Blackrock1
Registered User
- Messages
- 1,713
If you ask me this whole think looks and smells like a pyramid scheme.
I think that the example in the Telegraph of the dealer ringing up the woman early on to get another new car sounds uncannily like what happened to Blackrock. I'd love to know what percentage of people break their PCP before the 3 years.
Hi Blackrock1,
I hope you don't mind me using your own case, but I am trying to show how falling car values in the 2nd hand market would adversely affect the above deal. I think (and I mean think) that the issue will occur when you try to renew on your 3rd car. If you go again and get something similar to what you are currently driving, the GMFV on that 3rd car will be much lower or the repayments would be much higher. You can of course shop elsewhere but I think the other dealers will be in the same position - 2nd hand values will have fallen to such a level that the GMFV promised will be a lot lower. When selling this car, the dealer may only offer the GMFV and you may have little choice if the market is flooded. You bought the car for 50k too so you are looking at a near 30k loss. Of course you have the funds so you're fine, but for many others it could be a different story.
A post in boards.ie on the topic
I work in advertising. It's all below and above the line, digital and traditional.
Two of the advertisers I work with are the most popular motoring brands in Ireland. The push for PCP is very focused, they're targeting young social climbing men that are brand and year-reg obsessed diesel drivers whom are gearing for a new car to show off to contemporaries and family. And it's working very very well.
Making normally unaffordable purchases all of a sudden affordable along with the typical Irish hankering for the newest 162/171 latest reg to impress the neighbours is the new black.
If you're buying a 60k car. You will pay 60k for that car. One way or another. You will pay for it, now, then, three years down the line, fifteen years down the line. You Will pay the top price for these cars. These deals have been very well thought out with the best minds in finance. Don't for a minute think you're cleverer than them. You're not. It's absurd to think that you're getting a deal.
http://www.boards.ie/vbulletin/showpost.php?p=101710453&postcount=84
what has PCP got to do with the depreciation of value of the car, if i bought it for cash id be in the same position
quoting some random poster from boards doesnt make it any more factual
you will pay top price for these cars...
sounds far more dramatic than you will pay the rrp less whatever you manage to negotiate off for these cars.
I think most are in agreement on that point Firefly, I don't think we need another 15 pages arguing it. PCPs are designed to give them impression of affordability which, for some people, may blur the fact that you are still paying the full cost of a new car. However as the examples in Leos post show, overall it is a cheaper alternative to traditional car loans.The point I am repeatedly trying to make is that PCPs are luring people to buy new cars which they otherwise wouldn't do.
I really don't think this is the case. Maybe some people are fooled by these deals but I think any punter with half a brain is aware of the fact there is a balance owing at the end of the term. You make it sound like it is always easy to roll over to another new car but I don't think it is quite as easy as you suggest. If there is not enough equity built up (i.e. the difference between the GMFV and the market value at that time) then the customer needs to put their hand in their pocket again to top up the deposit required on the next new car. Time will tell but I would suggest that with so many of these deals being taken up, there won't be a massive difference between the GMFV and the market value so the equity built up will rarely come close to a deposit on the next new car. If people are as naive and as strapped for cash as you suggest then it's much more likely they will be handing the car back than rolling over onto a new deal. Obviously that's a concern too as some people may not imagine this can happen to them but I don't see the pyramid scheme doomsday scenario being a real concern with this offer.Another point I am trying to make is that for a lot of people they think once the initial deposit is paid they can drive new cars forever and a day with low monthly repayments which won't be the case.
You make it sound like it is always easy to roll over to another new car but I don't think it is quite as easy as you suggest. If there is not enough equity built up (i.e. the difference between the GMFV and the market value at that time) then the customer needs to put their hand in their pocket again to top up the deposit required on the next new car. Time will tell but I would suggest that with so many of these deals being taken up, there won't be a massive difference between the GMFV and the market value so the equity built up will rarely come close to a deposit on the next new car. If people are as naive and as strapped for cash as you suggest then it's much more likely they will be handing the car back than rolling over onto a new deal.
Obviously that's a concern too as some people may not imagine this can happen to them but I don't see the pyramid scheme doomsday scenario being a real concern with this offer.
which will mean they can go and pick up a second hand car for almost nothing if you follow your logic through
It would be interesting to know for sure. We have no idea of what bonuses car manufactures are giving garages to shift new cars. In VWs case, the timing was remarkable - it was around the same time as the emissions scandal. VW could not afford their cars not to sell given their massive production business - the whole thing could grind to a halt. Better to offer 0% and keep the lines going..You would be surprised at how little margin there is on new cars
I'm not saying that. I am saying that a number of people are suggesting that the price of 2nd hand cars in garages are being kept artificially high to make buying a new car more attractive.Do you think garages are sitting on second hand cars and happy not to sell them ?
I'm not saying that. I am saying that a number of people are suggesting that the price of 2nd hand cars in garages are being kept artificially high to make buying a new car more attractive.
It's clearly stated the two year term chosen was to give a fair representation of total cost of credit financing over a 5 year term for PCPs and straight financing.
Those who choose not to renew their car and pay off the GMFV can finance this however they choose.
However as the examples in Leos post show, overall it is a cheaper alternative to traditional car loans.
Which is fine in theory. In practice there are people who may not be able to stump up the extra cash to pay off the balloon in 2 years. Bear in mind that one of the attractions of the PCP are the low repayments.
Exactly and those who chose to finance the balloon over 5 years will end up paying more.
Leo's key post is fine in theory but it assumes the borrower can increase their repayments to pay off the balloon over two years. That's a big " if " .
1. Some people will never buy new cars - they will always buy second hand cards. A 3 year old second hand car with low mileage will always be attractive for this group. PCP allows a steady stream of these cars to the market and should keep the prices 'reasonable'.
Most people will fall into group 1 & 2 - but a few will fall into group 3.
There were 50% more car sold in 2016 that in 2014 and lots of cars imported from the UK too.
Maybe, but is that because it suits them and they would have bought the car anyway, or is it that they have both a car they would never have dreamed of because 'easy' finance was available ?I hope you're right but my aging hunch tells me a lot of people are driving on the never-never.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?