Advise on PCP finance - attempt #2
Discussion
Right so my previous thread turned into a car crash, with the holier-than-thou comments surpassing comments which actually answered my questions, by a factor of about 8:1.
Some comments however did make me realise that ultimately i'd only just about be able to afford a £47k car rather than easily, so i've downgraded my expectations.
Here is the new car i'm now looking at:
now, obviously that 11.9% rate is awful, so...my questions are:
[b]1. How often is the interest calculated? is it daily? i can't find a t's & c's small print anywhere.
2. Would i be able to pay the car off quicker and thus reduce the amount of interest i'm paying over the term? So each month put in another £500? is that possible under the agreement?
3. Where it says the optional final payment of £17345.83 - is that their GFV figure? Do i interpret that as that's what they think the car will be worth in 4 years time, with 45k miles on the clock?
4. If i'm correct on Question 3.....isn't that way undervalued? Imagine the year is 2022 and you'd seen this BMW M4 with 50k miles in good condition - would it really only be worth £17k?!
5. would it be possible to take out a bank loan later down the line when i've got say 25k left to pay, and capitalise on the significantly cheaper bank rates? I'm confident i'd get a 3% loan (up to 25k) - checked my experian credit report, i'm "excellent", no debts, no mortgage, nothing.
my worry here is taking out the PCP deal would then knock my credit score, and then i wouldn't get the lovely 3% rates. [/b]
Some comments however did make me realise that ultimately i'd only just about be able to afford a £47k car rather than easily, so i've downgraded my expectations.
Here is the new car i'm now looking at:
now, obviously that 11.9% rate is awful, so...my questions are:
[b]1. How often is the interest calculated? is it daily? i can't find a t's & c's small print anywhere.
2. Would i be able to pay the car off quicker and thus reduce the amount of interest i'm paying over the term? So each month put in another £500? is that possible under the agreement?
3. Where it says the optional final payment of £17345.83 - is that their GFV figure? Do i interpret that as that's what they think the car will be worth in 4 years time, with 45k miles on the clock?
4. If i'm correct on Question 3.....isn't that way undervalued? Imagine the year is 2022 and you'd seen this BMW M4 with 50k miles in good condition - would it really only be worth £17k?!
5. would it be possible to take out a bank loan later down the line when i've got say 25k left to pay, and capitalise on the significantly cheaper bank rates? I'm confident i'd get a 3% loan (up to 25k) - checked my experian credit report, i'm "excellent", no debts, no mortgage, nothing.
my worry here is taking out the PCP deal would then knock my credit score, and then i wouldn't get the lovely 3% rates. [/b]
Edited by wioifoiee on Monday 7th May 21:43
wioifoiee said:
[b]1. How often is the interest calculated? is it daily? i can't find a t's & c's small print anywhere.
2. Would i be able to pay the car off quicker and thus reduce the amount of interest i'm paying over the term? So each month put in another £500? is that possible under the agreement?
3. Where it says the optional final payment of £17345.83 - is that their GFV figure? Do i interpret that as that's what they think the car will be worth in 4 years time, with 45k miles on the clock?
4. If i'm correct on Question 3.....isn't that way undervalued? Imagine the year is 2022 and you'd seen this BMW M4 with 50k miles in good condition - would it really only be worth £17k?!
5. would it be possible to take out a bank loan later down the line when i've got say 25k left to pay, and capitalise on the significantly cheaper bank rates? I'm confident i'd get a 3% loan (up to 25k) - checked my experian credit report, i'm "excellent", no debts, no mortgage, nothing.
my worry here is taking out the PCP deal would then knock my credit score, and then i wouldn't get the lovely 3% rates. [/b]
Edited by wioifoiee on Monday 7th May 21:43
I don't think you can overpay pcp, it's where it different from a loan.
GFV is just a deferred payment, they could make it whatever they want, general half the amount financed after deposit is normal although it may be more or less dependent on whatever influences it.
It may be worth only 17k or less but unlikely. I guess a financial crash of some sort could make this a reality. I actually bought a 4yr old m3 for 18k a decade ago, like comparing apples with pears now however.
Bank loan to close out the balloon, I don't see why not. Again very circumstantial.
coljoh148 said:
Interest accumulated daily but is broken down into monthly amounts shown for finance purposes.
I don't think you can overpay pcp, it's where it different from a loan.
GFV is just a deferred payment, they could make it whatever they want, general half the amount financed after deposit is normal although it may be more or less dependent on whatever influences it.
It may be worth only 17k or less but unlikely. I guess a financial crash of some sort could make this a reality. I actually bought a 4yr old m3 for 18k a decade ago, like comparing apples with pears now however.
Bank loan to close out the balloon, I don't see why not. Again very circumstantial.
^ thisI don't think you can overpay pcp, it's where it different from a loan.
GFV is just a deferred payment, they could make it whatever they want, general half the amount financed after deposit is normal although it may be more or less dependent on whatever influences it.
It may be worth only 17k or less but unlikely. I guess a financial crash of some sort could make this a reality. I actually bought a 4yr old m3 for 18k a decade ago, like comparing apples with pears now however.
Bank loan to close out the balloon, I don't see why not. Again very circumstantial.
just to add the GFV is usually low to give you "equity" at the end, that they hope you'll use as a deposit against another PCP on another car
the PCP won't hurt your credit rating, in fact it could improve it, especially i've you've not got much other evidence of being a good borrower.
1. How often is the interest calculated? is it daily? i can't find a t's & c's small print anywhere.
2. Would i be able to pay the car off quicker and thus reduce the amount of interest i'm paying over the term? So each month put in another £500? is that possible under the agreement?
3. Where it says the optional final payment of £17345.83 - is that their GFV figure? Do i interpret that as that's what they think the car will be worth in 4 years time, with 45k miles on the clock?
4. If i'm correct on Question 3.....isn't that way undervalued? Imagine the year is 2022 and you'd seen this BMW M4 with 50k miles in good condition - would it really only be worth £17k?!
Assuming this is BMW Finance...
1. As mentioned - it's calculated daily but is taken as a monthly payment
2. Yes you can, you will need to call the lender and advise. They will then recalculate the remainder of the agreement and you can usually either lower your remaining rentals, shorten the term (hire purchase) or reduce the balloon payment.
3. Yes that's the guaranteed future value - either pay this to keep the vehicle or hand it back to them
4. Value is usually based on 92.5% of CAP price from memory. This *should* provide you with some equity to put towards a future vehicle.
2. Would i be able to pay the car off quicker and thus reduce the amount of interest i'm paying over the term? So each month put in another £500? is that possible under the agreement?
3. Where it says the optional final payment of £17345.83 - is that their GFV figure? Do i interpret that as that's what they think the car will be worth in 4 years time, with 45k miles on the clock?
4. If i'm correct on Question 3.....isn't that way undervalued? Imagine the year is 2022 and you'd seen this BMW M4 with 50k miles in good condition - would it really only be worth £17k?!
Assuming this is BMW Finance...
1. As mentioned - it's calculated daily but is taken as a monthly payment
2. Yes you can, you will need to call the lender and advise. They will then recalculate the remainder of the agreement and you can usually either lower your remaining rentals, shorten the term (hire purchase) or reduce the balloon payment.
3. Yes that's the guaranteed future value - either pay this to keep the vehicle or hand it back to them
4. Value is usually based on 92.5% of CAP price from memory. This *should* provide you with some equity to put towards a future vehicle.
Nano2nd said:
Herbs said:
Why not just get a personal loan rather than a car loan?
because the monthly payments are higher and/or its harder to get they are generally non secured.PCP then paying off the GFV with a loan normally (but not always) works out more expensive than just having a loan for the same extended time period. Be sure you look at the actual cost of both options if you are planning on keeping the car. I'd also be contrasting what you can lease for the same money, it might work out cheaper.
Don't forget GAP insurance as anything that causes the insurance company to write off the car (such as being stolen) and the insurance company will try to only pay out the remaining finance on the car, leaving you with next to nothing to start again when you might have actually generated a bit of equity in the car.
Other basics would be sure your estimated annual mileage has some wiggle room as the finance companies are getting sharper on being over mileage. Also check if you can get a service plan thrown in because you are buying via PCP and the dealer will most likely make more on a PCP sale vs. cash. Extended warranty would be top of my list of extras if I planned on owning the car long term, can be cheaper to buy this when you first buy the car.
Don't forget GAP insurance as anything that causes the insurance company to write off the car (such as being stolen) and the insurance company will try to only pay out the remaining finance on the car, leaving you with next to nothing to start again when you might have actually generated a bit of equity in the car.
Other basics would be sure your estimated annual mileage has some wiggle room as the finance companies are getting sharper on being over mileage. Also check if you can get a service plan thrown in because you are buying via PCP and the dealer will most likely make more on a PCP sale vs. cash. Extended warranty would be top of my list of extras if I planned on owning the car long term, can be cheaper to buy this when you first buy the car.
Have you considered financing the car via balanced payments?
http://www.stratstone.com/new-cars/finance-explain...
If they offer it - you can overpay, interest is calculated daily, but (importantly) you take the risk on the final payment - if the car value goes below, you're responsible for covering it.
A 4yo M4 is probably about £25k trade right now, so you should have headroom, but it might suit you better.
http://www.stratstone.com/new-cars/finance-explain...
If they offer it - you can overpay, interest is calculated daily, but (importantly) you take the risk on the final payment - if the car value goes below, you're responsible for covering it.
A 4yo M4 is probably about £25k trade right now, so you should have headroom, but it might suit you better.
Unless you are getting a good dealer contribution and plan to pay off the finance early in the agreement I'd avoid PCP completely - done it once myself and forever regretted it as in the real world the car was never worth what it owed the finance (i.e if circumstances changed and I needed to dispose of the car I'd be significantly out of pocket)
With the budgets you've talked about I think your sweet spot will be a 25k unsecured loan over 48-60 months (anything longer and rates tend to creep up) topped up with whatever deposit you can muster. If you're buying a car in the mid to high 30's then that should give you a decent wedge of equity should circumstances change and you need to get rid with minimum fess, penalty or dealer sponsored shafting...
As to future values, just look to the previous gen for guidance, would a 6 or 7 year old M4 with 50k on the clock be worth 17k'ish trade in 2022? Doesn't sound that unreasonable to me.
As to your point 5, I'd ask BMW for a full payment schedule outlining what is owing at the end of each month. The 25k outstanding balance point will be much further down the line than you think it will be given the frankly ludicrous rate of 11.9% - I reckon the 25k mark will be around month 14 using this calculator and the figures you've posted above;
http://bretwhissel.net/amortization/amortize.html
The only other option I'd suggest is speaking to Lloyds about their car finance product if you want to get lower monthies via a balloon payment at the end of the agreement (they do up to 60k and rates were pretty good last time I got a quote on a pre-reg RS6)
With the budgets you've talked about I think your sweet spot will be a 25k unsecured loan over 48-60 months (anything longer and rates tend to creep up) topped up with whatever deposit you can muster. If you're buying a car in the mid to high 30's then that should give you a decent wedge of equity should circumstances change and you need to get rid with minimum fess, penalty or dealer sponsored shafting...
As to future values, just look to the previous gen for guidance, would a 6 or 7 year old M4 with 50k on the clock be worth 17k'ish trade in 2022? Doesn't sound that unreasonable to me.
As to your point 5, I'd ask BMW for a full payment schedule outlining what is owing at the end of each month. The 25k outstanding balance point will be much further down the line than you think it will be given the frankly ludicrous rate of 11.9% - I reckon the 25k mark will be around month 14 using this calculator and the figures you've posted above;
http://bretwhissel.net/amortization/amortize.html
The only other option I'd suggest is speaking to Lloyds about their car finance product if you want to get lower monthies via a balloon payment at the end of the agreement (they do up to 60k and rates were pretty good last time I got a quote on a pre-reg RS6)
well, i reduced my horizons somewhat, and went to see a lovely bmw 440i for £26500 at my local dealer.
Went back home, started the loan applications.
Disaster. The best i got was the postoffice at 7.9% for a 25k loan, that's 4k in interest....
I just don't get it. I'm a model consumer - i checked my experian credit report last month and it was like 969/999, all the soft searches came back as highly likely to get the loan at the desired rate - using moneysavingexperts moneyclub thing also said the same thing.
Net income of 2700 a month, and outgoings of 1100 a month.
No debts, no previous debts, been using a credit card to pay for monthly stuff since june 2014 always paying the balance in full every month.
i was fully expecting to get low APR........absolutely no idea why i can't.
My credit card currently has a balance of 3k on it out of a limit of 7k, thats purely because i bought an expensive tv last month.
you'd hope that the checks are a bit cleverer and look at trend over time.
utterly confused and sad, i refuse to pay that much in interest a month.
i don't get what i would have to do to become a 3% loan applicant......
Went back home, started the loan applications.
Disaster. The best i got was the postoffice at 7.9% for a 25k loan, that's 4k in interest....
I just don't get it. I'm a model consumer - i checked my experian credit report last month and it was like 969/999, all the soft searches came back as highly likely to get the loan at the desired rate - using moneysavingexperts moneyclub thing also said the same thing.
Net income of 2700 a month, and outgoings of 1100 a month.
No debts, no previous debts, been using a credit card to pay for monthly stuff since june 2014 always paying the balance in full every month.
i was fully expecting to get low APR........absolutely no idea why i can't.
My credit card currently has a balance of 3k on it out of a limit of 7k, thats purely because i bought an expensive tv last month.
you'd hope that the checks are a bit cleverer and look at trend over time.
utterly confused and sad, i refuse to pay that much in interest a month.
i don't get what i would have to do to become a 3% loan applicant......
xeny said:
I wonder if that's the problem.
HTF do you spend £3K on a TV BTW?
lol no the TV was 2.2k, and then i spend about £400/month on the card for regular monthly things, food etc. HTF do you spend £3K on a TV BTW?
and the only reason i started doing that and using a credit card, was precisely for this situation - i had heard that if you used a credit card and demonstrated you had no issues, it would look good.......so i've been doing that since 2014, paying off the full balance every single month without a drop..
well...what a waste of time that was.
well thats that then, 2 years of saving it is. christ i'll be 34 by then. Whats the point. I might as well just do palmersport days each month.
Life is s
te. Edited by wioifoiee on Friday 11th May 20:09
Edited by wioifoiee on Friday 11th May 20:09
apply for a loan elsewhere
I applied for loan with my bank to buy my current car. came back a 6% or something. I rang the bank and asked what was going. Apparently they used some software or third party (or something else) to determine the interest rate and it was out of their control. "computer says no"
After that applied for a loan with my mortgage provider and get the lowest interest rate they offered
I applied for loan with my bank to buy my current car. came back a 6% or something. I rang the bank and asked what was going. Apparently they used some software or third party (or something else) to determine the interest rate and it was out of their control. "computer says no"
After that applied for a loan with my mortgage provider and get the lowest interest rate they offered
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