PCP: How many people actually pay the balloon

[briSk]

Hi, there's been all this chat about increased PCP-funded sales over the past couple of years.. and the risk of the balloon value being too low to 'pay off the debt' OR that if too many people 'walk away' that there will be a 'flood of used cars' but who ever pays the balloon anyway?

seriously - does anyone have any data on what % of people actually 'buy the car' at the end?

I think it must be incredibly low unless it's some middle aged person who gets an inheritance and things 'ooh this car is fine and it hasn't broken down i'll just keep it'. my believe is that people just keep rolling over and over..

so that makes me think that there is an expectation in the pricing of the loan that people won't pay the balloon (...??)

[briSk]

kambites said:

I know some people have had; mostly people who were intending to buy outright but it turned out that PCP was so heavily subsidized as to be cheaper.

'heavily subsidised' as in for that particular deal the effective interest was less than available through a personal loan?
ta

[briSk]

AJB88 said:

I did on my Leon Cupra, Balloon was 11k, to buy the same age car from SEAT with the same miles they wanted around 16-17k.

that's a fairly unique position though - right? as in someone a) actually thinking about it b) wanting the same car rather than another new one

AJB88 said:

Mine had been services by a specialist and myself so I knew where it had been, plus its running 420ps so decided to keep it.

:-)

[briSk]

some really great stuff here - does anyone know if there is any actual 'data out there' to support the view that 'the muggles' rarely pay it? I do like the anecdotal comment of "only 5 people" etc

[briSk]

spookly said:

This must qualify as one of the dumbest threads ever.

Have you even read it or are you on 'I bought my car on finance and feel the need to be ultra defensive even though nobody cares' mode.

It's all about what proportion of people actually pay the balloon (or rather have actually paid historically).

I think we're all perfectly comfortable with the concept.

[briSk]

Dan W. said:

Cant give any real data sorry

The only stat I was ever told was always the same crap on a PCP training course which was about 7% choose to buy the vehicle.. no idea where they got this figure from.

cool - gives me some more things to google

goes off to google "7% of people buy the car"

[briSk]

For what it's worth, this says 80% of people don't "buy the car":
https://www.contracthireandleasing.com/car-leasing...

so 3/15 is higher than the 1/15 of experience from our esteemed poster.. but no matter what it very firmly puts it in the far fewer people don't than do buy the car area!

[briSk]

Zod said:

I sold it to a mate for more than the balloon.

once a lawyer always a lawyer..! ;-)


hope all is well. interesting to see that 3 people I recognise the names of have joined in. I thought PH was meant to have been taken over by the hoi polloi?

[briSk]

GetCarter said:

as I'll get a brand new car tax deductible. Looking forward to it.

this is the other aspect I hadn't thought much about. the fact that as more and more people are in some way self employted etc there will be more and more people 'intending to buy' cough cough cough a car via PCP for the business so yeah as you say it makes sense that more and more people are choosing to cough buy cough this way.

could it be that the powers that be are trying to find a reason to do away with PCP because they know they're losing out..??

[briSk]

PistonBroker said:

thank you for quoting the worst part of my text for shocking typos!

[briSk]

nickfrog said:

No they don't get forgotten. I'll show you my maths : Tiguan 2.0 TDI Match. £5,240 over 2 years including tax. The car was £26k list and available at £22k after discount. It has lost £8k since then if you sell privately, more to the trade.

So lease has beaten depreciation by a long shot. Add £35 opp. cost/month on the £22k at 2% and buying would have been £370/month without tax as opposed to £218 rented. Why pay more for a new car taxed, warrantied, zero consumables, zero servicing ?

so [genuine question] how sustainable is this / why continue to pursue this business model if you're a manufacturer?

[briSk]

Dan W. said:

kambites said:

I'm not particularly pro- or anti-PCP but the answer to this is fairly obvious - because if you "rent" it you end up paying both the depreciation and someone else's profits.

Its a valid point and there are some valid arguments against that also. as you say pro or anti I am the same. the product does a good job for the correct customer type.

I think it's also fair to say - as we have seen in this thread - that because the intention of the manufacturer is to 'suck you in' that their pricing can be in favour of the PCP scheme and not cash purchase because they want people to be in the cycle of visiting their dealership and buying tyres from them (!) and all that good stuff. so if you are someone who wants a new car for whatever reason it may still be better financially.

[briSk]

valiant said:

Ahh, the weekly finance thread. Jolly good.


No right or wrong answer with finance, it's what works for you and if you can afford the repayments, who actually gives a fk.

to fair - read the bold bit - I was actually wondering about the actual statistics of the market. as you will have noted as you read through it appears that a moderately reputable source things it's about 20% of people actually end up buying the car so 80% ( ) are effectively leasing. a PHer salesperson thinks it's far lower even than that in their opinion.

HTH