PCP what size balloon ?

[j3gme]

Hi always purchased my cars with a pcp through my company (NOT LTD ) and was looking at a Ferrari 430 £79000 what size balloon would you expect to get on such a car on a 4 year deal? I was thinking 40% any ideas?............thanks

[j3gme]

Cheers, food for thought.

[wargriff]

As your not limited company, why not go for standard HP+Balloon. You will get larger balloon and no mileage charge.
As all contracts are now regulated you are able to hand vehicle back at contract end should you have negative equity.

[IMI A]

wargriff said:

As your not limited company, why not go for standard HP+Balloon. You will get larger balloon and no mileage charge.
As all contracts are now regulated you are able to hand vehicle back at contract end should you have negative equity.

Would this not affect ones' credit rating Wargriff?

This does not make sense as its the purchaser who has taken the risk on a large baloon without a guaranteed future value. Why should finance co suffer?

Would everyone not be doing this i.e getting a ridiculously high baloon with low monthly payments and then handing the car back?

[Soovy]

IMI A said:

Would this not affect ones' credit rating Wargriff?

100% NOT. You are exercising a contractual right.

Edited by Soovy on Friday 29th May 18:29

[51mes]

Hang on a minute,

You're telling us we can buy a car on HP+Balloon and hand the car back if the value of the car is less than the balloon. I take it it's invoking th eHP clause whereby if you have paid half the value of the car you can hand it back at any time with no penalty provided it is in reasonable condition.

If thats the case the maximum baloon is 50%!

Simes.

[DavidHM]

If thats the case the maximum baloon is 50%!...

... except that you might reach the 50% threshold rather sooner than you were expecting.

50% is great over four years, a bit poor over two weeks.

[jezzaaa]

51mes said:

Hang on a minute,

You're telling us we can buy a car on HP+Balloon and hand the car back if the value of the car is less than the balloon. I take it it's invoking th eHP clause whereby if you have paid half the value of the car you can hand it back at any time with no penalty provided it is in reasonable condition.

If thats the case the maximum baloon is 50%!

Simes.

No I don't think it's a simple as that. I think the regs under which the finance falls state that you can hand the car back if more than 50% of the loan/balance has been paid off. But since you're on a PCP type agreement anyway, that 50% is unlikely to occur until very late into the agreement term.

[anonymous-user]

where does the 25k limit come into this?

[matc]

Super Ted said:

My understanding (and I'm no expert) is that once you have paid 50%, you have a right to return the car and make no further payments.

So, buy a car for £50k, put down £5k deposit, and if you make £1k monthly payments - you have a right to hand it back after 20 months.

Therefore, all agreements have a form of GMFV of 50%. Your best bet is to get a minimal deposit, longest term agreement. If you tell them you are only doing low mileage that helps too. Their risk is potentially having cars coming back at 4 years old that owe 50% to them. You then ask yourself if a 2005 911 is worth £30-35k? Probably so, but how about some of the kit that takes a bigger hit on depreciation?

Not quite right; it's 50% of the total amount payable, including any interest or doc fees etc. There used to be a £25k limit before contracts became unregulated (meaning you didn't have the halves rule); but now all agreements are regulated. As you can imagine finance companies have taken a massive hit on a lot of cars during the 'credit crunch', so they are reluctant to put sensible balloons on anything any more; I would be surprised if anyone would offer 50% on a second hand Ferrari.

[wargriff]

coanda said:

where does the 25k limit come into this?

The £25,000 limit was removed from the contracts a few years ago, so all contracts are now classed as regulated, unless its a partnership of 3 or more or a limited company.

After paying 50% of the money due, ie deposit and interest charges you have the facility to end the contract under termination rights.

The finance companies hate it, but it is now law.

So really the only diff between the HP-Balloon route and the PCP is mileage charge. The PCP may have slightly cheaper int charge, but a lower balloon will cause the payments to often be higher.

[wargriff]

matc said:

Super Ted said:

My understanding (and I'm no expert) is that once you have paid 50%, you have a right to return the car and make no further payments.

So, buy a car for £50k, put down £5k deposit, and if you make £1k monthly payments - you have a right to hand it back after 20 months.

Therefore, all agreements have a form of GMFV of 50%. Your best bet is to get a minimal deposit, longest term agreement. If you tell them you are only doing low mileage that helps too. Their risk is potentially having cars coming back at 4 years old that owe 50% to them. You then ask yourself if a 2005 911 is worth £30-35k? Probably so, but how about some of the kit that takes a bigger hit on depreciation?

Not quite right; it's 50% of the total amount payable, including any interest or doc fees etc. There used to be a £25k limit before contracts became unregulated (meaning you didn't have the halves rule); but now all agreements are regulated. As you can imagine finance companies have taken a massive hit on a lot of cars during the 'credit crunch', so they are reluctant to put sensible balloons on anything any more; I would be surprised if anyone would offer 50% on a second hand Ferrari.

You may get a 50% 50% deal from blackhorse ? depending on age of vehicle, and probably only a max term of 24mths.