PCP finance.

acronym Chilli

ShadowHearth wrote: »

Looks like some of manufacturers are dialing back on offers now. Seats 172 deals are worse Then 171. For example they dont even offer scrapage on new ibiza anymore. Only leon got 0% apr left too..

Some of this just to do with how the orders/stock situation reconciles. The purchasing period in Ireland is pretty "lumpy" due to the plates setup concentrating sales into January & July. But dealers/distributors have to order well ahead from the factories. Once the cars are bought, they're loath to try to send them back or redirect them, so the deals will follow in order to make the sales soak up the available stock in a timely fashion. Or not if demand is healthy.

Fiskar

ShadowHearth wrote: »

Looks like some of manufacturers are dialing back on offers now. Seats 172 deals are worse Then 171. For example they dont even offer scrapage on new ibiza anymore. Only leon got 0% apr left too..

Brand new larger and more refined Seat Ibiza is now in so no deals. Deals only were on the outgoing model. New Ibiza has to get sales ahead of the new Polo due to ine the new year and which will no doubt take sales away from the Ibiza. Also the engine range on the new Ibiza offering in this country is awful. Who in their right mind would buy a 1litre 3 cyclinder Ibiza FR?
Saw the new Fiesta reviews for 2018 model. It is mutt ugly. Also has a 3 cylinder with cylinder deactivation (whatever for in such a small engine)

ShadowHearth

Fiskar wrote: »

Brand new larger and more refined Seat Ibiza is now in so no deals. Deals only were on the outgoing model. New Ibiza has to get sales ahead of the new Polo due to ine the new year and which will no doubt take sales away from the Ibiza. Also the engine range on the new Ibiza offering in this country is awful. Who in their right mind would buy a 1litre 3 cyclinder Ibiza FR?
Saw the new Fiesta reviews for 2018 model. It is mutt ugly. Also has a 3 cylinder with cylinder deactivation (whatever for in such a small engine)

I actually really dont like new fiesta. Definitely the worst of all super minis that coming out now.

I wanted new ibiza fr with 1.5tsi 150hp engine, but that engine online coming in January. No way I am waiting for it and went for old cupra.
New ibiza is fantastic and in my personal opinion it looks better then new polo. I just hope they will have cupra version of it.

I think ateca was same - no deals. So ibiza is new and looks like very good value, so no deals too. In 2-3 years we will see good deals.

DaveyDave

I know this was discussed not too long ago but would someone be able to tell me quickly the process of trading up a year early? If I remember correctly there's a small fee for doing so? Other than that, the car would be worth more wouldn't it, therefore having a better deposit for a different model?

Or is it just best to wait out the last year?

Cyrus

DaveyDave wrote: »

I know this was discussed not too long ago but would someone be able to tell me quickly the process of trading up a year early? If I remember correctly there's a small fee for doing so? Other than that, the car would be worth more wouldn't it, therefore having a better deposit for a different model?

Or is it just best to wait out the last year?

there was no fee when i did it

best thing to do is ask them see what the figures look like

mickdw

DaveyDave wrote: »

I know this was discussed not too long ago but would someone be able to tell me quickly the process of trading up a year early? If I remember correctly there's a small fee for doing so? Other than that, the car would be worth more wouldn't it, therefore having a better deposit for a different model?

Or is it just best to wait out the last year?

Basically you request a settlement figure which will be issued from whoever financed your car. You then go to dealer and see what they will offer for current car. Difference between this offer and the settlement figure is your deposit to go forward.
To say the car is worth more is true but you will also have more money outstanding. Generally you pay off the car loan quicker than the car devalues so the longer you go into tge deal, the more beneficial it should be to you in terms of deposit to go forward. There may be a case for doing an early deal if your current car is soon to become an old model.

DaveyDave

Asking again as I didn't see anyone answer. Has anyone returned a car with minor cosmetic scratches? i.e a small scratch on an alloy or some light side panel scratches from a bush etc. Wondering how harsh they'd penalize you for minor cosmetic wear and tear?

bazz26

Are you handing it back or trading it in as part of another PCP deal?

JoeA3

DaveyDave wrote: »

Asking again as I didn't see anyone answer. Has anyone returned a car with minor cosmetic scratches? i.e a small scratch on an alloy or some light side panel scratches from a bush etc. Wondering how harsh they'd penalize you for minor cosmetic wear and tear?

It would be no different to any other regular non pcp scenario when trading the car in. It depends on the car, it's mileage, year on the plate, the relative demand for said model/spec and the dealer in question. Minor cosmetic damage won't be a big factor in what you're offered for it.

mickdw

They cannot penalise you anymore than is reasonable if you are trading in for a new car as you are in an open market so if you think you are getting screwed, go to next dealer.
Handing the car back and walking away could leave you alittle snookered if there is damage as it will need to be paid for. My advice would be not to enter into a pcp if there is any possibility that you would have to walk away at the end as that is throwing money away.

mickdw

They cannot penalise you anymore than is reasonable if you are trading in for a new car as you are in an open market so if you think you are getting screwed, go to next dealer.
Handing the car back and walking away could leave you alittle snookered if there is damage as it will need to be paid for. My advice would be not to enter into a pcp if there is any possibility that you would have to walk away at the end as that is throwing money away.

ShadowHearth

https://www.irishtimes.com/business/personal-finance/buying-a-172-car-with-a-personal-contract-plan-read-this-1.3148532?mode=amp

I am pretty sure their writers go on boards.ie, get half arsed info and then do an article with messed up information. No wonder people are so confused about pcp.

youcancallmeal

ShadowHearth wrote: »

https://www.irishtimes.com/business/personal-finance/buying-a-172-car-with-a-personal-contract-plan-read-this-1.3148532?mode=amp

I am pretty sure their writers go on boards.ie, get half arsed info and then do an article with messed up information. No wonder people are so confused about pcp.

Seen a lot of these lately. Same old story warning people to have an appropriate end game plan if the value of their trade in doesn't allow them to go onto a new PCP deal in 3 years time.

Another factor is the cost of financing. You may well have acquired the initial car on a 0 per cent deal; but three years later that deal is gone and you’re now being charged 6 per cent on the rollover car purchase, which can change the sums significantly and require you to fund more of the deal through your own pocket.

But surely 0% finance for 3 years and then 6% for another 3 years is still going to be cheaper than going to a credit union for a loan in the first place and buying the car outright?

ShadowHearth

youcancallmeal wrote: »

Seen a lot of these lately. Same old story warning people to have an appropriate end game plan if the value of their trade in doesn't allow them to go onto a new PCP deal in 3 years time.



But surely 0% finance for 3 years and then 6% for another 3 years is still going to be cheaper than going to a credit union for a loan in the first place and buying the car outright?

Its good there are finally trying to inform people, but the way they do it is a mess. The examples they give are just stupid.
They missing the point that final balloon will be same no matter what deposit and repayments you will do. They don't explain properly how to manage thpse two and find a golden spot.
Minimum guarantee value is just completely weird by their explanation. 26k car will have 20k minimum value after 3 years?!

Instead of explaining properly ins and outs, they are going for scare tactics and click bait articles. This thread is the best information source for pcp at this point. Media is useless.

spuddy

ShadowHearth wrote: »

https://www.irishtimes.com/business/personal-finance/buying-a-172-car-with-a-personal-contract-plan-read-this-1.3148532?mode=amp

I am pretty sure their writers go on boards.ie, get half arsed info and then do an article with messed up information. No wonder people are so confused about pcp.

The thing which jumped out at me in the article was the lack of regulation surrounding PCP. Now where have seen something similar before

GavMan

A “good” PCP deal

Purchase price: €26,495

Deposit: €9,000

Monthly repayments: €278.42

Guaranteed minimum future value: €11,023

Trade-in price after three years: €20,000

Equity to bring to new PCP deal: €8,977

Hilarious. Show me a car with those residuals in that price bracket and I will buy it right now

Also, removing that bogus trade in price, thats a terrible PCP deal for the buyer. Lets be kind and assume its worth 16000. Customer needs to 4 grand to make his payments

DaveyDave

Anyone have any recommendations for GAP insurance? VW is €400 for a €20-30k car, I think that's return to invoice. I need to research the options more as I can't remember them well. I hear it's more expensive to get it through the dealer?

acronym Chilli

GavMan wrote: »

Hilarious. Show me a car with those residuals in that price bracket and I will buy it right now

Also, removing that bogus trade in price, thats a terrible PCP deal for the buyer. Lets be kind and assume its worth 16000. Customer needs to 4 grand to make his payments

I think they more or less put numbers together (picked a residual) so that the money left at the end was enough to "roll it over".

I think that'll be unlikely for most people/cars. The result is you either put more cash in at the end to close the difference, or you increase your monthly repayment, or you trade-down in car (hard to do since most are on PCP because they like to drive a new car); or some combination of all 3.

I suspect that the car companies have a rough idea that the additional amount needed to go in is somewhere in the range of money people might have saved up somewhere (holiday fund, rainy day fund etc.,); and that they'll also be prepared to go up on the monthly repayment ("we're already paying €260 a month, sure €330 isn't so bad, we'll have a brand new car"... if you were paying €260 last month to drive a 3 year old car, paying just €70 more next month to have the latest&greatest version isn't such a bitter pill). Could close a gap of €6k with €3k of savings (past earnings) and €3k of increased repayment (future earnings).

Almost nobody will go onto PCP and on top of the monthly repayment start a regular savings account to save up the (projected) deposit-shortfall. I don't think that PCP is dishonestly sold, per-se, however I'm rather confident that there's some very nice pricing-psychology baked into it (there are books and books on pricing techniques and structures).

Finally: all the talk of "walking away" being "throwing money away". If the value of the car is greater than GFMV, do you get the additional cash back? (seem to recall you do, but don't know detail, given you can take your PCP car to another garage/make to do deal there (while of course clearing your old finance with original dealer), should be possible). If you do, then you're not leaving it behind.
How you might lose out is if you have a car that you value higher than market value. This discrepancy could be entirely rational. e.g. say you've run up high miles, and you know they're all motorway miles, really careful driving, etc., but it's hard to convince a counter-party and T&Cs of the PCP are anyway imposing a specific penalty. You'd put one value on the car due to the asymmetry in information alone which might be higher than market. Or car might have a defect (damaged body-panel) that you aren't bothered by but that makes the car "rough" and a hard sell, etc.,

Finally, changing car for new more often will (almost certainly) cost more than holding car for longer. Basic economics and physics see to that. Same fundamental underpinning as how it's generally better for CO2 to drive older car another year than build a new car that's a bit more fuel efficient. If it doesn't look like that, there's almost certainly something wrong or concealed in the calculation, or it's not clear who's paying that premium.

joe40

I was always wary of Pcp deals but recently purchased a brand new volkswagen golf on 0% pcp and I think it was a reasonable deal. A 4300 euro deposit with 36 payments of 314 and then final payment of 10300 euro. If I went into a garage today to buy a 3 year old golf and only wanted to finance 10300 euro, I'm pretty sure I would need a 5000 euro deposit. Even if I finance the balance at the end of the three years over another 3 years at 6.5 %apr (credit union rate) the total interest would be less than a 5 year hp or loan from new.
Is there anything im missing?

mickdw

No. It looks good. You should get something similar to your deposit back in equity at end should you want to get another new car. Also as you say, buying out the car is a reasonable option too and going zero interest pcp for 3 years even if followed by reasonably high interest loan for the reaminder is still likely the cheapest way out.
The zero percent is the key though.

Lantus

Not bad. That's a 16.5% deposit. If you rolled over you'd probably see some slight uplift with monthlys all things being equal. If your going to keep the car could you save a little to one side? Say 50 to 100eu a month?

This would give you 1800 to 3600 after 3 years and would take a nice chunk out of the outstanding amount and further reduce your exposure to interest making the car even cheaper.

I think all PCP owners should be saving some money so after 3 to 8 years they have a viable exit strategy if needed.

joe40

Yeah that was my thinking, try not to have the equity you bring to the deal disappear along with the repayments, obviously future markets can change (diesel car may be very unattractive in 5 years time) but that will affect any car purchases

joe40

On a separate note I find it hard to work out how to purchase a car for under 300 euro pm, that will still perform approx 18000 miles a year. My wife will drive the golf with pcp. My own car is a 2011 avensis which I bought second hand. 2.5 years left of finance of 315 pm. Currently 106000 miles on the clock.
So in 2020 I will have a 9 year old car with approx 150,000 miles. Time to change, maybe
3 to 4000 trade so I will still need to come up with 15000 for a decent family car second hand car so back into repayments of 300 euro plus a month. So if a pcp deal can keep me in a new car with good warranty, is that not a better option.

Lantus

joe40 wrote:

On a separate note I find it hard to work out how to purchase a car for under 300 euro pm, that will still perform approx 18000 miles a year. My wife will drive the golf with pcp. My own car is a 2011 avensis which I bought second hand. 2.5 years left of finance of 315 pm. Currently 106000 miles on the clock. So in 2020 I will have a 9 year old car with approx 150,000 miles. Time to change, maybe 3 to 4000 trade so I will still need to come up with 15000 for a decent family car second hand car so back into repayments of 300 euro plus a month. So if a pcp deal can keep me in a new car with good warranty, is that not a better option.

Your right to look at all the options. Spreadsheet those figures because only then can you make honest comparisons. Factor in tax, repairs, fuel and everything else.

Cars all depreciate and lose value over time so at every stage you have a progressively cheaper car but with more miles and less lifespan.

I'd like to see the discriminatory insurance scam that arbitrarily blocks 15 year old vehicles removed on a side note.

Casati

joe40 wrote: »

I was always wary of Pcp deals but recently purchased a brand new volkswagen golf on 0% pcp and I think it was a reasonable deal. A 4300 euro deposit with 36 payments of 314 and then final payment of 10300 euro. If I went into a garage today to buy a 3 year old golf and only wanted to finance 10300 euro, I'm pretty sure I would need a 5000 euro deposit. Even if I finance the balance at the end of the three years over another 3 years at 6.5 %apr (credit union rate) the total interest would be less than a 5 year hp or loan from new.
Is there anything im missing?

What model Golf was that?

Toyotafanboi

Had to be a highline if he got 0%.

joe40

No it was a golf allstar, 172 reg. I think mid spec definitely not the highline

Toyotafanboi

I thought it was 3.9% APR for that. Did you do a deal on a pre facelift after the facelift came out?

bazz26

I thought the allstar was a Mk7 special edition and not carried over to the Mk7.5.

Toyotafanboi

It was, I'm just wondering were they offering any left overs at 0% to shift them?

bazz26

Probably I'd say.

Edit: Looks like some are:
http://www.carsireland.ie/detail.php?ad_id=1702238&r=s.php%3Fm%3D93%26o%3D812%26r%3D2017%26pp%3D50%26g%3D0

joe40

Yeah I think that what it was. The car is mark 7 not 7.5

Casati

joe40 wrote: »

Yeah I think that what it was. The car is mark 7 not 7.5

Looks like a great deal as you got a really high spec car and must have got a discount off full retail too boot. I can't see you having less than 4300 to put into a new one in years unless you do massive miles or wreck that car

sheff the ref

Does PCP apply for Electric Cars. I see the Government are offering €5000 of a grant for electric cars priced over €20,000

acronym Chilli

sheff the ref wrote: »

Does PCP apply for Electric Cars. I see the Government are offering €5000 of a grant for electric cars priced over €20,000

No reason why it shouldn't, but very few sold anyway, so won't have much going on

spuddy

Competition authority are set to investigate the PCP market according to RTE. Maybe we have learnt something after all.

grogi

spuddy wrote: »

Competition authority are set to investigate the PCP market according to RTE. Maybe we have learnt something after all.

What is there to learn? It's simply a brilliant social engineering combined with market dried up by the recession...

Atlantic Dawn

spuddy wrote: »

Competition authority are set to investigate the PCP market according to RTE. Maybe we have learnt something after all.

"I don't know what a PCP is" ads might be on the way ...

https://www.youtube.com/watch?v=l74083zafAM

jca

spuddy wrote: »

Competition authority are set to investigate the PCP market according to RTE. Maybe we have learnt something after all.

Before we know it we'll have another tribunal on our hands.

sheff the ref

This Volkswagen Jetta is only two and a half years old and seems to be well priced. Highly unlikely that it would have been possible to enter a new PCP deal if trading if this is the sale price after the Garage get their cut

http://www.carzone.ie/used-cars/volkswagen/jetta/used-2015-151-volkswagen-jetta-2-0-td-kerry-fpa-6275272045318280329

Falcon L

sheff the ref wrote: »

This Volkswagen Jetta is only two and a half years old and seems to be well priced. Highly unlikely that it would have been possible to enter a new PCP deal if trading if this is the sale price after the Garage get their cut

http://www.carzone.ie/used-cars/volkswagen/jetta/used-2015-151-volkswagen-jetta-2-0-td-kerry-fpa-6275272045318280329

The normal PCP car will have half the mileage of that though.

sheff the ref

Falcon L wrote: »

The normal PCP car will have half the mileage of that though.

Higher mileage is something that you may not necessarily be able to predict when entering a PCP deal 3 years ago. E.g your distance to work etc. could change

Falcon L

sheff the ref wrote: »

Higher mileage is something that you may not necessarily be able to predict when entering a PCP deal 3 years ago. E.g your distance to work etc. could change

Yeah, but that's the point. If you go into a deal with a mileage allowance of 15k a year and you do double that, every year, you shouldn't expect to get the same value for your returning PCP car.

Masala

Falcon L wrote: »

Yeah, but that's the point. If you go into a deal with a mileage allowance of 15k a year and you do double that, every year, you shouldn't expect to get the same value for your returning PCP car.

I heard from a garage that it could cost you €1,000 off your trade in value for every 10,000 kms over the allowance as a penalty.

Falcon L

Masala wrote: »

I heard from a garage that it could cost you €1,000 off your trade in value for every 10,000 kms over the allowance as a penalty.

Generally, the penalty is around 6 cents per Km.

Millem

I have a vw pcp and am allowed to do 20,000km per year. With nissan it was 15,000km per year.

NIMAN

Seen a piece on some British TV programme too about PCP, and it wasn't positive either.

Think it might have been Newsnight.

I get the impression quite a few experts reckon it could be the next big financial bomb. Like sub-prime mortgages, it appears too many people were given it despite not being able to afford it.

NIMAN

NIMAN wrote: »

Seen a piece on some British TV programme too about PCP, and it wasn't positive either.

Think it might have been Newsnight.

I get the impression quite a few experts reckon it could be the next big financial bomb. Like sub-prime mortgages, it appears too many people were given it despite not being able to afford it.

I don't know why these programmes keep this nonsense up about comparing it to sub prime mortgages. There is no comparison at all and no "bomb" to go off.

Can't afford the car, hand it back. Repayments stop, garage sells car to recoup finance and that's it. Yes the person loses the deposit and equity but they aren't in debt.

grogi

Andres Slimy Staircase wrote: »

I don't know why these programmes keep this nonsense up about comparing it to sub prime mortgages. There is no comparison at all and no "bomb" to go off.

Can't afford the car, hand it back. Repayments stop, garage sells car to recoup finance and that's it. Yes the person loses the deposit and equity but they aren't in debt.

In the States there is a big problem with sub-prime car loans.

https://www.youtube.com/watch?v=4U2eDJnwz_s

PCP is not one of them...

jimmytwotimes 2013

Bought recently. Looked at PCP but the thought of hitting a point where every extra kilometre would cost extra didn't appeal.

Would be an sh1tty way to go driving with the little voice inside saying 'well those kilometres cost you X'.

For people who can stay below the 15-20,000 kms it's worth thinking about but if probably just go over that each year.

An accident could be costly too.