PCP finance.

dil999

26000 Elephants wrote: »

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.

I understand it perfectly. I don't think you do. At any stage you owe the remainder of the loan.

The GMFV (Guaranteed Minimum Future Value) only comes into play if you decide to hand back the car. You get a Guaranteed Value when you hand back the car. The finance is structured so that the GMFV is the same as the outstanding loan amount after 36 Months, assuming you are within mileage limits. So handing back the car pays off the loan. You are effectively selling the car back to the finance company for the GMFV and that pays off the loan

If you exceed the mileage limits the GMFV drops by 0.08c per mile. For 30,000 miles over the agreed figure, the GMFV is reduced by €2400K. ('Extra miles knocks €2400 of the GMFV') so the finance company is effectively giving you less for the car. You need an additional €2400 to clear the finance. Since most people have a good idea of their mileage, they can reasonably predict the value of the car. Hence, 'Predictable value back'

The problem with this thread is that PCP is a a reasonably complex financial arrangement. Some of the poster here have a really good understanding of it. Unfortunately many have bits of knowledge they picked up from dealer websites and pub conversations. They then come on the thread here and post stuff that's completely off the mark. They then tell people who actually know what they are talking about that they are wrong. A perfect example is:

26000 Elephants wrote: »

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.

Job OXO, please read above. You are incorrect. If you had you ever actually done a PCP you would have a better understanding of it. Its called Guaranteed, hence the G. Its not actually Guaranteed. Also, no need to shout.

dil999

I originally posted here to give some help and info from my own experience for people deciding to purchase using PCP. I think (hope) I have posted some helpful information and it can all be found back in the thread. There are alo a lot of good and educated posts from other users such as acronym Chilli, DaveyDave, Mickdw. maidhc (we dont agree on the benefits of PCP but he makes an educated argument), Casati, Zachariah Disgusting Beginner, Lantus. jca, bazz26 and more.

Here are a few links that are worth a look to help you get an understanding of financing you car purchase:

The Competition and Consumer Protection Commission have an excellent section on their website. I posted it a couple of times before:
https://www.ccpc.ie/consumers/money/loans/paying-for-your-car/

Very good PCP and HP calculators:
http://www.wisercarbuyer.com/pcp-calculator.html
http://www.wisercarbuyer.com/hp-calculator.html

A few points from my personal experience: (Particularly if you are planning to change every 3 years)
- Research and understand PCP before you sign up;
- know your mileage and if you exceed the agreed amount, know by how much it will reduce the GMFV
- PCPs don't roll over. you pay one off and then sign up for a whole new one.
- Assume you are not going to get any equity in your trade-in (you likely will, but treat it as a bonus);
- Pay the minimum deposit (you will have to come up with it every 3 years);
- Get the lowest interest rate. (You pay interest on the total outstanding amount);
- Make sure you can afford the payments;
- Proactively finalise the PCP deal. the default position is that the final payment will automatically be taken from you account.
- Enjoy your car.


I am all posted out on this one

Jobs OXO

dil999 wrote: »

I originally posted here to give some help and info from my own experience for people deciding to purchase using PCP. I think (hope) I have posted some helpful information and it can all be found back in the thread. There are alo a lot of good and educated posts from other users such as acronym Chilli, DaveyDave, Mickdw. maidhc (we dont agree on the benefits of PCP but he makes an educated argument), Casati, Zachariah Disgusting Beginner, Lantus. jca, bazz26 and more.

Here are a few links that are worth a look to help you get an understanding of financing you car purchase:

The Competition and Consumer Protection Commission have an excellent section on their website. I posted it a couple of times before:
https://www.ccpc.ie/consumers/money/loans/paying-for-your-car/

Very good PCP and HP calculators:
http://www.wisercarbuyer.com/pcp-calculator.html
http://www.wisercarbuyer.com/hp-calculator.html

A few points from my personal experience: (Particularly if you are planning to change every 3 years)
- Research and understand PCP before you sign up;
- know your mileage and if you exceed the agreed amount, know by how much it will reduce the GMFV
- PCPs don't roll over. you pay one off and then sign up for a whole new one.
- Assume you are not going to get any equity in your trade-in (you likely will, but treat it as a bonus);
- Pay the minimum deposit (you will have to come up with it every 3 years);
- Get the lowest interest rate. (You pay interest on the total outstanding amount);
- Make sure you can afford the payments;
- Proactively finalise the PCP deal. the default position is that the final payment will automatically be taken from you account.
- Enjoy your car.


I am all posted out on this one

You are misinformed on this point.

"- know your mileage and if you exceed the agreed amount, know by how much it will reduce the GMFV"

If your GMFV is €10k and you exceed milage by 20000kms you will still pay €10k if you chose to buy out the car at the end of term it's still €10k. NO IMPACT !

dil999

Jobs OXO wrote: »

You are misinformed on this point.

"- know your mileage and if you exceed the agreed amount, know by how much it will reduce the GMFV"

If your GMFV is €10k and you exceed milage by 20000kms you will still pay €10k if you chose to buy out the car at the end of term it's still €10k. NO IMPACT !

Sorry I had to post again. Carefully read my post from last night it clearly explains GMFV

http://www.boards.ie/vbulletin/showpost.php?p=105074445&postcount=2284

GMFV is NOT the amount you pay at the end. the amount you pay at the end is the outstanding loan value. If you understand the difference you will go a long way to understanding PCP.


You have a total misunderstanding of the concept of PCP. Your posts are not helping anyone and just serve to confuse people looking for proper information.

Definitely all posted out.

Jobs OXO

dil999 wrote: »

Sorry I had to post again. Carefully read my post from last night it clearly explains GMFV

http://www.boards.ie/vbulletin/showpost.php?p=105074445&postcount=2284

GMFV is NOT the amount you pay at the end. the amount you pay at the end is the outstanding loan value. If you understand the difference you will go a long way to understanding PCP.


You have a total misunderstanding of the concept of PCP. Your posts are not helping anyone and just serve to confuse people looking for proper information.

Definitely all posted out.

Nope you are completely wrong. I understand PCP very well. I'm afraid Its you that has a total misunderstanding of the concept of PCP. Your posts are not helping anyone and just serve to confuse people looking for proper information.

EndaHonesty

I have a Skoda Octavia VRS on PCP.

The mileage on the PCP is 36,000 kms over 3 years.

I'm 2 years in and have 83,000 kms on the car already.

The GMFV is just under 14,000 euro.

That is how much I owe them on the final payment.

That figure does NOT change.
No matter what mileage is on the car.

The mileage affects the actual value of the car NOT the GMFV.

Jobs OXO

EndaHonesty wrote: »

I have a Skoda Octavia VRS on PCP.

The mileage on the PCP is 36,000 kms over 3 years.

I'm 2 years in and have 83,000 kms on the car already.

The GMFV is just under 14,000 euro.

That is how much I owe them on the final payment.

That figure does NOT change.
No matter what mileage is on the car.

The mileage affects the actual value of the car NOT the GMFV.

Correct.

_Brian

EndaHonesty wrote: »

I have a Skoda Octavia VRS on PCP.

The mileage on the PCP is 36,000 kms over 3 years.

I'm 2 years in and have 83,000 kms on the car already.

The GMFV is just under 14,000 euro.

That is how much I owe them on the final payment.

That figure does NOT change.
No matter what mileage is on the car.

The mileage affects the actual value of the car NOT the GMFV.

So where is the penalty of exceeding the mileage, because I’m sure you will be penalised.
If they guaranteed that with 36k on it it would be worth €14k, do you expect to be allowed the same with nearly 100k on the clock ??

Are people splitting hairs on terminology here, saying it will be worth €14k but I’ll have to give €3k as a penalty, so it's really only worth €11k, but I’m sticking to the €14k figure because tue penalty is seperate.

batman1

This is getting silly now....

Here's my tuppence worth.

Buy a car for 30k. Pay deposit and commence monthly payments.
GMFV is say, 10k. This is known from day 1 and will remain 10k.

Scenario 1.
You decide after 3 years you want to keep the car. You pay the GMFV of 10k (hasn't changed) and drive away.

Scenario 2.
You decide to trade in for a new one. The dealer values your 3 year old car at 15k. You take the 15k, pay off the GMFV of 10k (hasn't changed) and use the remaining 5k towards the deposit on your next car.

Scenario 3.
You decide to hand back the car.
The dealer checks the agreed mileage. If you haven't gone over then you hand the car back to pay off the GMFV of 10k (still hasn't changed) and walk home.

If you have gone over the mileage then he will calculate what extra money you owe to based on the agreed rate, lets say 2k. You then hand the car back to pay the GMFV of 10k (still hasn't changed), but you now owe him an extra 2 k because you went over the agreed mileage limit on your contract.

So, in summary, the GMFV doesn't change. Only the value of the car changes based on the mileage, condition etc. This in turn affects either the equity when trading up, or an extra payment for mileage when handing it back.

EndaHonesty

_Brian wrote: »

So where is the penalty of exceeding the mileage, because I’m sure you will be penalised.
If they guaranteed that with 36k on it it would be worth €14k, do you expect to be allowed the same with nearly 100k on the clock ??

Are people splitting hairs on terminology here, saying it will be worth €14k but I’ll have to give €3k as a penalty, so it's really only worth €11k, but I’m sticking to the €14k figure because tue penalty is seperate.

From VW Bank

What are my options for my PCP final payment?
1. Part exchange your vehicle for a brand new Volkswagen,Audi, Skoda or Seat at one of our dealerships.

2. Keep your current vehicle- Simply pay the final instalment plus the option to purchase fee and the car is yours. Alternatively talk to your Volkswagen Bank Ireland customer care representative about options to extend your current finance agreement.

3. Return your vehicle to your dealer.

* options 1 and 2 are subject to underwriting approval at Volkswagen Bank Ireland.

* option 3 is subject to being within mileage limits and that the car is in acceptable return condition as outlined in your vehicle return option agreement. Once you have returned the vehicle to your dealer's premises and made all payments under your Hire Purchase Agreement, excluding final payment, we will offset your vehicle's GFV from the final payment, and you will no longer be liable for any further payments, provided always that the GFV covers the final payment entirely. Where the GFV does not cover the final HP payment entirely as a result of excess mileage and / or damage over the acceptable return standards, you will have to clear the residual amount on your account balance. For further details please see your vehicle return option agreement.

The mileage limits are included as a protection to cover themselves for extreme scenarios.

In reality the GMFV is set low enough to mean the actual value of the car is always higher than the GMFV.

twin_beacon

EndaHonesty wrote: »

I have a Skoda Octavia VRS on PCP.

The mileage on the PCP is 36,000 kms over 3 years.

I'm 2 years in and have 83,000 kms on the car already.

The GMFV is just under 14,000 euro.

That is how much I owe them on the final payment.

That figure does NOT change.
No matter what mileage is on the car.

The mileage affects the actual value of the car NOT the GMFV.

Exactly. your GMFV is the outstanding balance you owe if you decide to keep the car. If you paid 60% of the price of the care over the 3 year PCP deal, then your GMFV is the remaining 40%. Doesn't matter if there is 10kms on the clock, or 100kms, the GMFV is fixed.

The GMFV is NOT the trade in price that you will be offered for your car if you decide to get another car on PCP. That is based on the current market value of your trade in. Of course then the mileage is taken into account, same as any other trade in deal. My sister in law first PCP deal ended last jan, she got the same make and model again on PCP, however, she had to pay more than she expected, as the the value of her trade in was lower than she thought. Poor sterling and an influx of UK cars into the Irish market of the year and similar mileage being a factor.

Lots of people seem to think that if they get a new car again at the end of their first PCP term that the GMFV is what they will be allowed as a trade in. This is not the case at all.

Jobs OXO

batman1 wrote: »

This is getting silly now....

Here's my tuppence worth.

Buy a car for 30k. Pay deposit and commence monthly payments.
GMFV is say, 10k. This is known from day 1 and will remain 10k.

Scenario 1.
You decide after 3 years you want to keep the car. You pay the GMFV of 10k (hasn't changed) and drive away.

Scenario 2.
You decide to trade in for a new one. The dealer values your 3 year old car at 15k. You take the 15k, pay off the GMFV of 10k (hasn't changed) and use the remaining 5k towards the deposit on your next car.

Scenario 3.
You decide to hand back the car.
The dealer checks the agreed mileage. If you haven't gone over then you hand the car back to pay off the GMFV of 10k (still hasn't changed) and walk home.

If you have gone over the mileage then he will calculate what extra money you owe to based on the agreed rate, lets say 2k. You then hand the car back to pay the GMFV of 10k (still hasn't changed), but you now owe him an extra 2 k because you went over the agreed mileage limit on your contract.

So, in summary, the GMFV doesn't change. Only the value of the car changes based on the mileage, condition etc. This in turn affects either the equity when trading up, or an extra payment for mileage when handing it back.

Also correct.

MentalMario

I've just been approved for 20k+ worth of PCP finance without even being asked for a payslip. That's insane by the finance company.

I'm strongly in the if you can afford it, pcp is the way to go camp.

arleitiss

MentalMario wrote: »

I've just been approved for 20k+ worth of PCP finance without even being asked for a payslip. That's insane by the finance company.

I'm strongly in the if you can afford it, pcp is the way to go camp.

Was it your first application ever?
Did they ask for references from work etc..?

or just literally bank statement and proof of address?

MentalMario

arleitiss wrote: »

Was it your first application ever?
Did they ask for references from work etc..?

or just literally bank statement and proof of address?

First pcp app, yeah.

They asked for no documentation. No work references. Not even proof of address. Crazy practice by them.

mickdw

What car company / bank is that with?
To be honest, it's not so crazy if you have a clear history and putting up a good deposit. They really couldn't lose.

sillysocks

MentalMario wrote: »

First pcp app, yeah.

They asked for no documentation. No work references. Not even proof of address. Crazy practice by them.

I had the same experience buying my car which was 35k. And I had only been in my current job less than 6 months. Couldn't believe how I got the finance with no work or bank statements. Just verbally told the salesman my salary and he told the finance company. And to be honest my salary wouldn't have been amazing compared with the price of the car (my husband was helping with repayments but applied for finance in my own name)

who_ru

I was approved for pcp last week without any requirement to prove or verify earnings.

I was asked if I had a mortgage but that was as much as they asked, didn’t ask what % of monthly earnings go toward mortgage or any other loans.

They didn’t go into too much detail regarding mileage allowance. I was just asked to bring picture ID and recent bill plus bank account details when collecting the car. All very unusual I have to say.

arleitiss

I am paying close attention to this thread every day as I am planning to apply for PCP in February/March.
I have about 1k income left for savings/spending (after rent, bills, food, petrol and extra) and never applied for any loans or anything.

Looking to apply for about 30-35k range car PCP finance too but I am afraid that they will check my employment history and tell me to go take a hike.

I graduated in 2015 then worked for 2 years until 2017 June, then was jobless for 2 months and started working in August again so by February it will be like a little under 6 months at the job (it's permanent contract but I am on 11 month probation even though there is 0 chance to lose job) but I have a feeling they will use that to refuse me the finance.

Jobs OXO

arleitiss wrote: »

I am paying close attention to this thread every day as I am planning to apply for PCP in February/March.
I have about 1k income left for savings/spending (after rent, bills, food, petrol and extra) and never applied for any loans or anything.

Looking to apply for about 30-35k range car PCP finance too but I am afraid that they will check my employment history and tell me to go take a hike.

I graduated in 2015 then worked for 2 years until 2017 June, then was jobless for 2 months and started working in August again so by February it will be like a little under 6 months at the job (it's permanent contract but I am on 11 month probation even though there is 0 chance to lose job) but I have a feeling they will use that to refuse me the finance.

For your own benefit you should be refused. You seem to be all over the gaff financially from your posting history.

If you do get PCP fair chance you will be one of those handing back the car after 3 years essentially making a loss.

arleitiss

Jobs OXO wrote: »

For your own benefit you should be refused. You seem to be all over the gaff financially from your posting history.

If you do get PCP fair chance you will be one of those handing back the car after 3 years essentially making a loss.

No, I would prefer to keep upgrading every 3 years or buy it out.
But it's fine anyway, if I get refused - I will just re-apply in summer when I am off probation.

colm_mcm

Now, this is a terrible article, but it shows the thought process of someone who doesn't fully understand how finance works, despite having all the facts to hand

https://www.motoringresearch.com/car-news/opinion/suzuki-jimny-finance/

Toyotafanboi

Thread cleaned.

dil999 and Jobs OXO please take some time away from this thread and consider your posting style before returning.

Plenty of boards users turn to this thread for good advice, please avoid muddying the waters and going for for tat with one another in future.

colm_mcm

colm_mcm wrote: »

Now, this is a terrible article, but it shows the thought process of someone who doesn't fully understand how finance works, despite having all the facts to hand

https://www.motoringresearch.com/car-news/opinion/suzuki-jimny-finance/

I dunno, summarises PCP nicely IMO ......

The deposit. ..........The bigger the deposit, the less you’ll have to pay each month.

The monthly payment. You’re essentially paying off the car’s depreciation here – not its value...........

The balloon payment. Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up.

CIP4

Out of curiosity what happens if your trade in is worth more than the 30% maximum deposit lets just say by 5K. Will there garage just give you back the excess and let you go ahead with a PCP deal with a 30% deposit ? But if they do does this put you in a bad position in terms of trade in value as in will they deliberately offer you less because they don't want to give you back money. As I know in the past garages in general don't want to give you back money but maybe in this scenario its different.

colm_mcm

They treat the equity as a deposit essentially, so going into deal 2 with €5k equity over the GMFV would be like putting down €5k day 1.

So if the second car is the same price as the first, you put down €5k day one,and the interest rate is the same - your payments should be the same.

colm_mcm

Augeo wrote: »

I dunno, summarises PCP nicely IMO ......

The deposit. ..........The bigger the deposit, the less you’ll have to pay each month.

The monthly payment. You’re essentially paying off the car’s depreciation here – not its value...........

The balloon payment. Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up.

It summarises it, but it shows how easily you can be led. He's still looking at spending big money on a bad car, only he's essentially financing it for a lot longer. If he's happy with a jimmy then great, but there's a reason banks don't give out 7 year finance.

colm_mcm

colm_mcm wrote: »

It summarises it, but it shows how easily you can be led. He's still looking at spending big money on a bad car, only he's essentially financing it for a lot longer. If he's happy with a jimmy then great, but there's a reason banks don't give out 7 year finance.

I don't see where he is?

"What would I do after four years? Hand back the Jimny with nothing to show for my cash? Not a chance. By then, Suzuki reckons it’d be worth a meagre £4,372. So, if I divide that figure over the 48 months I’ll have ‘owned’ the Jimny so far, it works out at just £91.08 per month. If I stick that money into a savings account each month, after four years I’ll be able to buy my Jimny outright. And by that point, Suzuki will have replaced the Jimny and mine will be well into future classic status. It’s practically an investment."

He's on about a 4 year PCP and tucking away 1/48th of the balloon payment every month so he'll have it set aside when it's due.

The bad car bit is irrelevant IMO, nothing to do with PCP.

Toyotafanboi

CIP4 wrote: »

Out of curiosity what happens if your trade in is worth more than the 30% maximum deposit lets just say by 5K. Will there garage just give you back the excess and let you go ahead with a PCP deal with a 30% deposit ? But if they do does this put you in a bad position in terms of trade in value as in will they deliberately offer you less because they don't want to give you back money. As I know in the past garages in general don't want to give you back money but maybe in this scenario its different.

If you're entering our first PCP using a trade in worth more than the max deposit, the dealer will write you a check for the difference between max deposit and the value of your car.

You're probably right that if you are just on the threshold of being worth more than max deposit then you will probably get offered slightly less than the car is worth to avid the hassle of refunding the difference.

CIP4

colm_mcm wrote: »

They treat the equity as a deposit essentially, so going into deal 2 with €5k equity over the GMFV would be like putting down €5k day 1.

So if the second car is the same price as the first, you put down €5k day one,and the interest rate is the same - your payments should be the same.

I meant if you were entering your first PCP deal and owned your trade in and it was worth 15k for example and the car you were looking at had maximum deposit of 10k bringing it to 30% what would they do with the difference but tfb has answered it anyway.

Lantus

CIP4 wrote:

Out of curiosity what happens if your trade in is worth more than the 30% maximum deposit lets just say by 5K. Will there garage just give you back the excess and let you go ahead with a PCP deal with a 30% deposit ? But if they do does this put you in a bad position in terms of trade in value as in will they deliberately offer you less because they don't want to give you back money. As I know in the past garages in general don't want to give you back money but maybe in this scenario its different.

What is the deposit ratio for your car? Beyond 30pc your at a tipping point where traditional finance may be more beneficial. Look at the interest rates and see what works out best.

CIP4

Lantus wrote: »

What is the deposit ratio for your car? Beyond 30pc your at a tipping point where traditional finance may be more beneficial. Look at the interest rates and see what works out best.

I haven’t looked at any specific cars so not sure more of just a general question. But you are right in my case HP would probably make more sense with a high deposit.

CIP4

OSI wrote: »

They'll require a letter from your employer stating your a permanent employee. If you're still on probation you won't get finance.

When I got HP last year with VW bank I filled out the paper work and the only thing they came back to me looking for was 3 months of up to date statements sent them off and got approved. No pay slips or contract or letter from my employer actually back then I was probably still on probation. So I wouldn’t say there is a hard and fast rule on it.

arleitiss

Is used car PCP a thing? I keep seeing ads for pre-owned PCP deals from Audi, do people really go for those? It seems stupid to be paying for a 3 year old car for 3 years.

vandriver

arleitiss wrote: »

Is used car PCP a thing? I keep seeing ads for pre-owned PCP deals from Audi, do people really go for those? It seems stupid to be paying for a 3 year old car for 3 years.

Any more stupid than spending approx 60% of your disposable income on a new car?

mickdw

CIP4 wrote: »

Out of curiosity what happens if your trade in is worth more than the 30% maximum deposit lets just say by 5K. Will there garage just give you back the excess and let you go ahead with a PCP deal with a 30% deposit ? But if they do does this put you in a bad position in terms of trade in value as in will they deliberately offer you less because they don't want to give you back money. As I know in the past garages in general don't want to give you back money but maybe in this scenario its different.

They happily give a cheque back with any money over and above although it would be up to you to make sure you are getting suitable value much like trading in in any other scenario.
As long as you realise that you won't have 30 percent deposit in the car the next time round for another pcp, all is good.

twin_beacon

Augeo wrote: »

I dunno, summarises PCP nicely IMO ......

The deposit. ..........The bigger the deposit, the less you’ll have to pay each month.

The monthly payment. You’re essentially paying off the car’s depreciation here – not its value...........

The balloon payment. Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up.

This is not what the balloon payment is, and its where most of the confusion is. The balloon payment is the remaining finance that owed on the car, that needs to be paid off before the PCP contracted for that car can be ended.

Example, I enter into a PCP contract for a car worth €30k, if over the course of the 3 years, my monthly payments and initial deposit amounts to 66% of the value of the car, the GFMV (balloon payment) after 3 years will be the remaining third, €10k. That figure won't change, however its not what the car is worth, its the outstanding value of the car.

If you want to trade in your pcp car, and get a new one with your current pcp car as a trade in, then the value of your current car, minus the GFMV is your deposit.

twin_beacon

twin_beacon wrote: »

This is not what the balloon payment is, and its where most of the confusion is. The balloon payment is the remaining finance that owed on the car, that needs to be paid off before the PCP contracted for that car can be ended.

Example, I enter into a PCP contract for a car worth €30k, if over the course of the 3 years, my monthly payments and initial deposit amounts to 66% of the value of the car, the GFMV (balloon payment) after 3 years will be the remaining third, €10k. That figure won't change, however its not what the car is worth, its the outstanding value of the car.

If you want to trade in your pcp car, and get a new one with your current pcp car as a trade in, then the value of your current car, minus the GFMV is your deposit.

lol, balloon payment is self explanatory.
The speel you quoted is "Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up", not at all incorrect.

It's the minimum they reckon the car will be worth when the PCP is up.

Like, GFMV stands for ?????

acronym Chilli

Augeo wrote: »

lol, balloon payment is self explanatory.
The speel you quoted is "Also referred to as the ‘guaranteed future value’, this is how much the finance company thinks the car will be worth when the PCP is up", not at all incorrect.

It's the minimum they reckon the car will be worth when the PCP is up.

Like, GFMV stands for ?????

That's probably the thinking, but there's assumptions there.

Two things are categorical:

1. It is the outstanding finance at the end of the 3 year process, so it's the amount you need to pay to clear the finance and drive away debt free.
2. It is the minimum amount they will take off the outstanding finance at the end if you hand back the car instead (subject to specific conditions on mileage/wear-and-tear/maintenance/etc.,)

The second of those indicates that they probably think the car will have a value in and around that at the end. It's like committing to buying the car back for a particular minimum price in 3 years. However, I'd need to look some more at the details and overall business model and incentives to work out if anything confounds that line of reasoning.

Thinking through outcomes:

• Say the cars all tend to be worth a good bit more than GFMV at the end, then you've got lots of equity, and you've overpaid the depreciation (i.e. front-loaded... you've not lost anything). Probably you can actually afford a better car than you thought.
• Say it's the other way and they trade at and below GFMV: no equity, means cars have depreciated more quickly, probably means that more should go for 3 year used cars.

arleitiss

arleitiss wrote: »

Is used car PCP a thing? I keep seeing ads for pre-owned PCP deals from Audi, do people really go for those? It seems stupid to be paying for a 3 year old car for 3 years.

Most people can't afford a 3 year old car outright, sure many are still over 20k so I'd rather be paying a 3 year low interest pcp for 3 years than a normal high rate loan.

Also nothing stopping you reading up before 3 years.

KFed

Has anyone got concrete examples on a pcp on a 3year old car?

If theyre offering 3y pcp on a 3year old, after that is up, what sort of gfmv are they offering? Im guessing brands like audi, that presumably so not retail 6yo stock on their main dealer network, are going to fairly low ball that gfmv to ensure the cars dont come back, or, have some other onerous return conditions?

Ive always thought the main draw of pcp on new was to keep monthly repayments low with the baloon on the back end and possibly a high (up to 30%?) deposit on the front end.

If youre financing a 3yo, im guessing volkswagen bank is not going to take any risk on 6yo stock coming back so are the deposits up front allowed to be larger (say 50% of the retail on the car) in order to force the gfmv down farther?

At 6yo most cars are almost guaranteed to be old model and 'high' mileage and woukd have to be sold on into the trade if they were to come back to audi.

Are they happy enough to do this if the buyers come back and take another 3yo on pcp? Woukd be interested to see an example to know what the customer buying the 3yo is repaying over their term and what sort of cost to change theyd be looking at to repeat the deal in 3y time...

Could be a very smart deal in fairness for the punter buying the 3yo on pcp. Conceivably they could get a current model, low mileage, good condition warrantied main dealer car, run it for 3y after someone else has taken the biggest hit on depreciation, have 3 light years maintenance wise and then move it on knowing at the outset definitively what it stands to lose them in that time...

It has its advantages to be fair.

It all depends on what the pcp is available on at that vintage and what the numbers are mind.

They could be shafting you on gfmv either, but youd know that in advance to be fair!

mickdw

Duplicate post

mickdw

I enquired about a 3 to 4 year old audi a7 from main dealer.
In my opinion, the used car pcp did not work.
I intended to hp the car over 5 years with about 30 percent deposit upfront.
Dealer made that deal so bad with crap finance rates that it was not a runner so I looked at the pcp option. Again the rate was not great and they would only do it for a 2 year pcp. Looking at the deal in front of me, I felt I would be putting in 8 to 10k deposit and paying maybe 400 per month for 2 years and I figured there was a good chance I'd get little or nothing back at end of term in terms of equity in car and I didn't fancy having to pay about 15k to buy out a 6 year old audi at end of term.
I think getting a slightly used car that is a fresh model and got at a very low rate would be the sweet spot.
It's also worth saying that while many of the independant trade now offer PCP, the rates are anywhere from 5.9 to 8.9 for people with good credit history making those terrible deals.

carsfan2

mickdw wrote: »

I enquired about a 3 to 4 year old audi a7 from main dealer.
In my opinion, the used car pcp did not work.
I intended to hp the car over 5 years with about 30 percent deposit upfront.
Dealer made that deal so bad with crap finance rates that it was not a runner so I looked at the pcp option. Again the rate was not great and they would only do it for a 2 year pcp. Looking at the deal in front of me, I felt I would be putting in 8 to 10k deposit and paying maybe 400 per month for 2 years and I figured there was a good chance I'd get little or nothing back at end of term in terms of equity in car and I didn't fancy having to pay about 15k to buy out a 6 year old audi at end of term.
I think getting a slightly used car that is a fresh model and got at a very low rate would be the sweet spot.
It's also worth saying that while many of the independant trade now offer PCP, the rates are anywhere from 5.9 to 8.9 for people with good credit history making those terrible deals.

Thought Audi offer 2.9% on used pcp?

mickdw

So did I.
Well they do if you do it on their terms. Had to be under 2 years old to get the best rate.
Had to be hp over 4 years to get 3.9
5.9 on 5 year hp.
Pcp only allowed over a 2 year term due to age of car. I can't remember the rate they offered but it wasn't great.
It was almost like they did everything they could to make it hard to buy the car and that was me walking in without a trade in.
This is the saga of the 24 month pcp. They emailed on a PCP quote as I didn't hang around which clearly said 36 x monthly payments. When I did my own figures it was way off. I was over paying by about 5 or 6k.
When they rang to follow up, told salesman they either made a mistake or were charging 10 percent interest. Finance guy calls and tells me I wouldn't be able to calculate a pcp and that it is quite complex and you have to account for gfv etc. I confirmed that I was happy with my calculations. He again stressed that it's complex. Only after I firmly told him his figures were wrong did he say this is obviously a 24 month deal. Note their quote clearly detailed 36 x monthly.
24 month hadn't been mentioned until that point.

carsfan2

That is a poor experience alright.
Maybe they are more focused on getting new deals for 181? Although a sale is a sale.
A one year old car at 2.9 could be good deal but when I see one year old Audi’s for sale in Audi garages they are priced too close to a new car to make sense.

mickdw

mickdw wrote: »

I enquired about a 3 to 4 year old audi a7 from main dealer.
In my opinion, the used car pcp did not work. .................

I suppose the Q7 depreciation curve is quite steep, market for a 6 year old Q7 is tiny to be fair so it'd be hard for the pcp to be anything but unattractive as GFMV will be low and the depreciation high.

carsfan2

Anybody know if BMW do pcp on nearly new cars i.e. less than a year old?
Can't see anything on their website .
thanks.

XsApollo

Yea they do.

sheff the ref

Seat Ireland are offering certain models at 0% VAT this weekend for Black Friday

I am currently on 0% finance with PCP with a Seat Ibiza. The Seat Leon is the only suitable model on 0% VAT. I am 18 months into my PCP with almost 80,000km and had intended buying out the car anyway after 3 years. I am unsure if the new car would be 172 or 181 but I presume it would be 172 Old Model.

To get a new car I wouldnt get 0% PCP finance as well as 0% VAT but I would get 3.9% PCP finance. Will enquire more tomorrow but I think that 0% VAT is a great deal in any mans language. However I hadn't really budgeted for change at the moment. Sometimes though you have to step back and consider your options.