on the new car sale, all while telling you that they are doing you a favor.
Is anyone actually paying the full MRSP? Honestly I'd really like to know if they should be as insulted as they are acting when I ask for discount?

And is anyone else sick of sales guys just keen on quoting "Monthlies" at you. I can figure out my own monthly repayments, I just need 2 pieces of info from you - 1. How much for my car? & 2. How much for the new car? - end of story.
They try to cloud up everything by just giving you the "well this is how much it will cost a month" - yehh but how much are you giving me for my car and how much is the new car? Once I squeezed this info out of one guy, turned out his figures didn't match mine - because he was adding in an extra 500 for metallic, when the colour I wanted wasn't metallic, and he was charging an extra 800 for delivery when 600 was already included in the price as a recommended deliver charge - so he wanted to charge me 1400 for delivery when the recommended delivery and related charged on the manufactures website is 600.
How difficult is it to just get a straight guy to give you straight figures with straight talk?
Its a sellers market at the moment I'm afraid - they are selling so many new cars right now that there is no incentive for them to negotiate. I'm afraid sellers hold all the cards at the moment.
Caveat emptor!!

Headshot

Iv had a real soar experience with my garage and I have a PCP with this garage and its up next year.

I was hope to upgrade the car next year to a higher spec but I dont really want to deal with this garage any more so iv have a PCP contract, do I have to deal with this said garage or can I go to another garage that has the same make of cars and deal with them and would they honour the contract?

ajamesr

Headshot wrote: »

Iv had a real soar experience with my garage and I have a PCP with this garage and its up next year.

I was hope to upgrade the car next year to a higher spec but I dont really want to deal with this garage any more so iv have a PCP contract, do I have to deal with this said garage or can I go to another garage that has the same make of cars and deal with them and would they honour the contract?

No need to stick with same garage or even same make of car. Its just a finance agreement. As long as they get paid they don't care who you deal with. Any garage will be happy to take your trade-in, pay the finance company what they are owed and give you the balance as a deposit towards your next car.

mickdw

Headshot wrote: »

Iv had a real soar experience with my garage and I have a PCP with this garage and its up next year.

I was hope to upgrade the car next year to a higher spec but I dont really want to deal with this garage any more so iv have a PCP contract, do I have to deal with this said garage or can I go to another garage that has the same make of cars and deal with them and would they honour the contract?

As said, you should shop around. Pcp is not complex. You can request a settlement figure from your finance company. Walk into any dealer of any make of car and they will work with you - it's all about selling cars after all.
Regardless of experience with dealer, everyone should be shopping around like this when nearing pcp end.

ajamesr

Spoke to another dealer today and he explained that while sales are good for the first quarter, the real reason why trade-ins are not making the money we would like them to make is because PCP has flooded the market with high quality second hand cars and most fore courts are full with them. Most buyers are now opting for the New Car via PCP as it so affordable and as a result less second hand cars are shifting.
So that would indicate that there might be some real value and bargaining to be done in the second hand market. So maybe think about sticking to the same year as you are trading in, but come way up in spec of car. Maybe they might need to start offering the PCP deal on the second hand cars in order to start shifting them.
I imagine you could get some rear nice 2014 cars in and around the 30,000 mark that probably cost well over 40,000 new. But if no PCP available for that 30,000 - the newer car would seem a more attractive offer, especially at some of the low interest rates available. Bank Car Loans and Credit Union loans just don't seem to come near those interest rates.

Sono

ajamesr wrote: »

Spoke to another dealer today and he explained that while sales are good for the first quarter, the real reason why trade-ins are not making the money we would like them to make is because PCP has flooded the market with high quality second hand cars and most fore courts are full with them. Most buyers are now opting for the New Car via PCP as it so affordable and as a result less second hand cars are shifting.
So that would indicate that there might be some real value and bargaining to be done in the second hand market. So maybe think about sticking to the same year as you are trading in, but come way up in spec of car. Maybe they might need to start offering the PCP deal on the second hand cars in order to start shifting them.
I imagine you could get some rear nice 2014 cars in and around the 30,000 mark that probably cost well over 40,000 new. But if no PCP available for that 30,000 - the newer car would seem a more attractive offer, especially at some of the low interest rates available. Bank Car Loans and Credit Union loans just don't seem to come near those interest rates.

Interesting points you make there, never thought about that where the second hand market would have some nice cars for sale, especially with the restriction on mileage and loyalty to get the car serviced by the main dealer you know you are getting a very decent car for the money, give it another couple of years and I think the second hand market will really show all these pcp cars as it really seems to have taken off this year according to new car sales.

mickdw

ajamesr wrote: »

Spoke to another dealer today and he explained that while sales are good for the first quarter, the real reason why trade-ins are not making the money we would like them to make is because PCP has flooded the market with high quality second hand cars and most fore courts are full with them. Most buyers are now opting for the New Car via PCP as it so affordable and as a result less second hand cars are shifting.
So that would indicate that there might be some real value and bargaining to be done in the second hand market. So maybe think about sticking to the same year as you are trading in, but come way up in spec of car. Maybe they might need to start offering the PCP deal on the second hand cars in order to start shifting them.
I imagine you could get some rear nice 2014 cars in and around the 30,000 mark that probably cost well over 40,000 new. But if no PCP available for that 30,000 - the newer car would seem a more attractive offer, especially at some of the low interest rates available. Bank Car Loans and Credit Union loans just don't seem to come near those interest rates.

Absolutely, I think it will follow that pcp will have to be offered much more widely. Sure some are offering it now on slightly used but even at that I notice vw for example were offering 0 percent on the new car pcp and 5.9 on a demo making the new car a better bet once again.
A pcp on 3 year old would be interesting. I guess the danger here is lack of manufacturer warranty for the period of any deal and the greater risk re condition of car coming back.
I think a gap in the market at the minute is a pcp solution on 3 year old stuff with very small deposit.
If the dealers can get people with little deposit into good quality used cars for small monthly, they will be onto a winner in terms of moving used stock.

ajamesr

For the most part at the moment, if you want to buy a 2 year old car you will need a standard Bank Car loan or CU Loan. Say the car is 21000 and you have 3000 deposit, balance is 18000. @ 7.5% over 3 years that will be €557 a month costing almost €2100 in interest. Even over 5 years its €360 a month costing over €3500 in interest.

I'd rather pay €450 a month for a €30,000 car and keep trading in every 2 or 3 years and have a new car under warranty, will give me no problems, probably have a service plan included. All I need to do is put fuel in and the odd tyre.

We are obsessed with "owning" everything. Sometimes there is sense in effectively renting some things. Especially at pretty low interest rates. I don't really want to pay €557 a month for three years to OWN a 5 year old car at the end of it. A five year old car, that will only get older, and is a constantly depreciating asset. Its not the best way to invest money. It will not rise in value. Property is different. Probably makes sense to own if you can as your property may well rise in value at some time in the future. Your car will not.

I'd rather pay €450 a month every month and have a new and reliable car where no surprise expenses are going to jump out at me. I will almost always have my deposit amount as equity in the car at most stages. And just accept that I am effectively renting - or paying off the depreciation.
A car is NEVER an investment.
PCP makes new cars affordable, and to me in my situation, it makes more sense to go for the PCP offer on a new car at low interest rate rather than pay more than that in monthly repayments for a secondhand car just so that I can own it at then end of 3 or 5 years at which point it is 5 or 7 years old and now I will only want to trade it in to buy another car anyway and I am back to square one of borrowing money again anyway.
Great if you are going to hang on to it and drive it into the ground, but remember driving cars into the ground costs money as well. Not going to scrap a car just becasue clutch is gone, get clutch done. Year later - not going to scrap the car just because fuel pump is gone ( and already invested in clutch being done) get fuel pump done. Year later - not going to scrap car just because " whatever" ( and I already invested in clutch and fuel pump) get "whatever" done. And so on and so on. Costs money to drive a car into the ground. Unless everything goes bang at once. I know, I have been there.

Now if they make PCP options available on the 2 year old cars - I'm all ears.

grogi

ajamesr wrote: »

For the most part at the moment, if you want to buy a 2 year old car you will need a standard Bank Car loan or CU Loan. Say the car is 21000 and you have 3000 deposit, balance is 18000. @ 7.5% over 3 years that will be €557 a month costing almost €2100 in interest. Even over 5 years its €360 a month costing over €3500 in interest.

I'd rather pay €450 a month for a €30,000 car and keep trading in every 2 or 3 years and have a new car under warranty, will give me no problems, probably have a service plan included. All I need to do is put fuel in and the odd tyre.

We are obsessed with "owning" everything. Sometimes there is sense in effectively renting some things. Especially at pretty low interest rates. I don't really want to pay €557 a month for three years to OWN a 5 year old car at the end of it. A five year old car, that will only get older, and is a constantly depreciating asset. Its not the best way to invest money. It will not rise in value. Property is different. Probably makes sense to own if you can as your property may well rise in value at some time in the future. Your car will not.

I'd rather pay €450 a month every month and have a new and reliable car where no surprise expenses are going to jump out at me. I will almost always have my deposit amount as equity in the car at most stages. And just accept that I am effectively renting - or paying off the depreciation.
A car is NEVER an investment.
PCP makes new cars affordable, and to me in my situation, it makes more sense to go for the PCP offer on a new car at low interest rate rather than pay more than that in monthly repayments for a secondhand car just so that I can own it at then end of 3 or 5 years at which point it is 5 or 7 years old and now I will only want to trade it in to buy another car anyway and I am back to square one of borrowing money again anyway.
Great if you are going to hang on to it and drive it into the ground, but remember driving cars into the ground costs money as well. Not going to scrap a car just becasue clutch is gone, get clutch done. Year later - not going to scrap the car just because fuel pump is gone ( and already invested in clutch being done) get fuel pump done. Year later - not going to scrap car just because " whatever" ( and I already invested in clutch and fuel pump) get "whatever" done. And so on and so on. Costs money to drive a car into the ground. Unless everything goes bang at once. I know, I have been there.

Now if they make PCP options available on the 2 year old cars - I'm all ears.

Supply and demand.

As a result of first wave of pcp cars, second hand will get cheaper. Lower Gfv brings payments up.

In result PCP becomes less attractive. Some people will prefer renting new, some will find perfect sense in owing slightly older.

Falcon L

I'm sure I saw an Audi dealer in Dublin offer PCP finance on cars up to 3 years old.

acronym Chilli

ajamesr wrote: »

For the most part at the moment, if you want to buy a 2 year old car you will need a standard Bank Car loan or CU Loan. Say the car is 21000 and you have 3000 deposit, balance is 18000. @ 7.5% over 3 years that will be €557 a month costing almost €2100 in interest. Even over 5 years its €360 a month costing over €3500 in interest.

I'd rather pay €450 a month for a €30,000 car and keep trading in every 2 or 3 years and have a new car under warranty, will give me no problems, probably have a service plan included. All I need to do is put fuel in and the odd tyre.

We are obsessed with "owning" everything. Sometimes there is sense in effectively renting some things. Especially at pretty low interest rates. I don't really want to pay €557 a month for three years to OWN a 5 year old car at the end of it. A five year old car, that will only get older, and is a constantly depreciating asset. Its not the best way to invest money. It will not rise in value. Property is different. Probably makes sense to own if you can as your property may well rise in value at some time in the future. Your car will not.

I'd rather pay €450 a month every month and have a new and reliable car where no surprise expenses are going to jump out at me. I will almost always have my deposit amount as equity in the car at most stages. And just accept that I am effectively renting - or paying off the depreciation.
A car is NEVER an investment.
PCP makes new cars affordable, and to me in my situation, it makes more sense to go for the PCP offer on a new car at low interest rate rather than pay more than that in monthly repayments for a secondhand car just so that I can own it at then end of 3 or 5 years at which point it is 5 or 7 years old and now I will only want to trade it in to buy another car anyway and I am back to square one of borrowing money again anyway.
Great if you are going to hang on to it and drive it into the ground, but remember driving cars into the ground costs money as well. Not going to scrap a car just becasue clutch is gone, get clutch done. Year later - not going to scrap the car just because fuel pump is gone ( and already invested in clutch being done) get fuel pump done. Year later - not going to scrap car just because " whatever" ( and I already invested in clutch and fuel pump) get "whatever" done. And so on and so on. Costs money to drive a car into the ground. Unless everything goes bang at once. I know, I have been there.

Now if they make PCP options available on the 2 year old cars - I'm all ears.

€450 a month is €5400 a year. Seems a lot to me, you can buy some decent used cars outright for less. Running car into ground? It's a very bad year when you spend €5400 on repairs!

Motoring is very expensive: add on fuel, tyres, services, tax, etc. The €5400 alone represents nearly €11k of gross salary.

ajamesr

acronym Chilli wrote: »

€450 a month is €5400 a year. Seems a lot to me, you can buy some decent used cars outright for less. Running car into ground? It's a very bad year when you spend €5400 on repairs!

Motoring is very expensive: add on fuel, tyres, services, tax, etc. The €5400 alone represents nearly €11k of gross salary.

Thats true if you are looking to buy a car for around 10,000 or so. And I have done that for many years also. But the point I was making is that if you want to be in a car that is no more than 5 years old then buying a 2 year old one is actually more expensive than buying a new one on PCP. Hence why the market is flooded with 2 and 3 year old cars that no one seems to want.
Those that can afford a 2 or 3 year old car will look at it and think I may as well buy new. And those that are looking to spend around 10,000 mark are not looking at 2 or 3 year old cars anyway.
So at the moment the cars being traded in after 2 years on PCP don't seem to have a target audience that want to buy them.
Does that make sense?

sheff the ref

I would imagine that the secondhand car market for ex PCPs would be far better for smaller cars. €10,000 seems to be an amount of money that can be borrowed over 5 years. The Toyota Yaris, Opel Corsa, Seat Ibiza, VW Polo, Ford Fiesta etc. will be bought for that after 3/4 years

ajamesr wrote: »

Thats true if you are looking to buy a car for around 10,000 or so. And I have done that for many years also. But the point I was making is that if you want to be in a car that is no more than 5 years old then buying a 2 year old one is actually more expensive than buying a new one on PCP. Hence why the market is flooded with 2 and 3 year old cars that no one seems to want.
Those that can afford a 2 or 3 year old car will look at it and think I may as well buy new. And those that are looking to spend around 10,000 mark are not looking at 2 or 3 year old cars anyway.
So at the moment the cars being traded in after 2 years on PCP don't seem to have a target audience that want to buy them.
Does that make sense?

ajamesr

sheff the ref wrote: »

I would imagine that the secondhand car market for ex PCPs would be far better for smaller cars. €10,000 seems to be an amount of money that can be borrowed over 5 years. The Toyota Yaris, Opel Corsa, Seat Ibiza, VW Polo, Ford Fiesta etc. will be bought for that after 3/4 years

Absolutely. Or the little Fiat 500. But the 2 or 3 year old 4 door saloons such as A4, Octavia, Mondeo, Insignia or the CLA will find it hard to sell in used car market.
I reckon PCP finance will tighten up over next year or two to give the used car market a chance to shift some cars. Or else the PCP market will expand to include the 3 year old cars as, has been mentioned already, Audi are doing. I think % is 5.9 PCP on the Audi Approved used cars. Thats only 2% over say Skoda's offering and its actually less than say Mazda's rates. So competitive.

Example:
http://audi-waterford.used.audi.ie/finance

26000 Elephants

I'm amazed at the number of people who will gladly pay 5 or 6 grand a year in depreciation and interest just so they dont have to "spend any money on the car"

Brand new cars can be as big a pain in the ass as an older one. While it may not actually cost you money ( other than the 500 a month you are already paying) its very annoying when minor faults have it in the shop for days. More so when you have a recently launched model.

Give me a well minded 3 year old car, which has all its teething issues sorted. Lower payments, less interest and nearly 75% of my money back after 2 years ( assuming average miles) As the purchase price was so much lower, that 25% loss represents a hell of a lot less cash than the 50% lost on a new car.

If you have the wherewithal to afford a new car on PCP, HP or cash, then good luck to you and well wear. But dont try and convince anyone that it is somehow a prudent choice over running an older car. Its not.

mickdw

26000 Elephants wrote: »

I'm amazed at the number of people who will gladly pay 5 or 6 grand a year in depreciation and interest just so they dont have to "spend any money on the car"

Brand new cars can be as big a pain in the ass as an older one. While it may not actually cost you money ( other than the 500 a month you are already paying) its very annoying when minor faults have it in the shop for days. More so when you have a recently launched model.

Give me a well minded 3 year old car, which has all its teething issues sorted. Lower payments, less interest and nearly 75% of my money back after 2 years ( assuming average miles) As the purchase price was so much lower, that 25% loss represents a hell of a lot less cash than the 50% lost on a new car.

If you have the wherewithal to afford a new car on PCP, HP or cash, then good luck to you and well wear. But dont try and convince anyone that it is somehow a prudent choice over running an older car. Its not.

Thats all fair enough but as you say yourself, there are people who are happy to pay 4 to 5k per year just to keep a new car every 3 years.
The way these people see it, it's a known cost - they likely have a known set income also. They know they can afford it and are happy that they won't have to unexpectedly pay for repairs at a bad time etc.
Take 500 quid to 1000 repairs on a cheap car, bit more tax, bit of depreciation, more fuel possibly and you are possibly at a point where the new car costs 2.5k more per year than an old one. In the grand scale of running a car for a year, 2.5k is small money.

Falcon L

mickdw wrote: »

Thats all fair enough but as you say yourself, there are people who are happy to pay 4 to 5k per year just to keep a new car every 3 years.
The way these people see it, it's a known cost - they likely have a known set income also. They know they can afford it and are happy that they won't have to unexpectedly pay for repairs at a bad time etc.
Take 500 quid to 1000 repairs on a cheap car, bit more tax, bit of depreciation, more fuel possibly and you are possibly at a point where the new car costs 2.5k more per year than an old one. In the grand scale of running a car for a year, 2.5k is small money.

Agreed. Also to be taken into account is the 'peace of mind' factor. I spend a lot of time on the M4 London/Pembroke/London. Heading for the 2am ferry in the pishing of rain in a new car is a lot less stressful than it is in a 6 year old, highish mileage car.

The thought of being stuck on the side of the motorway when some component decides it's time has come, and the ferry won't wait for you, and the wife scowling...etc. Worth every penny of the €250 a month PCP.

I know new cars can have their moments too, but on the whole, less likely to leave you stranded than an older, well used car.

26000 Elephants

mickdw wrote: »

Thats all fair enough but as you say yourself, there are people who are happy to pay 4 to 5k per year just to keep a new car every 3 years.
The way these people see it, it's a known cost - they likely have a known set income also. They know they can afford it and are happy that they won't have to unexpectedly pay for repairs at a bad time etc.

We are on the same hymn sheet so far.

Take 500 quid to 1000 repairs on a cheap car, bit more tax, bit of depreciation, more fuel possibly and you are possibly at a point where the new car costs 2.5k more per year than an old one. In the grand scale of running a car for a year, 2.5k is small money.

Bit of depreciation - as opposed to the new one?

why more tax? Lets compare like for like - things havent changed that dramatically between a 131 and a 161 car, have they?

ditto re: fuel consumption.

500 - 1000 repairs would be - as pointed out previously - a bad year for you. But since its still only 1 or 2 payments, its still not an issue. I said its cheaper, not cost free.

Anyway, I think you are just proving my point. Its not cheaper to buy a new car. It never will be. If you can afford it, and you want the new car, then go for it, its a great feeling all right.

Its just not cheaper.

26000 Elephants

Falcon L wrote: »

.... the wife scowling...etc. Worth every penny of the €250 a month PCP.

I think you are being unrealistic if you think you can sustain driving new cars long term on €250 a month.

As for the wife, sorry for your troubles!

Falcon L

26000 Elephants wrote: »

I think you are being unrealistic if you think you can sustain driving new cars long term on €250 a month.

As for the wife, sorry for your troubles!

Well, I'm not into Audi or BMW, so it's entirely possible.

To answer your second point: me too.

SteelyDanJalapeno

26000 Elephants wrote: »

I'm amazed at the number of people who will gladly pay 5 or 6 grand a year in depreciation and interest just so they dont have to "spend any money on the car"

Brand new cars can be as big a pain in the ass as an older one. While it may not actually cost you money ( other than the 500 a month you are already paying) its very annoying when minor faults have it in the shop for days. More so when you have a recently launched model.

Give me a well minded 3 year old car, which has all its teething issues sorted. Lower payments, less interest and nearly 75% of my money back after 2 years ( assuming average miles) As the purchase price was so much lower, that 25% loss represents a hell of a lot less cash than the 50% lost on a new car.

If you have the wherewithal to afford a new car on PCP, HP or cash, then good luck to you and well wear. But dont try and convince anyone that it is somehow a prudent choice over running an older car. Its not.

Any examples of the less interest on older cars finance?

26000 Elephants

Falcon L wrote: »

Well, I'm not into Audi or BMW, so it's entirely possible.

But your payment is just €3000 per year ( €9000 ) which must cover interest and depreciation of @45% at least.

Say your interest charge is €500 per year, that leaves €7500 to cover 45% depreciation, giving a present value of about €16000. You wont even get a basic basic fiesta for that, so you are on to budget brands, like a kia rio or dacia dustbin.

At that point in the market, it doesn't really make sense to PCP, you should be bank or CU loaning. Depreciation on poorly spec'ed budget cars can be cruel.

Also, dont forget your €3200 deposit. Considering you can buy a 131 Sendero for less than €6k, your deposit alone would get you half way to the 131 car.