Playing the pcp game?

[jjr1]

I have offered £46,500 cash for a BMW and the salesman is squirming and offering a PCP alternative.

His proposal is

Car 47866
Deposit 9500
Dealer contribution 1000
Balance to finance 37386

This would be with BMW financial services.

If I settle within the 14 days do I have to pay back the contribution?
If not am I correct in thinking I need his contribution to be 1386 to leave me in the same position as paying 46500.

A completely daft situation and I know they think I will probably not pay it off, but other than pissing them off have I missed anything?

Edited by jjr1 on Wednesday 29th May 12:31

[ScoobyChris]

This sounds more like HP than a PCP deal. Typically with PCP, you'll just pay off the depreciation based on the Guaranteed Future Value (GFV) of the car at the end of the term and at that point, you can either buy it, return it, or trade it in (if there's any equity over the GFV). HP is deposit and financing the remaining value of the car over the term.

Has he said 46,500 is an acceptable price? It sounds like he might not be able to hit it and so is doing his best to get close using the dealer contribution.

Chris

Edited by ScoobyChris on Wednesday 29th May 12:48

[jjr1]

He won’t do 46500 cash but will offer the above pcp.

I didn’t bother including the gfv or apr as they are irrelevant if I settle early.

[InitialDave]

ScoobyChris said:

This sounds more like HP than a PCP deal. Typically with PCP, you'll just pay off the depreciation based on the Guaranteed Future Value (GFV) of the car at the end of the term and at that point, you can either buy it, return it, or trade it in (if there's any equity over the GFV). HP is deposit and financing the remaining value of the car over the term.

I think it could be either, depends how that "balance to finance" is laid out in the details. The PCP final value payment is technically still part of how much us owing on the car until you hand it back or pay it off, so you still "finance" the same amount whether that's in the firm of equal monthly payments or monthly payments plus optional final payment.

Moot point for what the OP's asking about, though - I'd say check the detail of the contribution offer with them, see if it's conditional on a certain period of finance or not.

Also, I assume it's not a really good rate whereby you'd be better to put the cash somewhere else and take the finance?

[jjr1]

Yes the apr rate is terrible at 8.9% so I just ignored that fact.

The awkward point about the dealer contribution is that if I ask can they claw it back, it will raise large alarm bells, or at least it would to me.

[InitialDave]

Well, if you can't determine it from the paperwork they've provided, would you rather risk them having a sulk about being asked (about something it should be very clear is on the cards), or risk losing a grand?

[jjr1]

Good point. They haven’t sent any paperwork just an outline of the payments.

Will get them to send it over.

[ilikejam]

I've heard various different stories of people having dealers try to claw back contributions. Some have said 1 monthly payment, some 3 and some 6.

It's worth asking as you could both potentially benefit. Ask him to throw in a service pack if you hold off for the required time maybe?

[jjr1]

They have sent over the draft BMW financial services contract. It states nowhere in that, any reference to a clawback of a dealer contribution. They would have to get me to sign a separate agreement to introduce a clawback.

I am just going to go ahead and see if I benefit to the tune of a grand in 14 days time.

[panholio]

Assuming this is a used car? As huge discounts are available on most new BMWs.

[jjr1]

panholio said:

Assuming this is a used car? As huge discounts are available on most new BMWs.

Yes it is an i8 and I am just hoping that it will have slowed in its depreciation now that is is less than 1/2 price..

It is already cheapest by year and mileage so I know that if I have to pay the extra 1000 pounds after 2 weeks it won't be too sore a point. Interestingly of the private sellers out there selling similar i8's none are so competitively priced. I would happily have paid them a figure between trade and retail but most are above retail.......

[jjr1]

Just to update I paid off the finance yesterday and the only additional cost was a £9 a day interest charge. This is a stupid set of hoops you have to jump through to get the best deal but if the dealers want to play this silly game, we should to.

[ilikejam]

Well played, however...

[jjr1]

If you insist