PCP finance.

sunnysoutheast

Deleted User wrote: »

So If my GFV is calculated as being 11,500 in 3 years with 75,000 Kms and I have 120,000 Kms could the garage turn around and say "that's 3,600 Euro's you owe us" ?

Sure I get it that the garage could say, I'll give you 13,000 Trade in, but how likely are they to do this ?

I remember BMW saying they would charge for every single Km over on the I3 leading me to believe that I'd have a bill at the end or they would deduct this from the GFV ?

I know if I keep the car then the mileage doesn't matter but for instance if I wanted to buy the car and had more miles does this come out of the GFV meaning I would have less balloon to pay at the end ?

No the balloon payment is fixed at the start of the agreement. The easiest way to think of it is that a proportion of the loan you use to buy the car is on interest-only terms until the end of the agreement. You can then settle the outstanding amount by handing the car back (where the excess mileage charges may apply) or by paying the balloon amount via cash, loan or trade-in(where the excess mileage charges are irrelevant). With the first option any equity in the vehicle above the MFV is lost, with the latter it is yours.

Some years ago I took out a 3 year PCP on a Golf as the monthly payments were good but it had a low mileage limit of 10k miles. After 2 1/2 years it was at >70k and I traded it for a Passat. I simply paid the early settlement amount to the finance company and that was it.

I thought with these new-fangled electric vehicles that there wasn't an option to buy the car as they wanted them back to scrap them, not sure though. A friend of ours is looking at an i3 so I'll ask him!

sunnysoutheast

sunnysoutheast wrote: »

No the balloon payment is fixed at the start of the agreement. The easiest way to think of it is that a proportion of the loan you use to buy the car is on interest-only terms until the end of the agreement. You can then settle the outstanding amount by handing the car back (where the excess mileage charges may apply) or by paying the balloon amount via cash, loan or trade-in(where the excess mileage charges are irrelevant). With the first option any equity in the vehicle above the MFV is lost, with the latter it is yours.

Some years ago I took out a 3 year PCP on a Golf as the monthly payments were good but it had a low mileage limit of 10k miles. After 2 1/2 years it was at >70k and I traded it for a Passat. I simply paid the early settlement amount to the finance company and that was it.

So If I get a brand new car again in 2.5-3 years and I'm, say, 20-30k Kms over it doesn't matter ? they won't charge me excess or give me a lower GFV or am I getting confused with the GFV . The GFV being the balloon and the equity in the car if going to a new contract ?

sunnysoutheast wrote: »

I thought with these new-fangled electric vehicles that there wasn't an option to buy the car as they wanted them back to scrap them, not sure though. A friend of ours is looking at an i3 so I'll ask him!

No not at all, there is no reason a leccy car can't go 30 years on the electrics/motor etc, only thing to wear out really are the usual, pads, disks, 12v battery, wheel hub/motor bearings, suspension etc.

If the Prius is anything to go by then the electronics have been proven, there were some issues with the MK I Leaf that were corrected.

The battery in the Leaf will still be useful for someone that drives up to 40-50 miles a day in 10-15 years time (average mileage driver), it may loose 30% of it's original capacity. There may be the option to buy a newer better battery in the years to come, who knows .

The BMW I3 has a completely different battery and so does the E-Golf and Kia Soul all 3 cars have completely different battery, so too has the Renault Zoe so it could very well be that the rest of the batteries last the life of the car. The Model S with it's 85 Kwh battery will last the life of the car because it't so big that it will still be highly useful in 10-15 years even with a 30% reduction in capacity.

The I3/Model S battery is thermally controlled which will always help, As ev batteries increase in capacity there will be far less stresses on the battery.

The Leaf was a first Gen EV designed in 2009 with the best available technology at the time, and sacrifices had to be made and already there have been significant advances in the technology it's just cost is the main factor.

The Audi R8 E-Tron will have a 95 Kwh battery which is about 10 Kwh more than the Model S in a much smaller chassis, this is a major achievement if true and what the technology is I have no clue, possibly lithium air.

One thing is for sure electrics will improve greatly in the next 3-8 years.

I must say it's a great thing being off petrol and diesel and despite having to currently fast charge for 30 mins daily over lunch I wouldn't go back I love driving it so much. Work will be installing a charge point in the coming months.

You did have to bring up leccy cars didn't you ?

L-M

The only time the mileage limit comes into effect is if you're handing the car back to the bank/dealer/whom ever has underwritten the gfv and walking away from it.

If you're trading or selling the car the gfv is just an outstanding balance.

Right, lets see if I got this.

1 GFV matters if you want to buy the car at the end of the contract ? This is your balloon ?

2 The GFV is equity in the car if any going forward to a new contract ?

3 Excess mileage will be charged if you hand the car back ?

3 Excess mileage will be deducted from the GFV if going forward to a new PCP contract ?

I'm not really sure how the excess mileage works now, if I go to a new PCP in 2.5-3 years and have 50,000 Kms over, that devalues the car and someone's got to pay, me ? @ 0.8 C per Km that would amount to 4 K ?

mickdw

[Deleted User] wrote: »

Right, lets see if I got this.

1 GFV matters if you want to buy the car at the end of the contract ? This is your balloon ?

2 The GFV is equity in the car if any going forward to a new contract ?

3 Excess mileage will be charged if you hand the car back ?

3 Excess mileage will be deducted from the GFV if going forward to a new PCP contract ?

I'm not really sure how the excess mileage works now, if I go to a new PCP in 2.5-3 years and have 50,000 Kms over, that devalues the car and someone's got to pay, me ? @ 0.8 C per Km that would amount to 4 K ?

Still not got it.
You are correct on point 1 but Gfv is the outstanding balance owed and as such is important in all circumstances.
Wrong on point 2. The equity in the car is the actual value at year 3 minus the fixed gfv that you owe.
Yes, excess mileage will be charged as a direct further cost to you if you hand back the car. That would be a silly option to take as you would be giving away any equity in the car and also paying them for excess mileage.

With the excess mileage you mention, if you hand back the car, the dealer will say fine. The car covers the remainder owed(GFV) but you need to pay them 4k as you have gone over the agreed mileage.
If you go in with the same car and the same excess mileage and want to buy it outright, you write a cheque for gfv and car is yours. Dealer doesn't give a damn what condition or mileage is on it as he is then finished with it.
If you go in and want to trade up, dealer will offer a price on the car. Is then up to you to see how you like that price. It will likely cover the outstanding amount you owe plus give you a small amount towards the next car.

L-M

To keep your payments the same in year four on the new vehicle the trick is to not put in as much of a deposit day one.

If you put in 8 grand as a deposit now, chances are you're not going to have 8 grand equity the second time round so naturally your monthly payment in going to increase.

I think PCP is a brilliant idea for anyone who changes their car on a 3 year cycle.

Limerick man

Limerick man wrote: »

To keep your payments the same in year four on the new vehicle the trick is to not put in as much of a deposit day one.

If you put in 8 grand as a deposit now, chances are you're not going to have 8 grand equity the second time round so naturally your monthly payment in going to increase.

I think PCP is a brilliant idea for anyone who changes their car on a 3 year cycle.

Yeah I'm not a fan of putting large amounts of cash on a car, I just used the 5 K from the Prius.

So if I were to go much over the mileage I could just decide to get a new car after 2.5 years and put the money I would have been hit by excess mileage towards the deposit on the new car ?

Or maybe I have enough equity in the car to give me some kind of deposit, maybe the GFV could be more than 11.5K if the garage wants me to buy a new car bad enough they could decide to give me more for the car ?

L-M

Okay you're still missing out.

The excess mileage thing only becomes an issue if your mileage is astronomical and the value of the car is going to be less than the gfv or if you want to literally hand the car and keys back and walk away and never see it or the garage again (Ie. If you were leaving the country etc.)

Every other instance it's going to be what your car is worth vs. The gfv. Your gfv effectively becomes a balloon.

wandatowell

Quick question, if you have the cash can you pay the balloon payment with the deposit at the start of the finance agreement?

mickdw

wandatowell wrote: »

Quick question, if you have the cash can you pay the balloon payment with the deposit at the start of the finance agreement?

Its not a pcp them, it is effectively a traditional finance agreement then where you would be paying maybe 50 percent up front and the remainder over 3 years, owning the car outright at the end.
That type of deal suits people who have an expensive trade in. The dealer offer these finance deals too at better rates than banks

L-M

wandatowell wrote: »

Quick question, if you have the cash can you pay the balloon payment with the deposit at the start of the finance agreement?

No but what you can do is put the cash in the bank and let it earn around 4 euro interest over the three year period.

But seriously, unless it was very low Apr ie. 0% you would be better off on the normal finance route.

Limerick man

Limerick man wrote: »

Okay you're still missing out.

The excess mileage thing only becomes an issue if your mileage is astronomical and the value of the car is going to be less than the gfv or if you want to literally hand the car and keys back and walk away and never see it or the garage again (Ie. If you were leaving the country etc.)

Every other instance it's going to be what your car is worth vs. The gfv. Your gfv effectively becomes a balloon.

Thanks, yeah I think I've finally got it ! Bout time.

Limerick man

Limerick man wrote: »

No but what you can do is put the cash in the bank and let it earn around 4 euro interest over the three year period.

But seriously, unless it was very low Apr ie. 0% you would be better off on the normal finance route.

Not necessarily , PCP allows you 3 years to decide if you want to own the car after 3 years.

What people need to do is add up the total payments, including deposit + GFV and see ti it works out more expensive than normal finance.

Get the garage to calculate the total cost to buy after the 3 years and compare it to normal finance.

The cost for me to lease the Leaf is a lot less than if I went with normal finance or bank loan, I do not want to own it because I know the MK II and other cars will be available by Q4 2017 with a lot more range so PCP suits me perfectly.

positron

Not sure if this has been mentioned but I noticed Citroen's 0% APR PCP deal when I was looking into C4 Grand Picasso..

Their PCP calculator doesn't list the model I want, but taking a C4 Picasso as an example, it works out like this:

New C4 Picasso: €24,945

Under their 0% PCP, the payout be like this:

Deposit: €7,747
36 monthly installments: €259.61
Final payment (or hand the car back in): €8,371

Total cost: €25,824.06

Which is only about €850 more than paying for the car outright. Mileage restriction of 60k kms over three years.

It looks like decent-ish proposal for someone who could have been considering buying new outright. It's a bad deal if someone can't afford new but feels they could take this route to get a new car (and then live with the burden..)

jlm29

positron wrote: »

Not sure if this has been mentioned but I noticed Citroen's 0% APR PCP deal when I was looking into C4 Grand Picasso..

Their PCP calculator doesn't list the model I want, but taking a C4 Picasso as an example, it works out like this:

New C4 Picasso: €24,945

Under their 0% PCP, the payout be like this:

Deposit: €7,747
36 monthly installments: €259.61
Final payment (or hand the car back in): €8,371

Total cost: €25,824.06

Which is only about €850 more than paying for the car outright. Mileage restriction of 60k kms over three years.

It looks like decent-ish proposal for someone who could have been considering buying new outright. It's a bad deal if someone can't afford new but feels they could take this route to get a new car (and then live with the burden..)

Except for the mileage restriction. I'm sure not many people who would need a new car would have mileage that low. I know for me, it would end up costing a good bit more because of that.

Drummerboy08

The vast majority of people I speak to barely cover 15k km per year.

positron

jlm29 wrote: »

Except for the mileage restriction. I'm sure not many people who would need a new car would have mileage that low. I know for me, it would end up costing a good bit more because of that.

And if the plan is to keep the car after three years anyway, does the mileage restriction matter? Would Citroen care?

Drummerboy08

positron wrote: »

And if the plan is to keep the car after three years anyway, does the mileage restriction matter? Would Citroen care?

Doesn't matter if you plan on keeping the car.

15 K Kms per year ? I can only dream !

Seems like a decent offer. The Leaf would have been a lot cheaper for me if I did that small mileage per year. Probably 300 with 5K down.

Shame Nissan don't broaden their electric range. An electric X-trail 4x4 and 300 Hp would be really cool and 200 miles !

jlm29

Drummerboy08 wrote: »

The vast majority of people I speak to barely cover 15k km per year.

Jeepers! I've done 9k km since the start of march. I thought I was average enough!

marty_crane

I'm debating this option either now or in January and wondered if any Boardsie has any experience of the GMFV yet?

Great thread and very informative for someone like me who's still trying to find the catch in all this....

sheff the ref

I looked and thought about it, but my finances are being diverted elsewhere now anyway. However PCP wouldnt suit me unless I was prepared to buy out the car after 3 years because my mileage is simply too high.

186,000km on my own car bought new in April 2011. That is over 40,000km a year.

marty_crane

sheff the ref wrote: »

I looked and thought about it, but my finances are being diverted elsewhere now anyway. However PCP wouldnt suit me unless I was prepared to buy out the car after 3 years because my mileage is simply too high.

186,000km on my own car bought new in April 2011. That is over 40,000km a year.

I'm doing about 18,000km pa and looking at 0% Seat Leon or Skoda Rapid or Octavia, all in 16.D form. All have a GMFV of around €8500 but 2012 models in all are currently selling substantially above that so is that where the catch is perhaps? I understans the GMFV is "minimum" but wondered if anyone knew the reality, which is where I presume you're coming from re buying the car outright after 3 years.

sheff the ref

sheff the ref wrote: »

I looked and thought about it, but my finances are being diverted elsewhere now anyway. However PCP wouldnt suit me unless I was prepared to buy out the car after 3 years because my mileage is simply too high.

186,000km on my own car bought new in April 2011. That is over 40,000km a year.

No, pcp isn't really worth it at your mileage. I got a 25,000 Km limit on the Leaf but I can justify PCP because the savings on petrol are paying half the repayments on the car not to mention the savings on maintenance and motor tax V the MK II Prius which was a very fuel efficient car.

At your mileage you wouldn't even get PCP as far as I'm aware.

If I can keep close to the contract limit then hopefully the car will be worth more than the GFV which is usually the case and I'm hoping demand will grow for 2nd hand electrics now that the battery in the late 2013 + leaf's is proving to be much more robust , 2nd hand leaf's will be ultra cheap to fuel, great to drive and need feck all maintenance and so far ultra reliable. The Leaf is holding it's value well so far but anything I get above the GFV will be money off the next contract !

marty_crane

marty_crane wrote: »

I'm doing about 18,000km pa and looking at 0% Seat Leon or Skoda Rapid or Octavia, all in 16.D form. All have a GMFV of around €8500 but 2012 models in all are currently selling substantially above that so is that where the catch is perhaps? I understans the GMFV is "minimum" but wondered if anyone knew the reality, which is where I presume you're coming from re buying the car outright after 3 years.

The GFV is the absolute minimum they expect in 3 years with the agreed mileage so if you can keep the mileage below the agreed then you'll get even more off the next car.

I would expect the GFV to be got provided the car is in good condition with reasonable wear and tear, hand it back in bad condition and you will most likely not even see the gfv or go way over the mileage. I'm not sure what happens over the mileage if this comes from the gfv or if they charge you.

mickdw

marty_crane wrote: »

I'm doing about 18,000km pa and looking at 0% Seat Leon or Skoda Rapid or Octavia, all in 16.D form. All have a GMFV of around €8500 but 2012 models in all are currently selling substantially above that so is that where the catch is perhaps? I understans the GMFV is "minimum" but wondered if anyone knew the reality, which is where I presume you're coming from re buying the car outright after 3 years.

You are doing the exactly correct thing by looking at 3 year old values currently. This will help you to judge where you will be 3 years down the line.
Now you will owe the gfv at end of year 3 so ideally you want the car to be worth much more than that figure so the fact that you see 3 year old version currently selling for far in excess of gfv is a good thing and certainly not a catch as you put it. Any value in your car over and above gfv gives you deposit on next deal.

vandriver

If you want to buy the car outright in 3 years you pay the GMFV to the dealer.
No mileage check,no condition check,just pay the known amount.

pippip

mickdw wrote: »

You are doing the exactly correct thing by looking at 3 year old values currently. This will help you to judge where you will be 3 years down the line.
Now you will owe the gfv at end of year 3 so ideally you want the car to be worth much more than that figure so the fact that you see 3 year old version currently selling for far in excess of gfv is a good thing and certainly not a catch as you put it. Any value in your car over and above gfv gives you deposit on next deal.

The only bit I'd add to this would be if a new model comes out in the next three years, that would make the comparison now inaccurate and they should expect lower.

mickdw

vandriver wrote: »

If you want to buy the car outright in 3 years you pay the GMFV to the dealer.
No mileage check,no condition check,just pay the known amount.

Yep. After all, if you are buying the car, nobody cars what condition it is in except the person who has bought it.

marty_crane

I'm currently driving an old gas guzzler so the difference in current running costs and running costs/finance on a new car may be almost cost neutral if I get the right deal (tax, fuel, NCT, maintenance etc).

Frankly, at the minute I most likely can't squeeze enough for a personal loan in the traditional sense but in 3 years I should be better off financially, hence my predicament. The whole notion of a PCP suits-so long as I don't get burned at the end!

Thanks for the replies, very informative.

mickdw

pippip wrote: »

The only bit I'd add to this would be if a new model comes out in the next three years, that would make the comparison now inaccurate and they should expect lower.

Yep absolutely.
Still that is something to be aware of regardless of how one is paying for a car. Its never so wise to buy any model towards the end of its life cycle when thinking resale.

mickdw

marty_crane wrote: »

I'm currently driving an old gas guzzler so the difference in current running costs and running costs/finance on a new car may be almost cost neutral if I get the right deal (tax, fuel, NCT, maintenance etc).

Frankly, at the minute I most likely can't squeeze enough for a personal loan in the traditional sense but in 3 years I should be better off financially, hence my predicament. The whole notion of a PCP suits-so long as I don't get burned at the end!

Thanks for the replies, very informative.

Right so give an outline of what you are buying ,
What you are trading in or what deposit you are paying up front and what the gfv is and we will have an idea of how you may work out at year 3.

sheff the ref

A buddy of mine has bought a new Audi A6 recently on PCP.

His rationale was that a secondhand model up to 3 years old wouldnt come cheap and after 3 years he still has a 3 year old Audi that he has owned from the start. His payments are relatively low on PCP compared to a standard buyout, and ultimately he will just keep his car and pop down to the credit union or whatever to pay off the remaining lump sum at the end of the 3 years if the mileage is too high to continue the PCP.

ofcork

I don't know with the deposit and the 3 years of paying would be near the cost of a 2012 id say.

bilbot79

It's a load of */&#^. If you can't afford the car you want you have to save up for it. If you can't save for it then you clearly can't afford it

Drummerboy08

bilbot79 wrote: »

It's a load of */&#^. If you can't afford the car you want you have to save up for it. If you can't save for it then you clearly can't afford it

How did you buy your house?

PCP is really good for those who change their car every 3 years or less. But it shouldn't be seen as a means of buying a car if you otherwise couldn't afford it. Then you may as well go for regular finance and pay it over the 5 years. But PCP can be a good way of helping you decide if you want to keep the car after the 3 years but I'm not sure many people would choose to pay the lump sum which would pay xx years on a new contract.

Really high mileage drivers would probably be better off buying 2nd hand or buying and keeping for a good few years.

sheff the ref

ofcork wrote: »

I don't know with the deposit and the 3 years of paying would be near the cost of a 2012 id say.

I dont know, he did the sums, not me.

However his point was that after say 3 years of payments on a 2012, he would have a 6 year old car and with high mileage at that stage wouldnt know the first three years history of the car.

Whereas with PCP after 3 years he would have a 3 year old car that he knew the history of and drove from new and after a further three years, his 6 year old car would be a car he knew better.

badgerhowlin

What you think.

Is PCP for me.

Looking to get VM touran 34K
Deposit of 7k(trade in and own money)
Annual mileage is about 20k but might be up to 10k higher a year.
MFV is said to be 11804
Monthly repayments 452
APR 0%

But at the end of the 3 years we will be keeping the car.

mickdw

badgerhowlin wrote: »

What you think.

Is PCP for me.

Looking to get VM touran 34K
Deposit of 7k(trade in and own money)
Annual mileage is about 20k but might be up to 10k higher a year.
MFV is said to be 11804
Monthly repayments 452
APR 0%

But at the end of the 3 years we will be keeping the car.

Firstly if you were to change at year 3, the car would need to be worth 18800 in order for you to put forward a similar deposit without injecting more cash at that stage.
What are 3 year old tourans currently selling for?

If you intend to keep it and you are happy with the monthly figure, it's hard to see how zero percent finance could be a bad deal.
Just make sure you are getting a reasonable trade in on your own car.

jca

badgerhowlin wrote: »

What you think.

Is PCP for me.

Looking to get VM touran 34K
Deposit of 7k(trade in and own money)
Annual mileage is about 20k but might be up to 10k higher a year.
MFV is said to be 11804
Monthly repayments 452
APR 0%

But at the end of the 3 years we will be keeping the car.

Your mileage could scupper the deal in 3 years time but then again if your intention is to keep it will you still be able to get 0% finance on the final loan?

badgerhowlin

No you go into a normal HP finance agreement or so I understand. Just started to look there the weekend so not sure what is want yet!

GavMan

badgerhowlin wrote: »

What you think.

Is PCP for me.

Looking to get VM touran 34K
Deposit of 7k(trade in and own money)
Annual mileage is about 20k but might be up to 10k higher a year.
MFV is said to be 11804
Monthly repayments 452
APR 0%

But at the end of the 3 years we will be keeping the car.

Discuss it with a dealer.

See what affect that mileage might have on the GMFV and maybe check out what 3 year old Tourans with say 60-80k Kms are selling for. Car might still be worth more than the GMFV even with the higher mileage.

HP might be a better product for your mileage and that you want to keep the car beyond 3 years

moleyv

There are new model tourans out/coming out too so that would be a factor to consider for value after three years.

It would be better to have the new model unless there is a big discount on old model.

Bigcheeze

moleyv wrote: »

It would be better to have the new model unless there is a big discount on old model.

Might explain the 0% finance

badgerhowlin

Just talked to a different VM sales man. I liked him. He didnt try and sell me a car because he didnt have one.
Told me that the new one will be ready to order In November BUT it wont be 0% APR they only doing that with the current one is to get them sold. Most likely the APR on the new one would be 3.9% but he couldnt say.

As for the extra KM's
He told me that I could drive 200k a year and it wouldn't matter as long as I didnt walk away for the car at the end of the year. Then the penalty will incure. I asked him what the cost was and he was very slow in answering but said 8c per 100KM.

If I was to look to upgrade my car at the end of the 3 years. it would bring down the value of the car.

L-M

The 8 cent only comes in to effect if you hand back the car at the end of year 3. If you were stuck you could just sell it privately for more and clear the loan with the balance.

0% PCP is really a no brainer. The same loan on anything like 5-9% APR you're talking a couple of thousand in interest.

Just beware that there are very few (if any) Touran left.

The mileage penalty with be 8 C per KM not per 100 Km.

PCP or HP, bank loan makes no difference at the end of the day if you intend to keep the car what you need to do is find out the total cost to buy V bank loan, HP etc.

If you get 0 % interest on PCP doesn't mean you get 0% on the Hp at the end or however you pay off the balloon, perhaps a 1-2 year old car would be best if you want to keep it ?

badgerhowlin

Guess the lad in VM lied to me about the penalty! I know it was too good to be true...

You will never get 0% interest on you balloon repayment. because you are doing a finance deal so you will have to go with the finance APR rate.

PCP V HP does make a difference. Especially when you get 0% finance for 3 years. and then finance for 2
years.

My example 3 years 0% interest + 2 years of 7.9%(BOI motor loan) give total repayments at 29k
you would need your HP rate to be at 2.9% to match.

Granted if you went with a 141 with 20k KM on it, it would work out a 4 grand cheaper but you have a almost 2 year old car
131 would be 6grand cheaper for almost 3 year old car

Casati

jca wrote: »

Your mileage could scupper the deal in 3 years time but then again if your intention is to keep it will you still be able to get 0% finance on the final loan?

I hope your getting a discount off the rrp of the car too? If the list is 34k, then you should be trying to get 3k off that as a discount (or else make sure that 3k extra is built into the trade-in value)

If I saw a 2012 Touran, with less than 100km on it, that cost 34k new, on the market now for less than 18k I'd jump at this- these cars hold their value very well, especially any non imported VAG serviced car. Im sure as well as the % apr increasing the new model will be a lot more expensive and wont come with the same kit that the outgoing cars see as standard