Thinking of buying a car on PCP (a few questions)

[yellowbentines]

CampDavid said:

First off, are you confident that in 3 years time you'll still be in the same possition, going on your username you're 23. You'd finish at 25 or 26, during which time job offers abroad, a change of career, the desire to fk off and travel for a year, all those things. PCPs annoyingly get in the way.

Just sell the car privately & settle the finance then, you're not tied in to a PCP deal.

What do all the doom-mongers that think financing a car is madness because you don't know what financial position you'll be in 2/3 yrs down the line think of buying a house and spreading huge payments over 25yrs - or do you all pay cash

[SSBB]

Deva Link said:

SSBB said:

So if the final payment is more than the car's value, you can effectively negotiate to buy it at a lower price instead? These vehicles don't automatically go to auction or anything. This may sound idiotic but I haven't dealt with PCP before.

Not usually, no. Although when the recession first hit and the market was on its arse, apparently BMW was doing deals with people who's GFVs had been set 3 yrs before and were insanely high.

The vehicles do usually go to auction, often closed ones where only franchised dealers can bid so that tends to keep the prices up.

Ah right cheers, didn't know that.

[Blown2CV]

Fox- said:

Blown2CV said:

you will get the GFV they give you. A larger deposit will only reduce the payments, it won't change the end situation, so it will be 'lost' as such.

It wont be lost, because by reducing the total payments by the additional amount of deposit, you save both the initial amount of deposit on a monthly basis and the interest on this amount.

yes obviously, but generally people don't do the maths like that. Clearly it is not properly lost, however if you are monthly payment orientated, then you will probably just enjoy the extra hundred quid a month to spend on other things and then be disappointed when you get to the end and realise you can't afford to replace the car with something similar because you don't have a deposit. Finance isn't all about maths, it's also about psychology otherwise everyone would just get straight HP.

[Fox-]

Blown2CV said:

if you are monthly payment orientated

Then sort it out and look at TCO. Monthly payment orientation is bad and it's how crappy companies like Brighthouse manage to open up more and more stores selling second hand st for just £9 a month. Every month. Until its cost you 2x more than a new one.

Just because most people are like that doesn't mean we can't try and advise the few who come seeking advice that it's not the most important factor.

[Blown2CV]

Fox- said:

Blown2CV said:

if you are monthly payment orientated

Then sort it out and look at TCO. Monthly payment orientation is bad and it's how crappy companies like Brighthouse manage to open up more and more stores selling second hand st for just £9 a month. Every month. Until its cost you 2x more than a new one.

Just because most people are like that doesn't mean we can't try and advise the few who come seeking advice that it's not the most important factor.

but people don't!! lots of people don't. I'm not saying it's right. I'm warning those who might be, that if they are so focused to lower the payment that they whack down the entire sale value of their current car they will only realise they have come unstuck later. PCP makes more sense to me than straight finance, as why would you finance a large chunk of the balance that you never intend to pay off until you sell the car? If the (timeless) argument is finance versus paying cash - i CBA getting into it.

[Dog Star]

Muzzer79 said:

There's a whole army of people on here who think that any form of finance is the devil's work, that I've just advised you to 'rent' a car, you're wasting your money and you're part of this country's problem of a nice car on the drive but no money to put food in the fridge and that you could better spend your money on a 10 year old E39 V8 5 series with an MX5 for the weekends.

Gets a bit wearing, doesn't it.

Another thing to factor in is if you own a car outright you have to endure the utter misery of selling it, which is IME an utter ballache, I keep my cars immaculate, premium tyres, full dealer history etc etc - I am a buyer's dream seller. I have never ever ever got near the guide price when selling a car.

This bit alone is worth leasing a car for.

[Deva Link]

Fox- said:

Blown2CV said:

you will get the GFV they give you. A larger deposit will only reduce the payments, it won't change the end situation, so it will be 'lost' as such.

It wont be lost, because by reducing the total payments by the additional amount of deposit, you save both the initial amount of deposit on a monthly basis and the interest on this amount.

Right, but some people don't really appreciate that at the end of the deal, if the car is worth GFV or less, then they hand the car back and they have nothing. They might have started off with a car worth a few £K for the deposit and now they have nothing, so they see it as "lost".

A girl in our office thought she got the deposit back at the end, as though it was the deposit on a hire car etc!

[Fox-]

Deva Link said:

Right, but some people don't really appreciate that at the end of the deal, if the car is worth GFV or less, then they hand the car back and they have nothing. They might have started off with a car worth a few £K for the deposit and now they have nothing, so they see it as "lost".

They've not got nothing, they've exchanged the money for 3 years use of a car.

If you buy it for £20k new and sell it for £10k you've 'lost' the original £10k in that scenario, too.

[Deva Link]

Fox- said:

They've not got nothing, they've exchanged the money for 3 years use of a car.

Is there something in what I've written that makes you think I don't know that?

[Fox-]

Blown2CV said:

PCP makes more sense to me than straight finance, as why would you finance a large chunk of the balance that you never intend to pay off until you sell the car?

Errr... you do that with a PCP surely, the interest is on the balance *and* the GFV?

All the PCP does is reduce the monthly payments and add a GFV at the end. Before you pay that GFV you've still financed the whole value of the car and you are still paying interest on that!

[Deva Link]

Fox- said:

Blown2CV said:

PCP makes more sense to me than straight finance, as why would you finance a large chunk of the balance that you never intend to pay off until you sell the car?

Errr... you do that with a PCP surely, the interest is on the balance *and* the GFV?

There you go you see. The car industry relies upon the fact that an awful lot of people do not fully understand what they're getting into with a PCP.

[CampDavid]

yellowbentines said:

CampDavid said:

First off, are you confident that in 3 years time you'll still be in the same possition, going on your username you're 23. You'd finish at 25 or 26, during which time job offers abroad, a change of career, the desire to fk off and travel for a year, all those things. PCPs annoyingly get in the way.

Just sell the car privately & settle the finance then, you're not tied in to a PCP deal.

What do all the doom-mongers that think financing a car is madness because you don't know what financial position you'll be in 2/3 yrs down the line think of buying a house and spreading huge payments over 25yrs - or do you all pay cash

My point was that a car can tie you down and, at 23, I'd not want to be tied down over 4 wheels. Yes, you could sell it or hand back, either of which could be very expensive.

I'm not saying that finance is madness however your future plans and opportunities are always a consideration

[Andy665]

You are no more tied down to a car on PCP than on HP. Legally speaking PCP is HP with a different payment profile and its just as straightforward to settle a PCP deal as it is a HP deal

[jonah35]

Mercedes slk 250 cdi amg sport autos are 299 per month inc vat on lease. Theyre a forty grand car, 0-60 in 6.7, paddleshift 7 speed auto, leather, 56 mpg. 369 lb ft torque.

I think thats a steal, maybe a black one with red leather!

[rich12]

RIGHT.....

Been to a few dealers and the one we are both happy with is suprisingly Audi.
We were looking at a Audi A3 2.0TDI Sportback Black edition.

We agreed this;

Car OTR price £24,450
I will put in £2,643.13 as a deposit
They will put in £3,000 to the deposit
Having a £5,643.13 deposit.

3.65% APR fixed for the term (3 years)
MGFV of £13,539.40

£250 per month.

I work it out as the balance being £18,806.87 paying off £9k over those 3 years leaving a figure of £9856.87.

So there is about £1k difference between the GFV and the end figure (taking away the £3k contribution from Audi)

Abit of advice would be great to how this deal sounds.

Thanks.

[Deva Link]

rich12 said:

I work it out as the balance being £18,806.87 paying off £9k over those 3 years leaving a figure of £9856.87.

You haven't added the interest charge. I would be gobsmacked if that 3.65% is the APR. I bet it's the flat rate, so APR will be roughly double.

rich12 said:

So there is about £1k difference between the GFV and the end figure (taking away the £3k contribution from Audi)

What do you mean by "end figure"? The GFV is the end figure.

Edited by Deva Link on Saturday 7th July 16:10

Edited by Deva Link on Saturday 7th July 16:10

[rich12]

Deva Link said:

What do you mean by "end figure"? The GFV is the end figure.

Sorry the 'end' figure i ment being the purchase price, minus deposit and minus the £9k i have paid through installments.

The interest figure is £542.53.

[tercelgold]

Get GAP insurance, online it's very cheap; in dealers it will cost 10 times that. About £50 for a Ford Focus or similar cars.

Saves you the problem of someone crashing into you and ending up with a totalled car but still owing the repayments.

[Fox-]

They are trying to do a good deal to get rid of the cars fast. The A3 Sportback is ancient - that generation of A3 has been out for 9 years now and is prehistoric in product lifecycle terms. It's being replaed this year by a new A3.

They want rid before anyone notices. If you want to buy a new A3 please, please wait until the new model is available.

If you do want an A3 Sportback, go and buy a 2005 one for pennies because it's basically the same car.

[Deva Link]

rich12 said:

Deva Link said:

What do you mean by "end figure"? The GFV is the end figure.

Sorry the 'end' figure i ment being the purchase price, minus deposit and minus the £9k i have paid through installments.

OK, you can't do it like that. The end figure, the one you have to pay if you want to keep the car, is the GFV.

rich12 said:

The interest figure is £542.53.

Have you got a proper printed out quote? I didn't get much sleep last night so maybe my brain's not working properly but considering you're financing £18K that seems far too low.

The difference you referred to above (your "end price" and the GFV) is the cost of the interest.