PCP: How many people actually pay the balloon
Discussion
Hi, there's been all this chat about increased PCP-funded sales over the past couple of years.. and the risk of the balloon value being too low to 'pay off the debt' OR that if too many people 'walk away' that there will be a 'flood of used cars' but who ever pays the balloon anyway?
seriously - does anyone have any data on what % of people actually 'buy the car' at the end?
I think it must be incredibly low unless it's some middle aged person who gets an inheritance and things 'ooh this car is fine and it hasn't broken down i'll just keep it'. my believe is that people just keep rolling over and over..
so that makes me think that there is an expectation in the pricing of the loan that people won't pay the balloon (...??)
seriously - does anyone have any data on what % of people actually 'buy the car' at the end?
I think it must be incredibly low unless it's some middle aged person who gets an inheritance and things 'ooh this car is fine and it hasn't broken down i'll just keep it'. my believe is that people just keep rolling over and over..
so that makes me think that there is an expectation in the pricing of the loan that people won't pay the balloon (...??)
I've paid three off at the end (2 cars, 1 bike)
One of the car salesmen couldn't believe that I intended to pay it off and keep the car. Kept saying " but you can have a new car for no extra monthly payment" ", took a bit to convince him I was serious!
I could have financed them (very slightly) cheaper with personal loans. I preferred PCP though as it lowers the monthlies. I made sure I put money away into savings each month towards the PCP balloon but as my monthly income can vary it was nice to have the lower fixed payments.
One of the car salesmen couldn't believe that I intended to pay it off and keep the car. Kept saying " but you can have a new car for no extra monthly payment" ", took a bit to convince him I was serious!
I could have financed them (very slightly) cheaper with personal loans. I preferred PCP though as it lowers the monthlies. I made sure I put money away into savings each month towards the PCP balloon but as my monthly income can vary it was nice to have the lower fixed payments.
Edited by DuraAce on Thursday 19th October 11:55
kambites said:
I know some people have had; mostly people who were intending to buy outright but it turned out that PCP was so heavily subsidized as to be cheaper.
'heavily subsidised' as in for that particular deal the effective interest was less than available through a personal loan?ta
AJB88 said:
I did on my Leon Cupra, Balloon was 11k, to buy the same age car from SEAT with the same miles they wanted around 16-17k.
that's a fairly unique position though - right? as in someone a) actually thinking about it b) wanting the same car rather than another new oneAJB88 said:
Mine had been services by a specialist and myself so I knew where it had been, plus its running 420ps so decided to keep it.
:-)AJB88 said:
I did on my Leon Cupra, Balloon was 11k, to buy the same age car from SEAT with the same miles they wanted around 16-17k.
Even if you hated the car, you'd be daft not to buy it as surely it could be sold privately for around £14k at least.I wonder if that's a common position to be in, that the car is worth much more than the final payment.
nickfrog said:
I would expect it to be very low too. It's human nature. They can't afford it to start with so how on earth would they be able to save up more than a few shillings/twopences (not sure what that means).
A lot of people including me can afford to pay cash but prefer to quantity the depreciation risk so use pcp. I’ve no intention of keeping the car at the end of the agreement.Tuvra said:
Limpet said:
nickfrog said:
I would expect it to be very low too. It's human nature. They can't afford it to start with so how on earth would they be able to save up more than a few shillings/twopences (not sure what that means).
What utter crap.briSk said:
kambites said:
I know some people have had; mostly people who were intending to buy outright but it turned out that PCP was so heavily subsidized as to be cheaper.
'heavily subsidised' as in for that particular deal the effective interest was less than available through a personal loan?ta
bad company said:
Tuvra said:
Limpet said:
nickfrog said:
I would expect it to be very low too. It's human nature. They can't afford it to start with so how on earth would they be able to save up more than a few shillings/twopences (not sure what that means).
What utter crap.I am making a decision nearer the time based on the level of equity in it at the end, and whether I still like the car enough to keep it.
If there is equity in it, even if I don't want to keep it, I will pay the balloon, and then just sell it on and pocket the difference. If it's in negative equity they can have it back. Equally if the dealer makes me an offer I can't refuse on a new car I really like, I might choose to roll it into another one. This is of course one of the objectives of the whole thing from the dealer side.
Too many unknowns at the moment, but I plan to keep my options open. That's what I like about PCP - there are various routes open.
If there is equity in it, even if I don't want to keep it, I will pay the balloon, and then just sell it on and pocket the difference. If it's in negative equity they can have it back. Equally if the dealer makes me an offer I can't refuse on a new car I really like, I might choose to roll it into another one. This is of course one of the objectives of the whole thing from the dealer side.
Too many unknowns at the moment, but I plan to keep my options open. That's what I like about PCP - there are various routes open.
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