How did PCP work out in the end?

FaganJr

Lantus wrote: »

All cars depreciate in the same manner irrespective of how its paid for.

However in light of recession talk some big players are currently shorting the market to the tune of billions in the believe a crash is imminent. Possibly not a great time to over extend on anything. Esp a car....

Agreed

ronnie3585

Lantus wrote: »

However in light of recession talk some big players are currently shorting the market to the tune of billions in the believe a crash is imminent.

Who's shorting what, in what market?

beggars_bush

NIMAN wrote: »

Funnily enough, it was people borrowing for houses they couldn't afford 15 to 12 years ago that got us into a terrible mess.

it was the banks selling the mortgage credit to people and not doing proper finance checks that got them and people in trouble

same with the car industry selling credit to people now

bazz26

beggars_bush wrote: »

it was the banks selling the mortgage credit to people and not doing proper finance checks that got them and people in trouble

same with the car industry selling credit to people now

People also need to take some accountability for their debt situation too. It's far too easy to just say the bank forced me to borrow it and exonerate yourself from accountability. Borrowing money or having debt is not a bad thing, however reckless borrowing or spending and not knowing how to manager debt is.

ronnie3585

bazz26 wrote: »

People also need to take some accountability for their debt situation too. It's far too easy to just say the bank forced me to borrow it and exonerate yourself from accountability. Borrowing money or having debt is not a bad thing, however reckless borrowing or spending and not knowing how to manager debt is.

Absolutely, it's a two way street.

ShadowHearth

bazz26 wrote: »

People also need to take some accountability for their debt situation too. It's far too easy to just say the bank forced me to borrow it and exonerate yourself from accountability. Borrowing money or having debt is not a bad thing, however reckless borrowing or spending and not knowing how to manager debt is.

What?! People have to be responsible for their own financial decisions and Dept?! Madness, get out of here!

Actually another hate pet for me. Zero percent is evil! Can go right up to conspiracy theory threads.
If you check all manufacturers in Ireland, then pretty much the only ones who can do 0% apr are VW group dealers. VW has its own bank, that's why they can give good finance. They make money by selling car already. All other manufacturers use third party banks. So the bank wants to make their own slice of pie too. That's why VW group manufacturers are so competitive.
Ofc, if it's a new model, they will have their cake and eat it. New model in demand, so why not to make a few quid on top of it.
Keep in mind VW group gives second hand car PCP too at very low apr 0-2.9%. so you don't need to go new of you don't want.

Mad_maxx

Lantus wrote: »

All cars depreciate in the same manner irrespective of how its paid for.

However in light of recession talk some big players are currently shorting the market to the tune of billions in the believe a crash is imminent. Possibly not a great time to over extend on anything. Esp a car....

Someone is always shorting the market

sk8board

We have a 171 golf (1.2tsi highline) which was being serviced at a main dealer on Friday and while there the salesman (we know him well), offered a 1.5tsi r-line for slightly lower repayment (€336 v €345), ZERO up front, and a balloon which is increased slightly to €12k v €10.3k - however the guaranteed min value is also increased €2k.
We needed 4 tyres and pads on the 171, so we simply swapped the keys to a new one and pick it up Jan 2nd. 0% apr. 3 years servicing. Ceramic life shine coating all included.
We’re aware the mk8 is coming, and this deal is to shift the final Mk7’s, however the mk8 pricing looks like it’s going to be more for a similar high spec.

L-M

sk8board wrote: »

We have a 171 golf (1.2tsi highline) which was being serviced at a main dealer on Friday and while there the sale man (we know him well), offered a 1.5tsi r-line for lower repayment (€336 v €345), ZERO up front, and a balloon which is increased slightly to €12k v €10.3k - however the guaranteed min value is also €2k more.
We needed 4 tyres and pads on the 171, so we simply swapped the keys to a new on and pick it up Jan 2nd. 0% apr.
We’re aware the mk8 is coming, and this deal is to shift the final Mk7’s, however the mk8 pricing looks like it’s going to be more for a similar high spec

You did the right thing to be honest. Those 1.5s are excellent value and theres not many left

micks_address

sk8board wrote: »

We have a 171 golf (1.2tsi highline) which was being serviced at a main dealer on Friday and while there the salesman (we know him well), offered a 1.5tsi r-line for slightly lower repayment (€336 v €345), ZERO up front, and a balloon which is increased slightly to €12k v €10.3k - however the guaranteed min value is also increased €2k.
We needed 4 tyres and pads on the 171, so we simply swapped the keys to a new one and pick it up Jan 2nd. 0% apr. 3 years servicing. Ceramic life shine coating all included.
We’re aware the mk8 is coming, and this deal is to shift the final Mk7’s, however the mk8 pricing looks like it’s going to be more for a similar high spec.

Sounds like great deal

ForestFire

sk8board wrote: »

We have a 171 golf (1.2tsi highline) which was being serviced at a main dealer on Friday and while there the salesman (we know him well), offered a 1.5tsi r-line for slightly lower repayment (€336 v €345), ZERO up front, and a balloon which is increased slightly to €12k v €10.3k - however the guaranteed min value is also increased €2k.
We needed 4 tyres and pads on the 171, so we simply swapped the keys to a new one and pick it up Jan 2nd. 0% apr. 3 years servicing. Ceramic life shine coating all included.
We’re aware the mk8 is coming, and this deal is to shift the final Mk7’s, however the mk8 pricing looks like it’s going to be more for a similar high spec.

I few things of note here, and it happened in my trade in also, so nothing really wrong with what you done, just some things I noticed when I changed.

You original gmfv was probably low and this allowed you to gain some equity in the first car (like I did with octavia). As you said the gmfv is gone up by 2k in this car, which again was the same for me.

You say you but zero in, but in reality you but you equity and the value of your last car in. My car had a gmfv of 10.5k too but was offered 15.5k in nearly all dealers and 17.5k in my original dealer, so that's 7k going in on new car and not zero. What was your cars real value? Was you first gmfv very low?

Also increasing the gmfv on the next car allows the garage to reduce monthlys but leaves you with a higher balloon or less equity on the next car. The 2k extra would easily push you monthly payment back above you first cars over 3 years. 55 euro a month more on 0% in fact!

Obviously they need to still ensure they do not offer too high gmfv, but the first being possible low allows this apparent easy roll over to the next. It may be more difficult in 3 years on next car though.

sk8board

Completely agree - this is kicking the can down the road, saving an €800 service bill too, albeit moving up to the mk7.5, bigger engine, rline spec and virtual cockpit. We had intended paying off the balloon, so this also keeps €10k cash in our account for another 3 years.

We were given €20k on the trade in and the gmv was €17k.
The new gmv is €19k, but the new car listprice is very well discounted - but we had to pick one of the 1.5’s.
The story goes that VW couldn’t make the 1.0tsi engines quickly enough for all the VAG cars that now have it, so they put 1.5’s in some run out models and sold them at the 1.0tsi price.

Looking online, the current market value of our 171 is €20k private (at most) and perhaps €21.5k at dealers. Only 40k kms.

Edit: this is my partners car and we’ve had the ‘front assist unavailable’ error twice now and the active cruise control radar unit has had to be recalibrated twice by vw, which is €450 out of warranty, so she saw that the mk 7.5 has that radar moved up behind the badge and was sold

L-M

To be fair the GMFV is a percentage of the price of the new car.

The 12k GFMV is based off the value of an R line 1.5 TSI which is 3K dearer car than the Highline and also prices of cars have gone up since you bought yours in 2017.

Likewise in 2023 prices will have gone up further, so will GMFVs and so will (hopefully) the trade in of your then 3 year old Golf.

micks_address

The only worry I have for 2023 is the electric landscape . My guess is vw will want to keep customers so will give decent equity and 0 percent again to keep people buying.

L-M wrote: »

To be fair the GMFV is a percentage of the price of the new car.

The 12k GFMV is based off the value of an R line 1.5 TSI which is 3K dearer car than the Highline and also prices of cars have gone up since you bought yours in 2017.

Likewise in 2023 prices will have gone up further, so will GMFVs and so will (hopefully) the trade in of your then 3 year old Golf.

L-M

micks_address wrote: »

The only worry I have for 2023 is the electric landscape . My guess is vw will want to keep customers so will give decent equity and 0 percent again to keep people buying.

If that’s your only worry you should be happier that there’s a higher “guaranteed” value, no?

micks_address

L-M wrote: »

If that’s your only worry you should be happier that there’s a higher “guaranteed” value, no?

Well the gmfv on my Tiguan is 15400. To be able to but again without a 5k deposit I'd need a trade of something like 25k for my Tiguan in 2023..

L-M

micks_address wrote: »

Well the gmfv on my Tiguan is 15400. To be able to but again without a 5k deposit I'd need a trade of something like 25k for my Tiguan in 2023..

3 year old Highline Tiguan’s are currently mid to late 20s so you’re not far wrong.

Tiguan and Golf are probably two of the best for equity.

sk8board

Also bear in mind our 171 golf was €28k list, we made 35 payments (€12k) and got €20k in trade in value.
Previous car was also a golf, the first that was on pcp, so this will be the 3rd one. Car 1 was 18 months old when we got it, we drove it for 18 months and paid €2.5k to move up to the new 171, and now zero upfront to move into this 201 r-line

Wildly Boaring

L-M wrote: »

To be fair the GMFV is a percentage of the price of the new car.

The 12k GFMV is based off the value of an R line 1.5 TSI which is 3K dearer car than the Highline and also prices of cars have gone up since you bought yours in 2017.

Likewise in 2023 prices will have gone up further, so will GMFVs and so will (hopefully) the trade in of your then 3 year old Golf.

My thoughts too. Gone from 1.2 to 1.5 and to an RLine theres a 2k lift in GFMV anyway.

The mk8 is going to be very similar to 7. 7 will hold its value

ShadowHearth

sk8board wrote: »

Also bear in mind our 171 golf was €28k list, we made 35 payments (€12k) and got €20k in trade in value.
Previous car was also a golf, the first that was on pcp, so this will be the 3rd one. Car 1 was 18 months old when we got it, we drove it for 18 months and paid €2.5k to move up to the new 171, and now zero upfront to move into this 201 r-line

I personally think you did very well. Taking outgoing model has its own advantages too.
Mk 7.5 is out for a while so a lot of design flaws will be flushed out and you got a very good deal on it too. Mk8 early adapters will be beta testers, and it will take a while for flaws to pile up, before VW will do revision on it.
I have preference to take outgoing models myself for those reasons. New shiny is lovely ofc, but a bit more reliability tested over few years is better value for me.

photosmart

McGaggs wrote: »

€411 a month would lease one from leaseplan, and you'd have the 5k equity in your pocket.

I didn't know leaseplan were available to private motorists - are they?

ForestFire

Just to be clear in my comments, I'm not saying they have not done well and of course they have a better, higher spec car, just noting that the lower monthly payment does not reflect the whole story.

I went from an octavia Estate 1.2tsi to a leon st 1.5 dsg and also have a lower monthly payment, but I only put the min deposit on the octavia, 3k I think, vs 7k in on new car (equity) , and I now have a higher ballon payment also.

Nothing wrong with any of that, as I have a higher spec car also (at least engine and options) but you just need to considered all parts of pcp plan.

beggars_bush

bazz26 wrote: »

People also need to take some accountability for their debt situation too. It's far too easy to just say the bank forced me to borrow it and exonerate yourself from accountability. Borrowing money or having debt is not a bad thing, however reckless borrowing or spending and not knowing how to manager debt is.

completely agree.

it is far too easy to get large sums of money on credit, especially for cars

carsfan2

It seems to me from this thread that it is VAG group cars are the only ones that are reporting positive outcomes to pcp.
Possibly this is because they have their own banking arm that can offer cheap rates and incentives to keep the cars rolling over?
It’s in their interest to keep things moving I suppose to keep the factories busy.

mickdw

carsfan2 wrote: »

It seems to me from this thread that it is VAG group cars are the only ones that are reporting positive outcomes to pcp.
Possibly this is because they have their own banking arm that can offer cheap rates and incentives to keep the cars rolling over?
It’s in their interest to keep things moving I suppose to keep the factories busy.

100 percent and has been this way for a few years now.
They have the ability to offer relatively true zero percent finance.
It's a great way of discounting without devaluing the product.
Other brands have done the zero finance or 4k discount.
That immediately tells you the real price is the discounted price thereby hitting used values.
Bmw dealers on the other hand appear to let greed for margin destroy any possibility of a successful Pcp.
10k margin between trade in and retail pricing on stuff around 40k is nuts. Vw dealers on the other hand when all contributions from vw are taken into account offer close to retail figures for trade in.
That is the difference between a Pcp that works well and one that doesn't.

Mickiemcfist

I think what also helps VAG cars ln pcp is that they have quite predictable depreciation rates & are almost universally popular. I'm a bmw man myself but jesus the man maths doesn't work when you break it down to monthly payments, it becomes all too clear how much money you're spending if the PCP monthly payment accurately tracks depreciation rates.

carsfan2

Mickiemcfist wrote: »

I think what also helps VAG cars ln pcp is that they have quite predictable depreciation rates & are almost universally popular. I'm a bmw man myself but jesus the man maths doesn't work when you break it down to monthly payments, it becomes all too clear how much money you're spending if the PCP monthly payment accurately tracks depreciation rates.

I agree but do Audi not depreciate at pretty much same level as Bmw’s?
any Audi buyers here on pcp?

Heres Johnny

carsfan2 wrote: »

I agree but do Audi not depreciate at pretty much same level as Bmw’s?
any Audi buyers here on pcp?

They certainly do, I've what must be one of the best examples of a 2014 A6 bought in 2018 for 20k with only 36k miles on the clock. Lost 35 grand or so in those 36k miles and 4 years.

But that's higher end stuff, golf's and polo's and anything under 35k from VAG are generally good for holding value.

asteroids over berlin

photosmart wrote: »

I didn't know leaseplan were available to private motorists - are they?

Should be, my mate done this with Leaseplan UK, think it is only new offering

L-M

I disagree with Vw only having a good PCP because of the bank and the APRs, they just actually have a good product. As in, max deposit being 30 percent, no lowering of mileage allowances and a fixed (low) future value to allow for equity.

For example BMW have been well known to set the GMFV as basically what they car is worth (almost 50 percent and more) after three years. Thus giving the customers very low payments day one but absolutely no equity the second time around.

It’s the likes of BMW that gives PCP a bad name. I’ve been selling it since it’s inception and the only cases I’ve ever heard going sour are people who weren’t explained how it works properly day one, or those who bought BMW.

PCP really is a great product.

carsfan2

I agree they have a good product that works well for them and those that sell it but also the customer. Repeat business and replacement of cars is what pcp is about and if people want to be in new cars and pay monthly it’s win win.
It appears bmw especially have mispriced their product and it isn’t working out as no equity at end.
You say you sell pcp, do the manufacturers make it more lucrative for sales people if the car purchase is done using pcp?

L-M

No, to be honest theres far less out of a PCP because of the APRs. Ie 0percent APR there’s often very little or no commission.

Bring back the days of 12 percent APR!

Also, I think we end up doing tighter deals to keep a customer and sell a new car. Ie. If you’re in a PCP and you’re paying 450 a month, and we quote a new PCP and it’s 480 a month, the customer can often just say “Match my old payments and I’ll deal” and suddenly we’ve given an extra grand on the trade, just to get a deal.

So it has its benefits in that the customer is somewhat captive, and it’s downsides where the customers trade in value can be very much based on their PCP payments.

sk8board

I was in bmw on Thursday for a service and from the usual Dec chit-chat if it would be a busy January it was clear there are a lot of negative equity pcp’s out there.

L-M

sk8board wrote: »

I was in bmw on Thursday for a service and from the usual Dec chit-chat if it would be a busy January it was clear there are a lot of negative equity pcp’s out there.

I wouldn’t call it negative equity, just no equity.

If you’re negative you just hand it back, lol.

mickdw

They need to get real on gfv and on trade offers even if it needs support from the bmw Ireland.
It's not like the arse falls out of bmw pricing when you.look at used asking prices at main dealers so clearly.the dealers are trying to cream off silly profits.
Local mercedes dealer was telling me (not in a sales situation)
That he had done a good few trade in deals from 5 series owners going to e class where he managed to cover the outstanding finance with hisq trade in offer while bmw were 5k or more short. These were cars with a few km over agreed.

L-M

I find that hard to believe when I priced a 171 520d recently and he owed 27600 on it at the end of the PCP. Car is worth 30k next year, at a push.

You’d want 10k equity to get into any E class for any decent PCP, plus they’re almost 6 percent APR.

mickdw

L-M wrote: »

I wouldn’t call it negative equity, just no equity.

If you’re negative you just hand it back, lol.

Not if you are over mileage on a bmw! Very much negative equity.

L-M

mickdw wrote: »

Not if you are over mileage on a bmw! Very much negative equity.

Hire purchase agreement half rule! Just hand it back and walk away

mickdw

L-M wrote: »

Hire purchase agreement half rule! Just hand it back and walk away

Good point. I have heard of people having trouble with that. I know it's legit and should not effect credit in any way but it has happened that it does.
Is there anything at all re mileage or fair usage that can effect a half rule handback?

carsfan2

mickdw wrote: »

They need to get real on gfv and on trade offers even if it needs support from the bmw Ireland.
It's not like the arse falls out of bmw pricing when you.look at used asking prices at main dealers so clearly.the dealers are trying to cream off silly profits.
Local mercedes dealer was telling me (not in a sales situation)
That he had done a good few trade in deals from 5 series owners going to e class where he managed to cover the outstanding finance with hisq trade in offer while bmw were 5k or more short. These were cars with a few km over agreed.

So Mercedes dealer could offer more for a BMW than a BMW dealer could?
Seems odd but in 2017 my father traded his e class for a 5 series. At the time BMW Ireland were giving dealers 4K extra to offer a conquest purchaser i.e. someone with a non BMW car got the extra trade in allowance. I thought at the time it was nuts and went against loyal customers.

mickdw

L-M wrote: »

I find that hard to believe when I priced a 171 520d recently and he owed 27600 on it at the end of the PCP. Car is worth 30k next year, at a push.

You’d want 10k equity to get into any E class for any decent PCP, plus they’re almost 6 percent APR.

I didn't say they got into an e class cheaper. Mercedes allowed them to start clean whereas bmw dealer had them 5k or so in the hole before they thought of getting the new car. It's bad business having people returning with their pride and joy only to be told it won't even cover itself.
The mercedes Pcp is more expensive yet more realistic although if you knew you were going well over mileage, your half rule idea on a bmw with the highest gfv (for lowest monthly) deal you could find might be an idea.

bilbot79

How much worse is a PCP deal financially compared to buying outright?

mickdw

carsfan2 wrote: »

So Mercedes dealer could offer more for a BMW than a BMW dealer could?
Seems odd but in 2017 my father traded his class for a 5 series. At the time BMW Ireland were giving dealers 4K extra to offer a conquest purchaser i.e. someone with a non BMW car got the extra trade in allowance. I thought at the time it was nuts and went against loyal customers.

Yep, Merc were beating bmw on the trade in.
We know how bmw tend to piss take but it's possible mercedes were doing a sales push too in grabbing bmw buyers where possible. Mercedes chap didn't mention that though.

mickdw

bilbot79 wrote: »

How much worse is a PCP deal financially compared to buying outright?

It can be better, depends on the deal.

bazz26

BMW were mainly interested in bringing new customers to the brand by offering what appeared to be low attractive monthly PCP repayments. They then screwed over existing customers and returning customers through low ball trade-in values and little or no PCP equity. They will tell that weaker sterling and cheaper imports were responsible but these factors don't seem to influence the sticker prices of their used cars on their forecourts. They want their cake and eat it at the same time.

bilbot79

mickdw wrote: »

It can be better, depends on the deal.

How so? Would you have example figures to demonstrate?

L-M

bilbot79 wrote: »

How so? Would you have example figures to demonstrate?

For example, on a couple of Volkswagen models you can avail of 0 percent APR and get a €1,500 deposit contribution.

So if you paid cash it would actually cost you more than if you PCPd. Plus the benefit of getting free money.

carsfan2

L-M wrote: »

For example, on a couple of Volkswagen models you can avail of 0 percent APR and get a €1,500 deposit contribution.

So if you paid cash it would actually cost you more than if you PCPd. Plus the benefit of getting free money.

Do these offers eat into the dealer margin or is it still possible to negotiate a discount as well ?

L-M

carsfan2 wrote: »

Do these offers eat into the dealer margin or is it still possible to negotiate a discount as well ?

No they’re usually extra so you can negotiate as normal.

They’re paid by the brand

DaveyDave

carsfan2 wrote: »

Do these offers eat into the dealer margin or is it still possible to negotiate a discount as well ?

I don't believe 0% makes any difference to the dealer, just means the bank isn't making money off those payments. Dealer is paid the same for the car. I believe the dealer gets commission for making PCP sales but not entirely sure.

Very few models are 0%, the majority will have interest. If 1/3 of Golfs are 0% Highlines, this is likely made up by the 2/3 Comfortline/Trendline models at 3.9%. Then you've got 1.9% on the GTI and R, they're €45-45k cars so will bring in decent equity.

Then you've for 5.9% on all VW second hand cars, PCP isn't as favourable on second hand cars but still better than a bank loan.

Those Scania, Lamborghini and Bugatti don't pay for themselves either.