PCP: How many people actually pay the balloon
Discussion
I'm not sure a dealer would be able to tell you, I've not spoken to my dealer since picking my car up 2.5 years ago so they dont have a clue about my plans
We will be buying our cars a 2015 Toyota Prius and a 2015 Skoda Octavia
The Prius is coming up for 26,000 miles and has a balloon of around 10k
The Skoda is coming up on 18,000 miles and has a balloon of around £11k also has a 5 year warranty on it
Both cars are worth more than that either sold privately or traded in
We have the cash (had the cash when we bought but discounts and sweeteners were better with finance)
We dont really want to change at the moment, maybe this time next year and probably just 1 car.
I am also not enthused by anything, considered replacing the Octavia with a Focus RS but waiting to see what happens re the engine issues, also thought about the Superb 280, we also considered replacing the Prius with a BMW i3 but the timing isnt quite right
I also think there will be better deals next year after March as sales continue to drop.
Of course that might all change If I got the right car offered at the right deal, I would have no objection to starting another agreement
We will be buying our cars a 2015 Toyota Prius and a 2015 Skoda Octavia
The Prius is coming up for 26,000 miles and has a balloon of around 10k
The Skoda is coming up on 18,000 miles and has a balloon of around £11k also has a 5 year warranty on it
Both cars are worth more than that either sold privately or traded in
We have the cash (had the cash when we bought but discounts and sweeteners were better with finance)
We dont really want to change at the moment, maybe this time next year and probably just 1 car.
I am also not enthused by anything, considered replacing the Octavia with a Focus RS but waiting to see what happens re the engine issues, also thought about the Superb 280, we also considered replacing the Prius with a BMW i3 but the timing isnt quite right
I also think there will be better deals next year after March as sales continue to drop.
Of course that might all change If I got the right car offered at the right deal, I would have no objection to starting another agreement
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
liner33 said:
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Of course that might all change If I got the right car offered at the right deal, I would have no objection to starting another agreement
This is what tends to happen, based on people I know. They get a call from the dealership 6 months before the end of the agreement to come in for a chat, drive some stuff and drink the free coffee, maybe get invited to an event or two, and then a really attractive deal is put on the table. The outgoing agreement has of course been structured so the GFV should keep enough equity in for a deposit on a new agreement, so it's a simple adjustment to the monthlies for a brand new car. Can be quite compelling if it's a car you really want.Of course that might all change If I got the right car offered at the right deal, I would have no objection to starting another agreement
Limpet said:
This is what tends to happen, based on people I know. They get a call from the dealership 6 months before the end of the agreement to come in for a chat, drive some stuff and drink the free coffee, maybe get invited to an event or two, and then a really attractive deal is put on the table. The outgoing agreement has of course been structured so the GFV should keep enough equity in for a deposit on a new agreement, so it's a simple adjustment to the monthlies for a brand new car. Can be quite compelling if it's a car you really want.
Toyota have been pushing hard for months in fact almost a year but the wife wont buy another Toyota as their service department messed her about . Due to the residuals being fairly good there is no downside to us buying the cars and revisiting in a few more months
Limpet said:
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.
Earlier this year I got a new bike on a PCP; I fully intend to buy it at the end however I'm liking the idea that I can hedge my bets a bit because a. I think the days of the sportsbike are numbered b. I'll be 52 when it's due, not sure how my various joints etc will be holding up (it's a Yam R1 and the riding position is a bit 'radical') c. the value of these things might go through the floor - I may or may not be better giving it back and buying an identical, same aged used one?
Who knows?
Dog Star said:
Limpet said:
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.briSk said:
some really great stuff here - does anyone know if there is any actual 'data out there' to support the view that 'the muggles' rarely pay it? I do like the anecdotal comment of "only 5 people" etc
It's probably only the finance providers who've got that data, and they've no reason to make it public.It wouldn't surprise me at all if it's rare for the balloon to be paid, PCPs are structured to hopefully finish with just enough equity in the deal to roll over into a new PCP - as has already been mentioned on here the usual mantra is "new car, pretty much the same monthlies". Nothing wrong with that if said muggle has done their sums properly and it's what they want.
This must qualify as one of the dumbest threads ever.
It makes sense to take out a PCP if the total cost is less than the likely depreciation.
At the end of the PCP you'd have to really want to keep exactly *that* car to make the balloon payment *if* the payment is higher than it's current value. Why buy a car for more than it is worth? That's effectively what you're doing if you pay the balloon payment on a car that is worth less than the payment. You could just not pay the balloon, and then buy an identical car for cheaper.
It makes sense to take out a PCP if the total cost is less than the likely depreciation.
At the end of the PCP you'd have to really want to keep exactly *that* car to make the balloon payment *if* the payment is higher than it's current value. Why buy a car for more than it is worth? That's effectively what you're doing if you pay the balloon payment on a car that is worth less than the payment. You could just not pay the balloon, and then buy an identical car for cheaper.
I'll almost certainly be handing the Zoe back. I knew going into it the cars were subject to crippling depreciation, so was fully expecting it to be worth less than the final payment, so it's kind of how I'd planned it out anyway. By the time it's due to go back I think I'll have spent far less on it than it would have cost me had I bought outright and taken the depreciation risk myself.
If it were worth more than the final payment I might buy it, but that seems unlikely to me.
If it were worth more than the final payment I might buy it, but that seems unlikely to me.
We did with my wife's Golf. We'd owned it for 3 years it was a great car we knew the service history etc and weren't bothered about buying another one. We then kept for another 5 years and 140,000 miles in total.
This year swapped for a Mini Countryman expecting to do the same with this car but after 6 months ownership we probably won't and will look for another nearly new car on PCP or a loan depending on what suits us best at the time.
This year swapped for a Mini Countryman expecting to do the same with this car but after 6 months ownership we probably won't and will look for another nearly new car on PCP or a loan depending on what suits us best at the time.
briSk said:
some really great stuff here - does anyone know if there is any actual 'data out there' to support the view that 'the muggles' rarely pay it? I do like the anecdotal comment of "only 5 people" etc
No "actual data".But for me entering in to the PCP made no difference over buying there and then cost wise. Interest offset by subsidy I guess, I liked the monthly rather than lump approach and it gave me options.
The intent was always to pay the lump sum at the end and keep the car as I would have "tested" it for two years for cheaper than a rental, know exactly where it's been/serviced and have a final payment less than any used dealer approved car with unknown history.
That's how I justified it to myself anyway.
What has happened is a great deal came up on a house and due to the PCP (didn't plough savings in to a car) had funds available to pursue it. Not that I have to get rid of the car now but the likelihood is I will probably return the car happy that I always knew what it would cost me and likely go for a cheaper car, whether that be on PCP/lease or purchased I don't know, I'll make the call in a years time when I know what I want to commit to.
It's a stupid thing to say but having the intent to keep the car still makes me proud to "own" it and I believe it keeps me honest rather than treating the car like a white goods use it, abuse it, return it.
Of course all of that is entirely my own thoughts and people reconcile their choices and motivation differently. It was not intended to say I am right or wrong in approach.
briSk said:
some really great stuff here - does anyone know if there is any actual 'data out there' to support the view that 'the muggles' rarely pay it? I do like the anecdotal comment of "only 5 people" etc
Cant give any real data sorry 
The only stat I was ever told was always the same crap on a PCP training course which was about 7% choose to buy the vehicle.. no idea where they got this figure from.
kambites said:
In at least one case, "heavily subsidised" as in for that particular deal the interest was negative. Discounts ("deposit contributions") available only if (0%) finance was taken.
I didn't do that well, but the total interest charges over the whole term on my agreement come to just 1.8% of the balance to finance if I subtract the finance company's "contribution" to the deal. They put £3k in that I wouldn't have got if I'd paid cash, or financed it through an alternative means (and I did my research / shopping around thoroughly).spookly said:
This must qualify as one of the dumbest threads ever.
Have you even read it or are you on 'I bought my car on finance and feel the need to be ultra defensive even though nobody cares' mode.It's all about what proportion of people actually pay the balloon (or rather have actually paid historically).
I think we're all perfectly comfortable with the concept.
This thread has apt timing. Just started my 6th consecutive PCP deal. Often seriously considered keeping a car at the end and even put money aside each month to do this, but when the deadline comes around I think "sod-it" and spend my savings on a fun car instead!
By the way I handed my last car back to the VW dealer on Monday when I picked up my new one and yet they still haven't paid off the Finance Company baloon payment, even though the repayment deadline has just passed. The dealer's known about this for over 3 months and contacted the Finance people with promise of payment last week, so that's very naughty.
By the way I handed my last car back to the VW dealer on Monday when I picked up my new one and yet they still haven't paid off the Finance Company baloon payment, even though the repayment deadline has just passed. The dealer's known about this for over 3 months and contacted the Finance people with promise of payment last week, so that's very naughty.
I paid the balloon payment of my 107 as I loved it, was incredibly poor and didn't want another finance deal. Didn't have the £4,000, took a personal loan out, cleared it in 18 months.
I've had the car 7 years now and I don't want to get rid of it, it's cost me nothing to run except for the loan.
I've had the car 7 years now and I don't want to get rid of it, it's cost me nothing to run except for the loan.
Dan W. said:
Cant give any real data sorry
The only stat I was ever told was always the same crap on a PCP training course which was about 7% choose to buy the vehicle.. no idea where they got this figure from.
cool - gives me some more things to googleThe only stat I was ever told was always the same crap on a PCP training course which was about 7% choose to buy the vehicle.. no idea where they got this figure from.
goes off to google "7% of people buy the car"
LotusOmega375D said:
This thread has apt timing. Just started my 6th consecutive PCP deal. Often seriously considered keeping a car at the end and even put money aside each month to do this, but when the deadline comes around I think "sod-it" and spend my savings on a fun car instead!
.
Do you find you get offered a good price come handback or just the GFV? .
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