Car PCP and deposits on them
Discussion
After_Shock said:
Im suggest putting larger deposits into HP not PCP in order to save money on interest, not as you state so no.
You'll only be providing better value if the APR is roughly the same on both quotes.Or to put it another way, for the same cost of interest, the HP will be cheaper as the average amount being borrowed over the period is lower.
After_Shock said:
Im also saying if customer have a large sum to start with don't put it all into a PCP, keep some of it back for the next one, another person on here has also chipped in and said why. Circumstances change and you don't know whats around the corner and that cash might be gone putting people in an awkward position come when the PCP is over, again in the customers interest.
So lets say you are an expert which you profess to be, can you get me a APR rated PCP deal in the open market that will cost me less over the same period of time as a HP deal putting the same deposit in over the same amount of time?
No, as explained earlier, due to the timing of payments. The same APR means that both deals would offer equal value, but due to the nature of the PCP the total amount payable for the PCP would be more.So lets say you are an expert which you profess to be, can you get me a APR rated PCP deal in the open market that will cost me less over the same period of time as a HP deal putting the same deposit in over the same amount of time?
After_Shock said:
Just asking for some advice you see as the idiot typing on a computer system appears to be ripping people off without knowing.
It's quite possible that you don't have scope to provide like-for-like quotes on the computer system you are using. Manufacturers might well subsidise PCP rates to encourage repeat business. Is it fair to say that you can only change the flat rate of interest on the quotes you provide (and the deposit)??
After_Shock said:
How can APR be the true cost (factoring in PCP/HP) if the total amount payable is different between the two but for examples sake the PCP deal gives a lower APR but actually costs more in total?
Do you understand how interest rates work?If I borrow £10,000 and pay this back in 1 years' time at an APR of 5% then the total amount payable is £10,500
If I borrow £10,000 and pay £5,000 after 1 day and £5,400 after 1 year then the total amount payable is 'only' £10,400 but the APR is 8.0%
Which do you think offers the best deal??
Edited by sidicks on Sunday 8th March 18:22
sidicks said:
Do you understand how interest rates work?
If I borrow £10,000 and pay this back in 1 years' time at an APR of 5% then the total amount payable is £10,500
If I borrow £10,000 and pay £5,000 after 1 day and £5,400 after 1 year then the total amount payable is 'only' £10,400 but the APR is 8.0%
Which do you think offers the best deal??
Are you talking about paying the first example back in 12 equal instalments or just paying it back as 1 payment after a year?If I borrow £10,000 and pay this back in 1 years' time at an APR of 5% then the total amount payable is £10,500
If I borrow £10,000 and pay £5,000 after 1 day and £5,400 after 1 year then the total amount payable is 'only' £10,400 but the APR is 8.0%
Which do you think offers the best deal??
Edited by sidicks on Sunday 8th March 18:22
Thanks you have just given a prime example of why APR's are completely misleading to people, they also go the other way with time and or re payment methods and show lower rates but charge more interest.
Either its rather late where I am but how can something that offers equal value as an APR amount but cost someone more in total be classed as equal value?! Your paying more in total, its not equal value its more hence its worse value taking the PCP.
Manufacturers will typically subsidise some PCP or some HP deals depending on what the finance company wants at that time, so the same sorts of deals are rarely available. Yes we used to be able to change the flat rates and deposits except for on subsidised deals which were a fixed rate.
Where I live now everything is done on a case by case basis, no rates are guaranteed or offered until something is submitted to the bank, however we have no way of changing those rates for profit reasons, the rate is done between the bank and the customer and that's it, they get what the bank offers.
Manufacturers will typically subsidise some PCP or some HP deals depending on what the finance company wants at that time, so the same sorts of deals are rarely available. Yes we used to be able to change the flat rates and deposits except for on subsidised deals which were a fixed rate.
Where I live now everything is done on a case by case basis, no rates are guaranteed or offered until something is submitted to the bank, however we have no way of changing those rates for profit reasons, the rate is done between the bank and the customer and that's it, they get what the bank offers.
After_Shock said:
Are you talking about paying the first example back in 12 equal instalments or just paying it back as 1 payment after a year?
One payment at the end of 12 months.After_Shock said:
Thanks you have just given a prime example of why APR's are completely misleading to people, they also go the other way with time and or re payment methods and show lower rates but charge more interest.
You continue to demonstrate why your expertise is car sales not finance! APRs are only misleading to those who don't properly understand them.After_Shock said:
Either its rather late where I am but how can something that offers equal value as an APR amount but cost someone more in total be classed as equal value?! Your paying more in total, its not equal value its more hence its worse value taking the PCP.
APR is the relevant value measure - the total cost is a function of the amount borrowed and the time over which it is borrowed. As a convoluted alternative analogy. Suppose you were shopping and buying a TV.
There is a TV which has an RRP of £1,999 on offer for £1,799
There is another TV which has an RRP of £1,499 on offer for £1,309
Which is the best offer?
After_Shock said:
Manufacturers will typically subsidise some PCP or some HP deals depending on what the finance company wants at that time, so the same sorts of deals are rarely available. Yes we used to be able to change the flat rates and deposits except for on subsidised deals which were a fixed rate.
Where I live now everything is done on a case by case basis, no rates are guaranteed or offered until something is submitted to the bank, however we have no way of changing those rates for profit reasons, the rate is done between the bank and the customer and that's it, they get what the bank offers.
And that's where you have my sympathy - you may be faced with a limited number of options with which to advise the client and are therefore prevented from providing comparable quotes. But in this case you will always be comparing apples and oranges, not apples and apples!!Where I live now everything is done on a case by case basis, no rates are guaranteed or offered until something is submitted to the bank, however we have no way of changing those rates for profit reasons, the rate is done between the bank and the customer and that's it, they get what the bank offers.
Edited by sidicks on Sunday 8th March 18:48
sidicks said:
You continue to demonstrate why your expertise is car sales not finance! APRs are only misleading to those who don't properly understand them.
Lol you continue to show people examples of payment methods and returns you simply cant get. Its all well and good showing examples which are not actually available just to prove a point.Ironic in your first example at 5% flat you get the exact same amount of total amount payable (i.e real world interest not a variable APR) in repaying over 12 equal monthly instalments (you know something that's actually available to a customer)
So between the two of us your demonstrating a great expertise in finance too!
After_Shock said:
Lol you continue to show people examples of payment methods and returns you simply cant get. Its all well and good showing examples which are not actually available just to prove a point.
Ironic in your first example at 5% flat you get the exact same amount of total amount payable (i.e real world interest not a variable APR) in repaying over 12 equal monthly instalments (you know something that's actually available to a customer)
The examples are exaggerated to try and help you understand the important concepts that you are currently struggling with!Ironic in your first example at 5% flat you get the exact same amount of total amount payable (i.e real world interest not a variable APR) in repaying over 12 equal monthly instalments (you know something that's actually available to a customer)
The "real world" operates on APRs i.e. compound interest, not flat rates (i.e. simple interest)!
To put it another way, using my initial example you think that paying £10,500 at the end of one year (for a £10,000 loan) or paying £875 each month over 12 months offer equal value!!
Edited by sidicks on Sunday 8th March 18:53
After_Shock said:
Ironic in your first example at 5% flat you get the exact same amount of total amount payable (i.e real world interest not a variable APR) in repaying over 12 equal monthly instalments (you know something that's actually available to a customer)
Whereas using APR instead would distinguish between the two cases because the APR for the 12 monthly payment scheme would be higher, reflecting the fact that it isn't such a good value loan. That is precisely why APR is preferable.sidicks said:
And that's where you have my sympathy - you may be faced with a limited number of options with which to advise the client and are therefore prevented from providing comparable quotes. But in this case you will always be comparing apples and oranges, not apples and apples!!
Which TV has the most HDMI inputs? Edited by sidicks on Sunday 8th March 18:48
It may be a limited number of options but its actually whats available to customers!
Dr Jekyll said:
Whereas using APR instead would distinguish between the two cases because the APR for the 12 monthly payment scheme would be higher, reflecting the fact that it isn't such a good value loan. That is precisely why APR is preferable.
In that example yes using such a short period yes. Not always the best way, banks have been using it cleverly for a number of years.
sidicks said:
Maybe that's why customers should shop around for finance and not be tied to the car dealership who can only offer limited options!
Customers do shop around, called personal loans, putting it on the mortgage, borrow it from the parents they have been doing this for many years.sidicks said:
The examples are exaggerated to try and help you understand the important concepts that you are currently struggling with!
The "real world" operates on APRs i.e. compound interest, not flat rates (i.e. simple interest)!
To put it another way, using my initial example you think that paying £10,500 at the end of one year (for a £10,000 loan) or paying £875 each month over 12 months offer equal value!!
Im not struggling with any concepts thank you.The "real world" operates on APRs i.e. compound interest, not flat rates (i.e. simple interest)!
To put it another way, using my initial example you think that paying £10,500 at the end of one year (for a £10,000 loan) or paying £875 each month over 12 months offer equal value!!
Edited by sidicks on Sunday 8th March 18:53
Im just amusing myself that you are clearly quite happily saying that the total amount payable is basically completely irrelevant if you pay more over a period of a loan because the APR is lower.
Pay back 10,500 after 12 months or pay back 875 per month for 12 months your paying the same total, that is whats important to anyone the total paid back.
After_Shock said:
Customers do shop around, called personal loans, putting it on the mortgage, borrow it from the parents they have been doing this for many years.
And that's why they should look at the APR on the deals they are offered, so that they can sensible compare the different deals!Edited by sidicks on Sunday 8th March 19:15
sidicks said:
And that's why they should look at the APR on the deals they are offered, so that thy can sensible compare the different deals!
And you think people don't actually do this? People do look at the APR, or add the totals up to see how much they are actually re-paying its rare or almost non existent to find someone who doesn't do this (maybes only the few that know they wont get accepted on finance actually don't bother)
After_Shock said:
Im not struggling with any concepts thank you.
See below for details!! (*)After_Shock said:
Im just amusing myself that you are clearly quite happily saying that the total amount payable is basically completely irrelevant if you pay more over a period of a loan because the APR is lower.
I've said no such thing:
I've said APR is the the determinant of best value. I also explicitly said that there might be good reasons for not choosing the lowest APR.
After_Shock said:
Pay back 10,500 after 12 months or pay back 875 per month for 12 months your paying the same total, that is whats important to anyone the total paid back.
(*) I rest my case.The fact that you don't understand why the two options offer materially different value demonstrates your continued lack of understanding.
Edited by sidicks on Sunday 8th March 19:14
sidicks said:
(*) I rest my case.
The fact that you don't understand why the two options offer materially different value demonstrates your continued lack of understanding.
You cant buy a car and pay for it in a year you plum, I know the difference between the value in the payments but its not a 'real' world example. The total you are paying back is the same which is what people look at when buying a car. You need to keep things relevant which you are not.The fact that you don't understand why the two options offer materially different value demonstrates your continued lack of understanding.
Edited by sidicks on Sunday 8th March 19:14
After_Shock said:
You cant buy a car and pay for it in a year you plum, I know the difference between the value in the payments but its not a 'real' world example.
Really? You can't borrow money over 1 year?This just gets better and better, as if extending the analogy to 2 years or 3 years suddenly makes the maths entirely different!
After_Shock said:
The total you are paying back is the same which is what people look at when buying a car. You need to keep things relevant which you are not.
Priceless!Edited by sidicks on Sunday 8th March 19:22
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