PCP finance.

dil999 · 20-10-2017 12:26pm

carsfan2 wrote: »

I would class myself as a car enthusiast and have changed cars in the past after one or two years, mainly because I want to try something different. I can’t see the point in changing to the same car after a year or two unless it is a business tool that requires updating.

Just because you can't see the point in something doesn't mean there isn't one. Some people want to buy a new car every couple of years others don't. People spend their money on different things. Some people change their iPhones every year. Some people upgrade their 50" TV every year. Some people spend €120 per month on Sky when they could just as well have Freesat. Some people go on the beer in town every Saturday night and spend €100 plus. Some people go out for a meal, when they could just as easily eat at home.

This reverse snobbery regarding new cars is a little bit silly.

Leprechaun77 · 20-10-2017 2:49pm

dil999 wrote: »

Just giving my experience. I changed a car after one year and it cost me 20% of the value of the new car to change I changed that car after 2 years and it cost me 40%. My last car I changed after 2.5 years, and it cost me 50% of the value of the new car. Its pretty consistent.

If you have a different personal experience, let us know. If you are just guessing then also let us know.

Not having a go....I have nothing against people getting new cars every 1/2/3 years. I would ask though, if the depreciation is so linear, why would somebody wait three years to change a car when they could get in to a new one every year for the exact same effective cost?

Casati · 20-10-2017 3:24pm

micks_address wrote: »

Friend always trades his top end superb every two years
More often than not for about 10k

I got a price of 9500 to change from a 151 Superb Combi Ambition 2.0 TDI to a brand new, new model Superb Combi Ambition 2.0 TDI in Jan 2017. Decided to hold off another year.

Sterling has really damaged the second hand value of fresh cars like mine while the rrp continues to rise so I might get hammered when I go shopping around this month but in general I’ve never lost 60% the value of a car after three years but I’m sure it’s possible if you buy a high depreciation car initially

dil999 · 20-10-2017 3:44pm

Leprechaun77 wrote: »

Not having a go....I have nothing against people getting new cars every 1/2/3 years. I would ask though, if the depreciation is so linear, why would somebody wait three years to change a car when they could get in to a new one every year for the exact same effective cost?

Another poster "Viper" was, not you. I just replied to yours as the last post.

Again you and others seem to think that car buying decisions are completely money related, they are not.

I changed a car after one year because I wasn't happy with the car. I kept one Mondeo for 5 years because it was a super car. It can be hassle to change your car every year. It's a personal choice.

dil999 · 20-10-2017 3:49pm

Casati wrote: »

I got a price of 9500 to change from a 151 Superb Combi Ambition 2.0 TDI to a brand new, new model Superb Combi Ambition 2.0 TDI in Jan 2017. Decided to hold off another year.

Sterling has really damaged the second hand value of fresh cars like mine while the rrp continues to rise so I might get hammered when I go shopping around this month but in general I’ve never lost 60% the value of a car after three years but I’m sure it’s possible if you buy a high depreciation car initially

That was a pretty good deal. Obviously the Superb has good residual values. What mileage? Cars in that class tend to be worth approx 45% after 3 years.. So not quite 20% per year, I was rounding up.

Lantus · 20-10-2017 4:17pm

Casati wrote:

I got a price of 9500 to change from a 151 Superb Combi Ambition 2.0 TDI to a brand new, new model Superb Combi Ambition 2.0 TDI in Jan 2017. Decided to hold off another year.

Can you clarify this? Are you saying you are on a pcp deal and with your 151 you need 9500 cash to enter into another PCP deal? Cheers.

Casati · 20-10-2017 4:25pm

Lantus wrote: »

Can you clarify this? Are you saying you are on a pcp deal and with your 151 you need 9500 cash to enter into another PCP deal? Cheers.

The retail of my car in 2015 was 33000 and the 2017 has increased to 35000. I was offered 25500 trade in for my car. I didn’t get into details on pcp as at the time I wasn’t interested in another pcp deal. I had about 45000 km on the clock and the car was perfect condition

acronym Chilli · 20-10-2017 7:03pm

dil999 wrote: »

I
The only advantage of waiting 3 years, and it applies only to situations where finance is used, is that any deposit is spread over a longer period, and therefore the yearly cost over the period is slightly lower. But if you minimize the deposit, then it doesn't make a huge difference.

This is completely wrong and calls into question whether you've any grasp on the actual details.

dil999 · 20-10-2017 7:29pm

acronym Chilli wrote: »

This is completely wrong and calls into question whether you've any grasp on the actual details.

In the context of the specific point I was making it is correct. It's simple maths.

car 30K, 10% deposit 3K, GMFV 12K. 0% finance amount 5K per year

3 years.
year 1 you pay 8K
year 2 you pay 5K
year 3 you pay 5K

total 18K average 6K

2 years
year 1 you pay 8K
year 2 you pay 5K

total 13K average 6.5K

Perhaps it calls into question your ability to do simple maths :rolleyes:

acronym Chilli · 20-10-2017 10:34pm

dil999 wrote: »

In the context of the specific point I was making it is correct. It's simple maths.

car 30K, 10% deposit 3K, GMFV 12K. 0% finance amount 5K per year

3 years.
year 1 you pay 8K
year 2 you pay 5K
year 3 you pay 5K

total 18K average 6K

2 years
year 1 you pay 8K
year 2 you pay 5K

total 13K average 6.5K

Perhaps it calls into question your ability to do simple maths :rolleyes:

I think you're introducing new errors. Why average one scenario over 3 years and one over 2?
Maths does not equal arithmetic. Your arithmetic is ok.

The point is that the underlying cost of ownership is not driven by the financing choice, certainly in the first order level.
There might be a cash flow difference, and there could be interest costs, but you don't identify those.

mickdw · 20-10-2017 11:45pm

I believe you are making an error in your 20 percent thinking.
It could be argued that 20 percent of the reducing value is correct but this is significantly different to your thinking.
35k passat would therefore lose
7000 year 1
5600 year 2
4400 year 3

That's a 17k loss over 3 years or 5666 yearly or 34k for 6 years driving.

Changing the same car every 2 years with same depreciation figures will give a loss of 12600 over 2 years or 6300 yearly or 37800 over 6 years, that's an extra 3800 spent over 6 years.
Imo the depreciation is also steeper than this year 1 so the additional cost would be even more.

21-10-2017 1:36am

dil999 wrote: »

Another poster "Viper" was, not you. I just replied to yours as the last post.

Again you and others seem to think that car buying decisions are completely money related, they are not.

I changed a car after one year because I wasn't happy with the car. I kept one Mondeo for 5 years because it was a super car. It can be hassle to change your car every year. It's a personal choice.

Hope you didn't experience the linear 20% on that mondeo :pac:

viper5 · 21-10-2017 1:46am

dil999 wrote: »

Yes you are misunderstanding me.

My point is that for the first 3 years of a cars life, depreciation is more or less linear at 20%. And I know that because I have changed cars after 1, 2 and 3 years.

Regarding your own point; The advantages/disadvantages of buying a new car vs a used car is probably for another thread.In your case I get the impression you see buying a car as a financial decision, I treat it as a necessary expense. There are many reasons for changing car every 1,2 or 3 year. Cost is only one. Keeping up appearances and "number plate vanity" falls way down the list for most people.

As I said its an interesting topic for another thread, go ahead and start one. It might be a good discussion

Given all your comments in the last few pages and today are relating solely to the "hardly frightening expensive" practice of changing cars every 1-2 years , its very strange you think i should start a new thread when you are already commenting here so much about the practice so il keep my posts here . My comment was in relation to comments of yours like below

So for a 30K car it's 6K per year, €500 per month. for a 15K car its 3K per year or €250 per month. Hardly frighteningly expensive

I would almost thinking you were trolling here but i have seen the way you are replying to others here. I "get the impression" The dealer you are buying cars from is taking you to town if that is your level of value lost of the cars you are trading back in.

Beyond doing big mileage annually , changing every 1-2 years is certainly not a necessary as you say but an entirely optional choice involves a staggering waste of money if you do this 4-5 times over 10 years. You mention today people buying iphones, TVs etc as some comparisons but you could have all those and thousands left over every year so despite your best efforts to find examples justifying the financial side of changing car so often i feel it will fall on deaf ears. Finally, suggesting people who change their car every 1-2 years has nothing to do with vanity or showing off its plain denial - these are mainly sole and only reason haha.

maidhc · 21-10-2017 9:28am

acronym Chilli wrote: »

The point is that the underlying cost of ownership is not driven by the financing choice, certainly in the first order level.
There might be a cash flow difference, and there could be interest costs, but you don't identify those.

PCP certainly masks the cost to change beyond all recognition. What you are paying is wrapped up in gmfvs, monthlies and deposits. This is intentional by the financial institutions.

If you are changing a car and paying cash, dropping 15k every 3 years seems much less appealing, and dropping 20k every 6/7 seems far more palatable. Cars are reasonably reliable, and don't need changing every 2/3 years, so it is purely a choice thing.

My complaint remains that pcp is a dangerous tool.

Jobs OXO · 21-10-2017 9:44am

maidhc wrote: »

PCP certainly masks the cost to change beyond all recognition. What you are paying is wrapped up in gmfvs, monthlies and deposits. This is intentional by the financial institutions.

If you are changing a car and paying cash, dropping 15k every 3 years seems much less appealing, and dropping 20k every 6/7 seems far more palatable. Cars are reasonably reliable, and don't need changing every 2/3 years, so it is purely a choice thing.

My complaint remains that pcp is a dangerous tool.

It's only dangerous to the slow or simpletons among the population. These type of dimwits are generally separated from their cash easily anyway so whether it's pcp, holiday homes in turkey, gambling, fags & booze the end result will be the same.

dil999 · 21-10-2017 12:53pm

maidhc wrote: »

PCP certainly masks the cost to change beyond all recognition. What you are paying is wrapped up in gmfvs, monthlies and deposits. This is intentional by the financial institutions.

If you are changing a car and paying cash, dropping 15k every 3 years seems much less appealing, and dropping 20k every 6/7 seems far more palatable. Cars are reasonably reliable, and don't need changing every 2/3 years, so it is purely a choice thing.

My complaint remains that pcp is a dangerous tool.

What a load of utter nonsense. Reading through your earlier posts in this thread you seem to be of the opinion that only certain people should be allowed drive new cars. People who you believe can afford them. You really need to get over the fact that people who you deem unworthy can actually afford a new car.

PCP is a loan. No different from a bank loan or a hire purchase agreement. A dangerous tool????

You see buying a car as a financial decision. It's not. for many people it's simply a purchasing decision, like a buying a new 50" TV or upgrading your iPhone.

You have said on a few occasions that people are better off purchasing a new car from their savings. That's stupid advice. Why would you fund an expense like a motor vehicle from your savings? Nobody with any grasp of finance would ever consider doing that. If you required 3 years use of a product, only a complete idiot would pay for 8 years use out of their own money, then go back to the seller hoping to get the cost of the final 5 year's use back. You would be taking all the risk of depreciation, the seller none. Do businesses fund their vehicles from cash reserves? No. Why? Because they are an expense and they get funded as an expense.

PCP and HP are excellent financial product for a car. There may me an argument that they need to be better explained.

Jobs OXO wrote: »

It's only dangerous to the slow or simpletons among the population. These type of dimwits are generally separated from their cash easily anyway so whether it's pcp, holiday homes in turkey, gambling, fags & booze the end result will be the same.

Maidhc appears to wants to protect these people from themselves

dil999 · 21-10-2017 5:01pm

viper5 wrote: »

Given all your comments in the last few pages and today are relating solely to the "hardly frightening expensive" practice of changing cars every 1-2 years , its very strange you think i should start a new thread when you are already commenting here so much about the practice so il keep my posts here . My comment was in relation to comments of yours like below

So for a 30K car it's 6K per year, €500 per month. for a 15K car its 3K per year or €250 per month. Hardly frighteningly expensive

I would almost thinking you were trolling here but i have seen the way you are replying to others here. I "get the impression" The dealer you are buying cars from is taking you to town if that is your level of value lost of the cars you are trading back in.

Beyond doing big mileage annually , changing every 1-2 years is certainly not a necessary as you say but an entirely optional choice involves a staggering waste of money if you do this 4-5 times over 10 years. You mention today people buying iphones, TVs etc as some comparisons but you could have all those and thousands left over every year so despite your best efforts to find examples justifying the financial side of changing car so often i feel it will fall on deaf ears. Finally, suggesting people who change their car every 1-2 years has nothing to do with vanity or showing off its plain denial - these are mainly sole and only reason haha.

Does the way other people spend their money really bother you that much?

maidhc · 21-10-2017 5:11pm

dil999 wrote: »

You see buying a car as a financial decision. It's not. for many people it's simply a purchasing decision, like a buying a new 50" TV or upgrading your iPhone.

You have said on a few occasions that people are better off purchasing a new car from their savings. That's stupid advice. Why would you fund an expense like a motor vehicle from your savings?

Buying a car *is* a financial decision. Second biggest one after a house. Why is it stupid advice to buy a car from savings? Given that you are earning 0% on it in the bank, it is cheap money. If you don't have ample reserves after buying a car, then sure, you shouldn't do it.

I'm not against hp or pcp per se, just how people are using it. It isn't all sustainable. Hp is obviously much more transparent and a far better product imo. Leasing also has its uses, more in a commercial context though.

I would also suggest buying a new tv every two years would be pretty idiotic. iPhones obviously tend not to last as long, so different factors apply.

dil999 wrote: »

PCP and HP are excellent financial product for a car. There may me an argument that they need to be better explained.

Maidhc appears to wants to protect these people from themselves

If you had any knowledge of regulatory matters (I do...) a great deal of time is spent trying to protect people, not from themselves, but from savvy sales people.

acronym Chilli · 21-10-2017 5:21pm

dil999 wrote: »

You see buying a car as a financial decision. It's not. for many people it's simply a purchasing decision, like a buying a new 50" TV or upgrading your iPhone.

I sense that the word "financial" doesn't mean what you think it means.

You have said on a few occasions that people are better off purchasing a new car from their savings. That's stupid advice. Why would you fund an expense like a motor vehicle from your savings? Nobody with any grasp of finance would ever consider doing that.

I could be very mean and remind you that you've said buying a car is not "a financial decision" so why would that matter!

If you required 3 years use of a product, only a complete idiot would pay for 8 years use out of their own money

But mostly we're talking about people who want a car (or use thereof) for the foreseeable future. Anyway, the bigger problem I see in your posts is a muddle about the underlying costs, apparently from getting tangled up in the weeds of financing.

, then go back to the seller hoping to get the cost of the final 5 year's use back. You would be taking all the risk of depreciation, the seller none. Do businesses fund their vehicles from cash reserves? No.

Incorrect. I know directly of one large fleet, over 1000 vehicles (light commercial and up) and that fleet is directly funded from cash. Vehicles are continuously being replaced, so there's spend every year, but each vehicle is bought for cash. Leasing and other options have been explored, but don't stack up, so remains in this model.

When you talk about people not knowing finance or saying stupid things, you should really temper that language and look at your own posts. You've effectively argued that the depreciation cost for Year 1 is the same as that for Year 2 is the same as that for Year 3.

That means you've argued that the value of driving a brand new car from day 1 to day 365 is the same as having the same car for the third year of its life after its been used for 2 years already.
Does that really make sense to you? If I was a car dealer, and you had 6000 in your hands, and for that I was about to give you a brand new car (model X) to drive away for 1 year; and if I then said, "actually, hang on, I've a 2 year old car, same model, same features, but with 2 years of normal wear and tear on it, take that instead for your 6k", would you be just as happy?

You've also in the last post argued that your purchase practices allow you to transfer risk to the seller (e.g. for depreciation). Do you believe that there's a systematic way to transfer risk to another (well informed party) at zero cost?

dil999 · 21-10-2017 6:08pm

acronym Chilli wrote: »

I sense that the word "financial" doesn't mean what you think it means.

I understand what the word financial means.

acronym Chilli wrote: »

I could be very mean and remind you that you've said buying a car is not "a financial decision" so why would that matter!

Taking a big chunk of savings to fund an expense is a stupid decision. be that financial or otherwise

acronym Chilli wrote: »

But mostly we're talking about people who want a car (or use thereof) for the foreseeable future. Anyway, the bigger problem I see in your posts is a muddle about the underlying costs, apparently from getting tangled up in the weeds of financing.

But we are not. we are talking about people who want to change their car every 3 years

acronym Chilli wrote: »

Incorrect. I know directly of one large fleet, over 1000 vehicles (light commercial and up) and that fleet is directly funded from cash. Vehicles are continuously being replaced, so there's spend every year, but each vehicle is bought for cash. Leasing and other options have been explored, but don't stack up, so remains in this model.

If that is true it is a very rare occurance. Over the years I have worked for 5 different large mulinationals, All of their vehicle fleet was leased. And all of them had vast amounts of cash reserves.

acronym Chilli wrote: »

When you talk about people not knowing finance or saying stupid things, you should really temper that language and look at your own posts. You've effectively argued that the depreciation cost for Year 1 is the same as that for Year 2 is the same as that for Year 3.

My own experience of changing cars is that my cost to change was a little under 20% per year and that was changing after 1, 2 and 3 years. If you have some evidence that the depreciation curve is different, please share it. Otherwise you are just guessing.

acronym Chilli wrote: »

That means you've argued that the value of driving a brand new car from day 1 to day 365 is the same as having the same car for the third year of its life after its been used for 2 years already.

I didn't, I argued that the cost of driving a car from day 1 to 365 of driving a car is approximately the same as from day 366 to 731. 'Value' is a subjective concept and is not, on its own, a financial term and is meaningless as such

acronym Chilli wrote: »

You've also in the last post argued that your purchase practices allow you to transfer risk to the seller (e.g. for depreciation). Do you believe that there's a systematic way to transfer risk to another (well informed party) at zero cost?

Yes its called GMFV and its part of the PCP loan structure.

You really need to properly read the posts your are commenting on. You are coming across as being aggressive and argumentative for the sake of it. You completely misunderstood another earlier post of mine and then said:

acronym Chilli wrote: »

This is completely wrong and calls into question whether you've any grasp on the actual details.

If that's not being deliberately augmentative, then I don't know what is. I am not getting into anymore of these silly posts with you, as I have better things to be doing, and I am sure they are of no interest to the other posters in the thread

dil999 · 21-10-2017 6:27pm

maidhc wrote: »

Buying a car *is* a financial decision. Second biggest one after a house. Why is it stupid advice to buy a car from savings? Given that you are earning 0% on it in the bank, it is cheap money. If you don't have ample reserves after buying a car, then sure, you shouldn't do it.

I'm not against hp or pcp per se, just how people are using it. It isn't all sustainable. Hp is obviously much more transparent and a far better product imo. Leasing also has its uses, more in a commercial context though.

I would also suggest buying a new tv every two years would be pretty idiotic. iPhones obviously tend not to last as long, so different factors apply.

If you had any knowledge of regulatory matters (I do...) a great deal of time is spent trying to protect people, not from themselves, but from savvy sales people.

Putting money into a pension fund is a financial decision, buying shares is a financial decision, investing in a rental property is a financial decision. Buying a car is not.

A car may be the most expensive product you purchase after a house, but it is not a financial decision. Its a purchasing decision. You buy a car because you need one, then you pay as much as you want to or can afford. Its no different than buying a pair of shoes except for the price.

Cash reserves are worth far more that the return they receive from the bank. Liquidity is critical if you ever lose your job.

If you have 30K in the bank and a 2 year old car on PCP outside, you are in a lot better situation that if you have a 2 year old car, now worth 18K, outside and no savings in the bank

HP and PCP are very similar products. in fact PCP is a basically Hire Purchase product with a different payment schedule. It has the added advantage that you can hand back the car after 3 years if you don't like it.

I think the comment that "I would also suggest buying a new tv every two years would be pretty idiotic" perhaps sums it up. I would suggest that if someone wants to buy a new TV every 2 years to get the latest technology & innovations, then, good on them and I hope they enjoy it.

acronym Chilli · 21-10-2017 7:02pm

I may get to respond to other points, but...

dil999 wrote: »

I didn't, I argued that the cost of driving a car from day 1 to 365 of driving a car is approximately the same as from day 366 to 731. 'Value' is a subjective concept and is not, on its own, a financial term and is meaningless as such

This, this is where you show the gap.
You're muddling words like value, cost, price, finance.
You've said it costs the same to drive a car from day 1 to 365 as from 366 to 731, and for the 365 afterwards. That's ridiculous.
So why would anyone ever drive a car for the third year when they could have a brand new car for that year instead?

Value is not meaningless. It's based on the price you'll pay for something.

dil999 · 21-10-2017 7:41pm

acronym Chilli wrote: »

I may get to respond to other points, but...

This, this is where you show the gap.
You're muddling words like value, cost, price, finance.
You've said it costs the same to drive a car from day 1 to 365 as from 366 to 731, and for the 365 afterwards. That's ridiculous.
So why would anyone ever drive a car for the third year when they could have a brand new car for that year instead?

Value is not meaningless. It's based on the price you'll pay for something.

Your last comment suggests that you don't have a financial background. Value in terms of finance tends to be an agreed realisable amount. the Value of an asset in terms of accounting is what you could potentially sell that asset for.

Value in terms of a purchase transaction is not a financial concept. In that context, it is a subjective importance. What may be of value to you may not be of value to someone else.
Price is an agreed amount based on what the purchaser wants to pay and the seller whats to sell at. Value doesn't enter into it. You might value your 10 year old BMW 320 at 12K, but that is never going to be the price.

Rather than responding to my other points, go out and have a few pints and relax. You will feel a lot better for it.

acronym Chilli · 21-10-2017 8:12pm

dil999 wrote: »

Your last comment suggests that you don't have a financial background. Value in terms of finance tends to be an agreed realisable amount. the Value of an asset in terms of accounting is what you could potentially sell that asset for.

Value in terms of a purchase transaction is not a financial concept. In that context, it is a subjective importance. What may be of value to you may not be of value to someone else.
Price is an agreed amount based on what the purchaser wants to pay and the seller whats to sell at. Value doesn't enter into it. You might value your 10 year old BMW 320 at 12K, but that is never going to be the price.

Rather than responding to my other points, go out and have a few pints and relax. You will feel a lot better for it.

Lol

(Edit: A good laugh does deserve a thanks!)

jca · 21-10-2017 9:22pm

Every thread ends the same way on this site, pity as I liked this thread.

ftm2008 · 22-10-2017 5:08pm

Does anyone know the apr when Eco grants are used on the VW.. in particular the Skoda and Seats.. it is 0% or eco grant.

bazz26 · 22-10-2017 5:27pm

ftm2008 wrote: »

Does anyone know the apr when Eco grants are used on the VW.. in particular the Skoda and Seats.. it is 0% or eco grant.

http://www.joeduffy.ie/volkswagen/new-car-offers/eco-grant/

Looks like 4.9% APR.

Lantus · 22-10-2017 9:08pm

ftm2008 wrote:

Does anyone know the apr when Eco grants are used on the VW.. in particular the Skoda and Seats.. it is 0% or eco grant.

Looks like these vehicles will all be scrapped based on t&C's. When you trade in.

Presumably the value of older diesels for ten years or older is now sufficiently poor? A private sale may be slightly more beneficial in some cases?

ftm2008 · 22-10-2017 10:13pm

Lantus wrote: »

Looks like these vehicles will all be scrapped based on t&C's. When you trade in.

Presumably the value of older diesels for ten years or older is now sufficiently poor? A private sale may be slightly more beneficial in some cases?

Probably in cases ,, seems when you dig into the scrappage deals , econ grants or whatever there called, they just make it back using a higher apr which means we pay it back over the life of the deal

twin_beacon · 24-10-2017 1:22pm

dil999 wrote: »

PCP is a loan. No different from a bank loan or a hire purchase agreement. A dangerous tool????

PCP, IS a hire purchase agreement, which is very different to a car loan as you don't own the car during the period of finance with a hire purchase.

If you can't afford a new car without a PCP deal, then I would reconsider as any change to your current financial situation means you may not be able to afford PCP either and you could lose your car, and the money you paid on the car. Or even a change in job may mean that you may go over the mileage limits.

The overall winner of a PCP deal is the person that fully intends on keeping the car after the 3 year deal, as they get a lower interest rate for the first 3 years.

commited · 24-10-2017 2:25pm

twin_beacon wrote: »

PCP, IS a hire purchase agreement, which is very different to a car loan as you don't own the car during the period of finance with a hire purchase.

If you can't afford a new car without a PCP deal, then I would reconsider as any change to your current financial situation means you may not be able to afford PCP either and you could lose your car, and the money you paid on the car. Or even a change in job may mean that you may go over the mileage limits.

The overall winner of a PCP deal is the person that fully intends on keeping the car after the 3 year deal, as they get a lower interest rate for the first 3 years.

Absolutely. I think the other element is that people enter into PCP arrangements assuming that they will be able to change to a new car every 3 years and continue a monthly payment. The issue arises when the GFMV is near/equal to the market value = little to no equity to carry forward into a new deal. Realistically, this is where it can be dangerous to someone without the means to finance a car traditionally.

dil999 · 24-10-2017 2:39pm

twin_beacon wrote: »

PCP, IS a hire purchase agreement, which is very different to a car loan as you don't own the car during the period of finance with a hire purchase.

If you can't afford a new car without a PCP deal, then I would reconsider as any change to your current financial situation means you may not be able to afford PCP either and you could lose your car, and the money you paid on the car. Or even a change in job may mean that you may go over the mileage limits.

The overall winner of a PCP deal is the person that fully intends on keeping the car after the 3 year deal, as they get a lower interest rate for the first 3 years.

Yes you are correct in that a loan gives you 'ownership'. In practical terms that's pretty irrelevant.

You are in a better position with a pcp if your financial situation changes because:
1: you still have your savings.
2: you can hand back the car to repay the finance. If less than half has been repaid you will have to pay the difference between what is owed and the current price of the car, maybe 5% of the car price at worst
If you have paid more than half you just hand back the car.

PCP is not a competition. There are no 'winners' or losers. Interest is paid on the total outstanding finance over the 3 years. So while you might get a nominally lower rate. The actual interest in €s you pay will be the same as for a 5 year hp at twice the interest rate.

The increase in mileage is generally not a problem. 5000 km over the agreement will cost you €400 - an extra months payment. And only applies if you hand back the car.

If you can afford the payments you can afford the car. Irrespective of what financial instrument us use to fund it.

twin_beacon · 24-10-2017 3:13pm

dil999 wrote: »

Yes you are correct in that a loan gives you 'ownership'. In practical terms that's pretty irrelevant.

You are in a better position with a pcp if your financial situation changes because:
1: you still have your savings.
2: you can hand back the car to repay the finance. If less than half has been repaid you will have to pay the difference between what is owed and the current price of the car, maybe 5% of the car price at worst
If you have paid more than half you just hand back the car.

What do you mean by you still have your savings?
If you have a car loan and cant make the repayments, you can just sell the car to cover off the remainder of the loan, and keep the balance.

jca · 24-10-2017 3:19pm

This thread should really be archived at this stage, it's just going round and round in circles. I'm unfollowing it.

dil999 · 24-10-2017 5:12pm

twin_beacon wrote: »

What do you mean by you still have your savings?
If you have a car loan and cant make the repayments, you can just sell the car to cover off the remainder of the loan, and keep the balance.

Re the savings reference, read back on the previous 100 or so posts.

How easy is it to sell a car? It could take months. You also probably won't clear the loan.

jca is correct. This thread is definitely going round in circles. The same questions are being asked again and again.

DaveyDave · 24-10-2017 5:46pm

Got another letter from VW today stating the date and amount of my first payment, followed by 35 payments then a final payment.

Looks like they do automatically take the final payment but of course I'll be in well before then test driving and snooping around for a trade-in.

26000 Elephants · 24-10-2017 6:51pm

dil999 wrote: »

Re the savings reference, read back on the previous 100 or so posts.

But why would someone on PCP still have savings, while someone with a loan would not?

Savings are, at best, a very spurious pillar to your argument.

acronym Chilli · 24-10-2017 7:31pm

26000 Elephants wrote: »

But why would someone on PCP still have savings, while someone with a loan would not?

Savings are, at best, a very spurious pillar to your argument.

I think the main argument is that you haven't ploughed them into the cash purchase of a car.

I don't see the connection in the traditional car loan scenario though.

If you've a car loan, then you should still have your savings. In fact, you might have all your savings since you wouldn't be obliged to pay the upfront deposit, could finance the entire amount.

dil999 · 24-10-2017 7:41pm

26000 Elephants wrote: »

But why would someone on PCP still have savings, while someone with a loan would not?

Savings are, at best, a very spurious pillar to your argument.

Articulate but inaccurate.

twin_beacon posted
"If you can't afford a new car without a PCP deal, then I would reconsider as any change to your current financial situation....."

If not using PCP (or HP), the only other ways to purchase a new car is a bank/credit unit loan or cash i.e. savings

Hence i mentioned savings, because if you didn't use PCP and used savings to purchase your car, then you would have no savings in reserve in case of "any change to your current financial situation"

batman1 · 24-10-2017 7:49pm

Very few people/families will pay cash for a car, save an older one. The majority of people finance the cost through loans or whatever other finance product. In my case, I have paid around 480 a month for a car loan over the last 5 years at 10% interest as we wanted a reliable car for my wife who does night work, up mountain roads etc. Don't want any breakdowns if possible.
The car is now 6 years old and will need approx 1000 spent on it in 2018 between timing belt, tyres, nct etc.
In our case it's a no brainer to get a new car for another 5 years at 0% for 3 and maybe a bit more for the further 2 or close to it, with a reasonable trade in still in the current car.
Even after the 3 years if I save the difference between the new payment and what I have Bern paying then it will also be grand.

The scaremongering about losing jobs and not having a car is just nonsense.
90% of new cars are financed through Pcp and why not. Once you know what you're getting into then grand. Idiots will always be duped, same goes for loans and credit cards.

How many fancy jeeps and cars do you see of 06/07 where people got extra on the mortgage for a car and now they're stuck with them, paying them off over 40 years or whatever.

dil999 · 24-10-2017 7:56pm

acronym Chilli wrote: »

I think the main argument is that you haven't ploughed them into the cash purchase of a car.

I don't see the connection in the traditional car loan scenario though.

If you've a car loan, then you should still have your savings. In fact, you might have all your savings since you wouldn't be obliged to pay the upfront deposit, could finance the entire amount.

There wasn't a connection. Perhaps the post was not particularly well crafted and a little difficult to understand.

The first point only related to purchasing using cash
The second point was that it's easier to terminate a PCP as you can hand the car back quickly with minimal financial penalty. To terminate a loan you have to get cash to pay it off. That requires you to sell the car in the market, which will take time and it probably won't realise it full value (yes I said value

)

I have nothing against car loans btw except the 8% to 10% interest rates.

dil999 · 24-10-2017 7:59pm

batman1 wrote: »

How many fancy jeeps and cars do you see of 06/07 where people got extra on the mortgage for a car and now they're stuck with them, paying them off over 40 years or whatever.

Excellent point.

acronym Chilli · 24-10-2017 8:41pm

batman1 wrote: »

How many fancy jeeps and cars do you see of 06/07 where people got extra on the mortgage for a car and now they're stuck with them, paying them off over 40 years or whatever.

Once you're happy to borrow to buy a vehicle there's little reason not to put it in your mortgage really.

People doing that in 06/07 were probably on trackers, which while not 0% were and are very cheap credit. Plus, because the credit is separated from the car purchase you go to the dealer as a cash buyer.

To say you're paying it over 40 years is a misunderstanding. No reason you couldn't up the mortgage payment for a few years to effectively pay it (the car "bit") sooner.

mickdw · 24-10-2017 8:53pm

Yes you could pay extra car money into the mortgage at the rate you would normally pay for a car and it could work very cheap money. The reality is rather different for most. They took car money with mortgage, fell on harder times in recession and if lucky managed to keep the mortgage up to date. Paying in extra would be a fantasy for most. Now 10 years later they are still paying for that car and it needs to be replaced meaning they will end up paying for increased mortgage and now new car loan too.
The reality in alot of cases was that they could never afford the new car 10 years ago.

acronym Chilli · 24-10-2017 9:04pm

Fully agree.
But then we're back to the critiquemany level at PCP.
It's really a critique of imprudent use of credit in general

maidhc · 24-10-2017 9:07pm

mickdw wrote: »

Yes you could pay extra car money into the mortgage at the rate you would normally pay for a car and it could work very cheap money. The reality is rather different for most. They took car money with mortgage, fell on harder times in recession and if lucky managed to keep the mortgage up to date. Paying in extra would be a fantasy for most. Now 10 years later they are still paying for that car and it needs to be replaced meaning they will end up paying for increased mortgage and now new car loan too.
The reality in alot of cases was that they could never afford the new car 10 years ago.

The only thing is they got 10 years transport out of that car. Try not paying a pcp and see how long you will be left with the car.

People are buying fancy cars that are, all things being equal, outside their price range now as well. Referencing my earlier point, a "proper" hp package is far more reflective of the actual cost of buying a car.

I think this thread is serving a useful purpose if all it does is makes people think before barrelling into a garage!

twin_beacon · 24-10-2017 9:10pm

dil999 wrote: »

Articulate but inaccurate.

twin_beacon posted
"If you can't afford a new car without a PCP deal, then I would reconsider as any change to your current financial situation....."

If not using PCP (or HP), the only other ways to purchase a new car is a bank/credit unit loan or cash i.e. savings

Hence i mentioned savings, because if you didn't use PCP and used savings to purchase your car, then you would have no savings in reserve in case of "any change to your current financial situation"

You are making assumptions, and took my points up wrong.
Very few people buy a brand new car totally from their savings. However, IF you have that much disposable cash at the ready, by all means do it as you have no finance costs. I'm not suggesting that anybody clears out their savings, to buy a car, and leave them in financial difficulty as a result.

If not using PCP/HP, the alternative is not just a loan OR savings. My last car (bought second hand, but thats irreverent) was a combination of trade in, few grand from the savings (of course I didn't clear it out) and a small loan to cover the remainder. The car before that was paid for via trade in and a loan.

With a PCP deal, you basically pay 60% of the value of a car over 3 years. My point being, if you can't afford to finance that car over a 5 year period, with a car loan, then you should reconsider, as the monthly repayments should be roughly the same.
If you enter into a PCP deal for a car worth lets say for 35k, then and when your 3 years are up, you trade in, and get the same car again, by the end of year 2 on your second car, you have basically paid out a little over 35k, depending on the APR.

You asked earlier how easy is to sell a car? Depends on the car, however its impossible to sell if you are on PCP, as its not actually your car.

PCP is great for some people, but you are implying its the best way for everybody to buy new car, which it isn't.

dil999 · 24-10-2017 10:01pm

twin_beacon wrote: »

You are making assumptions, and took my points up wrong.
Very few people buy a brand new car totally from their savings. However, IF you have that much disposable cash at the ready, by all means do it as you have no finance costs. I'm not suggesting that anybody clears out their savings, to buy a car, and leave them in financial difficulty as a result.

If not using PCP/HP, the alternative is not just a loan OR savings. My last car (bought second hand, but thats irreverent) was a combination of trade in, few grand from the savings (of course I didn't clear it out) and a small loan to cover the remainder. The car before that was paid for via trade in and a loan.

With a PCP deal, you basically pay 60% of the value of a car over 3 years. My point being, if you can't afford to finance that car over a 5 year period, with a car loan, then you should reconsider, as the monthly repayments should be roughly the same.
If you enter into a PCP deal for a car worth lets say for 35k, then and when your 3 years are up, you trade in, and get the same car again, by the end of year 2 on your second car, you have basically paid out a little over 35k, depending on the APR.

You asked earlier how easy is to sell a car? Depends on the car, however its impossible to sell if you are on PCP, as its not actually your car.

PCP is great for some people, but you are implying its the best way for everybody to buy new car, which it isn't.

Just to clarify. PCP is not a way to 'buy a new car'. Its a way to finance the purchase.

I am not implying anything. I am categorically saying it. PCP is by far the best way to fund a new car. For anybody.

- It's cheap, generally the lowest interest rates of any finance option. 0% in many cases.

- You get a predictable value back after 3 years if you decide to change. So you minimise the depreciation risk. Even high mileage users can benefit. 30,000 miles over the agreed limit only knocks €2400 of the GMFV

- You get the same dealer discount as a cash purchaser even with a trade in.

- The half-rule protects you in that if you have paid over half the loan amount, you can hand back the car and the loan is settled. In fact if you haven't paid back half, you can still return the car and you are only liable for the difference in what you paid and half the loan amount.

- You can use a trade in.

- You can use part cash

- You can sell the car, It requires some more logistics around paying off the remaining amount before finalising the sale. But its very doable, and probably not much more effort than trying to sell any new to 3 year old car privately. Also selling the car is an unlikely scenario, it's an new to 3 year old car. The finance only runs for 3 years and you have a trade in option and hand back option.

- You can purchase the car outright at anytime if you wish. You can finance the GMFV through cash or a loan

No other finance structure offers you all these benefits. Not one single point has been made in the 180 odd pages of posts here (many informed, many uninformed) that has even gone close to making me change my opinion on it.

Your example is correct if you want to change your 35K car every 2 to 3 years it will cost you approx 20% of the price of the car. 7K per year. 35K every 5 years is spot on. That's a function of the price of the car and the depreciation rate of the car. Its completely independent of the method you use to finance. Cash, Personal loan, PCP its all the same. Like purchasing any thing if you agree to pay more than you can afford then you can get in trouble. Be that using too much cash, or financing something by paying a higher monthly payment than you can afford.

I really think this thread has been done to death at this stage

26000 Elephants · 24-10-2017 10:46pm

dil999 wrote: »

- You get a predictable value back after 3 years if you decide to change. So you minimise the depreciation risk. Even high mileage users can benefit. 30,000 miles over the agreed limit only knocks €2400 of the GMFV

Predictable value back? Extra miles knocks €2400 of the GMFV?

I'm not sure you are understanding that correctly.

the GMFV is what you owe, your mileage wont change it. It will effect the market value of your car, as will several other factors, hence "predictable value" is inaccurate.

Jobs OXO · 24-10-2017 11:23pm

dil999 wrote: »

Just to clarify. PCP is not a way to 'buy a new car'. Its a way to finance the purchase.

I am not implying anything. I am categorically saying it. PCP is by far the best way to fund a new car. For anybody.

- It's cheap, generally the lowest interest rates of any finance option. 0% in many cases.

- You get a predictable value back after 3 years if you decide to change. So you minimise the depreciation risk. Even high mileage users can benefit. 30,000 miles over the agreed limit only knocks €2400 of the GMFV

- You get the same dealer discount as a cash purchaser even with a trade in.

- The half-rule protects you in that if you have paid over half the loan amount, you can hand back the car and the loan is settled. In fact if you haven't paid back half, you can still return the car and you are only liable for the difference in what you paid and half the loan amount.

- You can use a trade in.

- You can use part cash

- You can sell the car, It requires some more logistics around paying off the remaining amount before finalising the sale. But its very doable, and probably not much more effort than trying to sell any new to 3 year old car privately. Also selling the car is an unlikely scenario, it's an new to 3 year old car. The finance only runs for 3 years and you have a trade in option and hand back option.

- You can purchase the car outright at anytime if you wish. You can finance the GMFV through cash or a loan

No other finance structure offers you all these benefits. Not one single point has been made in the 180 odd pages of posts here (many informed, many uninformed) that has even gone close to making me change my opinion on it.

Your example is correct if you want to change your 35K car every 2 to 3 years it will cost you approx 20% of the price of the car. 7K per year. 35K every 5 years is spot on. That's a function of the price of the car and the depreciation rate of the car. Its completely independent of the method you use to finance. Cash, Personal loan, PCP its all the same. Like purchasing any thing if you agree to pay more than you can afford then you can get in trouble. Be that using too much cash, or financing something by paying a higher monthly payment than you can afford.

I really think this thread has been done to death at this stage

Eh what? Do you know what GMFV is and how it works? It's set. You don't "knock anything off" it. It's GUARANTEED !!!! It's was the 'G' stands for.....

PCP finance.

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