What do you think I do be doing, turning corners like Ayrton Senna. I don't set out in the car of a morning to test just how well they work.
Is PCP a good way to finance a car?
- Thread starter Brendan Burgess
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What do you think I do be doing, turning corners like Ayrton Senna. I don't set out in the car of a morning to test just how well they work.
Look guys, I do low mileage, on secondary roads in a city and I might be on the motorway a couple of times a week at around 110 km and they work perfectly. I once nearly ended up in a lake though. And that was with the children
took a bend wrongly in the ice and skidded to within a foot of the water (frozen).This is the bit I need clarifying. So when is a 'guarantee' not a guarantee for the GMFV exactly?
We can do a key post from this and 'sticky' it so it remains at the top of the forum.
Nissan's calculator is one of the better ones out there, you can play around with deposit, term, and mileage options to see how they affect the numbers.
Blackrock1
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i think that everyone needs to be prepared for an emergency stop in sub optimal conditions
Blackrock1
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you are assuming its not guaranteed but as i said thats the premise of the agreement.
You won't get the GMFV if you do not maintain the car to the agreed standards in terms of mileage and damage. The T&Cs are pretty clear on what's expected, so there should be little doubt about what to expect when the time comes.
Ceist Beag
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Thanks Leo, I think that would be good as there is a lot of incorrect or irrelevant talk on this thread and I think Brendan was looking for one factually correct post on the pros and cons of PCP which I tried to address so it would be good to take this make this a sticky to help people see the wood from the trees here.
OK, a useful exercise!
A few things on the calculations:
TAX. The tax on my car is a whopping 710 euro. A newer diesel model comes in at about 290 I believe. So the extra cost to me is 420 per year.
Fuel. I get 30mpg but could probably double that with a newer diesel so I am also taking into account this extra cost to me in keeping the car I have.
I do approx 12,500 miles a year. This works out at 417 gallons a year. At 4.5 litres per gallon that's 1,875 litres per year. At say 1.30 a litre that comes in at 2,438. The newer diesel would only use half the fuel and going on a lower price of 1.20 a litre the annual cost would be 1,125. So from a fuel perspective it's costing me 1,313 per year to stick with what I have.
Servicing. I get the car serviced at 200-300 a pop every 18 months or so. Going with the higher figure, this works out at 198 per year.
Tyres are tyres and will have to be changed regardless (they're obvioulsy included in the new car cost also) so I have left this out. Ditto for insurance. The annual NCT charge does apply though. So it's .5 of the full charge, or about 23 euro.
One thing to note though. As in Bronte's case my car is practically fully depreciated at this stage, so that annual depreciation charge below will continue to drop the longer I keep the car.
Regarding the car itself, I believe its original price was circa 50k. I drove a 2012 model last year (albeit a lower spec) and I couldn't wait to get into my own car afterwards. Interestingly the only car I have driven that surpassed my own was indeed an Audi A5 for about the 50k mark too.
Soooo, here are my costings:
Purchase Price 15600
Current Value 2000
Net Cost 13600
Years 6
Annual Depreciation Cost 2,267
Servicing 198
TAX * 420
Additional fuel cost 1,312.50
Total Annual cost 4,220.17
So, my car has cost me just over 4k a year, all in, to buy outright. As mentioned this figure will fall the longer I have it.
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Blackrock1
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Firefly
a little comparison over the 6 years of my two PCPs then, some assumptions made but nothing outlandish
Purchase 15,600.00
Value 2,000.00
Cost 13,600.00
Monthly over 6 years 188.88
Extra tax 42.50 ( per your figures FF)
Servicing 16.67 (assume 200 per year)
Maintenance / repairs 20.83 (assume 250 per year)
Extra fuel cost 83.33 (assume 1k extra per year)
Monthly cost 352
Initial depost 10,000
6 years of monthly payments at 480 34,560
Remaining 'equity' -3,000 (who knows)
41,560
Monthly cost 577.22
you have your car at the end but technically i should have enough 'equity' to go and buy a similar or better car to yours (10 / 11 year old bmw for 2-3k)
a little comparison over the 6 years of my two PCPs then, some assumptions made but nothing outlandish
Purchase 15,600.00
Value 2,000.00
Cost 13,600.00
Monthly over 6 years 188.88
Extra tax 42.50 ( per your figures FF)
Servicing 16.67 (assume 200 per year)
Maintenance / repairs 20.83 (assume 250 per year)
Extra fuel cost 83.33 (assume 1k extra per year)
Monthly cost 352
Initial depost 10,000
6 years of monthly payments at 480 34,560
Remaining 'equity' -3,000 (who knows)
41,560
Monthly cost 577.22
you have your car at the end but technically i should have enough 'equity' to go and buy a similar or better car to yours (10 / 11 year old bmw for 2-3k)
You are assuming an interest rate of 1.9% to buy a 4/5 year old car. Can you show me any dealer offerring this rate (and please do as I might be interested).
I have my car from the beginning. I am not constrained on my annual mileage and am free to keep the car in any condition I choose (I keep mine well in any case). In addition I am not at the whim of a garage to honour my GFV (those guys in the shiny suits can be awfully shmart). Also, I would never buy a 10 / 11 year old car. God knows what it's been through. My car runs like a clock but I wouldn't expect anyone buying it to believe this. Hence why it's fully depreciated.
Blackrock1
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sorry where am i assuming the interest rate? i just took what you paid in cash?
i am not constrained by annual mileage either, i can do up to 20km per annum, although we only do 10 or so. and i have always kept all of my cars new or old in pristine condition so no constraint there.
i think you are being overly suspicious of a garage honouring the FV, PCP isnt a new product.
i am not constrained by annual mileage either, i can do up to 20km per annum, although we only do 10 or so. and i have always kept all of my cars new or old in pristine condition so no constraint there.
i think you are being overly suspicious of a garage honouring the FV, PCP isnt a new product.
But that's no comparing like for like then. A PCP has an interest rate. For second hand cars (if you can get one) this would be higher than zero. Therefore you would need to include this cost surely?
That's a decent allowance to be fair and as you love your cars you should be fine regarding the condition it is kept in also.
I probably am. However the shiny garage and the shiny suits have to be paid for somehow! The finance company also needs a return on their investment.
Blackrock1
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no, but i was more comparing your specific circumstance to my PCP, and you bought yours for cash? id imagine to borrow to buy a 5 year old car would 5-7%
In many cases, the finance provider is the manufacturer themselves as more and more of them run fully licensed FS businesses to boost sales.
I understand now. You can get 1.9% on a new car, but for someone borrowing to buy a 5 year old car the interest rate would be higher (which I would agree with), making the cost of finance for a new car cheaper. That's true alright.
Learner2015
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A lot of talk about the GFV and how do you know you will get this?
Its simple really if you service the car per the manufactures schedule, repair damage to the car you cause and don't go over the maximum allowable mileage you will at a minimum get the GFV. If the particular car you bought is selling well on the used market at the time you will get more.
So does your car have to be like new when you bring it back? No it does not, it has to be in good condition for its age. Look at any 3 year old on a forecourt and it will have the odd mark etc.
So when will you get more then GFV for you car? If the market is there for it as a used vehicle you probably will. Small example on the basis car is in good shape when you bring it back after three years:
GFV - €15k
Equivilant used models selling for €23K
Dealer will stock car at €20k, sell for €23k and dealers makes €3k less his costs.
You get €5k "equity" towards your next purchase.
or
You write the bank a cheque for €15k - you now own the car.
Sell it your self for €21.5k and walk away with €6.5k cash for your self.
When these GFV are set by the banks / dealers they are set assuming the worst case possible market conditions i.e. if we get 50 of these cars back in one go can we sell them all to the trade and not loose any money.
Its simple really if you service the car per the manufactures schedule, repair damage to the car you cause and don't go over the maximum allowable mileage you will at a minimum get the GFV. If the particular car you bought is selling well on the used market at the time you will get more.
So does your car have to be like new when you bring it back? No it does not, it has to be in good condition for its age. Look at any 3 year old on a forecourt and it will have the odd mark etc.
So when will you get more then GFV for you car? If the market is there for it as a used vehicle you probably will. Small example on the basis car is in good shape when you bring it back after three years:
GFV - €15k
Equivilant used models selling for €23K
Dealer will stock car at €20k, sell for €23k and dealers makes €3k less his costs.
You get €5k "equity" towards your next purchase.
or
You write the bank a cheque for €15k - you now own the car.
Sell it your self for €21.5k and walk away with €6.5k cash for your self.
When these GFV are set by the banks / dealers they are set assuming the worst case possible market conditions i.e. if we get 50 of these cars back in one go can we sell them all to the trade and not loose any money.
So then please explain to me what Charlie Weston means here:
Motor experts warn there is likely to be a glut of three-year-old cars as recent PCP deals mature.
This is likely to push values down, meaning many cars bought with PCPs will be below their guaranteed minimum future values.
http://www.autoexpress.co.uk/car-news/90794/pcp-personal-contract-purchase-car-deals-explained
The article from the UK is much more upbeat.