PCP deal calculation help
Discussion
crazy about cars said:
That's cheap! Is that with Audi?
I think I'll reply and say that after due consideration I will decline as the figures look to high to me...
As well as drive the deal have a look at coast2coastcars.co.uk they look to be offering 3k off the car your on about, they will give you finance quotes through audi too. I've used them twice very happy with the service.I think I'll reply and say that after due consideration I will decline as the figures look to high to me...
Mandat said:
What's the issue with putting in a high deposit on a PCP?
I curently have a 3 year PCP with Audi and when working out the different cost options at the outset, the overall cost was lower with a larger deposit, since the amount being borrowed is less, therefore accruing less interest over the term.
Ultimately, the total cost will be a combination of deposit + 36 payments. Therefore in simple terms (and ignoring the cost of interest in this example), the overall cost would surely be the same with either a low deposit + high monthly payment or a high deposit + low monthly payments. At the end of the day, the same amount get paid off.
In my situation, I went for a large deposit and smaller monthly payments becuase I preferred a lower monthly liability.
I think the GFV also plays a part in the calculation - depending if you will be keeping the car.I curently have a 3 year PCP with Audi and when working out the different cost options at the outset, the overall cost was lower with a larger deposit, since the amount being borrowed is less, therefore accruing less interest over the term.
Ultimately, the total cost will be a combination of deposit + 36 payments. Therefore in simple terms (and ignoring the cost of interest in this example), the overall cost would surely be the same with either a low deposit + high monthly payment or a high deposit + low monthly payments. At the end of the day, the same amount get paid off.
In my situation, I went for a large deposit and smaller monthly payments becuase I preferred a lower monthly liability.
For me the final cost of purchase of around £41k just doesn't make it worthwhile in the end. It just doesn't seem the best way for me to get a new motor.
mrdemon said:
The over all price will be the same what ever figures you do all will be about £560 a month give or take.
They just want you to pay so are left with a gfv.
I think it's a bad way to buy a car and to me £560 to rent a car ESP just a hot hatch does not seem worth it.
What it does allow is you to get into a brand new car for £560. But in 3 years time you will be worse off and have to start all over again, which is ok if you are happy always paying £560 for the rest of your life on average cars.
I just ran my car for. £120 a month for 2 years and it's a £50k car !!
Dealer love PCP and buyers love having new cars, you are stuck stuck in that loop for ever and it's a s
t loop to be in.
You have £13k, loan another £15k you will have £28k to buy a nice car at £260 a month !!! Paying 3.9%
Then just pick a nice 2 year old car which has lost a good % of money and ONLY keep it 12 months so it's in warranty while you have it, buy wise and the car might only drop 2 or 3k over that time.
Hopefully you will be paying the loan off faster than the car is dropping in value, so in 18months you should be able to buy a £32k car next not a £28k car.
Work your way up the ladder and you will soon be in £50k cars you pay cash for.
Oh god, I hope daemon doesn't read this! They just want you to pay so are left with a gfv.
I think it's a bad way to buy a car and to me £560 to rent a car ESP just a hot hatch does not seem worth it.
What it does allow is you to get into a brand new car for £560. But in 3 years time you will be worse off and have to start all over again, which is ok if you are happy always paying £560 for the rest of your life on average cars.
I just ran my car for. £120 a month for 2 years and it's a £50k car !!
Dealer love PCP and buyers love having new cars, you are stuck stuck in that loop for ever and it's a s
t loop to be in. You have £13k, loan another £15k you will have £28k to buy a nice car at £260 a month !!! Paying 3.9%
Then just pick a nice 2 year old car which has lost a good % of money and ONLY keep it 12 months so it's in warranty while you have it, buy wise and the car might only drop 2 or 3k over that time.
Hopefully you will be paying the loan off faster than the car is dropping in value, so in 18months you should be able to buy a £32k car next not a £28k car.
Work your way up the ladder and you will soon be in £50k cars you pay cash for.
Grandfondo said:
mrdemon said:
The over all price will be the same what ever figures you do all will be about £560 a month give or take.
They just want you to pay so are left with a gfv.
I think it's a bad way to buy a car and to me £560 to rent a car ESP just a hot hatch does not seem worth it.
What it does allow is you to get into a brand new car for £560. But in 3 years time you will be worse off and have to start all over again, which is ok if you are happy always paying £560 for the rest of your life on average cars.
I just ran my car for. £120 a month for 2 years and it's a £50k car !!
Dealer love PCP and buyers love having new cars, you are stuck stuck in that loop for ever and it's a st loop to be in.
You have £13k, loan another £15k you will have £28k to buy a nice car at £260 a month !!! Paying 3.9%
Then just pick a nice 2 year old car which has lost a good % of money and ONLY keep it 12 months so it's in warranty while you have it, buy wise and the car might only drop 2 or 3k over that time.
Hopefully you will be paying the loan off faster than the car is dropping in value, so in 18months you should be able to buy a £32k car next not a £28k car.
Work your way up the ladder and you will soon be in £50k cars you pay cash for.
Oh god, I hope daemon doesn't read this! They just want you to pay so are left with a gfv.
I think it's a bad way to buy a car and to me £560 to rent a car ESP just a hot hatch does not seem worth it.
What it does allow is you to get into a brand new car for £560. But in 3 years time you will be worse off and have to start all over again, which is ok if you are happy always paying £560 for the rest of your life on average cars.
I just ran my car for. £120 a month for 2 years and it's a £50k car !!
Dealer love PCP and buyers love having new cars, you are stuck stuck in that loop for ever and it's a s
t loop to be in. You have £13k, loan another £15k you will have £28k to buy a nice car at £260 a month !!! Paying 3.9%
Then just pick a nice 2 year old car which has lost a good % of money and ONLY keep it 12 months so it's in warranty while you have it, buy wise and the car might only drop 2 or 3k over that time.
Hopefully you will be paying the loan off faster than the car is dropping in value, so in 18months you should be able to buy a £32k car next not a £28k car.
Work your way up the ladder and you will soon be in £50k cars you pay cash for.
daemon said:
Grandfondo said:
mrdemon said:
The over all price will be the same what ever figures you do all will be about £560 a month give or take.
They just want you to pay so are left with a gfv.
I think it's a bad way to buy a car and to me £560 to rent a car ESP just a hot hatch does not seem worth it.
What it does allow is you to get into a brand new car for £560. But in 3 years time you will be worse off and have to start all over again, which is ok if you are happy always paying £560 for the rest of your life on average cars.
I just ran my car for. £120 a month for 2 years and it's a £50k car !!
Dealer love PCP and buyers love having new cars, you are stuck stuck in that loop for ever and it's a st loop to be in.
You have £13k, loan another £15k you will have £28k to buy a nice car at £260 a month !!! Paying 3.9%
Then just pick a nice 2 year old car which has lost a good % of money and ONLY keep it 12 months so it's in warranty while you have it, buy wise and the car might only drop 2 or 3k over that time.
Hopefully you will be paying the loan off faster than the car is dropping in value, so in 18months you should be able to buy a £32k car next not a £28k car.
Work your way up the ladder and you will soon be in £50k cars you pay cash for.
Oh god, I hope daemon doesn't read this! They just want you to pay so are left with a gfv.
I think it's a bad way to buy a car and to me £560 to rent a car ESP just a hot hatch does not seem worth it.
What it does allow is you to get into a brand new car for £560. But in 3 years time you will be worse off and have to start all over again, which is ok if you are happy always paying £560 for the rest of your life on average cars.
I just ran my car for. £120 a month for 2 years and it's a £50k car !!
Dealer love PCP and buyers love having new cars, you are stuck stuck in that loop for ever and it's a s
t loop to be in. You have £13k, loan another £15k you will have £28k to buy a nice car at £260 a month !!! Paying 3.9%
Then just pick a nice 2 year old car which has lost a good % of money and ONLY keep it 12 months so it's in warranty while you have it, buy wise and the car might only drop 2 or 3k over that time.
Hopefully you will be paying the loan off faster than the car is dropping in value, so in 18months you should be able to buy a £32k car next not a £28k car.
Work your way up the ladder and you will soon be in £50k cars you pay cash for.
My advice for what it's worth to " crazy about cars" is to run a mile, don't look back, this sounds like a very expensive way to scratch an itch.
I think we've all been there in getting caught up with a moment and having a particular deadline, but self imposing a Christmas purchase and rushing into it 9 times out of 10 have got to end in tears.
To me it sounds like lunacy to use a current asset of £13,000 as an entire deposit and then make relatively lumpy payments to find yourself either 4 years down the line having to part with another £14,000 just to keep the car that is then 4 years old or worse than that simply handing it back and ending up with nothing to show for it at all.
Surely as advised elsewhere if you do want to go for the shiny new car approach it would make more sense for a Lease and just be a bit flexible about the choice of car rather than being precise?
The problem is with a new car at this time of year, it won't look new for very long even though it might feel it inside for a bit longer.
I do speak from experience here, about 11 years ago I got all excited about a 911, I have cash in the bank but not enough to buy the car outright so through well over £20,000 on deposit for a used 911 cab, I then made monthly payments ( can't remember, and they were, but not massive), the final balloon was £28,000. I didn't keep the car the full term, after only 15 months I started to realise that there was no way I was going to pay the balloon and didn't fancy just handing the car back and getting nothing out of the deal, so sold it and pulled as much cash as I could which was a pretty big loss. I really couldn't afford to lose such a huge amount and it was an incredibly painful experience, I can talk anyone out of doing the same thing I will try - hence this post.
Luckily for me I have managed to bounce back, since then I have tried to buy the right car, enjoy it for 12 months or less and try and sell for about what I paid, sometimes making a small loss, sometimes making a slight gain but never losing massive fortunes. I've then been able to work my way up adding a bit more money to each purchase - definitely a very rewarding ladder to climb and actually quite enjoyable in terms of searching for the right car.
With all of this said I have 2 years ago jumped into a Lease deal for a daily driver giving me the chance to have a more cherished car sat in the garage. Although I would love to run round in a V8 all the time it has been practical in terms of work and of course fuel costs. The lease deal I went for was an SLK on a two-year deal, £200 per month plus VAT based on a six-month deposit and 10,000 miles a year. I handed it back 2 months ago with nothing extra to pay and ordered the next one which is due to arrive in the first week in January. A really painless and relatively inexpensive way of running a pretty nice car.
I think we've all been there in getting caught up with a moment and having a particular deadline, but self imposing a Christmas purchase and rushing into it 9 times out of 10 have got to end in tears.
To me it sounds like lunacy to use a current asset of £13,000 as an entire deposit and then make relatively lumpy payments to find yourself either 4 years down the line having to part with another £14,000 just to keep the car that is then 4 years old or worse than that simply handing it back and ending up with nothing to show for it at all.
Surely as advised elsewhere if you do want to go for the shiny new car approach it would make more sense for a Lease and just be a bit flexible about the choice of car rather than being precise?
The problem is with a new car at this time of year, it won't look new for very long even though it might feel it inside for a bit longer.
I do speak from experience here, about 11 years ago I got all excited about a 911, I have cash in the bank but not enough to buy the car outright so through well over £20,000 on deposit for a used 911 cab, I then made monthly payments ( can't remember, and they were, but not massive), the final balloon was £28,000. I didn't keep the car the full term, after only 15 months I started to realise that there was no way I was going to pay the balloon and didn't fancy just handing the car back and getting nothing out of the deal, so sold it and pulled as much cash as I could which was a pretty big loss. I really couldn't afford to lose such a huge amount and it was an incredibly painful experience, I can talk anyone out of doing the same thing I will try - hence this post.
Luckily for me I have managed to bounce back, since then I have tried to buy the right car, enjoy it for 12 months or less and try and sell for about what I paid, sometimes making a small loss, sometimes making a slight gain but never losing massive fortunes. I've then been able to work my way up adding a bit more money to each purchase - definitely a very rewarding ladder to climb and actually quite enjoyable in terms of searching for the right car.
With all of this said I have 2 years ago jumped into a Lease deal for a daily driver giving me the chance to have a more cherished car sat in the garage. Although I would love to run round in a V8 all the time it has been practical in terms of work and of course fuel costs. The lease deal I went for was an SLK on a two-year deal, £200 per month plus VAT based on a six-month deposit and 10,000 miles a year. I handed it back 2 months ago with nothing extra to pay and ordered the next one which is due to arrive in the first week in January. A really painless and relatively inexpensive way of running a pretty nice car.
Grandfondo said:
Jet ski's story makes me think of a statement I once used and was given a lot of abuse for but in reality was factually correct!
I really was young and naive I'm afraid, my father who has been in the motor trade all his life and used to run a BMW dealer was desperately trying to talk me out of going for the deal at the time, but of course I knew best.Grandfondo said:
Jet ski's story makes me think of a statement I once used and was given a lot of abuse for but in reality was factually correct!
I really was young and naive I'm afraid, my father who has been in the motor trade all his life and used to run a BMW dealer was desperately trying to talk me out of going for the deal at the time, but of course I knew best.JetskiJezz said:
Grandfondo said:
Jet ski's story makes me think of a statement I once used and was given a lot of abuse for but in reality was factually correct!
I really was young and naive I'm afraid, my father who has been in the motor trade all his life and used to run a BMW dealer was desperately trying to talk me out of going for the deal at the time, but of course I knew best.JetskiJezz said:
Grandfondo said:
Jet ski's story makes me think of a statement I once used and was given a lot of abuse for but in reality was factually correct!
I really was young and naive I'm afraid, my father who has been in the motor trade all his life and used to run a BMW dealer was desperately trying to talk me out of going for the deal at the time, but of course I knew best.Grandfondo said:
Your father had the benefit of knowing what PCP is designed to do and it is NOT for the customers benefit.
Yep, you're absolutely right, and I hated to admit it at the time but of course so was he. We have such a huge blazing row about it the day went to go and buy the car.Sometimes you only learn by your own mistakes, it's a conversation I had with my father on a handful of times since and without a doubt I seriously did learn.
daemon said:
Grandfondo said:
Your father had the benefit of knowing what PCP is designed to do and it is NOT for the customers benefit.
Is that something you learned from when you used it in the past?What about the M235i deal you were looking at last month, wasnt it a PCP offer?
Change of mind?
I own my vehicles!
How about you?
mrdemon's premise is in two parts: a) don't buy a new car and b) all PCPs are bad.
Ignoring the first point, as it is true that however you buy a new car - there is no such thing as a depreciation fairy that's going to take that pain away, I'll deal with the latter:
£50,000@5% PA = £2,500 / 12 = ~£208 PM
£120 + £208 = £328 (a ~273% increase in the quoted cost figure)
If I was in the market for a brand new (e.g. just released) S1 and Audi finance are happy to loan me the money @~2.6% APR (as per the OP, not the subsequent quotes on the S3) - there is no way I'm going to pull £36,000 out of my S&S ISA@~5%, the tax advantaged compounding return of which I can never get back*, I'd rather take the PCP. I also doubt you'll find anyone else willing to lend you that money at such a low rate - in this case due to what I assume is Audi support (i.e. low % APR) on a particular model.
Whilst the above may be true in the example given - I suspect this is still put forward (at point of sale) in blanket-support of PCP even for those who this benefit is highly unlikely to apply (e.g. no ISA) and/or have no realistic intention or chance of investing money that obtains a tax free return greater than the rate offered by the finance.
As previously stated - consider each deal on it merits and the funding method that is most appropriate for you.
*assuming I continue to max out contributions each year - there isn't any "spare" allocation remaining for me to get the £36,000 back into the ISA
Ignoring the first point, as it is true that however you buy a new car - there is no such thing as a depreciation fairy that's going to take that pain away, I'll deal with the latter:
mrdemon said:
I just ran my car for £120 a month
excluding the opportunity costmrdemon said:
for 2 years and it's a £50k car !!
If you had £50,000 in an (as was) S&S ISAs, of which you've obtained over a prolonged period of time by maxing out your ISA allowance/contributions every year, let's assume you're making ~5% Tax Free. Now by no means is this a risk free or guaranteed 5% - but if someone is happy to spend £50,000 on a car I think it's fair to say they're not a risk-free kind of guy (or gal).£50,000@5% PA = £2,500 / 12 = ~£208 PM
£120 + £208 = £328 (a ~273% increase in the quoted cost figure)
If I was in the market for a brand new (e.g. just released) S1 and Audi finance are happy to loan me the money @~2.6% APR (as per the OP, not the subsequent quotes on the S3) - there is no way I'm going to pull £36,000 out of my S&S ISA@~5%, the tax advantaged compounding return of which I can never get back*, I'd rather take the PCP. I also doubt you'll find anyone else willing to lend you that money at such a low rate - in this case due to what I assume is Audi support (i.e. low % APR) on a particular model.
Whilst the above may be true in the example given - I suspect this is still put forward (at point of sale) in blanket-support of PCP even for those who this benefit is highly unlikely to apply (e.g. no ISA) and/or have no realistic intention or chance of investing money that obtains a tax free return greater than the rate offered by the finance.
JetskiJezz said:
buy the right car
Buying/selling/haggling/etc may not be something that the OP, or indeed most people, excel at. The OP was already considering PX'ing the car - of which in itself may not give him the best return (vs. private).JetskiJezz said:
balloon
Most (all?) PCP's balloon is the Guaranteed Future Value - having been in the position of trying to offload lumpy metal, of which I bought for cash (do I get a medal?), during the near-destruction of the financial world as we know it - a hard limit (i.e. GFV) on the potential loss on a vehicle has value to me (with my post-financial-crisis loss aversion bias). A non-GFV'd/non-key-returning balloon would not be a risk I'm willing to bear - although some people are fine with this. In the same way that some people are willing to assume/try to predict potential future (none-guaranteed/>GFV) equity that may still be in a car at the end of a PCP.As previously stated - consider each deal on it merits and the funding method that is most appropriate for you.
*assuming I continue to max out contributions each year - there isn't any "spare" allocation remaining for me to get the £36,000 back into the ISA
Grandfondo said:
PCP (perpetual car prison) gets SOME people into cars they can't afford to OWN!
I own my vehicles!
How about you?
You didnt answer my questions - I own my vehicles!
How about you?
Is your conclusion about PCP deals based on your own experience of PCP deals you've already told us you had in the past?
Did you decide not to go for the 235i BMW PCP deal you were asking for more info on last month when someone was talking about the amazing PCP deals that could be got?
Edited by daemon on Monday 15th December 17:47
JetskiJezz said:
I do speak from experience here, about 11 years ago I got all excited about a 911, I have cash in the bank but not enough to buy the car outright so through well over £20,000 on deposit for a used 911 cab, I then made monthly payments ( can't remember, and they were, but not massive), the final balloon was £28,000. I didn't keep the car the full term, after only 15 months I started to realise that there was no way I was going to pay the balloon and didn't fancy just handing the car back and getting nothing out of the deal, so sold it and pulled as much cash as I could which was a pretty big loss. I really couldn't afford to lose such a huge amount and it was an incredibly painful experience, I can talk anyone out of doing the same thing I will try - hence this post.
Sounds awful. In hindsight i'm sure you'd agree that big deposits and big residuals arent the way to go on a PCP deal if you're real aim is to keep the car at the end of term.JetskiJezz said:
With all of this said I have 2 years ago jumped into a Lease deal for a daily driver giving me the chance to have a more cherished car sat in the garage. Although I would love to run round in a V8 all the time it has been practical in terms of work and of course fuel costs. The lease deal I went for was an SLK on a two-year deal, £200 per month plus VAT based on a six-month deposit and 10,000 miles a year. I handed it back 2 months ago with nothing extra to pay and ordered the next one which is due to arrive in the first week in January. A really painless and relatively inexpensive way of running a pretty nice car.
Sounds good. Tends to be the way my wife treats a PCP deal - smallish deposit, reasonable monthly payments, and then she has a bit of equity for next time for the next deal. Though i will have her have a look at the likes of that Merc lease when shes due a change.jw673 said:
mrdemon's premise is in two parts: a) don't buy a new car and b) all PCPs are bad.
Ignoring the first point, as it is true that however you buy a new car - there is no such thing as a depreciation fairy that's going to take that pain away, I'll deal with the latter:
£50,000@5% PA = £2,500 / 12 = ~£208 PM
£120 + £208 = £328 (a ~273% increase in the quoted cost figure)
If I was in the market for a brand new (e.g. just released) S1 and Audi finance are happy to loan me the money @~2.6% APR (as per the OP, not the subsequent quotes on the S3) - there is no way I'm going to pull £36,000 out of my S&S ISA@~5%, the tax advantaged compounding return of which I can never get back*, I'd rather take the PCP. I also doubt you'll find anyone else willing to lend you that money at such a low rate - in this case due to what I assume is Audi support (i.e. low % APR) on a particular model.
Whilst the above may be true in the example given - I suspect this is still put forward (at point of sale) in blanket-support of PCP even for those who this benefit is highly unlikely to apply (e.g. no ISA) and/or have no realistic intention or chance of investing money that obtains a tax free return greater than the rate offered by the finance.
As previously stated - consider each deal on it merits and the funding method that is most appropriate for you.
*assuming I continue to max out contributions each year - there isn't any "spare" allocation remaining for me to get the £36,000 back into the ISA
Lots of ifs and buts and and if the there is a financial armagedon "I can hand my car back (GFV)" but if that happens you 5% investment will not only evaporate but your capital will disappear like snow of a dyke so you can't have it both ways! Ignoring the first point, as it is true that however you buy a new car - there is no such thing as a depreciation fairy that's going to take that pain away, I'll deal with the latter:
mrdemon said:
I just ran my car for £120 a month
excluding the opportunity costmrdemon said:
for 2 years and it's a £50k car !!
If you had £50,000 in an (as was) S&S ISAs, of which you've obtained over a prolonged period of time by maxing out your ISA allowance/contributions every year, let's assume you're making ~5% Tax Free. Now by no means is this a risk free or guaranteed 5% - but if someone is happy to spend £50,000 on a car I think it's fair to say they're not a risk-free kind of guy (or gal).£50,000@5% PA = £2,500 / 12 = ~£208 PM
£120 + £208 = £328 (a ~273% increase in the quoted cost figure)
If I was in the market for a brand new (e.g. just released) S1 and Audi finance are happy to loan me the money @~2.6% APR (as per the OP, not the subsequent quotes on the S3) - there is no way I'm going to pull £36,000 out of my S&S ISA@~5%, the tax advantaged compounding return of which I can never get back*, I'd rather take the PCP. I also doubt you'll find anyone else willing to lend you that money at such a low rate - in this case due to what I assume is Audi support (i.e. low % APR) on a particular model.
Whilst the above may be true in the example given - I suspect this is still put forward (at point of sale) in blanket-support of PCP even for those who this benefit is highly unlikely to apply (e.g. no ISA) and/or have no realistic intention or chance of investing money that obtains a tax free return greater than the rate offered by the finance.
JetskiJezz said:
buy the right car
Buying/selling/haggling/etc may not be something that the OP, or indeed most people, excel at. The OP was already considering PX'ing the car - of which in itself may not give him the best return (vs. private).JetskiJezz said:
balloon
Most (all?) PCP's balloon is the Guaranteed Future Value - having been in the position of trying to offload lumpy metal, of which I bought for cash (do I get a medal?), during the near-destruction of the financial world as we know it - a hard limit (i.e. GFV) on the potential loss on a vehicle has value to me (with my post-financial-crisis loss aversion bias). A non-GFV'd/non-key-returning balloon would not be a risk I'm willing to bear - although some people are fine with this. In the same way that some people are willing to assume/try to predict potential future (none-guaranteed/>GFV) equity that may still be in a car at the end of a PCPAs previously stated - consider each deal on it merits and the funding method that is most appropriate for you.
*assuming I continue to max out contributions each year - there isn't any "spare" allocation remaining for me to get the £36,000 back into the ISA
I have always said that finance works best for those that don't need it but MOST people that use PCP don't have the purchase price of the car earning them 5% plus tax free!
Jetski has given his pesonal experience with PCP but of course he is wrong and the fact his father tried to warn him off PCP who is in the trade means nothing!
Grandfondo said:
Jetski has given his pesonal experience with PCP but of course he is wrong and the fact his father tried to warn him off PCP who is in the trade means nothing!
No, hes not wrong. It was a bad idea to put in a large deposit and be faced with a large residual payment on a car that it sounds like he really wanted to own but couldnt gather up the residual.It was a bad deal for him.
Doesnt make all PCP deals bad deals - just like the M235i PCP deal you were really interested in last month for example was a really good deal
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