Outrageous used electric 2 year pcp deals

[cjstott]

Long time lurker not really a big contributor, so be gentle,

Is anyone else seeing these crazy used PCP deals on electric vehicles on Instagram? Reminiscent of the old ridiculous lease deals (sub 200 Golf R anyone?).

Seeing crady deals on slightly used Tesla's, Jag Ipace & EQCs

Example:

20 plate Tesla model 3 performance 2k dep £289 a month for 24 months.

(vehicle price 36k, balloon payment 33k)

So total outlay would be £8936 (ish) and I'm aware it's only putting a 3k dent in the vehicle payments (towards ownership)

This end valuation is wild considering tesla have just dropped prices aggressively and the model 3s that were on 3 year business leases when they came out have been coming to an end recently. We're also seeing lots of forum posts of people not being able to get rid of their cars for prices they're happy with so it feels like these deals should not exist.

How on earth is the finance company able to guarantee the value of 33k in two years time? Arent they likely to get stung?

I have to admit i know it's a 9k (10k including a fast charger installation at home) down the drain but the monthlies are so good it has me thinking about chopping in the discovery sport I've got a loan on as i think that will cost me more to own over the two years than the tesla (new tyres, service items, diesel etc.)

i now work from home, doing super short trips, and definitely need to move away from the discovery to a hybrid at least as i don't feel good about firing an ICE up for a 20 min trip.

Is anyone else considering it? Or has stupid man maths got me thinking about making a change maybe im just missing something obvious.

Would love anyone elses 2p worth and if theyve seen/considering it

[kiethton]

Is it a PCP contract as you understand it - some PCP’s don’t actually guarantee the future value

[g40steve]

Buy a SH one for £25k

[cjstott]

Thanks here's the post discussing the finance agreement:

"T&C apply finance subject to status 18's and over guarantee may be required.
Representative example - vehicle price £36,100, deposit £2,000, 24 monthly payments of £289.25 final payment £33,187 total amount payable £41,839.75 PCP Mileage Restrictions and Charges Apply. Representative APR 8.9% fixed - fixed rate of interest 8.9%"

[cjstott]

g40steve said:

Buy a SH one for £25k

This is something im considering, I took an 18k loan out for my discovery sport before interest rates went crazy so I'm spending 380 a month to pay that off to own outright so I'm not against getting using a loan for it, just concerned the downside isnt protected if there's a massive price crash like it would be with PCP.

[covmutley]

Got any links, please?

[TRKid]

Where are you seeing these deals?

[cjstott]

there's numerous instagram car sales pages posting them I didnt really know if i should namedrop the companies but any of the VIP45 profiles, @prestigecarsofficial etc

[kiethton]

cjstott said:

Thanks here's the post discussing the finance agreement:

"T&C apply finance subject to status 18's and over guarantee may be required.
Representative example - vehicle price £36,100, deposit £2,000, 24 monthly payments of £289.25 final payment £33,187 total amount payable £41,839.75 PCP Mileage Restrictions and Charges Apply. Representative APR 8.9% fixed - fixed rate of interest 8.9%"

There is the kicker - final payment, not optional final payment

[cjstott]

kiethton said:

There is the kicker - final payment, not optional final payment

I didnt realise there was non-optional final payments, clearly my naivety.

[TRKid]

I stopped reading at “instagram”. I must be too old.

[cjstott]

TRKid said:

I stopped reading at “instagram”. I must be too old.

I got my last car "on instagram", it was significantly better interest rate than a dealer and the car was cheaper than i could find elsewhere too. I get its not for everyone though

[deggles]

VIP45? Has scam written all over it IMO. Ask yourself why would a legitimate car dealer have dozens of different social media accounts advertising super-cheap 'PCP' deals. They'll be selling cheap fireworks in Manchester next.

[cjstott]

deggles said:

VIP45? Has scam written all over it IMO. Ask yourself why would a legitimate car dealer have dozens of different social media accounts advertising super-cheap 'PCP' deals. They'll be selling cheap fireworks in Manchester next.

They've been established for a long time, looks to me like they just use a network of sales people each with their own social media account as a commission only thing rather than sales guys the accounts have been going a long time so I dont see that as a particular red flag, though i know its riskier than buying from what might look like a more established brick/mortar business.

[Heathwood]

I’m no expert with this sort of stuff but there could be all sorts going on here couldn’t there?

Is the purchase price competitive or over inflated to make it look like you’re getting a more expensive car when considering the monthly cost? Isn’t the balloon just a final payment? I know this is usually associated with a GFV but ultimately the dealer just needs to be in a position of profit should you hand it back (assuming you can). In that respect, it may be that, for eg, it’s actually a £34k car that only needs to fetch say £27k in two years to secure a profit. If that were the case, isn’t the balloon rather less relevant?

[samoht]

There's a huge problem of oversupply of used EVs, since new prices were slashed and some people have been feeling buyers remorse after suffering public charging issues.

Therefore it seems logical they'd be offering attractive deals to shift the cars. It's better than having to pay to store them at Bruntingthorpe or wherever because they can't shift them.

The GFV is just part of structuring the deal, it doesn't necessarily have to be realistic as long as the manufacturer is happy to punt the car out for X years for £9k or whatever, and then have the car come back.

[Jamescrs]

It does seem the final payment is not optional so not a normal PCP deal?

If I could do that and just give the car back after 2 years it would be tempting

[Wills2]

cjstott said:

Thanks here's the post discussing the finance agreement:

"T&C apply finance subject to status 18's and over guarantee may be required.
Representative example - vehicle price £36,100, deposit £2,000, 24 monthly payments of £289.25 final payment £33,187 total amount payable £41,839.75 PCP Mileage Restrictions and Charges Apply. Representative APR 8.9% fixed - fixed rate of interest 8.9%"

It's not a GFV so no option to it hand back after 24 months (finance company acting as buyer of last resort), so at the end of the term you'll find yourself with 33k to pay against a car worth less than 20k.

[samoht]

cjstott said:

kiethton said:

There is the kicker - final payment, not optional final payment

I didnt realise there was non-optional final payments, clearly my naivety.

I don't believe it would be considered fair or reasonable to advertise a deal as "PCP" with a compulsory final payment.

Official Goverment Website said:

What is a Personal Contract Purchase (PCP)?
At the end of the contract, you can:

• return the car
• pay the resale value and keep it
• use the resale value towards buying a new car.

MoneyHelper

I suspect 'final payment' is just short for 'optional final payment', and it is in fact a standard PCP arrangement. If not, it would seem they're counting on the ASA not catching up with social media based 'franchise' advertising of this kind. 'Outrageous' indeed.


It's common with used high-end cars to have finance deals where the final payment is mandatory, so you end up on the hook for the residuals. However these aren't described as "PCP" deals, as that term has a well understood meaning that includes optionality.

[Canon_Fodder]

cjstott said:

I got my last car "on instagram",

I got my last ride on OnlyFans