PCP Question

[Cossieian]

Hi guys so some of you know I've now ordered my be GTD, going through VW on PCP.

Can I just ask what the best deposit and term is to take out, I've originally based it on a £1500 deposit over 4 years, but as I intend to change in 18-24 months into it I want to have some equity for the next car, is there a way to work it out??

I know it's kinda impossible to guess what the car will be worth come that time

[p3asa]

I doubt very much if you'll get any equity at that given period if you have taken it out over 48 months.
IIRC the point being made about the PCP deals were you can get out of them at any time so in effect aren't tied into it and if left its course it gives you equity at the end.
I think you would lose out after 18-24months. I certainly wouldn't sink money into the car but rather put it aside if you are wanting out early to change to something else as when you do go to trade it in the salesman knows exactly what you have left to pay and it would be better if you had the extra money separately if you know what I mean.

[monkeyhanger]

Unless you have the full permissible 30% deposit*, doing a PCP at 4 years isn't going to have you breaking even (what the car is worth vs what you owe on it at that point) until you are approaching 3 years into your 4 year term to allow you to change.

Take a 3 year PCP and you'll be breaking even at around 2 years. Don't forget that on a 3 year PCP, about 1/3 of your monthly payment is interest. It's even more on a 4 year PCP - in any given month you'll be paying off less of the depreciation and more of the interest on a 4 year deal, and the car will obviously be worth less at 4 years old than 3 years old.

On the VW website, to finance a bare bones GTD, there's £37 difference between a 3 year and a 4 year PCP. If you can afford the extra then it'll give you a lot more freedom on a 3 year term.

Also remember, extras will tie you up longer and cost you a lot per month on a PCP deal. The car depreciates about 50% in 3 years to the GFV (you might get 55% of RRP in p/x value), but it's 80% depreciation on the extras. You take a £25k GTD and it might lose £11k over 3 years to what you get in p/x. Start adding £5k extras, and you've lost £15k in the same period. That's almost a third more money on your PCP!

*30% deposit is considered as the difference between VW's RRP for your car and what you are financing. If you get a 12% discount on a £25k car then you only have to find £4000 of that £7500 "deposit" from your own money to max out the deposit and minimise what you owe at any given time.