PCP finance.

mickdw

yep but just the one headlight. You need winter pack as well to get the other lamp.

MarkN

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.

15k and 600 pm. Not exactly cheap is it?

mickdw

MarkN wrote: »

15k and 600 pm. Not exactly cheap is it?

Not cheap bu they are using 37 percent gfv so there should be a fair bit of equity at end. bmw are selling with 44 percent leaving f all for deposit next time.
Went in looking for a 16 reg but they had no interest in selling one. pushing new all the way.
600 per month is too much for me.

carsfan2

mickdw wrote: »

Not cheap bu they are using 37 percent gfv so there should be a fair bit of equity at end. bmw are selling with 44 percent leaving f all for deposit next time.
Went in looking for a 16 reg but they had no interest in selling one. pushing new all the way.
600 per month is too much for me.

Did they offer you the 10% reduction off list? Are they really ending this or do you think it will extend?

batman1

bazz26 wrote: »

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.

Good point. It's all a bit hazy, perhaps intentionally.
However, looking at a random suv, the Kia sportage EX. If I trade in for 8k and the gfv is 12.5k that leaves payments around 350. 3 years old sportage retail around 19k. Assuming these figures, at a guess, and the mileage etc rules followed, I would have a equity of 6.5 towards the 2nd car. It appears that the gfv remains constant so the repayments would increase slightly due to the smaller deposit.

Is this right ?

mickdw

carsfan2 wrote: »

Did they offer you the 10% reduction off list? Are they really ending this or do you think it will extend?

The car he quoted for was in Stock and was just over 52500. That was the price less the 10 percent. It had a few bits of spec. He was discounting it down to 51000 for straight sale.
I would expect far better discount for straight sale and buying a car out of stock.
He said the 10 percent is ending but sure he would anyway. Maybe it will end but I only see it being replaced with zero percent interest or something similar. Can't see them making the cars harder to sell. If they saw a need to discount in January sales time, they surely will need something for march onwards.

mloc123

batman1 wrote: »

Good point. It's all a bit hazy, perhaps intentionally.
However, looking at a random suv, the Kia sportage EX. If I trade in for 8k and the gfv is 12.5k that leaves payments around 350. 3 years old sportage retail around 19k. Assuming these figures, at a guess, and the mileage etc rules followed, I would have a equity of 6.5 towards the 2nd car. It appears that the gfv remains constant so the repayments would increase slightly due to the smaller deposit.

Is this right ?

Not quite. If they are selling for 19k you could probably expect a trade in value from the dealer between 14-16k I would guess. So maybe 1500-3500 equity.

jca

mloc123 wrote: »

Not quite. If they are selling for 19k you could probably expect a trade in value from the dealer between 14-16k I would guess. So maybe 1500-3500 equity.

Spot on, people see 3 year old golfs, Octavia's etc and think that's what they'll get for their car in 3 years time.

SteelyDanJalapeno

jca wrote: »

Spot on, people see 3 year old golfs, Octavia's etc and think that's what they'll get for their car in 3 years time.

As I posted about 20 posts back, bog standard 3 yr old golf trade in was priced at 17.5k with vw

grogi

jca wrote: »

Spot on, people see 3 year old golfs, Octavia's etc and think that's what they'll get for their car in 3 years time.

That's what they are getting when paying full RRP. The RRP has a built-in trade-in allowance to let client feel he did a deal of century and sold his old banger for heaps of cash...

ctlsleh

mickdw wrote: »

carsfan2 wrote: »

Did they offer you the 10% reduction off list? Are they really ending this or do you think it will extend?

The car he quoted for was in Stock and was just over 52500. That was the price less the 10 percent. It had a few bits of spec. He was discounting it down to 51000 for straight sale.
I would expect far better discount for straight sale and buying a car out of stock.
He said the 10 percent is ending but sure he would anyway. Maybe it will end but I only see it being replaced with zero percent interest or something similar. Can't see them making the cars harder to sell. If they saw a need to discount in January sales time, they surely will need something for march onwards.

Nice car, although I think the AMG pack makes it really nice........this 10% discount offer is only available for cars registered by end March, which pretty much means the car has to be on stock.
Either way, it's a good deal, very solid car and more high tech than the new 5 Series, A6 or XF

carsfan2

I agree amg exterior pack makes car look lot better.
Think offer ending February not March.
Mercedes making some good looking cars these days.
Is their pcp rate not very high though 5.9 %?

Nika Bolokov

Equity in a car ?

If you pay 30k on a car and get 10 in whatever there calling it gmfv or whatever that's not equity....you've lost money and have some residual 'scrap' value

These PCP threads read like the Bulgarian apartment threads that used to knock around Boards in 2005....

Driving about in a massive car which you have on effectively a long term rental scheme you can only leave when you cough up 20k you never had in the first place.

For the majority of people this form of finance is high risk and for some pure nuts.

mickdw

If a car is 50k. I pay it off so that i owe 15k on it to own it outright after 3 years and the same car is worth 25k on the open market at that time, I have overpaid on the rental basically and have 10k of equity whatever way you cut it.
We all realise that it's money that has already been paid but it's a critical part of assessing a pcp deal. Better have 10k to go forward than pay the same money on a car that may be an old model or poorer residually and find zero to go forward.

And don't assume that everyone you gets a car is not able to afford it.
Take an example of someone who can clearly afford the car. Do they pay in cash, take high interest traditional finance that will buy the car outright after 5 years or take low interest pcp that will allow the car be bought outright at end of 3 years cheaper than on the higher interest traditional finance, dearer than paying cash but you get to hold onto alot of your cash for 3 years. Doesn't sound so scary when you can afford the car. If you cannot afford the car, it doesn't matter how you pay for it.

batman1

The risks are known by most people and there are risks with any finance arrangements.

Taking my earlier sportage example, if average Joe goes to buy a new one with his 8 k deposit he can either do the Pcp and buy the car at the end by getting a cu loan over a couple of years , or else get the cu loan at the start and buy the car .
Assuming he has the loan over 5 years and the Pcp plus loan also over 5 years, which is the cheapest way to buy the car ?

mickdw

mickdw wrote: »

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.

Personally I'd prefer to have the lowest monthly repayment and if you wish you can always save money every month to put towards another deposit but if you have an expensive month or what ever you can always not save/save less whereas if you have a high compulsory payment you have to come up with the cash every month.

If I were to go PCP I'd be planning on a 25 to 30% deposit.

mickdw

Andres Slimy Staircase wrote: »

Personally I'd prefer to have the lowest monthly repayment and if you wish you can always save money every month to put towards another deposit but if you have an expensive month or what ever you can always not save/save less whereas if you have a high compulsory payment you have to come up with the cash every month.

If I were to go PCP I'd be planning on a 25 to 30% deposit.

valid point. It's all good as long as you are aware that you will need a few quid to throw at it again.

jca

batman1 wrote: »

The risks are known by most people and there are risks with any finance arrangements.

Taking my earlier sportage example, if average Joe goes to buy a new one with his 8 k deposit he can either do the Pcp and buy the car at the end by getting a cu loan over a couple of years , or else get the cu loan at the start and buy the car .
Assuming he has the loan over 5 years and the Pcp plus loan also over 5 years, which is the cheapest way to buy the car ?

But do people know the risks? I don't think they do. Even if they figure out the value needs to be higher than the remaining money owed, they think the dealer is going to give them the value of the 3 year old car sitting out in the showroom.

robtri

BLUEMAN2010 wrote: »

30,000 New car
10,000 trade in / Deposit
10,000 repayments.( 36 months)
10,000 Bubble payment.

If you pay the bubble payment you then have the deposit/trade in for the next plan but........

If you don't pay the Final Bubble payment on the first PCP you then do not have a trade in /deposit for the next car.
i.e
30,000
10,000 cash or loan( no trade in)
10,000 repayments
10,000 baloon payment.

Nobody seems to know the answer or nobody seems to want to know.

no quite simple... you paid 20k you owe 10k
if the car is worth more than 10k you have the difference as a deposit for next car
if car is worth less than 10k you owe the differnce and have no deposit

bidiots

BLUEMAN2010 wrote: »

30,000 New car
10,000 trade in / Deposit
10,000 repayments.( 36 months)
10,000 Bubble payment.

If you pay the bubble payment you then have the deposit/trade in for the next plan but........

If you don't pay the Final Bubble payment on the first PCP you then do not have a trade in /deposit for the next car.
i.e
30,000
10,000 cash or loan( no trade in)
10,000 repayments
10,000 baloon payment.

Nobody seems to know the answer or nobody seems to want to know.

Is that a question or what?
Pay the bubble, keep the car.
Don't pay the bubble, hand the car back.
Don't pay the bubble but use equity, if any, towards deposit for new PCP deal.
It's pretty simple. This thread scares me.

grogi

robtri wrote: »

no quite simple... you paid 20k you owe 10k
if the car is worth more than 10k you have the difference as a deposit for next car
if car is worth less than 10k you owe the differnce and have no deposit

Don't feed the troll.

bidiots

grogi wrote: »

Don't feed the troll.

Bugger, didn't realise it was a one post wonder, if only the touch site showed user post count

Ivefoundgod

I think next year will tell us a lot about PCP in Ireland and if there is going to be a lot of disappointed punters returning cars. My father has a nicely specced Octavia to return next year, very interested to see what he's offered as there must be 100s of Octavias coming to the end of their term. PCP really seemed to kick off from 141 onwards. I'm hoping to see a great selection of 3 year old used cars next year as i'll be due an upgrade myself around then. I can't see used car prices staying as high as they are, it doesn't make much sense to be a year old car now with current prices, expect that to change soon.

MarkN

Nika Bolokov wrote: »

Equity in a car ?




Driving about in a massive car which you have on effectively a long term rental scheme you can only leave when you cough up 20k you never had in the first place.

Sounds like you should read this thread from the start so you begin to understand how PCP works.

Mantis Toboggan

Ivefoundgod wrote: »

I think next year will tell us a lot about PCP in Ireland and if there is going to be a lot of disappointed punters returning cars. My father has a nicely specced Octavia to return next year, very interested to see what he's offered as there must be 100s of Octavias coming to the end of their term. PCP really seemed to kick off from 141 onwards. I'm hoping to see a great selection of 3 year old used cars next year as i'll be due an upgrade myself around then. I can't see used car prices staying as high as they are, it doesn't make much sense to be a year old car now with current prices, expect that to change soon.

I would have thought most people buying a car on PCP would be keeping the car after the 3 years.

mickdw

Tyson Fury wrote: »

I would have thought most people buying a car on PCP would be keeping the car after the 3 years.

Not at all.
They are going back in for a new car.
Take something like a passat. 35k new, might owe 13k at end of term and car might be worth 17k.
So to buy it out, you need to come up with 13k.
To get a new car, you might have to come up with 4k or 5k and just continue paying monthly.
Spending 13k just to stay in current car does not agree with most people so they jump in again.

Tyson Fury

Tyson Fury wrote: »

I would have thought most people buying a car on PCP would be keeping the car after the 3 years.

I would save very very few intend keeping it, part of the attraction of PCP is you can get into a new car every 3 years but not have to pay the real cost like if you were doing it with loans etc.

davo2001

mickdw wrote: »

Not at all.
They are going back in for a new car.
Take something like a passat. 35k new, might owe 13k at end of term and car might be worth 17k.
So to buy it out, you need to come up with 13k.
To get a new car, you might have to come up with 4k or 5k and just continue paying monthly.
Spending 13k just to stay in current car does not agree with most people so they jump in again.

Passat new, today costs roughly 32k, check out 2014 Passats and you will see they average around 24k.

Ivefoundgod

davo2001 wrote: »

Passat new, today costs roughly 32k, check out 2014 Passats and you will see they average around 24k.

Right but presumably dealer isn't going to give you 24k is he? More like 20k or so, plus the interesting part is the surge of returning cars on PCP deals. If a 2014 passat is worth 24k now, in 2018 a 2015 passat may not be worth the same. Thats where there could be problems. Its all speculation anyway, we won't know for another few months.

Leprechaun77

davo2001 wrote: »

Passat new, today costs roughly 32k, check out 2014 Passats and you will see they average around 24k.

From my own experience, I have seen a lot of 3 year old Passats on our fleet going back to the lease company. Most would have about 60,000-70,000 kms on them. The list price was generally about €32,800 if I recall. The cost to buy my own one outright was €15,500. I was going to buy it for a family member but did not in the end.

Two weeks later I saw the car up for sale in a VW main dealer for €22,000 (slightly more expensive than a few others) and enquired for the craic. The cash price they would have let it go for was €19,250. This tells me that the true value was probably a couple of grand lower than this allowing for warranty etc. I will be interested to see how the PCP "round two" goes as there will need to be a lot of figure fudging going on.

mickdw

davo2001 wrote: »

Passat new, today costs roughly 32k, check out 2014 Passats and you will see they average around 24k.

You will not get 24k on a trade in for a 3 year old passat that was 32k new.
My figures were based on a highline nearer 35k and the car being worth 50% at 3 year years - More realistic than going into a deal assuming that you will get 75% of its new cost back on a trade in after 3 years.

grogi

Ivefoundgod wrote: »

Right but presumably dealer isn't going to give you 24k is he? More like 20k or so, plus the interesting part is the surge of returning cars on PCP deals. If a 2014 passat is worth 24k now, in 2018 a 2015 passat may not be worth the same. Thats where there could be problems. Its all speculation anyway, we won't know for another few months.

Leprechaun77 wrote: »

From my own experience, I have seen a lot of 3 year old Passats on our fleet going back to the lease company. Most would have about 60,000-70,000 kms on them. The list price was generally about €32,800 if I recall. The cost to buy my own one outright was €15,500. I was going to buy it for a family member but did not in the end.

Two weeks later I saw the car up for sale in a VW main dealer for €22,000 (slightly more expensive than a few others) and enquired for the craic. The cash price they would have let it go for was €19,250. This tells me that the true value was probably a couple of grand lower than this allowing for warranty etc. I will be interested to see how the PCP "round two" goes as there will need to be a lot of figure fudging going on.

I made my own calculations a while back and came to very similar figures:

http://www.boards.ie/vbulletin/showpost.php?p=100935555&postcount=5

air

Andres Slimy Staircase wrote: »

I would save very very few intend keeping it, part of the attraction of PCP is you can get into a new car every 3 years but not have to pay the real cost like if you were doing it with loans etc.

Of course you pay the real cost, it's just the packaging that's different and usually the interest rate.
You don't have to go looking for a loan for the headline RRP cost of the car but the overall monthly cost will be broadly similar to a normal loan when you account for having to save up the next deposit along the way also.

bazz26

A 3 year old Passat would be the old model, not a chance of getting anywhere near 24k for it when you can buy a 2015 new model for that sort of money.

For example:
http://www.driving.ie/used-cars/Volkswagen/Passat/HIGHLINE-1.6/1507033178270126711/

air

air wrote: »

Of course you pay the real cost, it's just the packaging that's different and usually the interest rate.
You don't have to go looking for a loan for the headline RRP cost of the car but the overall monthly cost will be broadly similar to a normal loan when you account for having to save up the next deposit along the way also.

No want I'm saying is correct, you do not pay the true cost of the car on PCP if you roll it over after 3 years and buy new again as you are not paying the final payment which is usually a considerable amount. Your monthly repayment are far lower on PCP than it would be to buy the car with a loan, you pay little or no interest also compared to a loan. Also you may not have to save too much of a deposit if there is good equity left in your car and you will have a fair idea of that when buying if you are buying cars that hold their value like VWs etc.

air

Andres Slimy Staircase wrote: »

No want I'm saying is correct, you do not pay the true cost of the car on PCP if you roll it over after 3 years and buy new again as you are not paying the final payment which is usually a considerable amount. Your monthly repayment are far lower on PCP than it would be to buy the car with a loan, you pay little or no interest also compared to a loan. Also you may not have to save too much of a deposit if there is good equity left in your car and you will have a fair idea of that when buying if you are buying cars that hold their value like VWs etc.

Complete nonsense.
The only possible saving to be made is on the loan APR.

You pay interest on the full cost of the car including the GFMV for the full PCP term.

hometruths

I got a quote for a PCP on a used car recently from a main dealer. It was a 152 low mileage, decent spec.

Dealer ran the numbers, and gave me the printout with all the details - deposit, monthly payment and GFMV.

It's from VAG bank who are offering 3.9% APR on used, and 0% on new.

The difference in rates means buying a new model at 0%, same spec, same deposit is €6 a month cheaper!

Have not got back to the dealer yet but will tell him that if it is cheaper to buy a new car than a used one then quite obviously the used one is overpriced.

This is going to be an increasingly bigger problem for dealers. They need to keep the used sticker prices high to make GFMVs look good on new PCPs but they will be unable to shift them at those prices.

grogi

Andres Slimy Staircase wrote: »

No want I'm saying is correct, you do not pay the true cost of the car on PCP if you roll it over after 3 years and buy new again

In that case someone is giving part of it to you for free... True beauty of PCP - nobody knows how much they are paying...

carsfan2

schmittel wrote: »

I got a quote for a PCP on a used car recently from a main dealer. It was a 152 low mileage, decent spec.

Dealer ran the numbers, and gave me the printout with all the details - deposit, monthly payment and GFMV.

It's from VAG bank who are offering 3.9% APR on used, and 0% on new.

The difference in rates means buying a new model at 0%, same spec, same deposit is €6 a month cheaper!

Have not got back to the dealer yet but will tell him that if it is cheaper to buy a new car than a used one then quite obviously the used one is overpriced.

This is going to be an increasingly bigger problem for dealers. They need to keep the used sticker prices high to make GFMVs look good on new PCPs but they will be unable to shift them at those prices.

Or else give 0% finance on the used car too to make it more attractive?

air

air wrote: »

Complete nonsense.
The only possible saving to be made is on the loan APR.

You pay interest on the full cost of the car including the GFMV for the full PCP term.

But you don't pay the full cost of the car, you obviously don't get that.

Using figures for a car I am doing my home work on at the moment. Lets use list price and ignore discounts etc. Price 39,210. Deposit 11,730.

If you buy using a car loan you will pay, 11,730 + 36x864.85 (:eek: yes 864 euro a month repayment) therefore after 3 years you will pay 42,864.

If buy on PCP, 11730 +36x389.79 (less than half hit on your monthly cash flow) so after 3 years you will repay 25,762 this is all you actually have to pay over the 3 years but if you want to save a little towards a deposit then lets look at the GFV which is 14,400. 141 examples for sale today range from 24k to 29k. So assuming a trade in price of around 20k means saving an extra 5k to have the same deposit to go in again so just a little over 30k in that case over 3 years.

The loan means you need 9k more cash flow over the three years and you are paying 2,500 more interest if you buy with a loan rather than PCP. 9K is a significant amount of extra money to find over 3 years for most people.

mickdw

you are comparing buying a car outright over 3 years with buying the car outright over 5 to 6 years which is effectively what the the pcp deals do - you pay a portion and if you want it owned outright at the end of 3 years, most would need to finance the gfv amount over a further 2 to 3 years.
There is no magic involved. It's actually quite similar to buying your car with a 5 or 6 year loan and trading in after 3 with part of the loan still outstanding.

mickdw

mickdw wrote: »

you are comparing buying a car outright over 3 years with buying the car outright over 5 to 6 years which is effectively what the the pcp deals do - you pay a portion and if you want it owned outright at the end of 3 years, most would need to finance the gfv amount over a further 2 to 3 years.
There is no magic involved. It's actually quite similar to buying your car with a 5 or 6 year loan and trading in after 3 with part of the loan still outstanding.

Unless you keep rollin rollin rollin every 3 years!

who_ru

Andres Slimy Staircase wrote: »

Unless you keep rollin rollin rollin every 3 years!

Maybe it's just me but i think point of having/owning a car is that one day you eventually stop making monthly repayments to a credit institution.

I just cannot see how being in a constant cycle of monthly repayments is a good thing.

X6.430macman

who_ru wrote:

I just cannot see how being in a constant cycle of monthly repayments is a good thing.

Keep the car fresh

Lantus

It really depends on your own circumstances. Both me and my wife drive 100+km every day and pick up and drop off kids. We spend 2 to 3 hours a day in them. They are essential tools that we want to be comfortable, safe efficient, reliable and nice. I'm happy to buy my clothes at penny's and Dunnes and shop at aldi and camp on holiday but I don't want to waste a single second worrying about a car. Don't need it don't want it. Aside from a service and a valet the only thing I need to buy is typically 2 front tyres in 3 years. That's worth something to me but it won't be to everyone. Also, I use a cheaper phone on pay as you go, cancelled sky and generally don't shop or place a lot of value on material possessions.

cart man

Lantus wrote: »

It really depends on your own circumstances. Both me and my wife drive 100+km every day and pick up and drop off kids.
Aside from a service and a valet the only thing I need to buy is typically 2 front tyres in 3 years.

You get >100k km out of your rear tyres, wow that's great, what make are they?

who_ru

who_ru wrote: »

Maybe it's just me but i think point of having/owning a car is that one day you eventually stop making monthly repayments to a credit institution.

I just cannot see how being in a constant cycle of monthly repayments is a good thing.

Staying in a new car all the time, up to date on tech, no worries about issues with the car, always having the exact spec you want etc etc.

If the monthly repayments are reasonable then I don't see the issue. Owning a car is not like owning your home having the use of it and being able to keep it updated and not worry about issues is very attractive to a lot of people. A lot of people changed cars every 3 years before PCP was ever heard off, is just a more attractive way to do it.

jca

cart man wrote: »

You get >100k km out of your rear tyres, wow that's great, what make are they?

Landsail, is there any other brand?( All the taxi men use them....)

jca

Lantus wrote: »

It really depends on your own circumstances. Both me and my wife drive 100+km every day and pick up and drop off kids. We spend 2 to 3 hours a day in them. They are essential tools that we want to be comfortable, safe efficient, reliable and nice. I'm happy to buy my clothes at penny's and Dunnes and shop at aldi and camp on holiday but I don't want to waste a single second worrying about a car. Don't need it don't want it. Aside from a service and a valet the only thing I need to buy is typically 2 front tyres in 3 years. That's worth something to me but it won't be to everyone. Also, I use a cheaper phone on pay as you go, cancelled sky and generally don't shop or place a lot of value on material possessions.

All those standard of living cuts for a car? The mind boggles.

mickdw

jca wrote: »

All those standard of living cuts for a car? The mind boggles.

They are not cuts, they are choices imo.
Different people spend on different things.
I spend near zero on drink and I don't smoke.
If I buy a car, I can be guaranteed to be told it's a waste of money as a 2k car will do the same job.
One person telling me this before spends 10k per year on beer. His choice but myself not spending that is not a sacrifice, I would never be interested in drinking 2 nights each week.