PCP finance.

Casati

sheff the ref wrote: »

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.

You've a 161 Ibiza with 80k on the clock to trade in? I'd say you'll need to prepared for a big shock - better to keep it as your on 0% finance unless its really too small for you?

copacetic

Is there any real options for a newish car except import or pcp?

I’m looking to change at the moment from a high spec 9 year old car and am being offered frankly incredible deals on high spec 181 Audi’s and Bmw. Massively inflated trade in values, loads of extra packs giving 10k or so of options and reasonable pcp deals.

On 3 year old cars, trade in is less than 50% but pcp is very affordable. Lose out on all the extra goodies though. However cars are about 20% over priced relative to imports (and some of them are imports!)

Most sensible thing seems to be selling car privately or at auction and going to uk, however the new car deals are very tempting. Am I missing something?

Interesting aside, I’m open to Petrol as diesel I believe will be out of vogue in 3 years. However the pcp deals are not a runner on petrol, same spec is roughly 2-3k cheaper in petrol. Gmfv is way down though so payments shoot up.

mickdw

Well if you are prepared to back your own hunch re diesel being out of vogue in 3 years, the petrol car could be the winner. The lower gfv while causing higher payments now could mean you do well at the end if petrol is in favour at that stage.
If you plan on buying out the car at the end, the petrol car will cost you less - that is a certainty.
I don't know what kind of deals you are getting but I've not seen any great offers from bmw or audi. I know they are offering a trade in for older diesels etc but most seem to up the interest rate when availing of such deals.

carsfan2

Please share what deals you have been offered on 181 pcp on Audi and Bmw.
I haven’t managed to do well.

copacetic

carsfan2 wrote: »

Please share what deals you have been offered on 181 pcp on Audi and Bmw.
I haven’t managed to do well.

I think the big difference to you guys is the trade in value, they are offering double to almost triple what they will offer against a 3 year old car. (Which is roughly auction price)

However this is on a nearly 10year old big engine car and I concentrated on audi

The other big difference on the brand new cars is the discount or else the included packs for low cost. So I estimate between the two you are getting a 15k to 18k discount on a 70k spec car.

These good deals would be why a 2-3 year old trade in value would be decimated I guess.

I’ve been agonising over it over night and came close to justifying it, but the offers of only auction value against a 3 year old car have made me see sense. They are charging 6-10k more than a landed UK 3 year old car.

Basically a pcp on a 3 year old is very low payments but at the end of it might still owe 15k. Importing with a loan is only slightly dearer a month and no outstanding cost in 3 year. More hassle but a no brainer (putting current car to auction)

carsfan2

I know the Audi a6 is coming with a lot of extras at the moment but that is because it is old design and a new model will be released in 2018.
Are you saying the dealers are offering you three times what your older car is actually worth as trade in to get you to sign up for pcp on a new car?

KFed

Can you give the figures on the bmw new v 3yo deal?

Makes sense a6 run out model having free extras thrown in to clear out the old stock. The g30 is a brand new model though, not sure why theyd be throwing in any free or heavily discounted extras?

Was looking at a dublin bmw dealer stock list. The asking on nearly new f10's (162) seems very strong. Low 40k asking for 162 m sport 520d.

In practice, are they discounting much off the asking on f10's? Havent pulled examples but woukd imagine for an f10 at least, if you can sell your own, uk import is the way to go financially by a material distance.

mickdw

They wouldn't be giving 3 times the true value of the trade in. Depending on value of trade in, they could well be giving 3 times the very poor offer given against a used car. So poor offer could be 3k with true value of 6k for example.
With diesel scrappage and available discount being thrown into trade in offer, they could be offering 9k for the trade in.
The interest rate would be my concern.
Are they changing the interest rate when offering the diesel scrappage?

copacetic

mickdw wrote: »

They wouldn't be giving 3 times the true value of the trade in. Depending on value of trade in, they could well be giving 3 times the very poor offer given against a used car. So poor offer could be 3k with true value of 6k for example.
With diesel scrappage and available discount being thrown into trade in offer, they could be offering 9k for the trade in.
The interest rate would be my concern.
Are they changing the interest rate when offering the diesel scrappage?

No need to guess I said in my post they offered auction value against a second hand car and double to triple that against a new one. Of course auction value == very poor offer to most people, but it's a reasonable way of comparing prices and it's what they will do with my car straight away, so it's likely to be actually what they will get for it. No mention of diesel scrappage, whether it's included or not without scrapping the car I don't know.

carsfan2

I’ve contacted 3 Bmw dealers about 171 5 series and can’t get a straight answer as to what apr they charge.
Anybody know?
I’m guessing it’s high.. so they aren’t forthcoming.

mickdw

Did they give you detailed figures?

carsfan2

No figures as I have just made general enquiries.
I have asked what apr is charged on used cars. Told it depended on a number of factors?!
“What would I like to pay per month?”
“why would you buy a 171 when we have 9% off 181?”
No straight talking.
Painful really.

markad1

carsfan2 wrote: »

I’ve contacted 3 Bmw dealers about 171 5 series and can’t get a straight answer as to what apr they charge.
Anybody know?
I’m guessing it’s high.. so they aren’t forthcoming.

I was in looking for a 171 5 series on Sat and the sales lad had no interest in talking 171. All he wanted to do was spec up a 181 and offer PCP on it. Still haven't got any figures yet

carsfan2

markad1 wrote: »

I was in looking for a 171 5 series on Sat and the sales lad had no interest in talking 171. All he wanted to do was spec up a 181 and offer PCP on it. Still haven't got any figures yet

Be very slow to go pcp on Bmw unless you’re not bothered having no or minuscule equity in the future. I’m in the middle of one and will have little or none.
Values of 2/3 year old cars are crashing due to uk imports and 9% price reductions.

vandriver

€18,900 vrt included.How does that compare to your gmfv?
https://www.cargiant.co.uk/car/bmw/520d/MF64MXS

fago

Just looking at a newish VW.
Its about 4-5 months to go on its PCP, and seller is going to clear PCP and sell privately. Obviously I will be verifying all of this if it goes ahead.
What I'm wondering about is if the PCP ran its course do VW apply a mileage excess and if so how much.
Car has almost 100 klms on it, so if PCP limit was say 20K pa, the excess would be 40Kms
- is there a mileage limit on VW PCPs
- what's the limit
- what's the excess mileage charge and do they usually apply it

Thanks

EndaHonesty

fago wrote: »

Just looking at a newish VW.
Its about 4-5 months to go on its PCP, and seller is going to clear PCP and sell privately. Obviously I will be verifying all of this if it goes ahead.
What I'm wondering about is if the PCP ran its course do VW apply a mileage excess and if so how much.
Car has almost 100 klms on it, so if PCP limit was say 20K pa, the excess would be 40Kms
- is there a mileage limit on VW PCPs
- what's the limit
- what's the excess mileage charge and do they usually apply it

Thanks

Mileage limits only apply if you are handing back the car.

The seller is buying the car (paying the balloon payment) so it's not relevant to this situation.

fago

Thanks for info - proposal is a chain, seller already has cash to clear PCP and then I buy car, so I will see letter beforehand

mickdw

carsfan2 wrote: »

No figures as I have just made general enquiries.
I have asked what apr is charged on used cars. Told it depended on a number of factors?!
“What would I like to pay per month?”
“why would you buy a 171 when we have 9% off 181?”
No straight talking.
Painful really.

That is the crap that has made buying a car a hassle now whereas previously it would have been a great pleasure to be car shopping.
Mercedes is the only dealer that I recently went to where the salesman sat down, gave me pricing on a factory order, pricing on a car from stock (suitably lower), did the figures for me, offered a sensible straight sale discount and said he wouldnt be hounding me on the phone with better offers.
He had an amount of sales chat but that is to be expected but overall, it got it fairly right and I will be calling again to have a look.
He was also realistic when commenting on equity at end etc.
Car was alittle too expensive but overall a pleasant experience. BMW on the other hand beyond bad..... Just gave off an impression of attempting to fleece me at every turn.

carsfan2

What apr are Mercedes charging mick?
Presume you were looking at e class?
I was chatting to my accountant who is car shopping and he reckons Mercedes have probably got gmfv about right and Bmw are way too optimistic as are Audi.

mickdw

That was back last March. I believe it was 5.9 at that time. 10 percent discount was running at that time also. Not sure if that is still the case.
The way I saw it, it was basically zero percent credit against full price.
I went in looking for used stuff tbh but didn't like the one I was interested in.
The quote I got was for an e class and yes I'd be of the same opinion re the Mercedes pricing being alittle safer in terms of gfv versus projected resale value.

MuddyDog

Quick question. If I were to get into a PCP deal now with the below figures:

Car price: 34k
Deposit: 8.5k
Monthly payments: 400pm
GMFV: 13k

If say after a year I want to upgrade to say a 45k car and the market price for a 1 year old version of the car I have is say 26k what would I be looking at to get the 45k car? Seems to me that I'd almost be able to bring the current car back and pay almost nothing and then continue paying about 400pm for a further 3 years with 13k at the end?

mickdw

MuddyDog wrote: »

Quick question. If I were to get into a PCP deal now with the below figures:

Car price: 34k
Deposit: 8.5k
Monthly payments: 400pm
GMFV: 13k

If say after a year I want to upgrade to say a 45k car and the market price for a 1 year old version of the car I have is say 26k what would I be looking at to get the 45k car? Seems to me that I'd almost be able to bring the current car back and pay almost nothing and then continue paying about 400pm for a further 3 years with 13k at the end?

Assuming 0 percent finance and a 26k valuation at 1 year, you would have paid 13300 off the 34k car meaning you owe 20700. Considering you figure it would be worth 26k, you would have 5300 deposit to go towards new car.
Basically, a worse situation than going for the 45k car now as your cash deposit is reduced from 8.5k to 5.3k
From rough calcs and again with zero percent finance, you would need to put down 12.5k deposit to drive the 45k car for 3 years paying 400 per month but with a further 18k due at end.
That 12.5k deposit would be 5.3k from equity and an additional 7.2k from you.
If you wanted to go back in and swap it without coming up with any extra cash other than the 5k equity, my calcs say it would cost you 600 per month, again with 18k due at end.
Figure are estimates based on 40% gfv and zero percent interest. Add interest into it, and the figures get a whole lot worse. In addition, the 1 year old car could be worth less than 26k which would further kill the figures.
In short, trading after 1 year is going to be expensive.

copacetic

Just said I'd update on what I did. Gave up on pcp, imported last week, sold mine this week. Loan for the < 3 year old import is 5 years but about 40% less a month than the pcp offer on a new one and no big deposit. My car sale covers the vrt. Car will land between 5-6k cheaper than available here. Depending on final vrt, Omsp on calculator is way off so appeal likely needed.

Smallish loan gives me a chance to possible pay a few chunks off and finish it in 3 years.

It's definitely more flexible financially than the pcp and can put you into a higher spec but not new car for a lot less a month, not brand new though and no manufacturers warranty worth talking about left.

carsfan2

Can you let us know what car you got out of and what you’re in now?
I’m 18 months into a pcp where I put max deposit allowed in and dealer tells me I am in negative equity still and will never have any equity going forwards at any stage.
Trying to decide whether or when to get out or just keep.

acronym Chilli

carsfan2 wrote: »

Can you let us know what car you got out of and what you’re in now?
I’m 18 months into a pcp where I put max deposit allowed in and dealer tells me I am in negative equity still and will never have any equity going forwards at any stage.
Trying to decide whether or when to get out or just keep.

What did you buy yourself?
Prob makes more sense to stay in your deal. You've neg equity now, but even if you never do achieve positive equity by end of PCP you hit zero (I.e. hand back car and debt gone, today you'd have to hand back car plus some extra cash).
What kills the economics is depreciation. Worst depreciation is at start, and gets better (rate slows)

Lantus

carsfan2 wrote:

Can you let us know what car you got out of and what you’re in now? I’m 18 months into a pcp where I put max deposit allowed in and dealer tells me I am in negative equity still and will never have any equity going forwards at any stage. Trying to decide whether or when to get out or just keep.

If you put 30% in then it often makes sense to buy outright if circumstances allow.

I have noticed that skoda PCP calculator has been updated recently and the gmfv is much smaller than it used to be. So your buying more of the car in the 3 year term. This pushes up monthlys but must be needed to ensure stability moving forward.

carsfan2

acronym Chilli wrote: »

What did you buy yourself?
Prob makes more sense to stay in your deal. You've neg equity now, but even if you never do achieve positive equity by end of PCP you hit zero (I.e. hand back car and debt gone, today you'd have to hand back car plus some extra cash).
What kills the economics is depreciation. Worst depreciation is at start, and gets better (rate slows)

Bmw 330e. Lovely car but dealer blames sterling and Bmw 9% price cuts in what he values it at.
BMW seems to keep gfv way too high to have any equity especially now cars are depreciating more rapidly than they were a few years ago when there was a shortage of goodsecond hands and imports were less financially attractive.

sheff the ref

Casati wrote: »

You've a 161 Ibiza with 80k on the clock to trade in? I'd say you'll need to prepared for a big shock - better to keep it as your on 0% finance unless its really too small for you?

I called in to enquire on the last day of the VAT free deal.

Basically the VAT is deducted from the Highest Named Price. A cash customer would come close to getting that deal

0% VAT sounds good, but in reality the customer isnt gaining much. It was a deal that might suit the right type of customer in the right place at the right time though

DaveyDave

Just wondering for those who have traded their PCP cars back in, have you gotten a fair value on it? I'd be curious to know if dealers try stiff you for silly scratches or blemishes VS a regular trade in?

Cyrus

DaveyDave wrote: »

Just wondering for those who have traded their PCP cars back in, have you gotten a fair value on it? I'd be curious to know if dealers try stiff you for silly scratches or blemishes VS a regular trade in?

not my experience, i have traded 2 cars in now and entered new PCPs with no issues, both around 24-26 months into a 36month pcp,

i moved marques the last time from audi to mercedes

Casati

Cyrus wrote: »

not my experience, i have traded 2 cars in now and entered new PCPs with no issues, both around 24-26 months into a 36month pcp,

i moved marques the last time from audi to mercedes

Yes they will shaft you in the same way that they will on any trade-in, mo difference if it’s pcp or not. If you handing back a car that is worth less than than the gmfv’ then they might starting looking for scratches etc

Cyrus

Casati wrote: »

Yes they will shaft you in the same way that they will on any trade-in, mo difference if it’s pcp or not. If you handing back a car that is worth less than than the gmfv’ then they might starting looking for scratches etc

exactly:p

bazz26

Yep and they will be telling that Brexit, weak sterling, etc is the cause of poor trade-in values. The second hand car market is a mess at the moment.

Jacovs

Might have been asked before.
Is it possible to pay off extra lump sums or even 50 a month?
Just looking on the online banking and the pcp loan is just listed as another account that you can transfer money to like you would between your own accounts.
Instead of saving the extra money every month towards the final payment at the end of pcp, just pay it off the loan every month and reduce the capital and thereby the interest you are paying?

ELM327

PCP is not a loan it's a lease agreement
You can't pay it off sooner.

Best - if you have spare cash - to save the 50 a month and put it in a savings account to contribute the balloon payment.

Jacovs

Thanks for the reply. Did some further digging and got the same information.
Currently saving more than enough into a credit union account for the balloon in 3 years. Be nice to have all the options available at end of PCP.

vintagevrs

ELM327 wrote: »

PCP is not a loan it's a lease agreement
You can't pay it off sooner.

.

That's not true. You can pay it off anytime you like.

ELM327

vintagevrs wrote: »

That's not true. You can pay it off anytime you like.

It is true.

Additionally you can request a settlement figure from the finance company.
To say flippantly, that you can pay it off any time you like, is misleading.
You can - just not by increasing your monthly lease payment.

blackmark

People are quick to make a mess of pcp and highlight all the negatives when in reality at the end of 3 years regardless of pcp or hire purchase etc you still have paid the same figure in all 3 circumstances. Cars don’t depreciate more just because it’s a pcp deal.

It’s all about convenience and affordability over the term for yourself do you a want to pay a lump sum at the start, have low monthly repayments and have a lump sum at the end..... pcp sounds good then or do you want a steady loan for the 3 years with no lump sum either side then pcp isn’t the choice for you either way the car will still cost the same at the end, will still depreciate as the market moves and you will have formed over the same amount regardless of which deal you went for (obv interest rates are different but in general)

mickdw

blackmark wrote: »

People are quick to make a mess of pcp and highlight all the negatives when in reality at the end of 3 years regardless of pcp or hire purchase etc you still have paid the same figure in all 3 circumstances. Cars don’t depreciate more just because it’s a pcp deal.

It’s all about convenience and affordability over the term for yourself do you a want to pay a lump sum at the start, have low monthly repayments and have a lump sum at the end..... pcp sounds good then or do you want a steady loan for the 3 years with no lump sum either side then pcp isn’t the choice for you either way the car will still cost the same at the end, will still depreciate as the market moves and you will have formed over the same amount regardless of which deal you went for (obv interest rates are different but in general)

Yes nothing at all wrong with pcp other than it allows foolish people to perhaps get into more expensive car than they could otherwise afford.....for one term and leaving in a mess at the end.
On the other hand if someone can clearly afford a golf for example, buying it on a zero percent pcp is the only way to do it.

spuddy

blackmark wrote: »

People are quick to make a mess of pcp and highlight all the negatives when in reality at the end of 3 years regardless of pcp or hire purchase etc you still have paid the same figure in all 3 circumstances. Cars don’t depreciate more just because it’s a pcp deal.

It’s all about convenience and affordability over the term for yourself do you a want to pay a lump sum at the start, have low monthly repayments and have a lump sum at the end...

For the average punter who needs finance & replaces their car every 3-5 years, PCP is more expensive:

1. The biggest running cost of any car, depreciation. PCP allows people to buy a newer car than they would otherwise be able to afford, which in turn costs them more in depreciation.
2. As the capital is not repaid, but interest is charged on the GMFV amount, the total cost of financing the car is higher than with a traditional loan (all other things, interest rate, term length etc, being equal).

As long as you're made aware of this, it's fine, but those selling PCPs need to do more to explain the above to Joe Soap.

ELM327

spuddy wrote: »

For the average punter who needs finance & replaces their car every 3-5 years, PCP is more expensive:

1. The biggest running cost of any car, depreciation. PCP allows people to buy a newer car than they would otherwise be able to afford, which in turn costs them more in depreciation.
2. As the capital is not repaid, but interest is charged on the GMFV amount, the total cost of financing the car is higher than with a traditional loan (all other things, interest rate, term length etc, being equal).

As long as you're made aware of this, it's fine, but those selling PCPs need to do more to explain the above to Joe Soap.

And this is the issue I outlined earlier with the lack of regulation.

Casati

spuddy wrote: »

For the average punter who needs finance & replaces their car every 3-5 years, PCP is more expensive:

1. The biggest running cost of any car, depreciation. PCP allows people to buy a newer car than they would otherwise be able to afford, which in turn costs them more in depreciation.
2. As the capital is not repaid, but interest is charged on the GMFV amount, the total cost of financing the car is higher than with a traditional loan (all other things, interest rate, term length etc, being equal).

As long as you're made aware of this, it's fine, but those selling PCPs need to do more to explain the above to Joe Soap.

You are ignoring the extremely low interest rates you can get with pcp

ELM327

Casati wrote: »

You are ignoring the extremely low interest rates you can get with pcp

On the full value (incl GFMV) in most instances.

Lantus

spuddy wrote:

For the average punter who needs finance & replaces their car every 3-5 years, PCP is more expensive: The biggest running cost of any car, depreciation. PCP allows people to buy a newer car than they would otherwise be able to afford, which in turn costs them more in depreciation.As the capital is not repaid, but interest is charged on the GMFV amount, the total cost of financing the car is higher than with a traditional loan (all other things, interest rate, term length etc, being equal). As long as you're made aware of this, it's fine, but those selling PCPs need to do more to explain the above to Joe Soap.

Except not true. Just compared an Octavia bought on a normal loan over 4 years and PCP. If 20% deposit in each case then you pay 440 a month for 4 years on hp. 2200 interest paid.

You pay 275 a month on PCP at zero interest. If you save the difference you can almost pay off the gmfv at the end bar a few grand.

So a significant saving for pcp and you still own the car after 4 years. Of course if you can afford over 2k in interest then you should of course pay it.

That's no say all such deals would be as good but generally PCP interest is very competitive and it's easy to Chech the numbers as I've just done.

mickdw

spuddy wrote: »

For the average punter who needs finance & replaces their car every 3-5 years, PCP is more expensive:

1. The biggest running cost of any car, depreciation. PCP allows people to buy a newer car than they would otherwise be able to afford, which in turn costs them more in depreciation.
2. As the capital is not repaid, but interest is charged on the GMFV amount, the total cost of financing the car is higher than with a traditional loan (all other things, interest rate, term length etc, being equal).

As long as you're made aware of this, it's fine, but those selling PCPs need to do more to explain the above to Joe Soap.

This argument is flawed. What you are saying is that buying a new car every 3 years is more costly than buying a cheaper used car every 3 years. That is obviously correct and while i understand you are referring to pcp allowing some people to buy a more expensive car than they otherwise might, that is down to individual stupidity and not relevant to cost of pcp versus hp. I also realise this scenario effects a good number of buyers.
But if we take a like for like scenario, a new golf on hp v a new golf on pcp, the car on pcp currently wins hands down due to the very low interest rate available. All else will be equal.
I have not bought this way myself but I have not heard any evidence to suggest that pricing or discounts are different when availing of vw pcp versus using other finance.

_Brian

What are the typical mileage allowances and penalties for exceeding.

Lantus

If you buy the car then nothing.

If you trade up it can effect your equity in the same way any trade in would.

If you hand the car back the lender applies the contract penalty clause if applicable.

spuddy

Casati wrote: »

You are ignoring the extremely low interest rates you can get with pcp

I'm highlighting the essential differences between the different types of finance, so people walk into this with their eyes open. PCPs are being incentivised by the manufacturers, but there's no guarantee that these rates will be lower in the years to come.