PCP: How many people actually pay the balloon

PCP: How many people actually pay the balloon

Author
Discussion

briSk

Original Poster:

14,291 posts

225 months

Thursday 19th October 2017
quotequote all
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 (...??)

kambites

67,462 posts

220 months

Thursday 19th October 2017
quotequote all
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.

Dan W.

1,196 posts

77 months

Thursday 19th October 2017
quotequote all
10 years doing the job and I am aware of 5 of my customers who have bought the car that's about it

nickfrog

20,874 posts

216 months

Thursday 19th October 2017
quotequote all
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).

AJB88

12,269 posts

170 months

Thursday 19th October 2017
quotequote all
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.

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.

DuraAce

4,240 posts

159 months

Thursday 19th October 2017
quotequote all
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.

Edited by DuraAce on Thursday 19th October 11:55

briSk

Original Poster:

14,291 posts

225 months

Thursday 19th October 2017
quotequote all
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

briSk

Original Poster:

14,291 posts

225 months

Thursday 19th October 2017
quotequote all
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 one

AJB88 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.
:-)

Limpet

6,293 posts

160 months

Thursday 19th October 2017
quotequote all
nickfrog said:
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.

Tuvra

7,920 posts

224 months

Thursday 19th October 2017
quotequote all
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 thought exactly the same hehe

DuraAce

4,240 posts

159 months

Thursday 19th October 2017
quotequote all
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).
Only took three minutes, must be a record even on here!

IanCress

4,409 posts

165 months

Thursday 19th October 2017
quotequote all
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.

bad company

18,484 posts

265 months

Thursday 19th October 2017
quotequote all
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.

PopsandBangs

922 posts

130 months

Thursday 19th October 2017
quotequote all
I did - the balloon was around £4.7k but the car worth about 7.5.

Paid it off and sold it privately for £7.2k within a week

DuraAce

4,240 posts

159 months

Thursday 19th October 2017
quotequote all
PopsandBangs said:
I did - the balloon was around £4.7k but the car worth about 7.5.

Paid it off and sold it privately for £7.2k within a week
I suppose in that situation a lot of people would just run that equity into a new car deal to act as the deposit/initial payment.

bad company

18,484 posts

265 months

Thursday 19th October 2017
quotequote all
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 thought exactly the same hehe
Crap indeed. yes

Dave Hedgehog

14,541 posts

203 months

Thursday 19th October 2017
quotequote all
i bought my R32, they wanted 11k for it and it booked at 16k so made sense, i drove it for 2 more years and sold it for 12k

on my later cars PCP was not cost effective

i suspect most people do not buy their car, its designed to keep you rolling over into new cars


Zippee

13,444 posts

233 months

Thursday 19th October 2017
quotequote all
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
We did on my wife's Evoque. Got a cracking deal subject to taking PCP over a personal loan. Balloon was cleared 1/2 way through the agreement. Not everyone wants a new car every x years, she tends to keep her 8 years or so before changing so makes more sense for us to do so.

nickfrog

20,874 posts

216 months

Thursday 19th October 2017
quotequote all
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 thought exactly the same hehe
Crap indeed. yes
Gotcha!

Limpet

6,293 posts

160 months

Thursday 19th October 2017
quotequote all
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.