Will PCP go POP?

rubbadubdub

Casati wrote: »

Yeah, unless you are on 0% Apr it's generally impossible to upgrade after two years as the way interest is front loaded. With 0% it might be possible though if trading a car with low depreciation e.g Octavia 1.6 tdi

Sorry should have been clear my PCP Deal is only for 2 years and finishes up in June so only about a month early having the conversation.

emeldc

rubbadubdub wrote: »

So I was curious as to what my option is now to upgrade to new car from my PCP Deal. Spoke to dealer and was advised that in order for me to go again with a new car I have to give them a €3.2k top up to keep my repayments at current level for same model of new car.

I paid 7k as original deposit for the pleasure of new car..... A lot of people will be expecting to hand keys back and get another one with no more deposit, I imagine our position will be just get a loan for the GFMV of the car but is too expensive IMO to justify the pleasure of an upgrade of 2 year old car!

Do you mind if I ask, what has your outlay been so far on the car including your deposit and repayments. You say the garage want €3.2k to upgrade to the same model, does that mean that your car is worth more than the original GFMV and if so will they pay you the difference if you walk away. I could never quite my head around the final leg of these deals

Casati

rubbadubdub wrote: »

Sorry should have been clear my PCP Deal is only for 2 years and finishes up in June so only about a month early having the conversation.

Is it an Opel? Has the model changed since 2015? Remember you can shop around and look at any other make and see if somebody else will offer you more for your car

rubbadubdub

emeldc wrote: »

Do you mind if I ask, what has your outlay been so far on the car including your deposit and repayments. You say the garage want €3.2k to upgrade to the same model, does that mean that your car is worth more than the original GFMV and if so will they pay you the difference if you walk away. I could never quite my head around the final leg of these deals

Your car is generally always worth more than the GMFV - that is the trapped equity you have in the car.

I have the same 3 options that everyone else will have in similar position.

1) Hand keys back for car, no further payments, no refunds. Cut ties and cycle off on my push bike.

2) pay the 3.2k upgrade cost to continue on for another 3 Years (increase PCP deal from 2-3 years) paying €200 a month - at end of that term I will be presented with the same 3 options again.

3) Pay the GFMV of the car which is around €12k - raise funds via finance directly or through alternative and enter 5 year loan with much higher APR and higher payments.

My total investment was 7k and €200 a month for 24 months. Option 1 is a non runner and realistically so is option 2.

My main point of re raising this thread is I know I was pretty much sold its as easy as coming back in 2 years and handing car back and getting another which its not. People are going to be in for shocks when dealers start asking them for more money to trade up again.....

GavMan

We'd need to know the specifics of the deal before commenting really.

What car is it, what car are you looking to trade into, Trade in offer on your car.

Looks like the low monthly's have come back to bite you, though. Dealer might be lowballing. Have you shopped around?

JoeA3

So if I understand this correctly, the reason the dealer wants 3.2k off you is because the equity in your car is not enough to match the deposit you put in the first time around. So in order to continue having similar monthlies you need to subsidise your existing car's equity with another 3.2k of your own cash.

This is where a lot of people on PCP deals (including myself) are going to get caught out. In my own case, I put up a deposit of approx 15k. I expect the equity in my car to be nowhere near 15k after 3 years. Little over half that maybe!

jimmycrackcorm

rubbadubdub wrote:

So I was curious as to what my option is now to upgrade to new car from my PCP Deal. Spoke to dealer and was advised that in order for me to go again with a new car I have to give them a €3.2k top up to keep my repayments at current level for same model of new car.

It's that because the market value of your car had dropped lower than expected? When you took it out was there an equivalent difference between the market value for a two year old car and the GFV that would have matched the deposit to keep the payments equivalent?

I know someone who was roughly in the same position but went to an alternative dealer for a different car who offered the extra value in the trade in.

TBH you'll pay a heavy premium for changing a car every year or two so it always makes sense to work out the figures.

Surely option 2 is the better way to go.

3.2k and the same monthly repayment and you are in a brand new car for another 3 years.

The cost of a set of tyres, your next service (both of which you will skip with the new car) and the interest on the high interest rate loan subtracted from the 3.2k will make that number quite a bit smaller. You also will rule out any unexpected out of warranty repair that might pop up and you will most likely have a lower monthly outlay than the high interest rate loan.

You could also split the difference a bit, pay a bit extra per month for a lower deposit if its finding the money for the deposit that's the issue.

emeldc

rubbadubdub wrote: »

Your car is generally always worth more than the GMFV - that is the trapped equity you have in the car.

I have the same 3 options that everyone else will have in similar position.

1) Hand keys back for car, no further payments, no refunds. Cut ties and cycle off on my push bike.

2) pay the 3.2k upgrade cost to continue on for another 3 Years (increase PCP deal from 2-3 years) paying €200 a month - at end of that term I will be presented with the same 3 options again.

3) Pay the GFMV of the car which is around €12k - raise funds via finance directly or through alternative and enter 5 year loan with much higher APR and higher payments.

My total investment was 7k and €200 a month for 24 months. Option 1 is a non runner and realistically so is option 2.

My main point of re raising this thread is I know I was pretty much sold its as easy as coming back in 2 years and handing car back and getting another which its not. People are going to be in for shocks when dealers start asking them for more money to trade up again.....

Thanks for clarifying that. I think some buyers get reeled in by the low monthly repayments an don't give the proper thought to what happens in 2/3 years time. In your case I think you're getting caught because the arse has fallen out of the secondhand market. It's hard to know what to do. If you keep the car you need to factor in extra maintenance costs that you wouldn't necessarily have with another new one.

jimmycrackcorm

Shepard Damp Someway wrote:

3.2k and the same monthly repayment and you are in a brand new car for another 3 years.

It's a cheap price to upgrade after two years. That's 1600 per year. Ultimately though you need to be putting something extra away so that you can buy out the GMV at some point, unless you want to continue changing every two years.

But if you do it's not a bad way to ultimately have a two year old car paid off.

Lantus

The issue of increased monthly payments on the second term comes about because the customer had a relatively high deposit for the initial deal.

The equity in a pcp car will always match 10 to 15% of the initial deposit. So if your deposit is in the 20-30 range you will get higher monthly payments.

No issue if your buying the car but if your rolling over it will come as a shock.

As many people have stated in this thread you should price the car at the 12-15 range for deposit. If the monthly is good then excellent. This way you only have to factor in normal inflation on cars after 3 years.

bidiots

rubbadubdub wrote: »

Your car is generally always worth more than the GMFV - that is the trapped equity you have in the car.

I have the same 3 options that everyone else will have in similar position.

1) Hand keys back for car, no further payments, no refunds. Cut ties and cycle off on my push bike.

2) pay the 3.2k upgrade cost to continue on for another 3 Years (increase PCP deal from 2-3 years) paying €200 a month - at end of that term I will be presented with the same 3 options again.

3) Pay the GFMV of the car which is around €12k - raise funds via finance directly or through alternative and enter 5 year loan with much higher APR and higher payments.

My total investment was 7k and €200 a month for 24 months. Option 1 is a non runner and realistically so is option 2.

My main point of re raising this thread is I know I was pretty much sold its as easy as coming back in 2 years and handing car back and getting another which its not. People are going to be in for shocks when dealers start asking them for more money to trade up again.....

So effectively, your car has cost you 4k per year.
Giving 3.2 deposit plus 7.2 over 3 years will work out at about 3.5k per year for the next 3 years.
So, over 5 years you will have paid almost 22.2k(10.2k deposit + 12000 monthly) and will probably face a bigger deposit or/and monthly at the end of term.
What car is it?

Casati

bidiots wrote: »

So effectively, your car has cost you 6k per year.
Giving 3.2 deposit plus 14.4 over 3 years will work out at about 5.8k per year for the next 3 years.
So, over 5 years you will have paid almost 30k and will probably face a bigger deposit or/and monthly at the end of term.
What car is it?

200 a month is 2400 per annum over two years is 4800. Add 3200 to this and 8100 has been the cost of the car over the last two years including any finance cost

bidiots

Early morning maths, bad idea:mad:

Doodah7

Casati wrote: »

200 a month is 2400 per annum over two years is 4800. Add 3200 to this and 8100 has been the cost of the car over the last two years including any finance cost

8100 plus whatever he gave as the initial deposit surely?

The total cost of the car will be 8100, the initial deposit and the final balloon payment.

What arises out of these PCP discussions time and again is that many people went into these deals suckered by low monthly payments with no real, clear idea how the finance deal worked and what the overall cost of buying a car would be.

joebloggs32

tallpaul wrote: »

8100 plus whatever he gave as the initial deposit surely?

The total cost of the car will be 8100, the initial deposit and the final balloon payment.

What arises out of these PCP discussions time and again is that many people went into these deals suckered by low monthly payments with no real, clear idea how the finance deal worked and what the overall cost of buying a car would be.

Sitting down for 5 minutes with a calculator is all that needs to be done.

Casati

tallpaul wrote: »

8100 plus whatever he gave as the initial deposit surely?

The total cost of the car will be 8100, the initial deposit and the final balloon payment.

What arises out of these PCP discussions time and again is that many people went into these deals suckered by low monthly payments with no real, clear idea how the finance deal worked and what the overall cost of buying a car would be.

No, you wouldn't add the original deposit as that deposit is still the equity in the new car, i.e. Assuming new car is same price as the old one was.

emeldc

Casati wrote: »

No, you wouldn't add the original deposit as that deposit is still the equity in the new car, i.e. Assuming new car is same price as the old one was.

If you don't keep upgrading, at some point you have to make a balloon payment or walk away and lose your equity. I'd include it.