PCP: How many people actually pay the balloon

[daemon]

HumanDoing said:

Communicate with people on their level? Ok fair enough I'll give that a whirl:

Your garage looks fantastic mate, well done. You're obviously a very successful 'IT contractor' if you can afford a Volkswagen saloon (after trading in your poor man's Porsche of course) That Merc gets an incredible amount of praise as well doesn't it and is no way held up as an example of people pissing money away when better cars in the same market are much cheaper - congratulations on that savvy purchase.

Hey everybody, I can't fight my own battles alone so can you all join me in ganging up on this person on the internet please so I can feel like a big shot from behind my computer keyboard.

How did I do?

[nickfrog]

Mark-C said:

Errm, cool but I’ll let HumanDoing reply for himself

Still waiting too.

[TA14]

InitialDave said:

HumanDoing said:

Owning outright = the car will depreciate. Depreciation is an unavoidable fact of life for almost all cars.

PCP = paying the same depreciation, plus interest, and have shat-all at the end of it.

You want to run a car for the period of the manufacturer's warranty, let's say three years.

You can buy it for A, sell it at three years old for B, and it has cost you the difference between these two, C.

Or you can pay an initial payment X, 35 monthly payments totalling Y, adding up to a total expenditure of Z.

Do you guarantee me that there never has been, and never will be, a situation with any car purchase where C is greater than Z?

Basic economics would support HD's argument and suggest that Z is greater than C. The reality is that manufacturer's like some aspects of PCPs (like repeat sales) and manipulate the sales price such that C is often/usually greater than Z, sometimes significantly so. Does it really take 283 threads to discuss this point?

[Stick Legs]

HumanDoing said:

Troll troll troll

Edited by Stick Legs on Tuesday 24th October 12:00

[TA14]

Stick Legs said:

HumanDoing said:

A bottle of wine? I'd assumed that it was because this is half term

[Ken Figenus]

J4CKO said:

Not saying PCP's are bad, but like your example Ken, if you play the long game, it works out quite a bit cheaper.

Some people arent bothered, they just pay it and dont fixate about it like us on here

Ahh but fixating on stuff like this (and buying the same food as Sainsbury's but in Lidl saving 40%) improves the quality of our toys and frequencies of holidays! I'll do a lot with my £12k

Lots of smoke and mirrors on the monthlies in the showroom - they jiggle many a parameter to tempt but I agree that PCP's are great for some people but I could never get my head around the fact that they are so much more expensive than an unsecured personal loan. A PCP is effectively a secured loan - you don't own the car, the bank does. They have more security and control but charge you MORE? Secured loans are meant to be cheaper! There are so many poor souls out there paying a "fixed at 10.9% by BMW sir" huge interest rate...

[Mandat]

nickfrog said:

Mark-C said:

Errm, cool but I’ll let HumanDoing reply for himself

Still waiting too.

Don't hold your breath.

HumanDoing is obviosuly trolling, and he conveniently ignores those posts which call him out on his ignorance.

[nickfrog]

TA14 said:

Basic economics would support HD's argument and suggest that Z is greater than C. The reality is that manufacturer's like some aspects of PCPs (like repeat sales) and manipulate the sales price such that C is often/usually greater than Z, sometimes significantly so. Does it really take 283 threads to discuss this point?

Clearly as HD hasn't taken into account the following factors:

Finance houses (whether in-house or not) get very low deals from manufacturers (bleeding obvious)
OHs are very low
Their CAPEX are financed out of very low rate
Competition is fierce, what with online aggregators
It's a very smart way to discount as you keep (some) control over residuals
Yield management is intense

Edited by nickfrog on Tuesday 24th October 12:45

[daemon]

HumanDoing said:

Communicate with people on their level? Ok fair enough I'll give that a whirl:

Your garage looks fantastic mate, well done. You're obviously a very successful 'IT contractor' if you can afford a Volkswagen saloon (after trading in your poor man's Porsche of course) That Merc gets an incredible amount of praise as well doesn't it and is no way held up as an example of people pissing money away when better cars in the same market are much cheaper - congratulations on that savvy purchase.

Hey everybody, I can't fight my own battles alone so can you all join me in ganging up on this person on the internet please so I can feel like a big shot from behind my computer keyboard.

How did I do?

Thanks yes, I am indeed a very successful IT Contractor. Thank you for acknowledging that

The Passat - i've actually taken a leaf from your book. Its a car i bought outright at a year old and I hope to run for many years. It lies at the airport most of the time, but needs to be a car i can rely on. It replaced an aging Volvo T5 which i couldnt rely on.

The Porsche - again, you'd be proud of that one. Bought for £6750, ran it for a year, sold it for £6,850.

The A45. Its purely an indulgence. We wanted it, so we bought it. Only real rival of its ilk would be an RS3 which we didnt like.

The Merc is a fantastic car, ignorantly quick, depreciating like snow off a ditch, but i'm not bothered, we can afford it.

It was preceded by a 370Z GT. Brilliant car. Bought at 2 years old for £20,000, ran it for two years, sold it for £18,000.

It will be replaced next time by probably by a newish Cayman. Aiming for one of the last of the NA 981 Cayman S models.

So summarising, all bar the A45 would be in line with your thinking about buying low depreciating cars OR keeping them a long time and i'd be the first to admit the A45 is depreciating more heavily than anything else we've owned recently, but hey ho.

Edited by daemon on Tuesday 24th October 13:18

Edited by daemon on Tuesday 24th October 17:22

[daemon]

Ken Figenus said:

Lots of smoke and mirrors on the monthlies in the showroom - they jiggle many a parameter to tempt but I agree that PCP's are great for some people but I could never get my head around the fact that they are so much more expensive than an unsecured personal loan. A PCP is effectively a secured loan - you don't own the car, the bank does. They have more security and control but charge you MORE? Secured loans are meant to be cheaper! There are so many poor souls out there paying a "fixed at 10.9% by BMW sir" huge interest rate...

Used car PCP deals are usually at mental money - 10.9% APR with VW and BMW currently i think.

New car ones are usually at 0%, 1.9% or 2.9% which make them more palatable

[beanbag]

I paid mine, although I extended the payments by a year as I wasn't sure if I could transfer the plates from Austria to Spain cheaply at the time....I think it was about €7k.

We also plan to do the same with my wife's new car. It's on a 4 year PCP deal but it was far cheaper to take PCP than outright finance. Maybe it's a Spanish thing....

[Ken Figenus]

daemon said:

Used car PCP deals are usually at mental money - 10.9% APR with VW and BMW currently i think.

New car ones are usually at 0%, 1.9% or 2.9% which make them more palatable

Smoke and mirrors mate. New car, they offered me £2k off the car to take a high PCP interest rate. They couldn't offer me the same £2k off when I got them down to 5.9%... Mirrors and smoke which is why we have to work it out ourselves - if you are suitably fixated!

>edit: off not of<

Edited by Ken Figenus on Tuesday 24th October 14:13

[daemon]

Ken Figenus said:

daemon said:

Used car PCP deals are usually at mental money - 10.9% APR with VW and BMW currently i think.

New car ones are usually at 0%, 1.9% or 2.9% which make them more palatable

Smoke and mirrors mate. New car, they offered me £2k of the car to take a high PCP interest rate. They couldn't offer me the same £2k off when I got them down to 5.9%... Mirrors and smoke which is why we have to work it out ourselves - if you are suitably fixated!

I would say there was £2,000 contribution at the 10.9% rate, however to flipped you on to a 5.9% rate (possibly with a different company) you didnt get the cashback offer. You didnt "negotiate down" on the 10.9% offer, they simply moved you to a different finance offer probably with a different company.

Its not smoke and mirrors if the rates are there and being advertised, and you've already negotiated effectively on the price of the car.

Heres a list of all the manufacturers offering 0% finance deals for example.

https://www.carwow.co.uk/best/cars-for-sale-with-0...

There is nothing at all to stop you negotiating the price of the car, THEN opting for the 0% finance. The two should - and are - independent of each other.

Find the best price via a broker. See if your local dealers will price match or better it, then run with the cheapest price. THEN find the finance deal.

At no point can they say "ah but hang on, we cant give you this discount now as you're taking out the manufacturers 0% finance offer". That is illegal.

Choosing to allow them to talk about the discount AND the finance at the same time allows them to muddy the waters as they did with you.

Edited by daemon on Tuesday 24th October 13:12

Edited by daemon on Tuesday 24th October 13:13

[HumanDoing]

swerni said:

Just curious, in this big crash you keep harping on about, what are you going to do when interest rates hit double figures?
Sell the fiesta to cover the mortgage payments on the house you don't own?

Edited by swerni on Tuesday 24th October 12:24

I had 'fked off' as you put it until I was alerted to my wife and I being directly insulted by the shafts on here who obviously miss bullying on the playground so bring it here as grown adults.

Seriously are you saying I can't defend my family and myself from direct attack? Is that your definition of integrity?

Also I think you're confusing me with someone else as I haven't brought up a crash ... what I can say is that interest rates won't rise to 10% if/when we have another crash ... with the way the economy is set up now, punishing debtors and putting downward pressure on house prices is the last thing any government would do.

Edited by HumanDoing on Tuesday 24th October 13:32

[Rawwr]

HumanDoing said:

I had 'fked off' as you put it until I was alerted to my wife and I being directly insulted by the shafts on here who obviously miss bullying on the playground so bring it here as grown adults.

Seriously are you saying I can't defend my family and myself from direct attack? Is that your definition of integrity?

Also I think you're confusing me with someone else as I haven't brought up a crash ... what I can say is that interest rates won't rise to 10% if/when we have another crash ... with the way the economy is set up now, punishing debtors and putting downward pressure on house prices is the last thing any government would do.

Edited by HumanDoing on Tuesday 24th October 13:32

Why haven't you told me what's so bad about my PCP deal yet? I asked nicely.

[Tuvra]

There's no way that belter got a wife.....

[funkyrobot]

daemon said:

I would say there was £2,000 contribution at the 10.9% rate, however to flipped you on to a 5.9% rate (possibly with a different company) you didnt get the cashback offer. You didnt "negotiate down" on the 10.9% offer, they simply moved you to a different finance offer probably with a different company.

Its not smoke and mirrors if the rates are there and being advertised, and you've already negotiated effectively on the price of the car.

Heres a list of all the manufacturers offering 0% finance deals for example.

https://www.carwow.co.uk/best/cars-for-sale-with-0...

There is nothing at all to stop you negotiating the price of the car, THEN opting for the 0% finance. The two should - and are - independent of each other.

Find the best price via a broker. See if your local dealers will price match or better it, then run with the cheapest price. THEN find the finance deal.

At no point can they say "ah but hang on, we cant give you this discount now as you're taking out the manufacturers 0% finance offer". That is illegal.

Choosing to allow them to talk about the discount AND the finance at the same time allows them to muddy the waters as they did with you.

Edited by daemon on Tuesday 24th October 13:12

Edited by daemon on Tuesday 24th October 13:13

That's an interesting post. Thanks.

[djc206]

HumanDoing said:

I had 'fked off' as you put it until I was alerted to my wife and I being directly insulted by the shafts on here who obviously miss bullying on the playground so bring it here as grown adults.

Seriously are you saying I can't defend my family and myself from direct attack? Is that your definition of integrity?

Also I think you're confusing me with someone else as I haven't brought up a crash ... what I can say is that interest rates won't rise to 10% if/when we have another crash ... with the way the economy is set up now, punishing debtors and putting downward pressure on house prices is the last thing any government would do.

Edited by HumanDoing on Tuesday 24th October 13:32

The government doesn't control interest rates

[964Cup]

I'm about to, for (I think) the first time ever. Back when I changed cars frequently, I would always refuse PCP deals and do balanced payments agreements so that I could get out during the term. Recently we've been running Discos and changing them at the end of the warranty, or up to a year before if sufficiently incentivised by the dealer. This time there's no point, as there's no hybrid Disco (and the new one is hideous anyway), so unless I pay a fortune for a Volvo there's no future-proof "oversized family car for the affluent" [(c)Top Gear] right now - so we're going to run this one for another two years and hope that something comes along in that time.

However (and it's a substantial proviso), I've always negotiated PCPs in the opposite direction to what the salesperson expected - by reducing the balloon rather than inflating it (while being very aggressive on rates) - so the total we now have to pay is vastly less than the used value; previously we would have recycled this surplus into the deposit on the next one.

[HumanDoing]

djc206 said:

The government doesn't control interest rates

The government controls who heads the Bank of England, which sets interest rates. Control by any other name.