Upgrading my PCP Finance car - explain like i'm 5 please
Discussion
Alright, hey everyone.
So in short, I've had my BMW 4 Series for 1 year into a 3 year pcp deal. I am tempted to upgrade and switch to something else.
Please, can someone explain to me how upgrading my car works and how my equity in the car is calculated along with what can i use my equity for? (A deposit on the new car?)
I've currently paid £5000 into the deal with £13000 left to pay before deciding to make a final one off payment to keep the car which i definitely don't want to do.
Thanks in advance.
So in short, I've had my BMW 4 Series for 1 year into a 3 year pcp deal. I am tempted to upgrade and switch to something else.
Please, can someone explain to me how upgrading my car works and how my equity in the car is calculated along with what can i use my equity for? (A deposit on the new car?)
I've currently paid £5000 into the deal with £13000 left to pay before deciding to make a final one off payment to keep the car which i definitely don't want to do.
Thanks in advance.
They effectively buy the car back off you. Assuming your car is now worth X amount, they will take X amount off what is left to pay. Most finance companies will work out payment plans so that you are in effect paying the depreciation on the car each month. Usually it works out that you lose everything you've paid into the car apart from your deposit and then you start again...
Take balloon payment plus outstanding balance on monthly payments = balance of finance against the car. Value of car = trade value of car. Price to change is the trade value of car, less the balance of finance against the car, plus the cost of the new vehicle.
I expect you've got no equity, and will be handing it back to start again. PCP only works if you keep the damn thing.
I expect you've got no equity, and will be handing it back to start again. PCP only works if you keep the damn thing.
edd344 said:
They effectively buy the car back off you. Assuming your car is now worth X amount, they will take X amount off what is left to pay. Most finance companies will work out payment plans so that you are in effect paying the depreciation on the car each month. Usually it works out that you lose everything you've paid into the car apart from your deposit and then you start again...
Nah, deposit covers the drop from retail to trade in value, especially on higher end cars.turtlephilly said:
Alright, hey everyone.
So in short, I've had my BMW 4 Series for 1 year into a 3 year pcp deal. I am tempted to upgrade and switch to something else.
Please, can someone explain to me how upgrading my car works and how my equity in the car is calculated along with what can i use my equity for? (A deposit on the new car?)
I've currently paid £5000 into the deal with £13000 left to pay before deciding to make a final one off payment to keep the car which i definitely don't want to do.
Thanks in advance.
We can work this out pretty easily if you give us the figures. So you've got £13000 in monthly payments left to pay. Add your final balloon payment to this and that gives you your outstanding finance payments.So in short, I've had my BMW 4 Series for 1 year into a 3 year pcp deal. I am tempted to upgrade and switch to something else.
Please, can someone explain to me how upgrading my car works and how my equity in the car is calculated along with what can i use my equity for? (A deposit on the new car?)
I've currently paid £5000 into the deal with £13000 left to pay before deciding to make a final one off payment to keep the car which i definitely don't want to do.
Thanks in advance.
Then find out the trade value of your car - put the details in to We buy any car to get a reasonable estimate of what this might be.
I will add though, that you're probably in for a bit of a shock as the trade value is probably less than the outstanding finance figure.
IanCress said:
We can work this out pretty easily if you give us the figures. So you've got £13000 in monthly payments left to pay. Add your final balloon payment to this and that gives you your outstanding finance payments.
Then find out the trade value of your car - put the details in to We buy any car to get a reasonable estimate of what this might be.
I will add though, that you're probably in for a bit of a shock as the trade value is probably less than the outstanding finance figure.
Bear in mind however that unless the PCP is 0% APR, there will be a rebate of interest due for settling early so whilst the above will give you a rough guide as to how much it would cost to exit the agreement, it will not be exact.Then find out the trade value of your car - put the details in to We buy any car to get a reasonable estimate of what this might be.
I will add though, that you're probably in for a bit of a shock as the trade value is probably less than the outstanding finance figure.
turtlephilly said:
Alright, hey everyone.
So in short, I've had my BMW 4 Series for 1 year into a 3 year pcp deal. I am tempted to upgrade and switch to something else.
Please, can someone explain to me how upgrading my car works and how my equity in the car is calculated along with what can i use my equity for? (A deposit on the new car?)
I've currently paid £5000 into the deal with £13000 left to pay before deciding to make a final one off payment to keep the car which i definitely can't afford to do.
Thanks in advance.
Fixed it for you.So in short, I've had my BMW 4 Series for 1 year into a 3 year pcp deal. I am tempted to upgrade and switch to something else.
Please, can someone explain to me how upgrading my car works and how my equity in the car is calculated along with what can i use my equity for? (A deposit on the new car?)
I've currently paid £5000 into the deal with £13000 left to pay before deciding to make a final one off payment to keep the car which i definitely can't afford to do.
Thanks in advance.
edd344 said:
Yes from when you take the car off the forecourt, not from one year on..
The monthlies will barely keep you in the black. If you put as little as £5k in, you will barely cover the initial drop as it is.I would be impressed if there's anything more than a grand or two in the car tops.
Leaving aside anybody else's agendas, what you need to do is this:
1)Find a car that you are interested in buying.
2)Ask the garage for a valuation on your car
3)Ask your finance company for a settlement figure.
If the valuation is more than the settlement figure then you already have some deposit to use for your next car.
If the valuation is less than the settlement figure then you will have to make up that shortfall in addition to any money you ut down on the new car.
If you have a good relationship with your dealer then they will be able to do all this for you.
1)Find a car that you are interested in buying.
2)Ask the garage for a valuation on your car
3)Ask your finance company for a settlement figure.
If the valuation is more than the settlement figure then you already have some deposit to use for your next car.
If the valuation is less than the settlement figure then you will have to make up that shortfall in addition to any money you ut down on the new car.
If you have a good relationship with your dealer then they will be able to do all this for you.
Pegscratch said:
edd344 said:
Yes from when you take the car off the forecourt, not from one year on..
The monthlies will barely keep you in the black. If you put as little as £5k in, you will barely cover the initial drop as it is.I would be impressed if there's anything more than a grand or two in the car tops.
As has been this is pretty easy to work out if you know the original price of the car and the current trade in value. I am going to guess that the OP is going to have to pay the dealer £5k to take the car away and settle the finance.
Buying a new car on finance and wanting to change after a year is financial suicide.
mike74 said:
Fixed it for you.
Or maybe OP likes changing cars quite often and PCP works for him.. Get off your high horse mate.OP, if you've got your finance agreement to hand, plug the details into this website and it'll give you a good idea of your balance.
https://www.themoneycalculator.com/vehicle-finance...
So say the balance left is £10,000, and the car is worth £10,500, you'll have £500 to put towards a new car etc.
Pegscratch said:
edd344 said:
Yes from when you take the car off the forecourt, not from one year on..
The monthlies will barely keep you in the black. If you put as little as £5k in, you will barely cover the initial drop as it is.I would be impressed if there's anything more than a grand or two in the car tops.
Oh look! Someone else who signed up to a PCP without actually understanding it. I've got a friend who came away with a very similar question recently. He seemed to think buying a car on PCP was like mortgaging a house ie buy with a loan then sell a few years later and use the equity to buy something bigger. Completely ignoring the fact that a car is a depreciating asset.
So explaining this like you are a 5 year old as you requested. THERE IS CURRENTLY NO EQUITY IN THIS CAR. There might be £1k in it at the very end or in 18 months time but if you try to "trade up" now or before then someone's going to have to pay the inevitable short fall.
So explaining this like you are a 5 year old as you requested. THERE IS CURRENTLY NO EQUITY IN THIS CAR. There might be £1k in it at the very end or in 18 months time but if you try to "trade up" now or before then someone's going to have to pay the inevitable short fall.
You need to know your settlement figure.
If you know your balloon you can do some mental maths to figure out a rough settlement figure: (Payments outstanding + Balloon) subtract apr.
Looking at the fact I can buy a 1 year approved used 440i/435d with decent spec and sub 10k miles for 34/30k respectively, I'm predicting you'll need to find about 4k if you have either of those. At least double if you got suckered into a pov spec 420d.
If you know your balloon you can do some mental maths to figure out a rough settlement figure: (Payments outstanding + Balloon) subtract apr.
Looking at the fact I can buy a 1 year approved used 440i/435d with decent spec and sub 10k miles for 34/30k respectively, I'm predicting you'll need to find about 4k if you have either of those. At least double if you got suckered into a pov spec 420d.
Edited by 16v stretch on Wednesday 7th November 11:55
In a previous thread, the OP mentioned he has a 34k mile 2015 420d convertible, so this is likely a PCP on a used vehicle.
Do used PCP's tend to be a worse deal than PCP's on new vehicles? I'm aware they are usually at a much higher interest rate, but that may work in the OP's favour if he's serious about changing, as he'll save a shed load (technical term) of interest.
Do used PCP's tend to be a worse deal than PCP's on new vehicles? I'm aware they are usually at a much higher interest rate, but that may work in the OP's favour if he's serious about changing, as he'll save a shed load (technical term) of interest.
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