Get out of PCP now before residuals take a hammering?

[handbraketurn]

OK, that headline is a bit hyperbolic but it's currently looking like there is going to be some slow down and potentially a recession after this current crisis runs its course over the coming months. Which could very well affect premium / sports car values as it did in 2008.

I'm 2 years into a PCP on a BMW demo, I'm fairly happy with it and the costs are manageable. It's an F30 3 series and they made too many at the end and discounted them anyway, so the market has always looked a bit bubbly to me.

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract. Rare to be in positive equity at this point of a PCP, I keep an eye on it because I'm always looking at alternatives/upgrades/more exciting options.

My fear is that values go down over the next few months or worse, I'll loose current equity and potentially go into negative. Even though I could voluntarily terminate in June, I'd still have to pay back any difference...

On the plus side that might be a good time to swap to something more exciting if prices take a dive, but not if I have to bail out of negative equity and will kick myself for not getting out earlier (now) when I could.

So I'm debating whether to get out now, buy a shed for a few months and buy something again in the summer....

Interested to hear others thoughts on residual car values?

Cheers,

HBT

[jonwm]

Can't comment on the PCP side, but seems F30 prices are quite low of late.

WBAC offered £13k for my 330e Sport (18 plate) 41k miles with Full BMW history, was £37k with options so a loss of nearly £25k in 2 years seems horrendous, wife's 5008 Peugeot is over 2 years old on a 67 plate granted less miles (15k) but they are offering £20k against a list of £31k.

[fourstardan]

handbraketurn said:

OK, that headline is a bit hyperbolic but it's currently looking like there is going to be some slow down and potentially a recession after this current crisis runs its course over the coming months. Which could very well affect premium / sports car values as it did in 2008.

I'm 2 years into a PCP on a BMW demo, I'm fairly happy with it and the costs are manageable. It's an F30 3 series and they made too many at the end and discounted them anyway, so the market has always looked a bit bubbly to me.

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract. Rare to be in positive equity at this point of a PCP, I keep an eye on it because I'm always looking at alternatives/upgrades/more exciting options.

My fear is that values go down over the next few months or worse, I'll loose current equity and potentially go into negative. Even though I could voluntarily terminate in June, I'd still have to pay back any difference...

On the plus side that might be a good time to swap to something more exciting if prices take a dive, but not if I have to bail out of negative equity and will kick myself for not getting out earlier (now) when I could.

So I'm debating whether to get out now, buy a shed for a few months and buy something again in the summer....

Interested to hear others thoughts on residual car values?

Cheers,

HBT

I'd take it.....

[Jimmy Recard]

I think I'd definitely take that. It sounds too good to be true somehow

[PurpleFox]

Aren't you locked into it for 4 years? I thought that's how those things worked.

[numtumfutunch]

JIMMYJ4ZZ said:

No one actually expects to have any money left in the vehicle at the end of the PCP right? I certainly never have, it's just fixed cost motoring.

If you can make money on it, do it.

Totally this

My 5 Touring arrives in May on PCP, or rather I hope it does

The monthlies were pretty damn bloody good
I have absolutely no intention of doing anything other than handing it back

The GFV was fair but paying that for a 4y old big diesel is naive at best these days
If the value tanks even more Im safe and its not my problem

Ive leased my last 2 cars but current deals have been shabby hence signing up for 4y in a 530d with a few toys

Cheers

[djc206]

JIMMYJ4ZZ said:

No one actually expects to have any money left in the vehicle at the end of the PCP right? I certainly never have, it's just fixed cost motoring.

If you can make money on it, do it.

I’ve had equity in most of mine. £7k in my mustang at 27 months into a 36.

Anyway what’s the problem with negative equity OP? Just hand the car back at the end and walk away.

[djc206]

PurpleFox said:

Aren't you locked into it for 4 years? I thought that's how those things worked.

No in a word. You can sell the car so long as the finance is cleared at any point. I’ve never kept a PCP to the bitter end.

[Adam B]

jonwm said:

WBAC offered £13k for my 330e Sport (18 plate) 41k miles with Full BMW history, was £37k with options so a loss of nearly £25k in 2 years seems horrendous

Does £24k sound a bit better

[Driver101]

handbraketurn said:

I'm 2 years into a PCP on a BMW demo, I'm fairly happy with it and the costs are manageable. It's an F30 3 series and they made too many at the end and discounted them anyway, so the market has always looked a bit bubbly to me.

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract. Rare to be in positive equity at this point of a PCP,

Only 3 months off the 50% mark, and £1.2k above the settlement just now?

£1.2k can only be 3 or 4 payments?

The 50% point is usually towards the very end of the deal with so much wrapped up in the GFV. Getting to the the 50% point at 30 months doesn't sounds right.

[Stevil]

Driver101 said:

Only 3 months off the 50% mark, and £1.2k above the settlement just now?

£1.2k can only be 3 or 4 payments?

The 50% point is usually towards the very end of the deal with so much wrapped up in the GFV. Getting to the the 50% point at 30 months doesn't sounds right.

I think by 50% mark he means 3 months off being halfway through the 4 year contract as opposed to 50% of the cars value.

[Driver101]

Stevil said:

Driver101 said:

Only 3 months off the 50% mark, and £1.2k above the settlement just now?

£1.2k can only be 3 or 4 payments?

The 50% point is usually towards the very end of the deal with so much wrapped up in the GFV. Getting to the the 50% point at 30 months doesn't sounds right.

I think by 50% mark he means 3 months off being halfway through the 4 year contract as opposed to 50% of the cars value.

He says he's 2 years through a 4 year PCP.

I've picked it up that he is 3 months off paying 50% of the amount he would be liable to pay, but not accounting for the final payment. That's an irrelevant number in a PCP deal.

I'm not sure how else to read that.

[blueg33]

Surely PCP is the safe play in terms of residuals. You can hand the car back at the end, so if residual is lower than the final payment you just give it back. If residuals are higher, you pay off the balance and sell it and get cash in the bank (just done the latter)

[Adam B]

handbraketurn said:

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract.

please explain this

Motorway have offered you £1200 over the year 4 balloon payment to buy the car now, or over a settlement figure which is available once 50% paid?

[snorkel sucker]

Adam B said:

handbraketurn said:

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract.

please explain this

Motorway have offered you £1200 over the year 4 balloon payment to buy the car now, or over a settlement figure which is available once 50% paid?

Surely the answer to the question lies in the maths. If you're 3 months off the 50% mark but only half way into the 4 year contract, that must mean that the deposit was a decent size. Ergo, the £1200 being offered over the settlement figure means nothing without understanding how much deposit went in.

The 50% figure on a 4 year PCP usually comes right near the death of the 4 year period. Its only brought forward when there is a deposit paid upfront therefore reducing the total amount payable.

If the deal was £0 deposit and £x / month for 48 months and you're being offered £1.2k to put into your pocket, happy days. If your deal was, let's say, £10k deposit and £x / month for 48 months then, well, the £1.2k you're getting back means you need to take the £8.2k difference, divide it by the number of months you've been in your deal, and add that to your monthly payment to give an idea of actually how much its cost you per month.

Edited by snorkel sucker on Tuesday 17th March 13:31

[sideways sid]

So you entered into an agreement to run a car for four years with no residual value risk / exposure at the end of the term.

Less than half-way through, with just over two years of residual-risk-free motoring ahead, you're considering, exiting the agreement, buying a second car to run for a few months (with unknown running costs / repair bills etc), then selling it a few months later and buying a third car? Because you're worried about depreciation?

What are you actually trying to achieve? Swapping the liability of future monthly costs for £1200 surplus and potentially lower overall costs, or just fancy a change of car?

[Terminator X]

handbraketurn said:

OK, that headline is a bit hyperbolic but it's currently looking like there is going to be some slow down and potentially a recession after this current crisis runs its course over the coming months. Which could very well affect premium / sports car values as it did in 2008.

I'm 2 years into a PCP on a BMW demo, I'm fairly happy with it and the costs are manageable. It's an F30 3 series and they made too many at the end and discounted them anyway, so the market has always looked a bit bubbly to me.

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract. Rare to be in positive equity at this point of a PCP, I keep an eye on it because I'm always looking at alternatives/upgrades/more exciting options.

My fear is that values go down over the next few months or worse, I'll loose current equity and potentially go into negative. Even though I could voluntarily terminate in June, I'd still have to pay back any difference...

On the plus side that might be a good time to swap to something more exciting if prices take a dive, but not if I have to bail out of negative equity and will kick myself for not getting out earlier (now) when I could.

So I'm debating whether to get out now, buy a shed for a few months and buy something again in the summer....

Interested to hear others thoughts on residual car values?

Cheers,

HBT

Nope just VT at the 50% paid point and hand the car back regardless of mileage, value etc. Car owners problem.

TX.

[Driver101]

snorkel sucker said:

Adam B said:

handbraketurn said:

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract.

please explain this

Motorway have offered you £1200 over the year 4 balloon payment to buy the car now, or over a settlement figure which is available once 50% paid?

Surely the answer to the question lies in the maths. If you're 3 months off the 50% mark but only half way into the 4 year contract, that must mean that the deposit was a decent size. Ergo, the £1200 being offered over the settlement figure means nothing without understanding how much deposit went in.

The 50% figure on a 4 year PCP usually comes right near the death of the 4 year period. Its only brought forward when there is a deposit paid upfront therefore reducing the total amount payable.

If the deal was £0 deposit and £x / month for 48 months and you're being offered £1.2k to put into your pocket, happy days. If your deal was, let's say, £10k deposit and £x / month for 48 months then, well, the £1.2k you're getting back means you need to take the £8.2k difference, divide it by the number of months you've been in your deal, and add that to your monthly payment to give an idea of actually how much its cost you per month.

Edited by snorkel sucker on Tuesday 17th March 13:31

A large deposit doesn't change the total amount payable.

[CooperS]

Unless your over the mileage or the car has a number of dings just VT at the 50% point.

I did that and it was an easy process.

The £2.5k deposit I put in was lost money and so is everyone else's. Those who put 8k in on a £30k car are only reducing the monthlies unless a higher deposit gets you a lower interest rate.

[snorkel sucker]

Driver101 said:

snorkel sucker said:

Adam B said:

handbraketurn said:

It's currently got an offer from Motorway.co.uk £1.2k above the settlement figure and it is 3 month off the 50% mark of a 4 year contract.

please explain this

Motorway have offered you £1200 over the year 4 balloon payment to buy the car now, or over a settlement figure which is available once 50% paid?

Surely the answer to the question lies in the maths. If you're 3 months off the 50% mark but only half way into the 4 year contract, that must mean that the deposit was a decent size. Ergo, the £1200 being offered over the settlement figure means nothing without understanding how much deposit went in.

The 50% figure on a 4 year PCP usually comes right near the death of the 4 year period. Its only brought forward when there is a deposit paid upfront therefore reducing the total amount payable.

If the deal was £0 deposit and £x / month for 48 months and you're being offered £1.2k to put into your pocket, happy days. If your deal was, let's say, £10k deposit and £x / month for 48 months then, well, the £1.2k you're getting back means you need to take the £8.2k difference, divide it by the number of months you've been in your deal, and add that to your monthly payment to give an idea of actually how much its cost you per month.

Edited by snorkel sucker on Tuesday 17th March 13:31

A large deposit doesn't change the total amount payable.

You're right; I worded that poorly. A large deposit doesn't reduce the total amount payable, but what it does do is reduce the time it takes to reach the 50% point as you've already paid off a chunk of the total amount.