PCP finance.

forzacalcio

OSI wrote: »

The excess mileage payment only comes in to affect if you are handing the car back I seem to remember. Which is hilarious as handing the car back is probably the most profitable option for them anyway.

I certainly wont be paying a lump sum to keep it, I would be either upgrading or selling it and pay them back what I owe. I went for 15k but I do think Id be hitting 18/19k per year. Just want to make sure Im not shooting myself in the foot

MojoMaker

forzacalcio wrote: »

I certainly wont be paying a lump sum to keep it, I would be either upgrading or selling it and pay them back what I owe.

lol.

You mean paying them back and then selling it...which is....paying a lump sum to keep it

grogi

adam88 wrote: »

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

That's normal - around 50% in three years...

forzacalcio

MojoMaker wrote: »

lol.

You mean paying them back and then selling it...which is....paying a lump sum to keep it

You know what I mean, I wont be handing over a lump sum to keep it, Ill be selling it off or upgrading, I wont have that cash to come up with that payment is what I mean

Soarer

forzacalcio wrote: »

I certainly wont be paying a lump sum to keep it, I would be either upgrading or selling it and pay them back what I owe. I went for 15k but I do think Id be hitting 18/19k per year. Just want to make sure Im not shooting myself in the foot

Work out the figures.

It's very likely that it'd be cheaper to declare 10k kms per year and go over, than declare 20k kms and stay under.

So in the 6c per 100km example, it'll cost €600 to go 10k kms over. But to up your annual allowance by 4k per year might cost you €20 per month over 3 years!

Shane732

adam88 wrote: »

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

Interesting comment - what are you driving?!

Unfortunately when you buy a car it is likely that the car will fall in value. For something like an E-Class I wouldn't think that 50% is outrageous.

Aka Ishur

Soarer wrote: »

Work out the figures.

It's very likely that it'd be cheaper to declare 10k kms per year and go over, than declare 20k kms and stay under.

So in the 6c per 100km example, it'll cost €600 to go 10k kms over. But to up your annual allowance by 4k per year might cost you €20 per month over 3 years!

At the end of the day if the car is worth more than what the GMFV and penalty say you will get that. The dealers largely overestimate the depreciation anyways to protect themselves. This means the GMFV will be lower than what the car is worth barring exceptional events.

They don't want someone swanning up with a perfect 3 year old car, fulfilling all the conditions of the PCP, they have to say the car is worth 6K when its only worth 4.5. They can't chase the lost equity then.

adam88

OSI wrote: »

You have no equity to use as a deposit towards the next agreement.

Can you not just give them the car and take a new one.

If that's the case then for example a 30k car, your deposit is forever lost. Why would someone do that. Not only are you spending your monthly repayments your also loosing your deposit.

Think an old credit union loan is way better. At least you know what your paying then

adam88

Shane732 wrote: »

Interesting comment - what are you driving?!

Unfortunately when you buy a car it is likely that the car will fall in value. For something like an E-Class I wouldn't think that 50% is outrageous.

171 skoda vrs. Won't be loosing 30k but you get the idea

Shane732

adam88 wrote: »

171 skoda vrs. Won't be loosing 30k but you get the idea

Do they do a VRS now? Thought they'd changed the name.

It's not really comparing like with like.

Squeaksoutloud

One thing to bear in mind is that in 2014 (3 years now so PCP returns now) there was only 75,000 cars sold versus twice that amount of 150,000 in 2016...will surely have a big effect on used car values. All 3 year old cars seem over priced to me at the mo. I mean they seem to be at 60% of new price vs uk mags 3 year cost usually have the values at 40-45%! Trade in v sale price maybe some of the difference? Taken into account loan rates of 9% v 0% PCP and its easy to see why people plump for the new car.

SteelyDanJalapeno

Squeaksoutloud wrote: »

One thing to bear in mind is that in 2014 (3 years now so PCP returns now) there was only 75,000 cars sold versus twice that amount of 150,000 in 2016...will surely have a big effect on used car values. All 3 year old cars seem over priced to me at the mo. I mean they seem to be at 60% of new price vs uk mags 3 year cost usually have the values at 40-45%! Trade in v sale price maybe some of the difference? Taken into account loan rates of 9% v 0% PCP and its easy to see why people plump for the new car.

Why is that not in turn lowering th price of the 2014 car so, if people are not buying them. price reflects the current demand/market.

Squeaksoutloud

TiltedBrain wrote: »

Why is that not in turn lowering th price of the 2014 car so, if people are not buying them. price reflects the current demand/market.

I can only presume there is still a market for them but possibly less than in the past. Between the lower numbers sold and dealers keeping prices high for PCP the prices appear to be holding higher than in the past.

mickdw

26000 Elephants wrote: »

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.

Ah but it is. Typically equity across alot of manufacturers ends up at circa 15 percent of new price. 9k in this case.
It's not enough equity for someone who could only afford the new car with max deposit up front. It is enough equity for someone who can buy with 15 percent deposit and still afford the repayments.
The long and short of it is - If you cannot afford the repayments based on 15 percent deposit, it's likely that you are not in a sustainable situation and will need to be putting cash in as per the above example.

Aka Ishur

adam88 wrote: »

If that's the case then for example a 30k car, your deposit is forever lost. Why would someone do that. Not only are you spending your monthly repayments your also loosing your deposit.

Think an old credit union loan is way better. At least you know what your paying then

If you do not understand how it works by now you should stick with the financial product you understand. That is the overall rule, if you don't understand PCP it is not for you.

26000 Elephants

TiltedBrain wrote: »

Why is that not in turn lowering th price of the 2014 car so, if people are not buying them. price reflects the current demand/market.

I suppose the market for used cars is larger and more fluid than new cars? There will always be people on a lower budget.

26000 Elephants

mickdw wrote: »

Ah but it is. Typically equity across alot of manufacturers ends up at circa 15 percent of new price. 9k in this case.
It's not enough equity for someone who could only afford the new car with max deposit up front. It is enough equity for someone who can buy with 15 percent deposit and still afford the repayments.
The long and short of it is - If you cannot afford the repayments based on 15 percent deposit, it's likely that you are not in a sustainable situation and will need to be putting cash in as per the above example.

Ah yeah, I know what you mean, but the default Mercedes 'use case' is max deposit, to keep the payments around €560. Some shock for the poor bugger in 3 years time when he has to go back to the wife and explain the new feckin Kia.

mickdw

To be honest, I don't believe anyone should be going around in a new e class if producing an additional 7k deposit for new deal is an issue for them or alternatively an additional 200 or so per month if they had only been paying 600 or so.
It all comes back to the same point - if you can afford the car with 15 percent deposit, good. If not, it's too expensive.
But sure anyway, isn't a kia lovely

Casati

26000 Elephants wrote: »

I suppose the market for used cars is larger and more fluid than new cars? There will always be people on a lower budget.

Plus many people will prefer to pay cash for cars, e.g. retired people who might have large savings but dont have large income are generally reluctant to get into debt of any sort. The trick is buying a new car that will appeal to second-hand buyers and which will hold its value

Lantus

adam88 wrote: »

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

It lost 50% which is relative to the value of the car. The more expensive the car the larger the real value. A 20k car would lose 10k. Also half. That's third of the merchant but it's a third of the cost. If you can afford the car the depreciation is meaningless.

mickdw

Lantus wrote: »

It lost 50% which is relative to the value of the car. The more expensive the car the larger the real value. A 20k car would lose 10k. Also half. That's third of the merchant but it's a third of the cost. If you can afford the car the depreciation is meaningless.

I bought my current car for 52k new back in 08.
If I'd sold it on after 2 or 3 years, the depreciation would have been frightening. At this stage, it averages out at about 4.5k per year which is ok.
Trading new e class every 3 years will never be cheap motoring.

Mantis Toboggan

mickdw wrote: »

But sure anyway, isn't a kia lovely

Ansolutely :cool:

ShadowHearth

mickdw wrote: »

I bought my current car for 52k new back in 08.
If I'd sold it on after 2 or 3 years, the depreciation would have been frightening. At this stage, it averages out at about 4.5k per year which is ok.
Trading new e class every 3 years will never be cheap motoring.

Those who buying E class mercs, dont really care about it. I would even bet a massive chunk of them are company cars.

mickdw

ShadowHearth wrote: »

Those who buying E class mercs, dont really care about it. I would even bet a massive chunk of them are company cars.

People who have lots of cash from experience care about every penny.
Id be pretty certain that in the general case, the reasonably wealthy person buying a new mercedes will bargain harder and shop around more than the buyer who is just managing to get into a new mercedes on a pcp.

MIKEKC

mickdw wrote: »

People who have lots of cash from experience care about every penny.
Id be pretty certain that in the general case, the reasonably wealthy person buying a new mercedes will bargain harder and shop around more than the buyer who is just managing to get into a new mercedes on a pcp.

I wonder if deposit contribution that's being advertised by car makers is to give people at end of pcp enoungh equity in their car to buy new again

mickdw

MIKEKC wrote: »

I wonder if deposit contribution that's being advertised by car makers is to give people at end of pcp enoungh equity in their car to buy new again

Yep. as long as they don't steal the contribution back by undervaluing the trade in, these contribution will be a great help in getting cars shifted again on pcp.

Ron Scott

If my trade in is worth 50% of the value of the car I'm buying, is PCP out for me ? 30% seems to be the limit.

techdiver

Ron Scott wrote: »

If my trade in is worth 50% of the value of the car I'm buying, is PCP out for me ? 30% seems to be the limit.

Nope, they will refund the difference. So 30% of the value will go as the deposit and they will write you a cheque for the rest.

grogi

techdiver wrote: »

Nope, they will refund the difference. So 30% of the value will go as the deposit and they will write you a cheque for the rest.

So that is a yes...

techdiver

Ron Scott wrote: »

If my trade in is worth 50% of the value of the car I'm buying, is PCP out for me ? 30% seems to be the limit.

grogi wrote: »

So that is a yes...

Part in bold was the question...

grogi

techdiver wrote: »

Part in bold was the question...

Then the answer is YES, it is for him... Why not? Because he'll unfreeze some cash?

techdiver

grogi wrote: »

Then the answer is YES, it is for him... Why not? Because he'll unfreeze some cash?

I'm not following your logic?

He wants to do PCP. His current car is worth 50% of the new car. He can still trade in his current car, the dealer will take 30% of the value of the new car from the trade in amount and refund him the rest.

Whether he chooses to do this is his decision, but I answered the question as put.

Edit: his question was "is pcp out for me?", meaning "can I not avail of pcp?". I answered "nope", meaning yes you can avail of pcp.

Ron Scott

Techdiver, thanks for your clear and helpful reply to my question.

rob316

Some great cars on these PCP deals, its just the 3 year depreciation is frightening.

SteelyDanJalapeno

A friend is trading a Bog standard golf he got in 2014 in PCP to upgrade.

Skoda offered him 15k, VW offered 17.5k car was probably about 26k new.

jca

TiltedBrain wrote: »

A friend is trading a Bog standard golf he got in 2014 in PCP to upgrade.

Skoda offered him 15k, VW offered 17.5k car was probably about 26k new.

That's a great offer from VW. How much does he owe? In other words, how much of a deposit will he have going into the new PCP deal? Skoda are getting very stingy with their trade in offers, they have short memories these car dealers.

SteelyDanJalapeno

jca wrote: »

That's a great offer from VW. How much does he owe? In other words, how much of a deposit will he have going into the new PCP deal? Skoda are getting very stingy with their trade in offers, they have short memories these car dealers.

I believe about 11k so equity is pretty much the same as his initial 1st time payment on the Golf. monthly's going up thou as he's upgrading

batman1

Would it be a reasonable move to trade in and get a new car on pcp, then change again after 3 years, keeping repayment the same or similar and the buy the car at the end of the 2nd deal. That way having 6 years to save for the buyout and having 2 new cars in the meantime and a nice 3yr old car to own at the end.

My assumption is based on similar cats being bought etc

bazz26

You maybe forgetting that when you trade back in car no1 in 3 years time you may have to put money towards a deposit for car no2 in order to keep similar monthly repayments as the first 3 years. So in order to put as little money into the deposit for car no2, you need the trade in value of car no 1 to be well above it's agreed GFV so you can use that towards the deposit for car no2.

You need to remember that these cars are still being paid for, it's just the structure of how they are paid for that is different.

SimonTemplar

Does anyone have a rough idea of what a Highline Golf (circa 30k) PCP arrangement would look like with 30% deposit?

mloc123

SimonTemplar wrote: »

Does anyone have a rough idea of what a Highline Golf (circa 30k) PCP arrangement would look like with 30% deposit?

I would be surprised if VW don't have a calculator on their site to work that out.

SimonTemplar

mloc123 wrote: »

I would be surprised if VW don't have a calculator on their site to work that out.

Couldn't find it on their main site, but a Google search brought me to

http://volkswagenbankcalculator.com/dealer_apr_calculator_for_pcp.php?id=q6k=

digitaldr

Interesting article in the Guardian today.

NIMAN

That makes for scary reading.

Considering PCP is likely huge in Ireland now, I'd like to see something like Prime Time do a piece on it, to alert the public to the dangers.


The opening lines of that article highlight the main issue:

A huge increase in the amounts borrowed by already indebted households in Britain and the US to buy new vehicles is fuelling fears that “sub-prime cars” could ignite the next financial crash.

If you are a household in debt, then surely you should not own a new car?

grogi

NIMAN wrote: »

That makes for scary reading.

Considering PCP is likely huge in Ireland now, I'd like to see something like Prime Time do a piece on it, to alert the public to the dangers.

For the public the biggest danger is that they will handle the car back and get a bicycle or a banger. Painful, but doable...

There is substantial risk for the financing institutions - but they want to eat as much cake while the market is fluid. Once it collapses, with piles of 3 year old cars that nobody wants, they will again reach to the public to help bail them out. I can only hope that we have learned the lesson...

NIMAN

To be fair, the end of the article does say that all these loans are performing incredibly well, with tiny default rates.

Add to this the fact that these are short term loans versus mortgages of up to 35yrs, its maybe not as scary. But the fact that there seems to be a bubble forming is a worrying part.

16thelegend

Volkswagen sales person today "PCP"

Views on the below.

VW Tiguan 2017

1. Cash Price €31,235
2. Deposit €7,000
3. Amount Financed, €24,235
4. interest charge €2.050.74
5. Doumented fee €75.00
6. Completion Purchased instalment €75.00
7. Total repayable €26,435.24
8. hire purchased €33,435.24


36 payments €373
BALLON PYMENT €12,929

mickdw

Not bad but what is the interest rate on that. possibly 3.9

Also, to get 7k back in equity at end, it would have to be worth 20k. That will not happen so possibly have a look at the figures with about 4.5k deposit and see if it's affordable monthly. That would be closer to a sustainable long term deal.

mickdw

Had a look at a new Mercedes e220d yesterday.
Not a fan of 4 cylinder diesel but this was acceptable to be fair.
Auto gear changes smooth but making a bit too much noise to get going in a hurry.
Nice car. wanted circa 15k deposit and 600 per month for an e220d avantgarde with night pack.
Reasonable enough figures for what it is.
Lovely looking cars with a bit of spec although the interior is not as impressive as it would appear in the photos. I feel the interior design will date super fast.

NIMAN

mickdw wrote: »

Had a look at a new Mercedes e220d yesterday.
Not a fan of 4 cylinder diesel but this was acceptable to be fair.
Auto gear changes smooth but making a bit too much noise to get going in a hurry.
Nice car. wanted circa 15k deposit and 600 per month for an e220d avantgarde with night pack.
Reasonable enough figures for what it is.
Lovely looking cars with a bit of spec although the interior is not as impressive as it would appear in the photos. I feel the interior design will date super fast.

Is that the one that comes with headlights?;)

I'll get me coat.