PCP finance.

SteelyDanJalapeno

APR must be quite high on that?

You should go in and talk to dealers, me and my partner both picked up motors with 0% APR recently, saved a nice bit overall.

Jasper79

djPSB wrote: »

Approx figures I get over the phone were:
New 1.6 Trendline Golf would cost approx €27,000

20% deposit =€5400
36 monthly payments at €404 p/m=€14,555

Value at end of 36 months =€9500

So handing the car back at the end isn't really an option as I would have already spent >€20000 on the car.

That seems quite high price, speced a 1.6 trendline with the tech pack and metalic paint at €23,322, what's the extra 4k for ? delivery ?

Casey78

Anyone know of any dealers doing PCP on second hand cars?

Drummerboy08

It's probably cheaper to pcp a Highline model with the lower APR.

Most dealers offer used PCP also.

jimmycrackcorm

djPSB wrote:

Value at end of 36 months =€9500

Can you buy a three year old golf for 9500 especially based on the original price spec you gave?

Seems a bit low.

djPSB wrote:

So handing the car back at the end isn't really an option as I would have already spent >€20000 on the car.

Like saying renting is dead money...

vandriver

Jasper79 wrote: »

That seems quite high price, speced a 1.6 trendline with the tech pack and metalic paint at €23,322, what's the extra 4k for ? delivery ?

2013 Golfs start at 15k on cars Ireland .It looks like they've priced in a full deposit for your next car in 3 years.

opinionated3

I've being following this thread for a while now and it seems to me that pcp is not something that will suit the typical average paid irish worker. I think the big problem is not the initial 3 years ...it's the decision time when the 3 years is up. I can't see there enough equity in most cars to see a person continue on with a new car again and keep the same repayments. I realise that the option is there to refinance the current car and pay it off over a longer term but obviously that won't suit someone who got into pcp on the basis of upgrading every three years.

Drummerboy08

It all depends on the initial deposit amount. If it's a 10/15% deposit then it should be ok but any higher and you're going to be topping your next deposit up to keep your payments the same.

opinionated3

I think you could be bang on with that assessment. A friend of mine enquired about pcp with a hyundai dealership and the salesman was dropping hints that he shouldn't put down a deposit higher than 20% of the cars worth. ....

digiman

My own view on how much deposit to put down is all based on the interest rate. The lower the interest rate the lower your deposit should be, and the higher the interest rate the higher your deposit should be. Your main concern is how much the car will cost you over the 3 years as the GFV will be the same no matter how much deposit you put down. The cost over 3 years is the deposit plus the 36 monthly payments.

E.g. Car is worth €33,000
Deposit is €10,000
GFV is €10,000

0.1% Interest, 36 payments at €362.50 Cost of car is €23050.00
5.9% Interest, 36 payments at €444.06 Cost of car is €25986.16

E.g. Car is worth €33,000
Deposit is €3,000
GFV is €10,000

0.1% Interest, 36 payments at €557.25 Cost of car is €23061.00
5.9% Interest, 36 payments at €656.70 Cost of car is €26641.20

So by putting down a smaller deposit you end up paying €700 extra in interest over the 3 years

26000 Elephants

opinionated3 wrote: »

I've being following this thread for a while now and it seems to me that pcp is not something that will suit the typical average paid irish worker. I think the big problem is not the initial 3 years ...it's the decision time when the 3 years is up. I can't see there enough equity in most cars to see a person continue on with a new car again and keep the same repayments. I realise that the option is there to refinance the current car and pay it off over a longer term but obviously that won't suit someone who got into pcp on the basis of upgrading every three years.

The problem is that PCP allows people to finance cars they otherwise might not afford. If you are realistic in your deposit and monthlies, then there is no reason why you wont be able to get back into a similar car in 3 years for similar money.

But if you look for small payments it ill be almost impossible to get another car without finding an extra few quid from somewhere.

MuddyDog

What happens if the GMFV is higher than the maximum 31% deposit of the new car you want to trade it in for after 3 years?

Lux23

It never would be, they would find some way to make sure it doesn't. In fact, you could end up owning them money.

MuddyDog

Lux23 wrote: »

It never would be, they would find some way to make sure it doesn't. In fact, you could end up owning them money.

Why would it never be? The dealer would not know what new car I'd want after 3 years. If my gmfv on my current pcp deal is 20k and after 3 years I want a 40k car then what happens?

Marcusm

Lux23 wrote: »

It never would be, they would find some way to make sure it doesn't. In fact, you could end up owning them money.

Huh? Do you understand PCP? The outstanding finance at the end of the 3 years is the GMFV; if the car is worth more than this it forms part of a deposit for a new vehicle. If the car is worth less than the GMFV/finance balance then that is a problem for the finance company.

Most PCP is provided by the captive finance subsidiaries of the motor manufacturers and they generally set the GMFV to be at a level below what the expected value will be to try and ensure that the customer will roll into a new PCP on a new vehicle at roughly the same monthly rate.

This is how PCP works, they need you to get hooked on a new car. Provided there is no shock and there is not a glut of secondhand PCP cars driving down residual values, it helps them establish a nice addictive 3 year cycle.

grogi

MuddyDog wrote: »

Why would it never be? The dealer would not know what new car I'd want after 3 years. If my gmfv on my current pcp deal is 20k and after 3 years I want a 40k car then what happens?

You clearly don't understand the scheme...

GMFV is how much you owe in three years, not how much you have...

Blazer

good calculator for pcp

http://www.icalculator.info/terminology/GMFV-final-payment.html

Heat_Wave

Hi guys,

Volkswagen have an APR of 3.9% for their PCP plan.

Can anyone tell me, does this apply to all Volkswagen garages in Ireland? Also, is there any movement/negotiation on this? It is very high.

carloscorreia

On the volkwagen.ie website I can see some models with 1.9% APR (Golf GTD/GTI,etc.) and other models at 5.9% like the new Tiguan.

Drummerboy08

How is 3.9% APR high?!

conzy

Heat_Wave wrote: »

Hi guys,

Volkswagen have an APR of 3.9% for their PCP plan.

Can anyone tell me, does this apply to all Volkswagen garages in Ireland? Also, is there any movement/negotiation on this? It is very high.

Not only is that lower than most other car dealers, its less than half the rate you will get from your credit union or bank. Which will be ~8% and ~10% respectively

mickdw

Drummerboy08 wrote: »

How is 3.9% APR high?!

Its very high compared to zero percent that they were offering. And they were offering that on newer models too not just run out stuff.

Heat_Wave

mickdw wrote: »

Its very high compared to zero percent that they were offering. And they were offering that on newer models too not just run out stuff.

Exactly.

conzy

They only seem to offer 0% on vehicles with a higher margin. Makes sense

jca

Skoda are still doing 0% on all models except the Superb

Drummerboy08

mickdw wrote: »

Its very high compared to zero percent that they were offering. And they were offering that on newer models too not just run out stuff.

Everything is high compared to 0% tho. Please remember that 0% finance will not be around forever, it's almost like a drug at the moment. Consumers will have to be weaned off it as time goes on.

3.9% APR is still a highly competitive rate, i certainly wouldn't call it high.

bazz26

conzy wrote: »

They only seem to offer 0% on vehicles with a higher margin. Makes sense

Or run out models that are soon to be facelifted or replaced e.g. the Golf.

grogi

Drummerboy08 wrote: »

Everything is high compared to 0% tho. Please remember that 0% finance will not be around forever, it's almost like a drug at the moment. Consumers will have to be weaned off it as time goes on.

3.9% APR is still a highly competitive rate, i certainly wouldn't call it high.

No, it will. It's just a marketing gimmick.

When you are offered 0% finance, the sale makes money somewhere else - thus there is a cash discount to be negotiated. Money costs - around 3% per year.

Thus if one finances 30k car with 10k deposit and GFMV in 3 years of 12k, the average finance balance over the period of PCP is €16,000. 3years * 16k * 3% ~= 1.5k. That's how much the 0% PCP costs the seller - and that's more-less what you could get on top of scrappage etc. when you pay cash.

Drummerboy08

I understand how it works.

Interest rates are low at the moment from the ECB but will rise in the near future. 0% is subsidised by the manufacturer, not the dealer, much like the scrappage offers that are currently out there.

It's also why you rarely see manufacturer backed scrappage AND 0% on new cars.

It's a simple fact that 0% will not be around forever, and the likes of VW Bank have already stated this to dealers an customers alike.

Just something to be aware of, especially if you are buying a run out model or older model as the 0% will more than likely not be there in 3 years time on the replacement car.

Heat_Wave

Would it be cheaper to order a car in the UK and go PCP on it, rather than here?

Can you even go the PCP route overseas?

conzy

Heat_Wave wrote: »

Would it be cheaper to order a car in the UK and go PCP on it, rather than here?

Can you even go the PCP route overseas?

Even if that was possible (I bet you need to be resident in the country you are taking out the PCP scheme in)

You would have to pay VRT as soon as you brought it to Ireland. So it would absolutely not be cheaper

tomaso11

Is PCP an option for someone who runs a taxi? was talking about it with a friend who owns one and was looking to change, he thinks is not an option if he wants to use it as a taxi

Fiskar

Heat_Wave wrote: »

Would it be cheaper to order a car in the UK and go PCP on it, rather than here?

Can you even go the PCP route overseas?

I looked into it last year, PCP is not available to non resident persons. I would imagine you need to have a UK social security number for credit checking. if you find a way please do let me know.

OmegaRed

tomaso11 wrote: »

Is PCP an option for someone who runs a taxi? was talking about it with a friend who owns one and was looking to change, he thinks is not an option if he wants to use it as a taxi

There are mileage restrictions on PCP financed cars if you intend on handing it back before or after 3 years. You'll have to pay more for each km you are over. The limit is like 10,000/15,000 km per year. Wouldn't make sense for a taxi unless you decided you'll have the car for more than 3 years, can afford the repayments and the balloon payment at the end....

OmegaRed

VW are now doing free insurance when you PCP finance a new VW Polo or UP Criteria apply:

http://ext.volkswagen.ie/en/162-polo-and-up.html

http://www.volkswagenbank.ie/content/sites/vwcorporate/volkswagenbank_ie/en/home/ourproducts/Drivers_Qualifying_Criteria.html

Drummerboy08

Fiskar wrote: »

I looked into it last year, PCP is not available to non resident persons. I would imagine you need to have a UK social security number for credit checking. if you find a way please do let me know.

The finance company won't allow you to permanently export the vehicle while it it is still on a PCP agreement, so no its not possible.

opinionated3

As regards the whole pcp phenomenon that's currently going on here in this country, I'm of the opinion that there may be serious problems down the line when the 3 year term comes to a conclusion and people have to make their choice. ...finance the balance, hand the keys back and walk away or upgrade to the newer model (which i imagine is what most buyers would like to do and what the dealers would also like them to do). However the problem i think that is going to rear it's ugly head is when the dealer tells the buyer there isn't enough sufficient equity in the trade in to clear the balance AND provide a suitable deposit for the new car that will keep the monthly repayment at a similar rate to what they have been paying all along.
For example the highest selling car at the moment is the hyundai tucson. I would reckon a significant amount were sold on hyundai pcp. In 3 years time dealers will be swamped with 161 tucsons on their forecourts. They will use this excuse to drive down the value of the trade in therefore resulting in a higher than expected deposit required to upgrade to the 191 reg.
I gave a lot of thought to buying a 162 (vw golf) but i could only realistically afford it via pcp. It's the thoughts of dealing with the deposit conundrum in 3 years time that has put me off.

FrontDoor

opinionated3 wrote: »

As regards the whole pcp phenomenon that's currently going on here in this country, I'm of the opinion that there may be serious problems down the line when the 3 year term comes to a conclusion and people have to make their choice. ...finance the balance, hand the keys back and walk away or upgrade to the newer model (which i imagine is what most buyers would like to do and what the dealers would also like them to do). However the problem i think that is going to rear it's ugly head is when the dealer tells the buyer there isn't enough sufficient equity in the trade in to clear the balance AND provide a suitable deposit for the new car that will keep the monthly repayment at a similar rate to what they have been paying all along.
For example the highest selling car at the moment is the hyundai tucson. I would reckon a significant amount were sold on hyundai pcp. In 3 years time dealers will be swamped with 161 tucsons on their forecourts. They will use this excuse to drive down the value of the trade in therefore resulting in a higher than expected deposit required to upgrade to the 191 reg.
I gave a lot of thought to buying a 162 (vw golf) but i could only realistically afford it via pcp. It's the thoughts of dealing with the deposit conundrum in 3 years time that has put me off.

There is no such thing as a free lunch.

A lot of what you describe will depend on broader economic factors. If employment keeps increasing and less graduates leave relative to the last 8 years, then there will be a strong market for these cars.

If something like Brexit causes a big issue, then demand will drop.

Drummerboy08

What you have to remember is that there is still massive shortage of used vehicles still.

It'll probably be 2018 before this starts returning to normal levels . New car sales will level off because certain people who are buying new cars at the moment we're originally in the used car market.

Heat_Wave

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

air

Heat_Wave wrote: »

Price of the car - €30,500 ... a salary of €29,000

Insanity

Heat_Wave

air wrote: »

Insanity

May I ask why?

I have the deposit saved up, and I live at home, so no rent. My concern is what will happen in 3years time.

conzy

Heat_Wave wrote: »

May I ask why?

I have the deposit saved up, and I live at home, so no rent. My concern is what will happen in 3years time.

Let's assume the GFV will be about 10k you will need to refinance that or save it. Let's say you only have 2-3k of equity at the end. Now you trade and go again. Your monthly repayments will increase a lot.

3 years is a long way off but you don't want to snooker yourself or signup to something unsustainable. Will you still be living at home in 3 years or potentially paying considerable rent? etc etc

bazz26

Heat_Wave wrote: »

May I ask why?

I have the deposit saved up, and I live at home, so no rent. My concern is what will happen in 3years time.

What age are you? How long do you plan to live at home? Things can indeed change very quickly - get married, children, need to rent in the short term or save up to buy a house.

dissed doc

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

€29k = €24452/year net. €73356 over 36 months net earned.

With the downpayment and monthly payments you will have paid €18904 after 36 months. There will be a balance of e.g., €13k to clear (e.g., with 3-4% interest) = around €32500 (I am guessing around €2k in interest).

So you will spend around 44% of your net income for the next 3 years, to own this car. Excluding running costs. That will be around €2-3k/year with insurance, tax, petrol, maintenance. Adding in €9k over 3 years means you will spend an astonishing 56.5% of your net income on the car to own after 36 months.

MY feeling is that you should spend no more than 10% of your net on a car. Budget around €7500 max excluding running costs over 36 months and you will be a lot better off IMHO.

FrontDoor

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

Unless you are some sort of apprentice about to become qualified or chartered, then not for me.

Jack lemmon

Heat_Wave wrote: »

I would like to hear people's thoughts on the below, as I am torn and do not know what to do.

I am looking at a new Mini Cooper on PCP.

Price of the car - €30,500
Deposit - €8,500
Monthly repayments - €289

These are the only figures I have been given. I have not been given a GFV yet. Based on these figures, if I was to go on PCP again in 3 years time, what deposit might I be looking at?

I'm on a salary of €29,000 and I live at home. Is this doable?

Your taking home 2k a month? If you don't have other large outgoings then I can't see how you couldn't afford it. It all depends on what you want to spend your money on. It'll be very difficult for you to save for a house deposit, but maybe you don't intend on moving outta home, only you can know that.

If I were you I'd pay a smaller deposit(15%) and larger monthlys. That way you've a very likely chance of having the same deposit in the equity of the car at the end of the 3years.

air

There's a big difference between being able to afford something and it being a good idea. PCP (and any other type of finance to be fair) allow people to buy cars they wouldn't otherwise to be afford.
None the less, spending such a high proportion of your discretionary income on a car (over and above a basic model) is pretty silly.
Have you any plans to buy your own home, get married, travel, start a pension or anything else?
I'm all for nice cars but I couldn't justify that type of expense on that salary. Each to their own.

Drummerboy08

GFV has been tradionally high with BMW Finance, leaving very little equity after 3 years. APR can also be a fair touch higher compared to the competition.

mickdw

Drummerboy08 wrote: »

GFV has been tradionally high with BMW Finance, leaving very little equity after 3 years. APR can also be a fair touch higher compared to the competition.

Are you seeing cars coming in at 3 years. I believe vw are working out at about 15 percent to 20 percent equity.
How are audi looking?
Bmw?