PCP Finance - Very Boring yet Potentially Saving us all money?

[Mr Savage]

Thanks Monkey,

However, I was more thinking of people who change their cars every 3 years. It would surely make more sense to get a PCP, use a bank loan to get a really low APR near 3% and pay off the bit up to the GFV then sit on it for 4 years and trade in the car. This works out so much cheaper than HP as you're not financing the whole car in one go.

[jlwhitworth1]

So you can actually settle the middle portion Of the PCP agreement in one lump sum without paying the GMFV at the same time? I know a lot of people take out the car on an initial PCP agreement and then settle in full after the 11 day 'cool down' period, but never heard of only financing the middle portion?

[dubber36]

However, I was more thinking of people who change their cars every 3 years. It would surely make more sense to get a PCP, use a bank loan to get a really low APR near 3% and pay off the bit up to the GFV then sit on it for 4 years and trade in the car. This works out so much cheaper than HP as you're not financing the whole car in one go.

I'm sure you are finacing the whole car in one go (less the initial deposit) The lenders will still have the GFV amount outstanding for the term of the deal, so surely there is interest from that built into the monthlies too?

[Beddie]

However, I was more thinking of people who change their cars every 3 years. It would surely make more sense to get a PCP, use a bank loan to get a really low APR near 3% and pay off the bit up to the GFV then sit on it for 4 years and trade in the car. This works out so much cheaper than HP as you're not financing the whole car in one go.

I'm sure you are finacing the whole car in one go (less the initial deposit) The lenders will still have the GFV amount outstanding for the term of the deal, so surely there is interest from that built into the monthlies too?

Quite correct, on a PCP deal you are paying interest on the total amount financed which includes the balloon payment 

[phazer]

Remember you can take the PCP car to any marque and they won't know what the GFV figure is just what the car is actually worth.

I wouldn't be so sure on that one. When we were considering chopping the mini in for the Golf the first VW dealer we saw was able to pull up the finance details using the reg even though it was financed through BMW.

Didn't ask about it as that dealer was an arse and part chop was low on the priority list.

[p3asa]

Yeah if you bought from a VW Arnold Clark and are going to a BMW Arnold Clark say, your details will be on the same system.

[phazer]

Nope. It was Sytner BMW and *urgh* Parkway VW.

I suspect there are solid reasons for this given how the market is set up to allow any dealer to settle finance to keep used cars on the merry-go-round.

[monkeyhanger]

I was prepared to take the wife's A1 under finance with the biggest deposit allowable but the salesman arsed around with the GFV pushing it way down, around £1100 lower than the figure quoted on the Audi website for the same model. He told me that he had to do this because of the discount given. I said that didn't seem right - why should that car potentially be worth less to him in p/x 3 years down the line because I negotiated a discount?  I'd always look at the used forecourt sticker price when p/xing and expect 85% rather than settle for a standard arbitrary value more than GFV

Obviously I get the lower the price of the GFV then the higher the monthly payments but that GFV wouldn't really come into play unless handing the car back and walking away as Audi would then give at least this to clear the finance.
If Audi have given you a GFV of say £10k and you think that is really low like you have mentioned above, would you not be offered book price anyway and thus make out of it come trade in?
Remember you can take the PCP car to any marque and they won't know what the GFV figure is just what the car is actually worth.

Well an Audi is worth more to an Audi dealer than any other marque. According to the Audi website, the missus' A1 (not taking into account any options - they add so little to the used price anyway) should have a GFV of around £9600 at 3 years old, and with that in mind i'd be pushing towards £11k.

Previous multiple experiences of p/xing cars is being offered that statutory amount over GFV (likely a round £1000 on a 3 year old A1 1.6TDI Sport) They had the GFV calculated at £8600 on our finance proposal. Chances are i'd be offered £9600 in 3 years time - the Audi website GFV. They had 3 year old examples up for £13500 on the forecourt, so I'd consider £11000 to be a fair p/x price. I doubt they'd offer me that.

The dealers generally assume your p/x is on finance, they're wanting to know what you owe on it and then offer you a bit as a hook. True value rarely comes into what they're looking to offer you.

The Audi salespeople seemed a bit slimy when I was considering an S3 while 1/2 way through the R's 8 month wait, but the missus really wanted an A1. He had £2k room to manipulate the S3's GFV to keep monthlies down (I had to feign interest in finance to try to get the best deal from them - they want that finance lumper to subsidise the discount).

This time around for the A1 I was able to not get messed around as there was nothing to p/x against it. We bought the 5 year warranty. Plan is to keep it 4 years and sell with a year's warranty for £9-10k in a private sale.

[monkeyhanger]

However, I was more thinking of people who change their cars every 3 years. It would surely make more sense to get a PCP, use a bank loan to get a really low APR near 3% and pay off the bit up to the GFV then sit on it for 4 years and trade in the car. This works out so much cheaper than HP as you're not financing the whole car in one go.

I'm sure you are finacing the whole car in one go (less the initial deposit) The lenders will still have the GFV amount outstanding for the term of the deal, so surely there is interest from that built into the monthlies too?

Yes there is - in effect you'll have 2 loans on the go, one to pay the interest to VW finance on the GFV, and the other to pay the depreciation and diminishing interest on the depreciation as you pay it off. If VW finance is 6% and private bank finance is 3.5%, you'll still end up with a true APR between the 2 of around 5%.

It's like you've got an interest only mortgage on the GFV and a capital repayment mortgage on the depreciation.

As I said before, VW love finance, it suits their high residuals model. If you always owe more than half the car's sticker price you'll always be paying a lot of interest to them.