Why is this?
How come there are so many expensive new cars on the roads?
- Thread starter bmount
- Start date
postman pat
Registered User
- Messages
- 332
How come people have such expensive houses.......
Honestly don't understand why people are changing cars every 3 years unless they are doing major mileage. I don't think you have to buy expensive to get reliability.
My car was purchased new in 2010, the alternator broke in the first two years but was repaired for free. Had two accidents, one my fault (drove into a car in a basically empty supermarket one morning very early) the other someone pulled out of a parking spot into me. No major damage either time. About 50K on the clock now. A city run around. I do the annual service and have to do an MOT every year now. Changed tyres once I think, might be twice (when the garage tells me too) but because it's a small car it doesn't cost much. My car tax is lower too because of it's size. But it takes 5 people and the boot seems tiny but I can do a big shop in it. (Opel Agila - to you guys based on the Suzuki Wagonlit). Cost me €15.65 a week in petrol last year. Great for parking. I'll keep it until it falls apart. That's a joke, no I'm not allowed to do that here but you know what I mean, when I'm told a repair means something major has gone then I'll replace it with one that has a 5 year guarantee.
My husband's car, well as far as I'm concerned it's all about ego. Naturally he hates my car.
PCP
This is a very big trend in Ireland. Is there a downside?
I'll fund mine in cash or with a car loan that has zero interest, that's how I bought my current car from Opel and ditto my husbands Renault. I refuse to pay interest needlessly but it's a major purchase so people should be planning in advance for when they are going to buy if they possibly can.
We once had a poster on here who was changing his car nearly yearly, ended up with debt of something like 80K (that was around the height of the celtic tiger madness), think it was his wife who came on here in despair.
My car was purchased new in 2010, the alternator broke in the first two years but was repaired for free. Had two accidents, one my fault (drove into a car in a basically empty supermarket one morning very early) the other someone pulled out of a parking spot into me. No major damage either time. About 50K on the clock now. A city run around. I do the annual service and have to do an MOT every year now. Changed tyres once I think, might be twice (when the garage tells me too) but because it's a small car it doesn't cost much. My car tax is lower too because of it's size. But it takes 5 people and the boot seems tiny but I can do a big shop in it. (Opel Agila - to you guys based on the Suzuki Wagonlit). Cost me €15.65 a week in petrol last year. Great for parking. I'll keep it until it falls apart. That's a joke, no I'm not allowed to do that here but you know what I mean, when I'm told a repair means something major has gone then I'll replace it with one that has a 5 year guarantee.
My husband's car, well as far as I'm concerned it's all about ego. Naturally he hates my car.
PCP
This is a very big trend in Ireland. Is there a downside?
I'll fund mine in cash or with a car loan that has zero interest, that's how I bought my current car from Opel and ditto my husbands Renault. I refuse to pay interest needlessly but it's a major purchase so people should be planning in advance for when they are going to buy if they possibly can.
We once had a poster on here who was changing his car nearly yearly, ended up with debt of something like 80K (that was around the height of the celtic tiger madness), think it was his wife who came on here in despair.
Last edited:
Yes, I see that in my place of work as well. Average salary might be 70k yet nearly no new cars but a good few high end cars 2-6 years old.
In my opinion, when you start accumulating some money you value it more rather when you don't have very much then it is too easy to sign up to a car loan.
Ditto - both of ours were paid for with the filthy lucre! Mine is 10 years old and Mrs. Firefly's is 15 years old. Both are good for ages yet as our mileage is quite low, but I'll probably change mine in the next 2-3 years when all these ex-PCP cars start flooding the market!
Very true!
just remember, getting insurance is an issue now for "older" cars - specifically for cars around the 15 year mark!
We insured the 15 year old car before it turned 15 (??!!) so we're good for another 9 months, but yeah, take your point thanks. Maybe herself will be getting a new jalopy before me so!
Gordon Gekko
Registered User
- Messages
- 7,849
Agreed. In my experience, new car owners are either extraordinarily wealthy, or struggling to keep up with the neighbours.
willyfones
Registered User
- Messages
- 39
I would say it is related to PCP deals or the fact that there is a lot of cash tucked away on deposits maybe people are beginning to splurge again.. as someone who doesn't even own a car.. I can't understand buying anything over 20k myself so anyone paying 80k+ is just obscene.
Unless you are some sort of car enthusiast
PCP deals are bad news for the following reasons.
Ownership - you don't own the car (the finance company does, you can pay a large balloon payment at the end of the agreement but this can be as high as 35% of the car price).
Conditions attached to GMFV (guaranteed Minimum Future Value) is full of conditions reducing the value of the car - upper mileage limit for example will incur significant financial penalties.
Set up/ Documentation fees can be significant
Breakage fees The finance company will charge you up to 70% of the interest they would have received or they take back the car.
End of the Agreement as mentioned Pay a balloon payment or hand back the car.
Save and buy with cash or If you look at the terms of any Credit Union car loan they are better value long term.
Unless you are some sort of car enthusiast
PCP deals are bad news for the following reasons.
Ownership - you don't own the car (the finance company does, you can pay a large balloon payment at the end of the agreement but this can be as high as 35% of the car price).
Conditions attached to GMFV (guaranteed Minimum Future Value) is full of conditions reducing the value of the car - upper mileage limit for example will incur significant financial penalties.
Set up/ Documentation fees can be significant
Breakage fees The finance company will charge you up to 70% of the interest they would have received or they take back the car.
End of the Agreement as mentioned Pay a balloon payment or hand back the car.
Save and buy with cash or If you look at the terms of any Credit Union car loan they are better value long term.
Some brands are offering way more attractive rates though. Some CUs are charging over 10% APR!
I never dreamed my car would last so long. My mother was forever going to the garage with her jalopy. No idea how she passed the Irish NCT with the amount of dints and bangs and doors not locking etc.
Is 15 years now considered the max, I was thinking mine is holding out so well I might be able to let the eldest have it as a first car, as a) it will cost me nothing b) it's worth nothing, I asked the trade in value about 5 years ago and was told 1K, c) it's not a fast car d) excellent starter car for bumps and scrapes
PCP does seem to be the new thing. I'm sure if I looked into it that it ends up costing a fortune. Prior to my 'new' car I always had second hand, but bought from a reputable garage and with a guarantee. I was there recently as they invited people to a BBQ as I wanted to see the new model of a small car, in preparation for the day my car dies, and I noticed their second hand cars were 3 years old max.
Well what's the odds we're going to have a few posters in the future who are regretting going down the PCP route. A worked example of the figures might be interesting.
If you fail to pay your lease, the finance company will repossess their car, sell it, and bill you for the remaining balance. Traditional car loans are unsecured.
When you arrive at the end of a lease, you can either
a) pay a 30-35% final payment and drive away with your car.
b) walk away, discarding your equity in their car (you've paid 75-80% of the sticker price by now). If you have exceeded the agreed mileage, you will get a bill.
c) roll the equity into deposit for a new PCP agreement, and "drive away in a new car with the same low monthly payment". If you have exceeded the agreed mileage, your equity/deposit will be less than expected.
For punters who aren't good at saving, option c becomes the path of least resistance, even though it's the most expensive option long term. Customers who like to drive new cars and who don't like financial planning will find that car payments become a permanent part of their lives.
It's not hard to see why manufacturers/dealers prefer this arrangement to any sort of car loan, let alone a discounted one. I imagine that discounts for cash buyers are becoming a thing of the past?
Edit: a case study.
Avensis D-4D 112 (2.0) Luna Touring Sports Navi + options
Cash
Total Cost: €33,170
Toyota Flex PCP
Deposit: €2,281
Repayments: €611 for 36 months = €22,009
Final Payment: €12,712
Total Cost: €37,066 (111% of cash price over 36 months)
Hypothetical 7.9% car loan
Deposit: €2,281
Repayments: €966 for 36 months = €34,794
Final Payment: €0
Total Cost: €37,075 (111% of cash price over 36 months)
Toyota Flex PCP + Personal loan to cover balloon payment
Deposit: €2,281
Repayments: €611 for 36 months = €22,009
Balloon Payment: €12,712
Personal loan to cover balloon payment: €609 for 22.5 months @ 7.9%
Total Cost: €38,081 (114% of cash price over 58.5 months)
Last edited:
I assume there will be a number of cars being sold privately before the company repossess, with no mention of "outstanding finance" on the vehicle - even if you ask the private sellet at the time - "buyer beware" kicks in!
Is there an easy way of checking for outstanding finance on a vehicle - or is just through the usual "car history check" web sites?
The customer will have the option to finance the final payment, either via the dealer at the same rate as they're on, or via bank or CU loan. Some dealers are offering finance around 4% on PCPs as well (VW even had 0% offers for a while).
Very good point!
Gordon Gekko
Registered User
- Messages
- 7,849
PCP can make sense for some people though...0% finance in certain circumstances and great for someone with deferred remuneration.
Good point. I'll add this scenario to the case study.
In the case where the dealer/manufacturer is offering subsided finance, the cost of the subsidy is baked into the car's sticker price. I'd expect the cash price to be correspondingly lower than the sticker price to a savvy cash buyer.
Last edited: