PCP finance.

DaveyDave

who_ru wrote: »

I was going over the SEAT PCP calculator last night for a new Leon FR.

Price = €25675
Deposit (30%) = €7702.50
Finance = €17972.50 over 36 months 0% (0% offer may be over now)
Final payment = €9757
36 monthly payment = €228.20

Overall price of 25675 is with no extras whatsoever - when I included extras in configuration price was >€28K.

If I was to put aside money each month to meet the final payment this would mean €9757/36 = €271.02 plus the monthly payment of €228.20 would mean I am effectively paying €499.22 per month for 36 months in order to own the car outright at the end of the 3 years.

That's a lot of cash per month for 36 months.

food for thought. Even with 0%. And this offer might be over as it was due to end 30 Sep.

If you don't have enough for the monthly payments and to save for the final payment at the same time then simply don't do it. You don't need to pay for the car at the end of the 3 years of you wish to own it. You can refinance it further and if you're keeping the car then paying for it for 5 years won't be an issue. If that's too long then simply trade in for a new one after 3 years.

Not aimed at you, but so many people go on about how 5 years is a long time to pay for a car. If you didn't trade-in a new car every 2-3 years that's exactly what you'd be doing. Paying a car loan off for 5 years. I guess trading in every 2-3 years was very popular before PCP? People seem astounded that anyone would pay for a car for so long, but how else would you own a car? Assuming you didn't have €30k in your pocket.

mickdw

499 to buy outright over the relatively short period of 3 years is not bad.
Very few would go that route. You are being very safe in doing that route.
A more reasonable yet safe option may be to use the pcp to get the zero interest then be happy to refinance for a further 2 years. I figure if you put 350 total in every month, you will have 4500 saved and only need to finance 5k over a further 2 years.
That gives you the option of as I say buying out over a further 2 years or going again for a new car with a very healthy deposit.

nebraska132

anyone know of a site that tracks the PCP deals themselves....what rates are being charged by the different car manufacturers

bazz26

Some seem to forget that a brand new car still has to be paid for, PCP is just a different way of structuring how it's paid. It's designed so that you roll over to a new PCP deal every 3 years so that the balloon payment doesn't need to be paid because your trading the car in for another one.

However if you decide you want to buy the car outright after the 3 years it can be a cheap way of doing it if the initial 3 year PCP interest rate is very low, you just use regular borrowing then in the form of a loan/HP to pay off the balloon payment after year 3. So instead of paying a high interest rate for 5 years on a car loan, you could avail of a cheap PCP rate for the first 3 years and then a regular interest rate for the remaining 2 years.

arleitiss

I would be one of those people who would get hooked onto PCP for life.
For me - it's just another bill to pay while saving a lot of hassle (Having to take time off work for NCT's, mechanics, failed starts etc...) while being able to upgrade every 3 years.

I get bored of things pretty quick and always keep changing them, car would be one of them and I would hate to save up or get long-term loan to buy and own car that would then keep losing it's value every year so PCP is definitely appealing to me.

veryangryman

Update.. balloon payment taken. However the final 75 wasnt taken at same time. When does this go?

jca

veryangryman wrote: »

Update.. balloon payment taken. However the final 75 wasnt taken at same time. When does this go?

If you were on 0% you aren't charged the doc fee.
You have me worried now that in three years time vw bank will try to take the balloon payment. Were they in contact with you at all?

SteelyDanJalapeno

jca wrote: »

If you were on 0% you aren't charged the doc fee.
You have me worried now that in three years time vw bank will try to take the balloon payment. Were they in contact with you at all?

Just go talk to them a few months before 3 years is up???

The mind boggles on some recent comments.

jca

TiltedBrain wrote: »

Just go talk to them a few months before 3 years is up???

The mind boggles on some recent comments.

Yea I'll probably be fed up of it by then anyway. If it's thirst doesn't improve dramatically it'll be long gone before 3 years!!!

ELM327

jca wrote: »

If you were on 0% you aren't charged the doc fee.
You have me worried now that in three years time vw bank will try to take the balloon payment. Were they in contact with you at all?

Yes I was unaware that the standard process was to take the balloon payment by DD.
That's put me off PCP for sure.

veryangryman

ELM327 wrote: »

Yes I was unaware that the standard process was to take the balloon payment by DD.
That's put me off PCP for sure.

Not sure why that's a problem. You just save the money and put into current account in time for it. Wasn't a problem for me.

The contract says that the completion payment of 75 would be taken with balloon but it wasn't. Not sure why.

ELM327

veryangryman wrote: »

Not sure why that's a problem. You just save the money and put into current account in time for it. Wasn't a problem for me.

The contract says that the completion payment of 75 would be taken with balloon but it wasn't. Not sure why.

It's a problem for me, I don't want to sign up for a default option like that.
My last car was bought at 1 year old on personal finance (ie not a car loan/pcp) so that's probably the best option for someone like me.

jca

ELM327 wrote: »

Yes I was unaware that the standard process was to take the balloon payment by DD.
That's put me off PCP for sure.

It wasn't explained to me either that they'd be taking the balloon as payment 37. I was all on for having the money for the final payment in the credit union and keeping the car but I'm unsure now. Ah I'll worry about it in 2020.

dil999

jca wrote: »

It wasn't explained to me either that they'd be taking the balloon as payment 37. I was all on for having the money for the final payment in the credit union and keeping the car but I'm unsure now. Ah I'll worry about it in 2020.

All you have to do is transfer it to the appropriate account before the payment due date.

jca

dil999 wrote: »

All you have to do is transfer it to the appropriate account before the payment due date.

Really? Aren't I so lucky I'm on boards, i wonder how i managed my finances before joining this site of geniuses!!

dil999

jca wrote: »

Really? Aren't I so lucky I'm on boards, i wonder how i managed my finances before joining this site of geniuses!!

Sorry. But you did say you were unsure.

jca

dil999 wrote: »

Sorry. But you did say you were unsure.

Ah, I'm only pulling your leg. I'll see what's happening when the time gets near. I think I'm being a bit previous as the first payment isn't due to be taken until the 23rd!!!

dil999

Its interesting reading posts from people who were not told that the final payment would automatically be deducted from their account.

It was said to me before I did my current PCP, so I specifically asked the question. Had I not asked the question I don't believe I would have been told. I am certain it wasn't explained to me in my first PCP 2 plus years ago. The documentation doesn't explicitly mention the final payment being automatically debited, but it is implied

There are many arguments for and against PCP. I believe it is an excellent way to structure payment for a car. There is one thing that is glaringly obvious though. The dealers and the manufacturers are not explaining it very well at all.

Again I would say to anyone signing up to a PCP that it is a serious financial commitment. Educate yourself, and get independent advice. Do not rely on marketing snippets on the manufacturers website, and question everything a dealer tells you.

veryangryman

Update: Last 75 has been taken. I guess i own her now

autumnbelle

Has anyone here been charged for extra mileage if upgrading the car after the 3 years, the garage we purchased our car from put the annual mileage ridiciously low and said it wont matter at the end. 1 year into the deal and I think we will be way over the mileage

dil999

autumnbelle wrote: »

Has anyone here been charged for extra mileage if upgrading the car after the 3 years, the garage we purchased our car from put the annual mileage ridiciously low and said it wont matter at the end. 1 year into the deal and I think we will be way over the mileage

You don't upgrade the car after 3 years. You may trade it in against a new car and the excess above what you owe will be credited against the new car. The dealer will give you a trade in value that will take into account the kms on the car. There is no way to know the exact affect of excess kms in this case

The excess kms clause in your PCP agreement only comes into effect if you terminate the agreement by returning the car. The GMFV will be reduced by an amount corresponding to the excess kms above the agreed limit multiplied by an agreed cost per km. The cost is usually between 6 and 8 cent.
So if you do 15,000 kms total above the limit you will have to pay an additional €900 to €1,200 to finalise the agreement.

bazz26

It's covered many times in this thread:

Mileage only becomes an issue if you have to hand the car back and walk away. If the mileage is high then the car has a lower market value, if this market value is lower than the final balloon payment (GFV) then you will have to pay the difference to walk away with nothing.

If you are buying the car out after the end of the PCP deal then the mileage is of no concern to the PCP company because the buy out price (balloon or GFV amount) was determined on day one and your payments to date took account of predetermined depreciation.

If you trade the car in and take out another new car on PCP then all the dealer will do is adjust the trade in value of the old car to account for the extra mileage. Lower trade-in value may mean you need to put more money into the deposit for the next PCP deal in order to keep repayments similar to what you had.

jca

dil999 wrote: »

Its interesting reading posts from people who were not told that the final payment would automatically be deducted from their account.

It was said to me before I did my current PCP, so I specifically asked the question. Had I not asked the question I don't believe I would have been told. I am certain it wasn't explained to me in my first PCP 2 plus years ago. The documentation doesn't explicitly mention the final payment being automatically debited, but it is implied

There are many arguments for and against PCP. I believe it is an excellent way to structure payment for a car. There is one thing that is glaringly obvious though. The dealers and the manufacturers are not explaining it very well at all.

Again I would say to anyone signing up to a PCP that it is a serious financial commitment. Educate yourself, and get independent advice. Do not rely on marketing snippets on the manufacturers website, and question everything a dealer tells you.

To be fair some of the manufacturers aren't explaining it very well to their salesmen. The guy I bought mine from explained it very well except for the big payment being automatically being requested in month 37!!

bazz26

To be honest buyers need to educate themselves too. It's probably the second biggest financial commitment for them outside of buying a home otherwise we will end up making the same mistakes that were made in Celtic Tiger years. It's a salesman's job to make a sale, it'a a buyer's job to make sure they can fully afford and understand what they are buying.

dil999

bazz26 wrote: »

To be honest buyers need to educate themselves too. It's probably the second biggest financial commitment for them outside of buying a home otherwise we will end up making the same mistakes that were made in Celtic Tiger years. It's a salesman's job to make a sale, it'a a buyer's job to make sure they can fully afford and understand what they are buying.

You are spot on when you say buyers need to educate themselves. But there should be an onus on the salespeople to present the PCP in a clear way. As well as selling a car, they are selling a financial product. They should be, within reason, subject to the same requirements as any other financial organisation selling loans.

mickdw

To be fair this is crazy stuff. What did people expect?
Do people think they might leave the car with them after 3 years if you ignore them or did people expect to pay them at some random point a few months after the term ended.
You agree to get a new car or buy it out or hand it back.
Buying it out is the only scenario where the large final payment is required. In such case, only an idiot would have not thought shout and arranged arranged way to pay that before they come to take it by DD.

Ivefoundgod

Collecting the final payment via DD is a strange move, if the customer doesn’t have the funds in the account the payment won’t go through and the customer will have an unpaid fee on the account, it’s not like it will overdraw them. Would have thought dealers would be getting in touch before presenting a DD for that amount.

dil999

mickdw wrote: »

To be fair this is crazy stuff. What did people expect?
Do people think they might leave the car with them after 3 years if you ignore them or did people expect to pay them at some random point a few months after the term ended.
You agree to get a new car or buy it out or hand it back.
Buying it out is the only scenario where the large final payment is required. In such case, only an idiot would have not thought shout and arranged arranged way to pay that before they come to take it by DD.

You can see from this thread that there are many people who just don't have the foggiest idea about loans or financing. They rely on the 'expertise' of the person selling the finance. Just look at the current bank loan controversies.

While there has to be personal responsibility, It doesn't remove responsibility from the lender to sell their products in a clear and unambiguous manner.
It can be said a hundred times to people to educate themselves. Not all do.

getcover

Hi,
Can anyone answer this slightly complicated question for me?

I'm changing my car, and decided to go with a PCP deal. There were 2 specific models I was looking at, and had decided on one.
I put a deposit of €500 on the car, my first choice, and awaited approval for the financing. However, when I checked the quote documentation, it was for a higher spec that I had wanted, and the monthly repayments are more than I wanted to pay. I rang the garage, and told them I didn't want to go ahead with that car, as the discussion I had with them, admittedly over the phone, was for a cheaper spec model. He said okay, he understood.

The following day I went to the other garage, had a chat with them, picked what was my second choice and paid a deposit of €300. This was approved more or less immediately, and so I ordered the car.
That was last Friday.

This morning, the first garage rang me and said they were prepared to do a suitable deal on what was my first choice car.
I would really like to go with this one, but, while I'm prepared to lose the €300 on the deposit for my second choice car, does anyone know if I'm obligated to pay for my second choice car, am I bound by a contract now after they have put the order through?

Thanks

bazz26

You should be able to cancel the second car but inform the garage as soon as possible. Whether you lose your deposit or not will really boil down to how much inconvenience it is to the dealer. If it's a factory order then at this early stage the car hasn't even been scheduled to be built so it can be cancelled or changed easily enough. If the dealer is not out of pocket then I'd think they would return your deposit as an act of goodwill in the hope you chose them next time. They might hold onto the PCP admin fee though if the paperwork has already been submitted. Worst case then your down €300. The important thing is to notify the dealer that you wish to cancel as soon as possible.

Lantus

Getcover this a little odd.

You handed over a deposit before a car. price or approval for finance had even been agreed? Why?

When the dealer made a slight mistake that was easily rectify able you went off and ordered another car and laid down 300 again before a model or price was formed up or agreed.?

On the one hand your flush for cash but no need to do this so early on.

Hopefully dealer refunds, ask nicely.

robm77

My pcp finance is finished in february, and i was going to hand the car back as im not 100% happy with it, however in the last 2 weeks the dealer i bought from has closed up shop completely and gone.
Who will i have to return the car to?
Anyone have any similar experience of this happening?

mickdw

Firstly, handing it back is throwing away any value over and above what is owed on it so it's the worst way out.
If you do go to hand it back and that dealer is gone, I'd imagine you contact any dealer for that brand.
What I would do is get trade in values against new cars, see how much over and above amount owed is being offered and from there make a decision as to whether you are throwing away money or not by handing it back.
In reality, it might be worth 1500 or so less than the trade in offers. So for example if it appears that the car on trade in is only achieving 1500 over gfv, you would do just as well handing it back cause you would do just as well buying straight on next car.

Jobs OXO

robm77 wrote: »

My pcp finance is finished in february, and i was going to hand the car back as im not 100% happy with it, however in the last 2 weeks the dealer i bought from has closed up shop completely and gone.
Who will i have to return the car to?
Anyone have any similar experience of this happening?

Wow ! So they do indeed exist.....

26000 Elephants

robm77 wrote: »

My pcp finance is finished in february, and i was going to hand the car back as im not 100% happy with it, however in the last 2 weeks the dealer i bought from has closed up shop completely and gone.
Who will i have to return the car to?
Anyone have any similar experience of this happening?

Your PCP contract is with a finance company, not the dealer. It should be clearly stated on your contract documents who they are.

You can just go to any car dealer with that info and they should be able to finish the deal for you - either find a settlement figure to keep the car or trade for a newer one.

DaveyDave

Hi all, dealer said to bring a bank draft for my deposit when collecting the car but I initially used card when placing the order. Can I use my card again for the remaining €5,500 or will I need to get a bank draft? Don't have time to call them right now as I'm heading to work...

Doddles88

So I had agreed a deal with VW for a new car being delivered 2018. Everything signed, deposit down and car ordered. It was agreed I would be financing it through PCP. They asked for statements etc etc which I provided. They subsequently came back requesting a guarantor because I had no previous credit history (even though through my bank statements and payslips it shows that I can easily cover the monthly repayments). This was reluctantly agreed to by myself because I just feel I am old enough not to need help from my parents but anyway I got them to be guarantor. VW Bank then came back requesting that the repayments would be taken out of my Dad’s account as opposed to my own. Basically as if my Dad was the one getting the car financed. So hypothetically after 3 years if I was looking to trade in for a new PCP I still would have no credit history because the previous loan was in my Dad’s name.

Am I right in thinking this is rather unfair. I would have thought no previous debt and a proven ability to comfortably cover the repayments would be the ideal situation for these places? Should I expect the same conditions if purchasing a different brand?

R.O.R

26000 Elephants wrote: »

Your PCP contract is with a finance company, not the dealer. It should be clearly stated on your contract documents who they are.

You can just go to any car dealer with that info and they should be able to finish the deal for you - either find a settlement figure to keep the car or trade for a newer one.

On most PCP deals the GFV is underwritten by the dealer rather than the finance provider though (VW seem to be the only one where it's not the dealer). I presume in the case where a dealer has gone under and therefore can't uphold their end of the bargain, that the buy back reverts to the finance provider.

mickdw

Doddles88 wrote: »

So I had agreed a deal with VW for a new car being delivered 2018. Everything signed, deposit down and car ordered. It was agreed I would be financing it through PCP. They asked for statements etc etc which I provided. They subsequently came back requesting a guarantor because I had no previous credit history (even though through my bank statements and payslips it shows that I can easily cover the monthly repayments). This was reluctantly agreed to by myself because I just feel I am old enough not to need help from my parents but anyway I got them to be guarantor. VW Bank then came back requesting that the repayments would be taken out of my Dad’s account as opposed to my own. Basically as if my Dad was the one getting the car financed. So hypothetically after 3 years if I was looking to trade in for a new PCP I still would have no credit history because the previous loan was in my Dad’s name.

Am I right in thinking this is rather unfair. I would have thought no previous debt and a proven ability to comfortably cover the repayments would be the ideal situation for these places? Should I expect the same conditions if purchasing a different brand?

Tell them to stick it.
You are an adult, with your own money and providing a guarantor. If that does not satisfy them, walk away.

Wynner05

Doddles88 wrote: »

So I had agreed a deal with VW for a new car being delivered 2018. Everything signed, deposit down and car ordered. It was agreed I would be financing it through PCP. They asked for statements etc etc which I provided. They subsequently came back requesting a guarantor because I had no previous credit history (even though through my bank statements and payslips it shows that I can easily cover the monthly repayments). This was reluctantly agreed to by myself because I just feel I am old enough not to need help from my parents but anyway I got them to be guarantor. VW Bank then came back requesting that the repayments would be taken out of my Dad’s account as opposed to my own. Basically as if my Dad was the one getting the car financed. So hypothetically after 3 years if I was looking to trade in for a new PCP I still would have no credit history because the previous loan was in my Dad’s name.

Am I right in thinking this is rather unfair. I would have thought no previous debt and a proven ability to comfortably cover the repayments would be the ideal situation for these places? Should I expect the same conditions if purchasing a different brand?

Looks to me like VW Bank are going to turn your application down and the dealers are trying to find a way to make it go through and still get a sale, seems a very strange request to say it came from VW bank.

Masala

That would put me right off VW...... I definitely would walk away.

All in all... VW still own the car so they completely covered on their side.

As mentioned above.... sounds very Del-boy / Arthur Daly stuff from the Salesman

Ivefoundgod

The request for a guarantor isn’t in itself unusual given you have no lending history and would be a common request for large lending. If there is no repayment history at a certain level underwriters will look to cover that lack of history with a suitable guarantor. Repayment capacity is not the only criteria. Each lender would have different criteria so you could shop around if not happy.

I wouldn’t be agreeing to allow repayments from your fathers account under any circumstances. I’d say the dealers are submitting a joint application in order to get it over the line.

EndaHonesty

Doddles88 wrote: »

So I had agreed a deal with VW for a new car being delivered 2018. Everything signed, deposit down and car ordered. It was agreed I would be financing it through PCP. They asked for statements etc etc which I provided. They subsequently came back requesting a guarantor because I had no previous credit history (even though through my bank statements and payslips it shows that I can easily cover the monthly repayments). This was reluctantly agreed to by myself because I just feel I am old enough not to need help from my parents but anyway I got them to be guarantor. VW Bank then came back requesting that the repayments would be taken out of my Dad’s account as opposed to my own. Basically as if my Dad was the one getting the car financed. So hypothetically after 3 years if I was looking to trade in for a new PCP I still would have no credit history because the previous loan was in my Dad’s name.

Am I right in thinking this is rather unfair. I would have thought no previous debt and a proven ability to comfortably cover the repayments would be the ideal situation for these places? Should I expect the same conditions if purchasing a different brand?

Car finance is usually one of the easier forms of credit to get.

It looks like VW bank are refusing you credit so you should check your credit rating with ICB in case there is an incorrect rating which is affecting your application.

It will take some time to check with ICB so I would suggest you withdraw your application, as a formal refusal from VW bank will negatively affect your credit rating...

Masala

EndaHonesty wrote: »

It will take some time to check with ICB so I would suggest you withdraw your application, as a formal refusal from VW bank will negatively affect your credit rating...

... that's a good point.

Doddles88

Car finance is usually one of the easier forms of credit to get.

It looks like VW bank are refusing you credit so you should check your credit rating with ICB in case there is an incorrect rating which is affecting your application.

It will take some time to check with ICB so I would suggest you withdraw your application, as a formal refusal from VW bank will negatively affect your credit rating...




The application has already been refused. I have contacted VW Bank directly to gain a greater understanding of what the problem is.
As for having an incorrect rating, surely having never had or even applied for credit before it is more a case of having no history which has gone against me as opposed to an incorrect rating? Again not sure, I will wait to see what VW bank say.
The way it has been put across to me, I should take out a small loan and pay it back to increase my credit rating. Am I the only one that thinks this is pure bonkers to get myself into debt just to prove I can pay it off? Just throwing money away.

EndaHonesty

Doddles88 wrote: »

The application has already been refused. I have contacted VW Bank directly to gain a greater understanding of what the problem is.
As for having an incorrect rating, surely having never had or even applied for credit before it is more a case of having no history which has gone against me as opposed to an incorrect rating? Again not sure, I will wait to see what VW bank say.
The way it has been put across to me, I should take out a small loan and pay it back to increase my credit rating. Am I the only one that thinks this is pure bonkers to get myself into debt just to prove I can pay it off? Just throwing money away.

By being refused credit from VW your credit rating will now be negatively affected.

If I was you I'd be checking with the ICB to see if there is an incorrect credit rating against you.

If there's no errors with your score then I would buy a car with a credit union loan to get you started on the credit "ladder"...

Doddles88

EndaHonesty wrote: »

By being refused credit from VW your credit rating will now be negatively affected.

If I was you I'd be checking with the ICB to see if there is an incorrect credit rating against you.

If there's no errors with your score then I would buy a car with a credit union loan to get you started on the credit "ladder"...

Again I do not know if you are necessarily 100% correct there. I know for fact through reading BMW's terms a declined application from them does not affect a credit rating.

"We do not subsequently record the decision made by us in respect of the application. Therefore if your application is declined it should not impact your credit rating."

This could be different for VW, but I hope it is not haha. Nothing I can do now until I hear back from VW Bank. Just very disappointed.

26000 Elephants

R.O.R wrote: »

On most PCP deals the GFV is underwritten by the dealer rather than the finance provider though (VW seem to be the only one where it's not the dealer). I presume in the case where a dealer has gone under and therefore can't uphold their end of the bargain, that the buy back reverts to the finance provider.

I've never heard of that ( we certainly dont structure deals that way) but if that is the case then he should be pretty happy. Drive away until the receiver for the dealer gets in touch, and then negotiate a rock bottom settlement with them.

But I would be surprised if that is the case.

Ivefoundgod

The ICB is a bit of relic and is being replaced by the CCR next year. Not all credit institutions report to the ICB, some credit unions don't for example. VW bank have no obligation to report your declined app to the ICB, also, being declined credit will show for 3 months (if i'm remembering right) and is not a black mark to another lender unless there are further issues around the decline, i.e. you misled or lied on the application.

maidhc

EndaHonesty wrote: »

Car finance is usually one of the easier forms of credit to get.

It looks like VW bank are refusing you credit so you should check your credit rating with ICB in case there is an incorrect rating which is affecting your application.

Maybe the posters income just isn't high enough for the underwriters and VW bank are just being prudent. This sense of entitlement to borrow is just the ****e I used to listen to 10 years ago.