PCP finance.

mickdw

Attempting to fully finance a new car over 3 years can be quite severe money wise.
I don't see an issue with financing the outstanding amount over another couple of years if you wish to keep the car.
One thing though. Anyone going into a PCP should be pretty sure that they will qualify for finance on the remainder at end of term. It would be a disaster to get caught at end of 3 years with no cash to buy car outright and no way to finance it.

Lantus

Ludo wrote: »

That is true alright.....good point. Balance that also against the fact it is slightly cheaper to pay off the finance early rather than over another year by a few hundred and new tyres which will be needed this year which is another few hundred.

Decisions, decisions...

Good point re tyres. We needed new ones in year 3 start plus an extra service out of contract due to mileage. That would be a cost of 300 to 500 depending on tyre quantity and quality and any service issues.

Ludo

mickdw wrote: »

One thing though. Anyone going into a PCP should be pretty sure that they will qualify for finance on the remainder at end of term. It would be a disaster to get caught at end of 3 years with no cash to buy car outright and no way to finance it.

Just sell it privately and settle PCP...yeah you will have no car you should have a few quid left over at least. Not ideal but better than this idea of just walking away.

Aka Ishur

Ludo wrote: »

Just sell it privately and settle PCP...yeah you will have no car you should have a few quid left over at least. Not ideal but better than this idea of just walking away.

The only reason they wouldn't qualify for finance is if they missed payments and if that's the case PCP was the wrong choice from the start.

.G.

mickdw wrote: »

Attempting to fully finance a new car over 3 years can be quite severe money wise.
I don't see an issue with financing the outstanding amount over another couple of years if you wish to keep the car.
One thing though. Anyone going into a PCP should be pretty sure that they will qualify for finance on the remainder at end of term. It would be a disaster to get caught at end of 3 years with no cash to buy car outright and no way to finance it.

Yeah that's an option but I like to get things over with asap. The last car I bought was 9k and I paid it off over a year. This will be a much bigger expense though so I'll be paying the monthly and as much of the final balloon I can each month, finance the rest if I'm short. All depends on what the car cost me as I've no idea what bloody car I want yet!

Penalty

Ludo wrote: »

Just sell it privately and settle PCP...yeah you will have no car you should have a few quid left over at least. Not ideal but better than this idea of just walking away.

This could be a problem as you need to clear the PCP before you sell as any intelligent buyer will do a finance check - could get buyer to write check for finance company but messy me may put buyers off

Lantus

Penalty wrote: »

This could be a problem as you need to clear the PCP before you sell as any intelligent buyer will do a finance check - could get buyer to write check for finance company but messy me may put buyers off

Quite. Also selling a car can take time and once you reach the end you must pay the balance on the alloted date or you have renaged on a contract and effectively have stolen the vehicle. Poor idea.

Also being without a car for most people for even a day is simply not feasible re work, kids and other commitments.

Ludo

Penalty wrote: »

This could be a problem as you need to clear the PCP before you sell as any intelligent buyer will do a finance check - could get buyer to write check for finance company but messy me may put buyers off

Of course you are right. is possible to do it but organising it may be tricky privately alright.

mickdw

Aka Ishur wrote: »

The only reason they wouldn't qualify for finance is if they missed payments and if that's the case PCP was the wrong choice from the start.

I wouldn't be so sure. it's easier to obtain finance from vw bank for example when you are buying a new car from vw than to obtain finance on the general market.
One could easily find that the finance offered from vw bank to refinance balloon is of much higher rate and some marginal borrowers could find themselves out of favour with the traditional banks.
I'm just saying it's an eyes wide open type of deal but the deals can be excellent. The only issue I have with pcp is that it does allow people who cannot afford the car to use the car for 3 years and leaves them up sh1t Street after.
I buyer who can afford the car using a PCP with zero interest is a no brainer.

Aka Ishur

mickdw wrote: »

I wouldn't be so sure. it's easier to obtain finance from vw bank for example when you are buying a new car from vw than to obtain finance on the general market.
One could easily find that the finance offered from vw bank to refinance balloon is of much higher rate and some marginal borrowers could find themselves out of favour with the traditional banks.
I'm just saying it's an eyes wide open type of deal but the deals can be excellent. The only issue I have with pcp is that it does allow people who cannot afford the car to use the car for 3 years and leaves them up sh1t Street after.
I buyer who can afford the car using a PCP with zero interest is a no brainer.

Yup I think the one consistent message everyone seems to be reiterating is you need to know what you are getting, as with any financial product.

Carson10

Visited a Vw garage last week with a friend who was looking at a new Polo Fun.

They got a PCP quote as follows.

Trade in-/deposit €3700 followed by 3 years monthly payments of €260

At the end of the 3 years, they simply swap the car for a new 2020 polo for zero cost, and just keep paying the monthly repayments.

techdiver

Carson10 wrote: »

Visited a Vw garage last week with a friend who was looking at a new Polo Fun.

They got a PCP quote as follows.

Trade in-/deposit €3700 followed by 3 years monthly payments of €260

At the end of the 3 years, they simply swap the car for a new 2020 polo for zero cost, and just keep paying the monthly repayments.

I would double check that "zero cost" claim. Some dealers don't even understand the terms 100% themselves.

For the payment of €260 to be the same for the new car in 2020, there would have to be sufficient equity left in the old car (Trade in value - GFMV) to cover the same deposit again to keep the payments at €260.

26000 Elephants

techdiver wrote: »

I would double check that "zero cost" claim. Some dealers don't even understand the terms 100% themselves.

For the payment of €260 to be the same for the new car in 2020, there would have to be sufficient equity left in the old car (Trade in value - GFMV) to cover the same deposit again to keep the payments at €260.

At 0% apr, he'd have 13K paid into the car that lists at 16300. I'd say thats doable.

His GMFV must be around 3.5K

techdiver

26000 Elephants wrote: »

At 0% apr, he'd have 13K paid into the car that lists at 16300. I'd say thats doable.

His GMFV must be around 3.5K

I'm not saying it isn't, but some people are sold the PCP deal as a matter of turning up after 3 years and getting a new car and continuing on as before, when that might not always be the case.

Carson10

the APR on the polo fun is 3.9%. This was the quote:

Car costs €17,900
Deposit part ex €3700
Finance amount €14,200
Total Interest €1,118

Car GMV in 3 years will be worth around €12/13000 given its the 'fun' model with sunroof, alloys, etc, which will be used against the trade for the 2020 polo, in which you will be just swapping one car for the other with no cost. (That was our take on it anyway)

They said your better off not giving a big deposit.

Current car is 11 years old which we got new, and costs about €1300 a year in repairs and tax (€445), window regulators, airbag lights, nct, tyres, etc etc...

owning the polo would cost tax €190, service €100. so €290 in total. 3 year warranty, and a 3 year service pack for €300..

SteelyDanJalapeno

Carson10 wrote: »

the APR on the polo fun is 3.9%. This was the quote:

Car costs €17,900
Deposit part ex €3700
Finance amount €14,200
Total Interest €1,118

Car GMV in 3 years will be worth around €12/13000 give its the 'fun' model with sunroof, alloys, etc, which will be used against the trade for the 2020 polo, in which you will be just swapping one car for the other with no cost. (That was our take on it anyway)

They said your better off not giving a big deposit.

Current car is 11 years old which we got new, and costs about €1300 a year in repairs and tax (€445), window regulators, airbag lights, nct, tyres, etc etc...

owning the polo would cost tax €190, service €100. so €290 in total. 3 year warranty, and a 3 year service pack for €300..

Whats the final payment? about 4 or 5k?

valuation looks high

Carson10

TiltedBrain wrote: »

Whats the final payment? about 4 or 5k?

valuation looks high

Yeah maybe I done that valuation a bit high for the GMV, say its around €11,000. Final payment is €6,500 (give or take) only if you want to keep the car.

Carson10

OSI wrote: »

GMV doesn't mean what you think it means. GMV (GMFV) is the mimimum they guarantee the car is worth at the end for the purposes of calculating a final payment. If your final payment is €6,500 your GMV is €6,500. Anything above this is equity and can be used towards a deposit on the next car. If when you go back they decide the car is worth €11,000 as a trade in, you'll have €4,500 to use as a deposit on the next car.

Thanks Op..

What do you think the reality would be in 3 years time? Car value wise?

ShadowHearth

I don't want to be that guy, but no way 18k polo now, will be worth 12-13k in 3 years with very mature pcp at that point.
Dealers can paint a very bright lies, with fecking bells hanging of them, because they covered. When trade in tome comes, I wouldn't be surprised that op will need to inject at least some sum to keep same repayments.

bidiots

When they say that they walk into a new car, what spec is agreed?

bidiots

ShadowHearth wrote: »

I don't want to be that guy, but no way 18k polo now, will be worth 12-13k in 3 years with very mature pcp at that point.
Dealers can paint a very bright lies, with fecking bells hanging of them, because they covered. When trade in tome comes, I wouldn't be surprised that op will need to inject at least some sum to keep same repayments.

Get it in writing?

bazz26

Carson10 wrote: »

the APR on the polo fun is 3.9%. This was the quote:

Car costs €17,900
Deposit part ex €3700
Finance amount €14,200
Total Interest €1,118

Car GMV in 3 years will be worth around €12/13000 given its the 'fun' model with sunroof, alloys, etc, which will be used against the trade for the 2020 polo, in which you will be just swapping one car for the other with no cost. (That was our take on it anyway)

They said your better off not giving a big deposit.

Current car is 11 years old which we got new, and costs about €1300 a year in repairs and tax (€445), window regulators, airbag lights, nct, tyres, etc etc...

owning the polo would cost tax €190, service €100. so €290 in total. 3 year warranty, and a 3 year service pack for €300..

The Polo is being replaced by a new model this year. It might not be a good idea to be taking one now on PCP as when you go to trade it back in 3 years time it will be an old model which means lower trade-in/resale value which maybe a problem if you wish to use the car's equity as a deposit on another PCP deal.

SteelyDanJalapeno

Carson10 wrote: »

Thanks Op..

What do you think the reality would be in 3 years time? Car value wise?

Well what is a 3 year old polo worth now? looking on Donedeal average seems to be 11k - 500 for haggle room.

I'd imagine best case 10500 would be the max your car would be worth in 3 years time, giving you about 4k equity, which wouldn't be bad.

Carson10

Yeah, its hard to know is it a good deal or not.

We have the current car from new 2006 Renault, it has 230,000 KM, and every other week something goes wrong with it, its €120 here and there for repairs, new battery, ball joints, and its still not perfect. Its a diesel and feels really groggy and rattly to drive. always seems to fail the nct on something, be it a light bulb etc it costs nearly €100 alone for the NCt between re-tests etc...

We could go out and buy a 2008 golf for example, but after 3 or 4 years it will be 12 years old, and need new clutch, tyres, electric window motors, nct, all that wear and tear stuff.

SteelyDanJalapeno

Carson10 wrote: »

Yeah, its hard to know is it a good deal or not.

We have the current car from new 2006 Renault, it has 230,000 KM, and every other week something goes wrong with it, its €120 here and there for repairs, new battery, ball joints, and its still not perfect. Its a diesel and feels really groggy and rattly to drive. always seems to fail the nct on something, be it a light bulb etc it costs nearly €100 alone for the NCt between re-tests etc...

We could go out and buy a 2008 golf for example, but after 3 or 4 years it will be 12 years old, and need new clutch, tyres, electric window motors, nct, all that wear and tear stuff.

I was in much the same boat for years, had some major issues with well looked after cars in the past, stretch chain in a Golf, snapped timing belt in a Corolla.

I got a new Seat Leon FR on PCP last year, all its cost me was tax(200) and Diesel 100pm, it's going infor a service soon but that was part of the package.

The piece of a mind of a guarantee is worth a lot too me.

Kenya1234

for someone who may put up a minimum of 40,000 km a year, is PCP not even a feasible option?

26000 Elephants

Kenya1234 wrote: »

for someone who may put up a minimum of 40,000 km a year, is PCP not even a feasible option?

If you intend to buy it outright at the end of term, then its not a problem. If you want to change for a new car after 3 years then it will be a huge problem.

Aka Ishur

Kenya1234 wrote: »

for someone who may put up a minimum of 40,000 km a year, is PCP not even a feasible option?

Not a chance. PCP is aimed at 15000 a year people. More than that will crucify your GMFV

sillysocks

Aka Ishur wrote: »

Not a chance. PCP is aimed at 15000 a year people. More than that will crucify your GMFV

But doesn't the GMFV only come into play if you're handing the car back? If you buy outright at the end the mileage wouldn't matter? If you use it as trade in then the trade in value would be less but that'd be the same regardless of if you bought on PcP?

Aka Ishur

sillysocks wrote: »

But doesn't the GMFV only come into play if you're handing the car back? If you buy outright at the end the mileage wouldn't matter? If you use it as trade in then the trade in value would be less but that'd be the same regardless of if you bought on PcP?

Yes that's correct. I meant its the wrong option if you intend on following the trade it in for the same model PCP game. If you just keep the car PCP is just a 3 year loan that you have a balloon payment on at the end.

Just to point out you wouldn't be able to just hand the car back if you ran up the mileage so it would be worth less than the GMFV, you would still be on the hook for the difference between the car value and GMFV.

sillysocks

Aka Ishur wrote: »

Just to point out you wouldn't be able to just hand the car back if you ran up the mileage so it would be worth less than the GMFV, you would still be on the hook for the difference between the car value and GMFV.

Sorry yes that's what I meant-you'd have to pay the agreed amount plus any penalties for going over the mileage if my understanding is correct!

Micky 32

I ordered a new car on PCP and i do 50,000km a year but i'll buy it outright and if i decide to change i will sell privately. I went PCP because of low interest rate and i didn't want to go into my savings even though i could buy the car outright.

MidMan25

TiltedBrain wrote: »

I was in much the same boat for years, had some major issues with well looked after cars in the past, stretch chain in a Golf, snapped timing belt in a Corolla.

I got a new Seat Leon FR on PCP last year, all its cost me was tax(200) and Diesel 100pm, it's going infor a service soon but that was part of the package.

The piece of a mind of a guarantee is worth a lot too me.

What about the cost of massive depreciation?

It's amazing how many people look at running costs and nothing else.

Based on the above it's costing you 1400 a year for tax and diesel. Your 29k new car is now worth about 20k as a trade in. So your real cost per year is 5900 a year (Based on 4500 depreciation per year).

Lantus

Carson10 wrote: »

Visited a Vw garage last week with a friend who was looking at a new Polo Fun.

They got a PCP quote as follows.

Trade in-/deposit €3700 followed by 3 years monthly payments of €260

At the end of the 3 years, they simply swap the car for a new 2020 polo for zero cost, and just keep paying the monthly repayments.

Nothing wrong with that quote. I would ask what the expected equity will be in 3 years. Also does the buyer want another car in 3 years or to buy outright? Assuming a new car bear in mind that the phrase keep paying the monthly payments while correct is not entirely accurate. Increases in the cost of the car will increase the monthly payments and the dealer has no control over that. So to maintain the same spec and comfort a small increase would be realistic irrespective on the slight sugar coating the dealer provides.

Eyes open!

adam88

Carson10 wrote: »

Visited a Vw garage last week with a friend who was looking at a new Polo Fun.

They got a PCP quote as follows.

Trade in-/deposit €3700 followed by 3 years monthly payments of €260

At the end of the 3 years, they simply swap the car for a new 2020 polo for zero cost, and just keep paying the monthly repayments.

That's why I thought pcp was but from reading this you have to have another deposit at the end of it. I always thought you could use the value of your car to use against a new one

jelutong

A friend drives a 2014 E Class. Cost €60k. Last week he was offered €30k as a trade in against a new one. What's the theoretical GMFV of a 2017 E Class costing €60 in 3 years time anybody?
How anyone can predict the value of a car 3 years hence is a mystery to me. Too many unknown unknowns.

ofcork

That's some drop 30k in 3 years.

Soarer

ofcork wrote: »

That's some drop 30k in 3 years.

Thought it'd be worth.

You'd imagine most cars to lose at least 50% in the first 3 years.

bazz26

Mercedes shaved 10% off the cost of brand new cars a month or two back so it has a knock on effect on used examples, any factory extras would hold very little resale value either and there was also a new model E Class launched last year so that would go some way to explain the heavy depreciation.

adam88

jelutong wrote: »

A friend drives a 2014 E Class. Cost €60k. Last week he was offered €30k as a trade in against a new one. What's the theoretical GMFV of a 2017 E Class costing €60 in 3 years time anybody?
How anyone can predict the value of a car 3 years hence is a mystery to me. Too many unknown unknowns.

I'd be well sickened if my car lost 30 k in three years

Aka Ishur

adam88 wrote: »

That's why I thought pcp was but from reading this you have to have another deposit at the end of it. I always thought you could use the value of your car to use against a new one

He didn't mention another deposit. The value of the old car over that of the GMFV is acting as the deposit. That's why payments remain the same.

mickdw

Mercedes currently have gfv for a new E Class worth 63k set at 24k.
In fairness to mercedes, they offer pretty realistic deals not making the monthly cost super low. There will be a fair amount of equity over and above 24k at year 3 for an e class that cost 63k.
Your friend is losing out cause he bought a model that was due to be renewed within the time that he was keeping the car.
You can get a very nice new E Class for a little over 50k therefore an old model 3 year old car is never going to be worth much over 30k.
Having said that, it would be a very nice car at that price.

26000 Elephants

mickdw wrote: »

There will be a fair amount of equity over and above 24k at year 3 for an e class that cost 63k..

Sure. If you are replacing it with a Hyundai.

As per the previous example of 50% depreciation, lets say they offer you 32K. Pay back the 24K, that leaves you with 8K. Thats not enough to get into a new e class today ( 15K deposit) never mind in 3 years.

jca

ofcork wrote: »

That's some drop 30k in 3 years.

50℅ in 3 years is the norm, some slightly more and some slightly less (for mainstream cars anyway) according to any of the car buyers magazines.

jca

adam88 wrote: »

I'd be well sickened if my car lost 30 k in three years

Why? All cars lose money unless you're a banger or classic car driver.

MidMan25

jca wrote: »

Why? All cars lose money unless you're a banger or classic car driver.

I think the value lost is key here!

SteelyDanJalapeno

MidMan25 wrote: »

What about the cost of massive depreciation?

It's amazing how many people look at running costs and nothing else.

Based on the above it's costing you 1400 a year for tax and diesel. Your 29k new car is now worth about 20k as a trade in. So your real cost per year is 5900 a year (Based on 4500 depreciation per year).

2014 Leon FRs averaging about 19 - 20k, so you're values are off a fair bit unless you're trying to predict the future?

either way, it's the same for all new cars, its not a symptom of PCP.

adam88

Aka Ishur wrote: »

He didn't mention another deposit. The value of the old car over that of the GMFV is acting as the deposit. That's why payments remain the same.

AND what happens if your car value is the same as gmfv

forzacalcio

What is the cost per km if you go over the PCP limit in Ireland? Does it differ from Garage to garage?

forzacalcio

Thanks OSI, On the basis 6 cent is the cost, If I go 10,000 KM over does this mean on top of my final baloon payment I will owe them another €600 or is it more serious than that?
Does it get added onto what I owe or taken off what the car is worth?