Negative equity - is this normal?
Discussion
Jellybeans2016 said:
AudiMan9000 said:
No regret or desire to get rid early. Just curiosity. It seem a huge amount of negative equity to be in. But you’re right, I paid no deposit, only paid 3 x £477 in 7 months of ownership, and drove it 7.5k. I’m doing much less than the 15k miles pa my deal is based on. So hopefully my unnecessarily larger monthly payments will clear off the negative equity faster than commensurate payments otherwise would have.
Out of interest where did you think you’d be 7 months into a deal and having paid less than £1500? Genuinely interestedpanholio said:
Classic pistonheads. Everyone likes to jump on someone who has a PCP. Newsflash shed enthusiasts, literally millions of people pay this much for cars.
I’d also point out that the low deposit is not necessarily a factor as many have referenced. You can stick £10k into a PCP and still be in negative equity for most of it. The payments are just less. That’s how it works and what the finance company want.
Your position OP is as per usual. PCP’s are not good to get out of early. Especially with a 3 month holiday.
Mean salary is £27k and average house price is £280k ish. I’d also point out that the low deposit is not necessarily a factor as many have referenced. You can stick £10k into a PCP and still be in negative equity for most of it. The payments are just less. That’s how it works and what the finance company want.
Your position OP is as per usual. PCP’s are not good to get out of early. Especially with a 3 month holiday.
I dare say no millions do not do this.
rlg43p said:
If forum rules meant that posting like a smartarse t
t got you banned the membership of Pistonheads would be half what it actually is.
If a lot of the replies on this thread were spoken face to face you'd end up punched in the mouth.
When I said that the face to face but and the action mods banned me from posting in a thread - despite a vile vindictive post driving the reaction. t got you banned the membership of Pistonheads would be half what it actually is.If a lot of the replies on this thread were spoken face to face you'd end up punched in the mouth.
Say no more.....
The most eyewatering part of this is paying £477/month to drive a Q3.
Hopefully you can afford the payments that you committed to, but this is the perfect example to people of why low upfront, long term deals are not ideal for everyone. The moment your needs change you're then having to look at whether you can adapt the policy to meet these new needs or if you're facing a painful amount to escape the PCP.
Hopefully you can afford the payments that you committed to, but this is the perfect example to people of why low upfront, long term deals are not ideal for everyone. The moment your needs change you're then having to look at whether you can adapt the policy to meet these new needs or if you're facing a painful amount to escape the PCP.
ilikejam said:
Look up a general 'car depreciation' graph and you'll see it drops steeply in the first year then starts to turn over the next 3 years then starts to level out more as the car gets older.
Your finance agreement will be a straight diagonal line from the purchase price at the 0 year mark to the value at the 4 year mark - the GFV/balloon payment the dealers give you is where they expect the price to be at the end of your term.
The gap between the finance line and the car value line is your neg equity (and what gap insurance providers are supposedly covering should the car be written off).
If you're lucky, the finance line might drop below the value line near the end and you can claw some equity back by selling the car.
Interesting, I’ve never seen that graph but it’s fairly accurate in my case.Your finance agreement will be a straight diagonal line from the purchase price at the 0 year mark to the value at the 4 year mark - the GFV/balloon payment the dealers give you is where they expect the price to be at the end of your term.
The gap between the finance line and the car value line is your neg equity (and what gap insurance providers are supposedly covering should the car be written off).
If you're lucky, the finance line might drop below the value line near the end and you can claw some equity back by selling the car.
Edited by ilikejam on Thursday 25th February 15:57
Mini was £24k new and I’m about to hit year 3 with £14300 to go. Tempted to get a bank loan and pay the settlement and keep it a few more years. Anything new seems far more than I’m paying now for similar spec and used would be a risk considering I know the history of this having had it since new
J1990 said:
The most eyewatering part of this is paying £477/month to drive a Q3.
Hopefully you can afford the payments that you committed to, but this is the perfect example to people of why low upfront, long term deals are not ideal for everyone. The moment your needs change you're then having to look at whether you can adapt the policy to meet these new needs or if you're facing a painful amount to escape the PCP.
His last thread was, he wasn’t using the Q3 and whether to swap it for a new Q7Hopefully you can afford the payments that you committed to, but this is the perfect example to people of why low upfront, long term deals are not ideal for everyone. The moment your needs change you're then having to look at whether you can adapt the policy to meet these new needs or if you're facing a painful amount to escape the PCP.
Wagonwheel555 said:
ilikejam said:
Look up a general 'car depreciation' graph and you'll see it drops steeply in the first year then starts to turn over the next 3 years then starts to level out more as the car gets older.
Your finance agreement will be a straight diagonal line from the purchase price at the 0 year mark to the value at the 4 year mark - the GFV/balloon payment the dealers give you is where they expect the price to be at the end of your term.
The gap between the finance line and the car value line is your neg equity (and what gap insurance providers are supposedly covering should the car be written off).
If you're lucky, the finance line might drop below the value line near the end and you can claw some equity back by selling the car.
Interesting, I’ve never seen that graph but it’s fairly accurate in my case.Your finance agreement will be a straight diagonal line from the purchase price at the 0 year mark to the value at the 4 year mark - the GFV/balloon payment the dealers give you is where they expect the price to be at the end of your term.
The gap between the finance line and the car value line is your neg equity (and what gap insurance providers are supposedly covering should the car be written off).
If you're lucky, the finance line might drop below the value line near the end and you can claw some equity back by selling the car.
Edited by ilikejam on Thursday 25th February 15:57
Mini was £24k new and I’m about to hit year 3 with £14300 to go. Tempted to get a bank loan and pay the settlement and keep it a few more years. Anything new seems far more than I’m paying now for similar spec and used would be a risk considering I know the history of this having had it since new
Jellybeans2016 said:
J1990 said:
The most eyewatering part of this is paying £477/month to drive a Q3.
Hopefully you can afford the payments that you committed to, but this is the perfect example to people of why low upfront, long term deals are not ideal for everyone. The moment your needs change you're then having to look at whether you can adapt the policy to meet these new needs or if you're facing a painful amount to escape the PCP.
His last thread was, he wasn’t using the Q3 and whether to swap it for a new Q7Hopefully you can afford the payments that you committed to, but this is the perfect example to people of why low upfront, long term deals are not ideal for everyone. The moment your needs change you're then having to look at whether you can adapt the policy to meet these new needs or if you're facing a painful amount to escape the PCP.
Thanks to those who’ve kindly given positive and constructive responses.
Wagonwheel555 said:
Yeah sounds normal to me, especially if you paid zero deposit.
Our Mini was 24k new so £2k deposit and £300pm on a 4 year PCP. I’m at month 35 and settlement is £14300 but WBAC is £11.5k so nowhere near.
I can VT it once I get to £13400 which is 50% of the cost plus interest so that’s a better option as I don’t see myself ever being in positive equity to a point it’s worth me buying the car.
Under average miles too, 25k total for the three years.
Ouch ! That sure looks like an expensive way to have the use of a car for 25k miles. Our Mini was 24k new so £2k deposit and £300pm on a 4 year PCP. I’m at month 35 and settlement is £14300 but WBAC is £11.5k so nowhere near.
I can VT it once I get to £13400 which is 50% of the cost plus interest so that’s a better option as I don’t see myself ever being in positive equity to a point it’s worth me buying the car.
Under average miles too, 25k total for the three years.
AudiMan9000 said:
I’m 7 months into a 48 month PCP on a 2020 Audi Q3.
It has about 7.5k miles on the clock.
I paid nil deposit, negligible equity from last deal as trade in, and there was nothing to pay in the first 3 months. Monthlies are £477,
Settlement figure - £31.5k
WBAC valuation - £24k
So I’m £7.5k in negative equity. Is this normal or something to do with Covid or something else?
I think in the real world of ownership it's called depreciation! It has about 7.5k miles on the clock.
I paid nil deposit, negligible equity from last deal as trade in, and there was nothing to pay in the first 3 months. Monthlies are £477,
Settlement figure - £31.5k
WBAC valuation - £24k
So I’m £7.5k in negative equity. Is this normal or something to do with Covid or something else?
And surprisingly rentals depreciate too!
£477 a month for a Q3 - wow!
Welshbeef said:
You need to take that graph into consideration of increase in the costs of consumables servicing etc
Of course, I have a service plan anyway so the major service in a years time is covered and its every 2 years.I have had the Mini for 3 years and 25k miles, front tyres are on 3mm and have replaced them once already. Goodyear Eagle F1's so not budget either, perhaps its the way I drive.
Even if I kept it three more years, assuming just consumables were needed I would estimate a minor service (£275), brake fluid change £70), four tyres (£450) and front and rear pads (£100) which I can change myself anyway.
Sounds like keeping it might be the better option financially then
Welshbeef said:
Mr Tidy said:
I think in the real world of ownership it's called depreciation!
And surprisingly rentals depreciate too!
£477 a month for a Q3 - wow!
My S205 C63 Premium pack - bought for £36k doesn’t / isn’t losing that much money And surprisingly rentals depreciate too!
£477 a month for a Q3 - wow!
The two aren't comparable - if he'd bought a 2/3 year old Q3 he wouldn't be taking this much of a hit either.
Jesus wept.
Some of these PCP threads make me wince at the levels of short term debt people take on to have new metal on the driveway.
I can't decide if I'm envious at the people who have no anxiety issues taking on £300+ a month deal on cooking spec boring cars or whether I'm just tight with money.
Guy who works for me just bought a new £800 tv on credit despite already having a 55 inch and a 45 inch telling in the bedroom. Chap earns £19.5k and complains he can't save money. Mental attitudes.
Rant over.
Some of these PCP threads make me wince at the levels of short term debt people take on to have new metal on the driveway.
I can't decide if I'm envious at the people who have no anxiety issues taking on £300+ a month deal on cooking spec boring cars or whether I'm just tight with money.
Guy who works for me just bought a new £800 tv on credit despite already having a 55 inch and a 45 inch telling in the bedroom. Chap earns £19.5k and complains he can't save money. Mental attitudes.
Rant over.
Welshbeef said:
Mean salary is £27k and average house price is £280k ish.
I dare say no millions do not do this.
I think you're probably underestimating the UK's collective intelligence when it comes to what gets prioritised. I get that I am not agreeing with the sentiment of Panholio (is that username from Hexus forums?) post, but I think he IS right in terms of the amount of cars that get sold this way.I dare say no millions do not do this.
As per the post above me, I know of a few folks that do exactly that sort of thing (I'm related to one of them) - it is utterly crazy how image conscious people are, and how they will move heaven and earth to have something that they perceive will put them on terms with those they aspire to be like.
500 quid a month to drive a junior SUV sounds mad to me.
okgo said:
Welshbeef said:
Mean salary is £27k and average house price is £280k ish.
I dare say no millions do not do this.
I think you're probably underestimating the UK's collective intelligence when it comes to what gets prioritised. I get that I am not agreeing with the sentiment of Panholio (is that username from Hexus forums?) post, but I think he IS right in terms of the amount of cars that get sold this way.I dare say no millions do not do this.
As per the post above me, I know of a few folks that do exactly that sort of thing (I'm related to one of them) - it is utterly crazy how image conscious people are, and how they will move heaven and earth to have something that they perceive will put them on terms with those they aspire to be like.
500 quid a month to drive a junior SUV sounds mad to me.
To me, a Q3 is a Tiguan, Atteca/Tarraco, or the Kodiaq/Karoq in disguise. All are the same car effectively but have differing scales of vanity attached. Each to their own.
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