Car PCP and deposits on them
Discussion
Dr Jekyll said:
I suspect what they mean is 'ordinary people are too stupid to understand finance so it's easy to convince them that low deposits save money'
Your typical PCP buyer, getting a heavily subsidised 3 Series or C Class that they couldn't possibly afford to actually buy, doesn't need convincing about a low deposit. They live life with the bank balance hovering around zero, and paying the minimum off their credit cards every month.They couldn't give a toss about APR except they know it always looks higher on a PCP.
Sheepshanks said:
Your typical PCP buyer, getting a heavily subsidised 3 Series or C Class that they couldn't possibly afford to actually buy, doesn't need convincing about a low deposit. They live life with the bank balance hovering around zero, and paying the minimum off their credit cards every month.
They couldn't give a toss about APR except they know it always looks higher on a PCP.
1) it doesn't They couldn't give a toss about APR except they know it always looks higher on a PCP.
2) the discussion is about what they should care about, not what they actually care about.
HTH
Sheepshanks said:
For equal parameters, it does. If the flat rate changes for different types of finance then the only realistic way of comparing is to look at the total payable.
If you were focussed on 'total amount payable' you'd favour a high deposit...And if you were focussed on 'total amount payable' you'd favour HP over PCP.
So no idea what your point is?!
Edited by sidicks on Sunday 8th March 21:36
sidicks said:
And, once again, the discussion is about what is best value and what people should do, NOT what people actually end up doing having been advised 'helped' by the finance salesman...
Sorry I edited my post, but to make the point again, the OP thinks he shot himself in the foot by putting £1K down rather than £0.Sheepshanks said:
Sorry I edited my post, but to make the point again, the OP thinks he shot himself in the foot by putting £1K down rather than £0.
The OP's post has been lost in the rush by car salesman to offer poor advice...!! Back to the OP - paying a larger deposit should have led him to paying a lower monthly amount (and, most importantly, less interest overall), provided that other parts of the contract weren't changed (I.e. APR).
No one that understands finance would dispute that (it's also not in dispute that purchasers of PCP contracts do not necessarily take the most economically optimal strategy).
Edited by sidicks on Sunday 8th March 22:01
sidicks said:
If you were focussed on 'total amount payable' you'd favour a high deposit...
And if you were focussed on 'total amount payable' you'd favour HP over PCP.
So no idea what your point is?!
Thank you finally you have actually said what ive been attempting to say all along but you have been changing the argument to ridiculous examples to prove an alternative point many times.And if you were focussed on 'total amount payable' you'd favour HP over PCP.
So no idea what your point is?!
Edited by sidicks on Sunday 8th March 21:36
Large deposits are favoured by HP as you pay back less interest than putting a large deposit into a PCP deal which I have repeated several times despite you trying to relate this back to APR and TAP being not so relevant.
Thank you finally.
Dr Jekyll said:
But you're paying it back later. I could give an example but then you would say the example is irrelevant because it doesn't match an available car finance deal.
Put it this way. Borrow money on a 5% APR and invest it, dipping into the investment to make repayments, and the investment needs to return > 5% a year to cover the repayments and have anything left over. That's what 5% APR means. Borrow at 4% APR and you have more money left from the same investment. If the payments on the 4% deal are further in the future (EG large balloon at the end) then the total payable may be higher. But because of the timing difference you still have more of your investment left at the end, so it's better value.
Total amount is relevant, size of payments is relevant, but the APR tells you how expensive the loan is.
These examples are all great however in the real world for real customers, please find me an example of a 5% APR PCP/Lease purchase deal on a nearly new/used car anywhere please? Exactly they don't exist so no its not relevant, im aware of how APR works despite what the other poster is trying to prove by giving totally unrealistic examples in relation to the motor industry. The whole point of these discussions is to try and keep things to whats actually available not ridiculous examples of payment options that are not available in the context of the discussion.Put it this way. Borrow money on a 5% APR and invest it, dipping into the investment to make repayments, and the investment needs to return > 5% a year to cover the repayments and have anything left over. That's what 5% APR means. Borrow at 4% APR and you have more money left from the same investment. If the payments on the 4% deal are further in the future (EG large balloon at the end) then the total payable may be higher. But because of the timing difference you still have more of your investment left at the end, so it's better value.
Total amount is relevant, size of payments is relevant, but the APR tells you how expensive the loan is.
sidicks said:
No one that understands finance would dispute that (it's also not in dispute that purchasers of PCP contracts do not necessarily take the most economically optimal strategy).
I don't think its been disputed, in fact I think it was agreed with at every turn that putting a higher deposit in results in less interest.Edited by sidicks on Sunday 8th March 22:01
Ari said:
Ford, if I recall correctly, used to offer a single deferred payment, may stil do.
But what Siddicks is doing is using exaggerated examples to try and make the point easier to understand.
It would depend on whether their intention was to understand the other's point, or argue for the sake of it I guess.
Ford used to yes you are correct, it was offered throughout the PAG group but was dropped as no one took it, hence his example which I fully understand the point he is trying to make is simply not available in a PCP world which is what he is refusing to understand. Its great giving examples that don't exist to prove a point however in the real world if those examples are simply not available why are they relevant.But what Siddicks is doing is using exaggerated examples to try and make the point easier to understand.
It would depend on whether their intention was to understand the other's point, or argue for the sake of it I guess.
Im more than happy to understand the others point, however any example I give back is simply ignored regardless if its right or not, so why not argue.
sidicks said:
After_Shock said:
Haha its getting to that level then.
After making the same mistake in almost every post you've made, I thought I'd help you out!After_Shock said:
Anyways its late in the middle east, im calling it a night.
After_Shock said:
As of tomorrow I shall start advising my customers to re-pay the largest amount possible back to the banks due to the APR being lower, great advice thank you, that will certainly help them get out of the car and into a new one in 3 or 4 years time.
Now, having lost the argument and demonstrating your ignorance on finance, you are resorting to mis-representing what I've said.How predictable.
Edited by sidicks on Sunday 8th March 19:36
After_Shock said:
Ford used to yes you are correct, it was offered throughout the PAG group but was dropped as no one took it, hence his example which I fully understand the point he is trying to make is simply not available in a PCP world which is what he is refusing to understand. Its great giving examples that don't exist to prove a point however in the real world if those examples are simply not available why are they relevant.
Im more than happy to understand the others point, however any example I give back is simply ignored regardless if its right or not, so why not argue.
Ford might not any more but Lotus, Jag and Landrover do on 2 year deals!!!!Im more than happy to understand the others point, however any example I give back is simply ignored regardless if its right or not, so why not argue.
sidicks said:
The OP's post has been lost in the rush by car salesman to offer poor advice...!!
Back to the OP - paying a larger deposit should have led him to paying a lower monthly amount (and, most importantly, less interest overall), provided that other parts of the contract weren't changed (I.e. APR).
No one that understands finance would dispute that (it's also not in dispute that purchasers of PCP contracts do not necessarily take the most economically optimal strategy).
What amazes me about the OP, is that the partner put in a £4000 deposit on a 0% APR. Why didn't they put in as low as possible on that deal and then use the rest as a deposit on the OP's car. Back to the OP - paying a larger deposit should have led him to paying a lower monthly amount (and, most importantly, less interest overall), provided that other parts of the contract weren't changed (I.e. APR).
No one that understands finance would dispute that (it's also not in dispute that purchasers of PCP contracts do not necessarily take the most economically optimal strategy).
Edited by sidicks on Sunday 8th March 22:01
After_Shock said:
Your resulting to correcting grammar as an aside as you wont accept anything im saying, also how predictable.
You keep demonstrating that you don't really understand finance - not being able to understand why APR is the relevant metric not flat rate is just the latest example.After_Shock said:
Im not being ignorant to finance at all, if you wish to discuss finance in relation to whats actually available to customers purchasing a PCP im more than happy to discuss it, you however clearly are not willing to as you wont discuss anything that's an actual example of what a customer is able to obtain in the motor trade.
Everything I've discussed is relevant to any quote you come up with - the examples were illustrative but the principles apply across the board.The entire point of the discussion is whether the OP should have put down a larger deposit or a smaller one on a PCP.
The car salesmen started off by arguing that a smaller deposit made it cheaper overall. Once it was pointed out it was wrong they started changing their ground. But whether HP is cheaper than PCP isn't the point, whether some people misunderstand PCP isn't the point, whether large deposits make it more difficult for the salesman to sell a new PCP deal in
3 years isn't the point.
The only issue is whether a large deposit is cheaper for the customer than a small one all other things being equal.
I fully appreciate that it might be easier for the salesman to sell the deal by talking about flat rates instead of APR, but this isn't because flat rates are a better measure, rather the contrary. If a customer doesn't understand APR that means the customer is an ignorant, not that APR isn't a valid measure.
The car salesmen started off by arguing that a smaller deposit made it cheaper overall. Once it was pointed out it was wrong they started changing their ground. But whether HP is cheaper than PCP isn't the point, whether some people misunderstand PCP isn't the point, whether large deposits make it more difficult for the salesman to sell a new PCP deal in
3 years isn't the point.
The only issue is whether a large deposit is cheaper for the customer than a small one all other things being equal.
I fully appreciate that it might be easier for the salesman to sell the deal by talking about flat rates instead of APR, but this isn't because flat rates are a better measure, rather the contrary. If a customer doesn't understand APR that means the customer is an ignorant, not that APR isn't a valid measure.
TheHound said:
What amazes me about the OP, is that the partner put in a £4000 deposit on a 0% APR. Why didn't they put in as low as possible on that deal and then use the rest as a deposit on the OP's car.
I noticed that as well, although couples seem to keep their finances very separate these days. I guess it's also a sign that people don't trust themselves not to fritter away a few £K.Dr Jekyll said:
The entire point of the discussion is whether the OP should have put down a larger deposit or a smaller one on a PCP.
His original question was had he wasted money by putting £1K down rather than £0. That was quickly answered.Then people started talking about putting multi £K's down or trying to rig the GFV. There are perfectly valid reasons why they're both bad ideas (particularly the latter) plus, as has been pointed out many times, your average PCP buyer doesn't have multi £K's anyway.
Dr Jekyll said:
The entire point of the discussion is whether the OP should have put down a larger deposit or a smaller one on a PCP.
The car salesmen started off by arguing that a smaller deposit made it cheaper overall. Once it was pointed out it was wrong they started changing their ground. But whether HP is cheaper than PCP isn't the point, whether some people misunderstand PCP isn't the point, whether large deposits make it more difficult for the salesman to sell a new PCP deal in
3 years isn't the point.
The only issue is whether a large deposit is cheaper for the customer than a small one all other things being equal.
I fully appreciate that it might be easier for the salesman to sell the deal by talking about flat rates instead of APR, but this isn't because flat rates are a better measure, rather the contrary. If a customer doesn't understand APR that means the customer is an ignorant, not that APR isn't a valid measure.
Exactly!The car salesmen started off by arguing that a smaller deposit made it cheaper overall. Once it was pointed out it was wrong they started changing their ground. But whether HP is cheaper than PCP isn't the point, whether some people misunderstand PCP isn't the point, whether large deposits make it more difficult for the salesman to sell a new PCP deal in
3 years isn't the point.
The only issue is whether a large deposit is cheaper for the customer than a small one all other things being equal.
I fully appreciate that it might be easier for the salesman to sell the deal by talking about flat rates instead of APR, but this isn't because flat rates are a better measure, rather the contrary. If a customer doesn't understand APR that means the customer is an ignorant, not that APR isn't a valid measure.
QED. Let's move on...
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