Initial PCH payments

[deason]

Why in PCH do brokers do different levels of initial payment?

[MildRelish]

To make the monthlies cheaper. Which appeals to the customer.

[talksthetorque]

Because different customers want different Initial Payments.

They are a business and they are meeting the differing needs of their customers.

Also a Higher initial makes their monthlies look better in the ads.

A 1 + 23 also looks good in the ads as you can go in there and get the car you want with no savings.

[deason]

But why do they tend to differ? Is it a seasonal sales period thing or a bit like Dealer contributions offer with a PCP?

[talksthetorque]

No. The car costs x
Borrowing the money to buy the car costs y
The money they expect to sell the car for at the end is Z


So there is a fixed cost for the amount the car costs the Finance Company,from start to finish. X + Y - Z

They then cut that cost up in slices ( am I really using cake analogies? I'm starving) depending on how you ask for it.

If you want a 1+23, then you will pay "a little" more overall, as you are not paying the money back quite so quickly, so they have to borrow some of it for a bit longer.

If you have a 9 or 12 + 23 it will cost "a little" less as they don't have to borrow as much money for as long,

If a dealer/broker is advertising a 9+23, and you don't have £1500 in your back pocket then you can ask them for a quote for a 1 + 23, 3+23, whatever.

[Gareth1974]

Is the arrangement fee the cherry on top of the cake?

[PositronicRay]

It's also about your credit file, if marginal sometimes you'll be accepted with a higher upfront payment.

[Fast Bug]

Gareth1974 said:

Is the arrangement fee the cherry on top of the cake?

That's usually what the broker earns from the deal, sometimes their commission is built in to the monthly rentals though.