Best way out of a PCP

You can hand it back after 18 months iirc

Once the term ends, you can hand it back. I assume it's a 3 year PCP, so that's two more years of payments.

You can normally get a quote to end it early.

Indeed,

It’s the easy rather than best way, I guess it depends if the loss in value is less than the remaining PCP payments.

If selling Private having the settlement figure is important too, then the buyer can split the payment accordingly

Very difficult to sell a 2 year old car privately. Especially one with finance owed on it. You can’t take trade ins, offer warranty or finance, so that rules out most buyers

As Fits suggested, use the half rule, if you got half the loan paid back you are 100% legally entitled to hand the car back with absolutely no financial repercussions.

I handed back my last car and will never go on PCP again, absolutely ridiculous way to buy cars.

what cars lose 30% in the first year ?

Assume average cars not those costing over say 70k ?

whats ridiculous about a PCP? Its just a loan to buy the car. roughly speaking you pay a third deposit, a third over 3 years and then either borrow the remain third, or trade in the car at the end.

Otherwise you end up paying 2 thirds over 3 years on a loan/HP deal.

As a matter of interest what did you buy?

I have a couple of friends that bought new cars during covid at inflated prices, they're seriously regretting it now. One guy reckons the car is worth less than what's left on the loan.

There was a thread here a few months back with someone paying over €1k per month for a BMW that's now worth less than the loan balance.

the poster mentioned 30% dep in year one. I’m curious what cars drop by that much. I accept 20% for trading in on most cars and indeed have changed family cars many times after a year for significantly less than 20% selling privately and buying straight new.

I’m hoping to do the same with my own current 251 car in Nov this year, wife’s car won’t be changed ..I think.

ThThe problem with PCP's is you are probably financing a car you really cannot afford. When the economy is syrongbits great. Cars usually retain a higher value than the balloon payment especially when the economy is strong.

Balloon payments are structured at present to protect car dealers. From 2008 on dealers got caught many went bust because balloon payments were too high and deposits too small to reflect the new residual values. Even though PCP's are financed separately to the dealership in general in early 2008 dealers traded in cars at or above balloon payments and found they could not shift second hand stock. Now with significant deposits and miniscule balloon payments both finance houses and Var dealerships are covered.

The misconception about PCP'S is what you posted above 1/3 deposit/ 1/3 repayed and 1/3 balloon. However in reality you are financing the balloon payment as well. You are paying interest to cover the interest on that balloon payment. As well you are betting that there will be significant residual value left in the car to fund the balloon payment

The catch will be in an economic downturn where the residual value of the car is not sufficient to make the balloon payment and fund most or all of the deposit.

Yes you can however now you have to fund a deposit for your next car unless you take out a personal loan. The present system.is structured so dealers will never get caught with a car worth less than the balloon payment. Your car woukld need to devalue by 60+%.

However most buyers are dependent on residual value to cover the balloon payment and deposit or most of itanyway. If it dose not you have to fund a significant part of tge deposit.

For example if the residual value is only 15k, tge balloon payment is 10k say and you are buying a 30k car you now have to fund 5k for the deposit and the payments ate based on a 10k loan and 10k balloon payment interest

Buying a new car is a bum deal but someone has to do it.

Buying new cars, especially today at massively inflated prices is definitely a mugs game, all the money 20K or more handed straight over to the Government is enough alone to make me finally cop on and stop loosing tonnes of money on cars.

And it's because of PCP why manufacturers have cars priced so high is because all people think about is the monthly payment. If you get 5 cars on PCP then this means the manufacturer has got full payment off the finance company and the dealer gets their cut, it's win win for them and a huge loss of you no matter what way you look at it because they know all people care about is the cost per month and they will keep coming back to avoid the balloon.

I intend to keep this car a while , I bought it 2nd hand , around 11 K less than new price with low mileage.

The next car I will pay a lot less. I got a cracking car for my Sister for 10 K and it would have done me just fine, she loves it, it was in mint condition, well looked after and a pity I didn't see it but I got my car a couple of months before.

People really underestimate the money lost on cars including fuel, maintenance, tax, insurance, if I could we'd just have 1 car as I got the motorbike which costs pittance vs car but I'm still a taxi service for the kids and have to drive to the Work site in Dublin, I'd do it on the bike if it was half the distance and I don't fancy going on the M50.

I lost around 50 % on my last car after 2.5 years and around 70,000 Kms. Never again.

While yes, as you said, you could pay for your car with HP over 3 years and pay around twice the money per month and own it, but the thing is that most people wouldn't be able to afford this which is why to go with PCP in the first place and which is why they're spending money they never would have before on cars and why Manufacturers have greatly increased the price of the cars by offering SUV and tonnes of tech, they know people don't care @xxx a month.

Finance "is" for people who can't afford cars be it HP, bank loan or PCP, if someone has to ask how much deposit and how much per month , then they can't afford the car. We have got into a culture of debt here in Ireland like never before, people spending more and more on cars because of the cheap monthly payments on PCP and it's becoming the norm.

A lot of people and dealers just don't understand PCP properly and some dealers often put down someone is doing way less mileage than they are to keep the monthly payments even lower, the price of that is you pay come trade in and have a higher balloon at the end.

Another piece of advice for people is that if you hand the car back after the contract you will have to pay the agreed per Km charge, usually around 8 cent, but if you hand the car back using the half rule then you do not pay this excess mileage, I avoided this when I handed my car back.

There are many who don't realise that the cheap interest PCP 0-4% can be as much as 10% to refinance that balloon.