PCP finance.

Cyrus

spuddy wrote: »

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.

they are fixed when you take it out so not sure what point you are making?

Lantus

spuddy wrote:

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.

If rates go up then they will for all products so normal loans will be affected equally as well.

spuddy

mickdw wrote: »

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....

That you're accepting there's truth to the argument speaks for itself. It's the elephant in the room. People are buying new cars on PCPs as the repayment (in their first PCP) is the same as a loan/HP on a second hand one. I'm all for personal choice & responsibility, as long as people are armed with all the facts. As you've alluded to, there's a lack of awareness about the true total cost of running a new car, and PCPs are actively contributing towards people buying these.

spuddy

Lantus wrote: »

If rates go up then they will for all products so normal loans will be affected equally as well.

Today rates for PCPs are typically lower than for other forms of finance. Why is this the case? It's clearly an incentive and it's more likely that PCP rates will fall in line with other forms of finance in the coming years, than all products going being equally affected.

Mickiemcfist

spuddy wrote: »

That you're accepting there's truth to the argument speaks for itself. It's the elephant in the room. People are buying new cars on PCPs as the repayment (in their first PCP) is the same as a loan/HP on a second hand one. I'm all for personal choice & responsibility, as long as people are armed with all the facts. As you've alluded to, there's a lack of awareness about the true total cost of running a new car, and PCPs are actively contributing towards people buying these.

Surely a level of personal responsibility has to be taken. We're less than 3 years out of a lax consumer credit driven recession. A car salesman sells cars for a living, they're not personal financial advisors.

*i say this as someone who hates 99% of Car salesmen, but people have to be responsible for their own actions. Particularly a transaction this large.

mickdw

spuddy wrote: »

That you're accepting there's truth to the argument speaks for itself. It's the elephant in the room. People are buying new cars on PCPs as the repayment (in their first PCP) is the same as a loan/HP on a second hand one. I'm all for personal choice & responsibility, as long as people are armed with all the facts. As you've alluded to, there's a lack of awareness about the true total cost of running a new car, and PCPs are actively contributing towards people buying these.

People buying expensive cars they cannot afford is a whole other argument. Is buying an expensive car you cannot afford more costly that buying a cheaper used car. Yes it is regardless of how you pay for it.
I fully agree with you that people are going in and buying cars they otherwise couldnt afford. That still doesnt equate to pcp being more expensive that other finance.
Ive long argued that people should check to see if they can afford the car with 15 percent deposit on pcp. If not they are looking at pain at end.
People need to be responsible. If you are signing a finance form, you should damn well know what its about and have a sure fire escape plan at end.
People sometimes miss that a quoted interest rate on pcp will cost more than the same quoted rate on hp - again people should do the calcs and see what the interest costs are but zero percent finance is the key to pcp being an excellent product if you can afford the car.

spuddy

mickdw wrote: »

People buying expensive cars they cannot afford is a whole other argument. Is buying an expensive car you cannot afford more costly that buying a cheaper used car. Yes it is regardless of how you pay for it.
I fully agree with you that people are going in and buying cars they otherwise couldnt afford. That still doesnt equate to pcp being more expensive that other finance.
Ive long argued that people should check to see if they can afford the car with 15 percent deposit on pcp. If not they are looking at pain at end.
People need to be responsible. If you are signing a finance form, you should damn well know what its about and have a sure fire escape plan at end.
People sometimes miss that a quoted interest rate on pcp will cost more than the same quoted rate on hp - again people should do the calcs and see what the interest costs are but zero percent finance is the key to pcp being an excellent product if you can afford the car.

We both know the reality is that many people simply won't do their homework. More fool them, and all that, but as our own very recent history has shown, more fool all of us, in the end. While it's fine to say they're separate topics, in practice, people make decisions based on the monthly repayment, a repayment which is being made artificially low on new cars with PCPs, and of course also coming with a big cost to the consumer in the form of depreciation.

More and more ads are advertising the car's monthly PCP repayment, rather than it's OTR price. It's masking the actual cost to the consumer, and is a step backwards for transparency.

mickdw

spuddy wrote: »

We both know the reality is that many people simply won't do their homework. More fool them, and all that, but as our own very recent history has shown, more fool all of us, in the end. While it's fine to say they're separate topics, in practice, people make decisions based on the monthly repayment, a repayment which is being made artificially low on new cars with PCPs, and of course also coming with a big cost to the consumer in the form of depreciation.

More and more ads are advertising the car's monthly PCP repayment, rather than it's OTR price. It's masking the actual cost to the consumer, and is a step backwards for transparency.

Im not disagreeing with any of that. My only disagreement relates to saying that pcp is more expensive when clearly due to widespread low pcp interest rates, it is cheap finance when proper comparison is undertaken.

Lantus

There is no evidence to support the idea that everyone is buying more expensive cars than they can afford. The popularity of mainstream brands is the same. If every 2nd car on the road was a 5 series I'd be a little worried. That's not the case. Clearly some people have overstretched which I imagine has always happened. Most folks would budget fairly carefully for such a large purchase. Some marques like BMW have less than ideal PCP structures in place. Some have higher interest rates.

But, there is a good range of cars where the low interest and longer time period make it a cheaper purchase overall by several thousand euros overall. A lot of these people like me will keep the car and buy outright after 3 years.

boardsuser1

Can someone explain something to me on PCP please?

A buddy of mine is getting a brand new Corolla today.

He said it is on PCP and he is paying €500 a month on a €24k car, is that normal or how does it work?

3 years is all i know the term is.

According to the dealer he can pay extra on top of this to clear it faster and looks at me with 20 heads when i mention:

Balloon payment
GMFV
Mileage

Am i right or wrong or is he just plain silly?

bazz26

PCP monthly payments are usually fixed from day one afaik. 500 x 36 = 18000. Did he put a deposit on the car, what interest rate is he paying? Sounds to me like he just got regular hire purchase finance.

MarkN

Cork Truck Driver wrote: »

Can someone explain something to me on PCP please?

A buddy of mine is getting a brand new Corolla today.

He said it is on PCP and he is paying €500 a month on a €24k car, is that normal or how does it work?

3 years is all i know the term is.

According to the dealer he can pay extra on top of this to clear it faster and looks at me with 20 heads when i mention:

Balloon payment
GMFV
Mileage

Am i right or wrong or is he just plain silly?

Well for starters, €500 PM seems odd for that price of car. Did he have any deposit at all?! 36 payments on that is €18,000 so another 6k potentially left (not sure if a deposit was given) plus cost of credit and document fees etc

Any chance it’s just HP with a decent deposit on his part?

Something not right anyway IMO with his story or yours.

boardsuser1

MarkN wrote: »

Well for starters, €500 PM seems odd for that price of car. Did he have any deposit at all?! 36 payments on that is €18,000 so another 6k potentially left (not sure if a deposit was given) plus cost of credit and document fees etc

Any chance it’s just HP with a decent deposit on his part?

Something not right anyway IMO with his story or yours.

I'm purely relaying what he said.

He traded in a 2008 Corolla against it and he specifically stated PCP and a 3 year term.

boardsuser1

bazz26 wrote: »

PCP monthly payments are usually fixed from day one afaik. 500 x 36 = 18000. Did he put a deposit on the car, what interest rate is he paying? Sounds to me like he just got regular hire purchase finance.

He might well be mixing the 2 up, i'll ask him again there

boardsuser1

He confused himself apparently.

€495 a month over 5 years on hire purchase.

That's the end of the PCP discussion.

vintagevrs

Cork Truck Driver wrote: »

That's the end of the PCP discussion.

Haha I doubt it, this thread is never ending

retweet

Bit of a stupid question and might differ from dealer to dealer but when do you pay the deposit? When you order the car or when the car is delivered?

If it was the latter, I could give a bigger deposit while waiting the few weeks.

DaveyDave

retweet wrote: »

Bit of a stupid question and might differ from dealer to dealer but when do you pay the deposit? When you order the car or when the car is delivered?

If it was the latter, I could give a bigger deposit while waiting the few weeks.

For VW, it was €1,000 to place an order and the remaining due on collection.

boardsuser1

vintagevrs wrote: »

Haha I doubt it, this thread is never ending

In my own case of course :pac:

Not the topic itself

Rusky rusky

DaveyDave wrote: »

For VW, it was €1,000 to place an order and the remaining due on collection.

I only paid 500 in November. Actually, in 2015 I also paid 500

DaveyDave

Rusky rusky wrote: »

I only paid 500 in November. Actually, in 2015 I also paid 500

I guess it's different depending on the dealer? Not a big deal though as it's part of the deposit anyway

Dtp1979

Is there A fixed fixed price to pay on the deposit or is it calculated off the total cost of the vehicle?

ctlsleh

is there a PCP Best Buy forum does anyone know?

capefear

Don’t think so, could we have a thread were we list all the pcp offers for 2018 we see

comanche_cor

Shopping around for a new car at the moment and it seems like garages are using PCP as a great way to ensure they get maximum margins on their sales.

In most of that garages once I mentioned I was interested talking about the cost to change first and then finance afterwards they would immediate jump to monthly cost in an attempt to not get drawn into negotiations over the cost of the car.

IMO they are using people's financial illiteracy against them... it's a great way to show a load of 'confusing' figures and then tell a customer all they need to focus on is their monthly payment.

Though perhaps this was always the way with financing ...

Lantus

comanche_cor wrote:

IMO they are using people's financial illiteracy against them... it's a great way to show a load of 'confusing' figures and then tell a customer all they need to focus on is their monthly payment.

comanche_cor wrote:

Though perhaps this was always the way with financing ...

Always been the way for mortgages and phones and any other type of finance, catalogue etc since I can remember.

A monthly figure is the most common way to determine affordability. It doesn't prevent any consumer from asking a whole other range of questions though.

comanche_cor

Lantus wrote: »

Always been the way for mortgages and phones and any other type of finance, catalogue etc since I can remember.

At the moment there's talk of the central bank banning cash deals as it blurs the real cost for the consumer.

Phones are not the same financial commitment as a house or a car.

A monthly figure is the most common way to determine affordability. It doesn't prevent any consumer from asking a whole other range of questions though.

A monthly figure is only part of the cost. This can be adjusted by playing with the figures one example is that they will play with the retail value of the car so that deposits can be increased to get the monthly figure down. This however doesn't matter a damn if you are paying 2k more for the same car than another garage who gives you a better trade/discount but does not play with the figures as much.

IMO consumers need protection from themselves here as they are most likely not asking the right questions and from my experience sale people are guiding them away from these questions...

autumnbelle

I bought a car on pcp finance June 2016. The dealer set the annual milage very low and gfv very high-At the end of the 36 month I will owe approx 10k on the car. The milage so far is 70k kms. I am just wondering what my options are at the end- If I hand back the car there will be milage penalties. Can I change to a lower year car with the garage? Or if I buy a new car will my monthly repayments increase hugely? Currently €230 a month. should I be saving big money now to fund whatever will happen at the end of the 36 months. The car is renault.

bazz26

Most of the answers to your questions are asked numerous times in this thread, just go back a few pages and do some light reading.

Casati

autumnbelle wrote: »

I bought a car on pcp finance June 2016. The dealer set the annual milage very low and gfv very high-At the end of the 36 month I will owe approx 10k on the car. The milage so far is 70k kms. I am just wondering what my options are at the end- If I hand back the car there will be milage penalties. Can I change to a lower year car with the garage? Or if I buy a new car will my monthly repayments increase hugely? Currently €230 a month. should I be saving big money now to fund whatever will happen at the end of the 36 months. The car is renault.

Yes they might penalize you handing it back with north of 110km on it. Would you be able to pay the 10k and keep it? You could refinance the 10k via a bank or credit union etc

IrishHomer

Anyone know what I should do,

I have a VW almost three years on PCP and was crashed last week other car was at fault.

Do I need to notify VW bank PCP?

Other car agreed to pay damages or insurance

DaveyDave

IrishHomer wrote: »

Anyone know what I should do,

I have a VW almost three years on PCP and was crashed last week other car was at fault.

Do I need to notify VW bank PCP?

Other car agreed to pay damages or insurance

Do you have GAP insurance?

Lantus

autumnbelle wrote:

I bought a car on pcp finance June 2016. The dealer set the annual milage very low and gfv very high-At the end of the 36 month I will owe approx 10k on the car. The milage so far is 70k kms. I am just wondering what my options are at the end- If I hand back the car there will be milage penalties. Can I change to a lower year car with the garage? Or if I buy a new car will my monthly repayments increase hugely? Currently €230 a month. should I be saving big money now to fund whatever will happen at the end of the 36 months. The car is renault.

What was the car cost and the deposit?

Handing back is generally the worst case scenario. You won't get back any equity you invested and the dealer can invoke the mileage penalties as you correctly state.

Saving now with view to pay off the gmfv could be an option especially as your monthlys are so low.

twin_beacon

IrishHomer wrote: »

Anyone know what I should do,

I have a VW almost three years on PCP and was crashed last week other car was at fault.

Do I need to notify VW bank PCP?

Other car agreed to pay damages or insurance

I would imagine you need to call the garage where you bought the car asap, as you are not the owner of the car, VW is. If the person that crashed has accepted liability and is willing to pay, the garage where you bought the car will probably want the work done to fix it by one of their approved mechanics. Either way, you should be fine but better let them know now, rather than when the pcp deal is up.

autumnbelle

Is it possible to go down in the years when going back with the car at the end of the pcp package? to lower repayments

DaveyDave

I know trading in early has been discussed here but it's quite a big thread. What's the deal with trading in early in terms of 1 year Vs 2 years?

If I remember correctly it's not worthwhile trading in before a certain amount has been paid back?

Lantus

Ask your dealer or any other dealer your interested in for a quote.

1 year probably isn't viable but 2 years is pretty common for trade in. However, with 2nd hand sales seriously eroded by UK imports the probability of a good deal at any period is much less likley. Please come back with offers and feedback as the more info we have as consumers the better.

mickdw

IrishHomer wrote: »

Anyone know what I should do,

I have a VW almost three years on PCP and was crashed last week other car was at fault.

Do I need to notify VW bank PCP?

Other car agreed to pay damages or insurance

well firstly what do you want to do. Sounds like the ideal time to get a new car if you are planning on changing at 3 years.
If that is the case, get onto dealer where you might be buying and see what the figures look like considering damaged cars value plus payout from outer driver etc.
If you are planning to just buy out the car and keep, now might be best time to do that also. It is then your car and you can do as you wish - Have it fixed where ever you wish etc.

MarkN

twin_beacon wrote: »

I would imagine you need to call the garage where you bought the car asap, as you are not the owner of the car, VW is. If the person that crashed has accepted liability and is willing to pay, the garage where you bought the car will probably want the work done to fix it by one of their approved mechanics. Either way, you should be fine but better let them know now, rather than when the pcp deal is up.

The garage have been paid for the car, they’re not interested.

Why would a mechanic be involved in body repair?

You don’t own a car on HP either but you don’t go ringing the garage you bought the car in 2 years ago to say you were in an accident.

McGrath5

Okay so I have read through this thread aplenty,but here is my quote for a new factory order highline Golf from VW I got over the weekend.

Deposit of €8k.
36 monthly payments of €405.
Outstanding balance at the end will be €11500.

I nearly have the cost of the car in cash, but I would prefer to spread it out over 3 years instead of parting with that kind of money now.

SteelyDanJalapeno

McGrath5 wrote: »

Okay so I have read through this thread aplenty,but here is my quote for a new factory order highline Golf from VW I got over the weekend.

Deposit of €8k.
36 monthly payments of €405.
Outstanding balance at the end will be €11500.

I nearly have the cost of the car in cash, but I would prefer to spread it out over 3 years instead of parting with that kind of money now.

APR?

McGrath5

SteelyDanJalapeno wrote: »

APR?

I don't have the paperwork in front of me, pretty sure it is 1.9%.

SteelyDanJalapeno

McGrath5 wrote: »

I don't have the paperwork in front of me, pretty sure it is 1.9%.

Well if you have the cost of it in cash, I presume you'd get a slight discount for paying in full, so ball park if it was 33k on PCP,
I'd imagine at least 500 off for cash plus the 1.9 Apr saved.
That's quickly a grand saved straight away.

Depends on how much you'd wanna keep the cash thou.

Rusky rusky

McGrath5 wrote: »

I don't have the paperwork in front of me, pretty sure it is 1.9%.

Afaik, you can get a 0% apr and a €1000 contribution for a highline model if financed though the vw bank. The caviat is that the has be to registered before end of March so only stock cars.
Is it a diesel? The price of the car is ab 33k w/o interest and the min price is ab 27.6k for a petrol manual w/o options and delivery

mickdw

The vw deals are generally pretty good but are you getting any contribution from vw? Is it zero percent or 1.9?
I'd imagine better terms may appear for the new quarter given that this is the first part of the year where sales are plentiful however if you were to finalise a purchase towards the end of this quarter, you might get a good deal too.
You are not going max deposit and the final payment looks on the low side so there is every chance that you will have a reasonable level of equity at year 3 if you want a new car.

bazz26

According to the VW website they have 0% on the Golf Highline, 1k contribution and Technology Pack upgrade for €699 at present. As said there might be a slightly better deal next quarter when the traditional Jan to March new car buying is done and order books are a little more thin. If want factory extras rather than a car already in stock then you won't make the current deal.

Terms and conditions from the site:

1. Models shown are for illustrative purposes only. Golf Range Fuel Consumption l/100km (high to low): urban 6.7 – 4.1, extra-urban 4.6 – 3.8, combined 5.3 – 3.9. CO2 emissions g/km (high-low) 121 – 102. Increased weight of a vehicle, including higher trim levels and the addition of options may have an affect on the fuel consumption and CO2 emissions produced. Typical Finance Example: Golf Highline 3DR 1.6 TDI OTRP €29,825. Deposit / Part Exchange €8,742.00. 36 monthly payments of €279. 0% APR. Optional Final Payment €11,039. Total cost of credit €0. Minimum deposit is 10%. Subject to lending criteria. This offer is made under a hire purchase agreement. Volkswagen Bank GmbH Branch Ireland is authorised by the Federal Financial Supervisory Authority in Germany and regulated by the Central Bank of Ireland for conduct of business rules. *Purchase Contribution and finance offers only available on new retail sales ordered and registered before March 31st 2018 and must be financed through Volkswagen Bank. This offer is subject to availability and may be withdrawn at any time. This offer does not apply to fleet sales. Please contact your local Volkswagen dealer for full details.

McGrath5

The dealer was trying to push me towards what they had in stock, as opposed to a factory order, but they did not have anything with the configuration I am after.

mickdw

Nothing new there.
There was a time when ordering a car from the factory was the common approach. Recently, I've seen far too much of salesmen seeing what they have in the country and losing all interest if you mention getting a car built.

Lantus

McGrath5 wrote:

I nearly have the cost of the car in cash, but I would prefer to spread it out over 3 years instead of parting with that kind of money now.

If you max your deposit you will save on some interest which I would consider. Won't be much at 1.9% but better in your pocket.

spyderski

bazz26 wrote: »

According to the VW website they have 0% on the Golf Highline, 1k contribution and Technology Pack upgrade for €699 at present.
Terms and conditions from the site:

1. Models shown are for illustrative purposes only. Golf Range Fuel Consumption fuel consumption and CO2 emissions produced. Typical Finance Example: Golf Highline 3DR 1.6 TDI OTRP €29,825. Deposit / Part Exchange €8,742.00. 36 monthly payments of €279. 0% APR. /I]

I enquired about a Golf HL the other week. 0% apr only available on diesel models from stock, the rest are 1.9%. Diesels not shifting I’d say...