Getting out of a PCP deal?
Discussion
Sarnie said:
But he won't have paid 50% of the total payable after two years. As with any regulated loan, it's front loaded with interest meaning at the start you pay mainly interest rather than capital. Thus, 50% of the actual capital wouldn't have been repaid till much further into the finance agreement than month 24.....
Interest isn't "front loaded", so you are paying capital off from month one although obviously your loan balance is higher at the start so the interest is higher.It's not 50% of the capital, it's 50% of the agreement (including balloon and interest), although you are correct that it won't be month 24.
So say car is 30k, interest over the 4 years is say 4k, total agreement is therefore 34k, so the vt point is when you have paid 17k, say you put 2k as deposit in that means once have paid 15k more your at the vt point. so if you were paying 450 a month at month 33ish you would be able to vt.
Sarnie said:
That's what I said...........
"it's front loaded with interest meaning at the start you pay mainly interest rather than capital"No you don't, you will find with this type of deal from BMW you are paying more capital than interest from day 1. The interest reduces each month as your balance is lower.
Front loading of interest was common but is no longer allowed.
northandy said:
Sarnie said:
That's what I said...........
"it's front loaded with interest meaning at the start you pay mainly interest rather than capital"No you don't, you will find with this type of deal from BMW you are paying more capital than interest from day 1. The interest reduces each month as your balance is lower.
Front loading of interest was common but is no longer allowed.
If you're not saying that, then you're agreeing with me
For clarity, I'm not saying that all the interest chargeable is added to the loan at the outset (ala Welcome Finance etc). I'm saying that if the payment is £500 a month, at the very start, £400 may be interest & £100 capital. The next month, as the balance is lower, the interest figure is lower and the capital figure is higher, in the same way as a mortgage. This is why 50% of the balance hasn't been paid at month 24.....
Sarnie said:
So are you saying the balance between interest and capital is 50/50? Because it's not.
If you're not saying that, then you're agreeing with me
For clarity, I'm not saying that all the interest chargeable is added to the loan at the outset (ala Welcome Finance etc). I'm saying that if the payment is £500 a month, at the very start, £400 may be interest & £100 capital. The next month, as the balance is lower, the interest figure is lower and the capital figure is higher, in the same way as a mortgage. This is why 50% of the balance hasn't been paid at month 24.....
I think the use of the front loading term is the issue, so yes I think we agree on that bit. If you're not saying that, then you're agreeing with me
For clarity, I'm not saying that all the interest chargeable is added to the loan at the outset (ala Welcome Finance etc). I'm saying that if the payment is £500 a month, at the very start, £400 may be interest & £100 capital. The next month, as the balance is lower, the interest figure is lower and the capital figure is higher, in the same way as a mortgage. This is why 50% of the balance hasn't been paid at month 24.....
However your miles off with the 400 interest versus 100 capital which is the point I was making, on this type of deal the capital reduction will be more than the interest from the 1st payment. On this type of deal with BMW it'll be roughly £260 capital and £140 interest in month 1 on a £400 monthly.
Your still wrong on the reason for the 24 month not being the mid point, as it has nothing to do with interest vs capital. It's purely and simply 50% of the agreement, which includes the full term interest and balloon payment! that's the reason it's not month 24 on a 48 month deal.
northandy said:
I think the use of the front loading term is the issue, so yes I think we agree on that bit.
However your miles off with the 400 interest versus 100 capital which is the point I was making, on this type of deal the capital reduction will be more than the interest from the 1st payment. On this type of deal with BMW it'll be roughly £260 capital and £140 interest in month 1 on a £400 monthly.
Have a day off! My figure of £400 + £100 was purely illustrative to explain my point around the front loading issue. I assumed the fact that I used a payment of £500 a month, and not the £400 a month that the OP pays, was enough to make this clear, apparently not, night! However your miles off with the 400 interest versus 100 capital which is the point I was making, on this type of deal the capital reduction will be more than the interest from the 1st payment. On this type of deal with BMW it'll be roughly £260 capital and £140 interest in month 1 on a £400 monthly.
Sarnie said:
Have a day off! My figure of £400 + £100 was purely illustrative to explain my point around the front loading issue. I assumed the fact that I used a payment of £500 a month, and not the £400 a month that the OP pays, was enough to make this clear, apparently not, night!
Calm down fella, I know you don't want to be wrong but there are several areas where your miles off. Whether you can admit or not I don't care really. 
Martin_M said:
I have heard of people who have actually been offered improved deals around half way through their term.
The manufacturer make their money when you get a new car, regardless of when this is. All the interest is paid for use the front of the term, so they'd ideally like you to take a new car as soon after that as possible, yet they know it would cost people a ton of money so hardly anyone would do that. Half way would seem a good bet for them, so I'm not surprising they subsidise their finance company to incentivise people to change then. Clearly they don't want anyone to keep a car for very long at all, so they definitely don't want people paying it off at the end and keeping it, especially with that customer being a new car buyer and no longer a finance virgin, so in theory being a hot lead. Martin_M said:
I have no plans to but can you modify a PCPa car? I can't see there being a problem if you sold it privately or traded it in to another dealer but what if you wanted to hand it back and you had changed the exhaust system? etc.
Depends if they spot it.There will be a checklist of concerns in terms of checking condition, etc, on a PCP handback but a modded exhaust may well pass unnoticed.
Why not stick on whatever exhaust you have in mind, but keep the old one and swap them when you come to hand the car back?
Martin_M said:
I have no plans to but can you modify a PCPa car? I can't see there being a problem if you sold it privately or traded it in to another dealer but what if you wanted to hand it back and you had changed the exhaust system? etc.
If you'd performed a genuine enhancement then why would you choose to hand back? Surely it would be worth more than standard... Or are you planning on doing one of those far more common value-reducing mods?!Edited by Blown2CV on Monday 10th March 22:36
Buying outright doesn't interest me as I'll sell it before the end of the term.
Mods are a mindset - of course you could save the money for something else but on that basis, I could have bought the base model and saved even more. There are lots of modifications such as performance exhausts and brake upgrades which I like the look of - for me, it isn't about adding value to the car but about maximising my enjoyment of driving it for the time I have it.
Mods are a mindset - of course you could save the money for something else but on that basis, I could have bought the base model and saved even more. There are lots of modifications such as performance exhausts and brake upgrades which I like the look of - for me, it isn't about adding value to the car but about maximising my enjoyment of driving it for the time I have it.
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