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PCP rough guidance

2K views 37 replies 14 participants last post by  ASB1960 
#1 ·
my deal is on 3.9% over 48 months i am currently 14 months into the deal does anyone know ( broadly speaking ) when the car has done its mega dip in value and the payments will start to make a dent into the actual capital of the loan?

long story short , my circumstances have changed a fair bit recently and it was quiet unforeseen , i have no real use for the car anymore i think iv driven it twice in the last month which is a shame .... and an expensive thing to own when i dont really need it , id just rather someone else enjoyed it and also save myself thick end of £400 a month! dont get me wrong i can afford to keep it until the deal is up but it just seems a waste i could potentially roll the neg into something cheaper but no real point as i dont need a car full stop !

this is the issue with pcp iv discovered, if you have an unforeseen change in lifestyle you are kind of stuck i could give the car back and pay the neg but its about 4 grand which would be a bitter pill
 
#2 ·
if your about 4k in neg eq and 400s pm then add interest on. you could be looking well over 12/18months to get close to by point/ almost break even

i think most vt points/break even are closer to 3/3.5 years depending on deposit etc
 
#3 ·
I'm afraid you will only get to a non neg equity position on your last payment.

At present (14 months) the car is almost certainly depreciating faster than your monthly payments, and will be for some time.

If you want out, there is no time like the present. You might be 4K in the hole, but in 10 months you'll still be 4-5k in the hole and have paid the £4K you are in right now in monthlies.

Buying new cars on pcp is not to be taken lightly.

Sent from my iPhone using Tapatalk
 
#4 ·
cheers ,

I know the PCP thing is a risk which is why i didnt stretch myself with it , worst case scenario for me is that i have a car that i love but dont really need but at least can comfortably afford it , i was just trying to explore the options that i had in terms of getting rid and saving the monthlies but i suppose these contracts are set up in such a way that they are difficult to get out of otherwise everyone would be chopping their cars in every other month when they fancied something different wouldnt they ! cant really blame the finance companies to be fair
 
#5 ·
NISFAN said:
I'm afraid you will only get to a non neg equity position on your last payment.

At present (14 months) the car is almost certainly depreciating faster than your monthly payments, and will be for some time.

If you want out, there is no time like the present. You might be 4K in the hole, but in 10 months you'll still be 4-5k in the hole and have paid the £4K you are in right now in monthlies.

Buying new cars on pcp is not to be taken lightly.

Sent from my iPhone using Tapatalk
Depends on deposit.
 
#6 ·
Creepy Coupe said:
NISFAN said:
I'm afraid you will only get to a non neg equity position on your last payment.

At present (14 months) the car is almost certainly depreciating faster than your monthly payments, and will be for some time.

If you want out, there is no time like the present. You might be 4K in the hole, but in 10 months you'll still be 4-5k in the hole and have paid the £4K you are in right now in monthlies.

Buying new cars on pcp is not to be taken lightly.

Sent from my iPhone using Tapatalk
Depends on deposit.
here lies the problem , it was the £359 down £359 a month deal that was doing the rounds last year .... before id even heard of the tame sales manager on here ! live and learn though its not a real problem tbh is it !
 
#7 ·
RJW_1989 said:
Creepy Coupe said:
NISFAN said:
I'm afraid you will only get to a non neg equity position on your last payment.

At present (14 months) the car is almost certainly depreciating faster than your monthly payments, and will be for some time.

If you want out, there is no time like the present. You might be 4K in the hole, but in 10 months you'll still be 4-5k in the hole and have paid the £4K you are in right now in monthlies.

Buying new cars on pcp is not to be taken lightly.

Sent from my iPhone using Tapatalk
Depends on deposit.
here lies the problem , it was the £359 down £359 a month deal that was doing the rounds last year .... before id even heard of the tame sales manager on here ! live and learn though its not a real problem tbh is it !
As per Nisfan, You're fumbared.
 
#9 ·
NISFAN said:
Creepy Coupe said:
Depends on deposit.
True, but reading into the monthly payments, I knew it was a low deposit.

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yeah it was one of them at the time .... i had no intention of purchasing the car at any point , even with the low deposit , 359 a month i was happy with for a car like that so it made no sense in my situation to throw a lump at something thats just going to lose money because i was happy with the payments on a low deposit anyway..... HOWEVER if i was to go back and do it again i would probably put a bit more down to soften the blow of the neg when my circumstances inevitably change but we dont have a crystal ball do we haha
 
#10 ·
Regardless of how you bought the car, selling a car bought new so soon after purchase means you swallow a significant loss. On a PCP, it's negative equity, on a cash buy, it's getting much less back than you paid for it which is only slightly less painful as you've already paid for the loss - and a loan would tend to be somewhere in the middle. But regardless of how the car was financed, you'll stand the same loss. However, as pointed out earlier, that loss is pretty much a sunk cost. Better to accept and swallow the loss now than continue paying out for something you aren't using which is continuing to depreciate.
 
#11 ·
NISFAN said:
Creepy Coupe said:
Depends on deposit.
True, but reading into the monthly payments, I knew it was a low deposit.

Sent from my iPhone using Tapatalk
I pay the same per month for my M240 with a £3k depo
 
#13 ·
Uncle Tupelo said:
Regardless of how you bought the car, selling a car bought new so soon after purchase means you swallow a significant loss. On a PCP, it's negative equity, on a cash buy, it's getting much less back than you paid for it which is only slightly less painful as you've already paid for the loss - and a loan would tend to be somewhere in the middle. But regardless of how the car was financed, you'll stand the same loss. However, as pointed out earlier, that loss is pretty much a sunk cost. Better to accept and swallow the loss now than continue paying out for something you aren't using which is continuing to depreciate.
:celebrate: exactly!

i hate to get all 'get off my lawn', but the younger crowd (ahem, facebook mlite group) make all this out to be some financial rocket surgery.
ya acquire something with a determined value. it drops in value. doesnt matter if its hp/pcp/hiv/aid/fb... the rest is grade school mathematics.
 
#14 ·
sir richard large said:
Uncle Tupelo said:
Regardless of how you bought the car, selling a car bought new so soon after purchase means you swallow a significant loss. On a PCP, it's negative equity, on a cash buy, it's getting much less back than you paid for it which is only slightly less painful as you've already paid for the loss - and a loan would tend to be somewhere in the middle. But regardless of how the car was financed, you'll stand the same loss. However, as pointed out earlier, that loss is pretty much a sunk cost. Better to accept and swallow the loss now than continue paying out for something you aren't using which is continuing to depreciate.
:celebrate: exactly!

i hate to get all 'get off my lawn', but the younger crowd (ahem, facebook mlite group) make all this out to be some financial rocket surgery.
ya acquire something with a determined value. it drops in value. doesnt matter if its hp/pcp/hiv/aid/fb... the rest is grade school mathematics.
Who's making something out of it? The OP knows he's on a slippery slope and was asking when he might be in a position to level out. If you read the various replies It's clear the variables don't make it that straight forward. :celebrate:
 
#15 ·
Creepy Coupe said:
If you read the various replies It's clear the variables don't make it that straight forward. :celebrate:
Not sure I understand what you mean? It seems quite clear that selling a new car this soon means accepting a significant loss, regardless of how the car was financed. It's also the case that the loss will increase as more payments are made and the car continues to depreciate. That would be tenable if the owner was gaining some utility from the vehicle, but that doesn't appear to be the case here. Maybe I'm missing something?
 
#16 ·
Uncle Tupelo said:
Creepy Coupe said:
If you read the various replies It's clear the variables don't make it that straight forward. :celebrate:
Not sure I understand what you mean? It seems quite clear that selling a new car this soon means accepting a significant loss, regardless of how the car was financed. It's also the case that the loss will increase as more payments are made and the car continues to depreciate. That would be tenable if the owner was gaining some utility from the vehicle, but that doesn't appear to be the case here. Maybe I'm missing something?
At the time the OP asked. We didn't know how much his deposit was. He might have put £15k down. I which case he might have be able to hand it back without finding a settlement
 
#19 ·
Superlevure said:
No matter what, you'll lose a lot of money. May as well keep, you won't lose much more. Feels like a waste, yes, but a car like that is never really necessary anyway, right?
Mmmmmm. I'd suggest he'll lose a ****load more. The monthlies will accumulate and the car will continue to depreciate. Exiting now, he'll lose c. £4k. Keeping it until the end of the agreement will cost more like £14k in monthlies alone, plus insurance, tax, fuel and servicing for a car he doen't need or use.
 
#20 ·
Uncle Tupelo said:
Regardless of how you bought the car, selling a car bought new so soon after purchase means you swallow a significant loss. On a PCP, it's negative equity, on a cash buy, it's getting much less back than you paid for it which is only slightly less painful as you've already paid for the loss - and a loan would tend to be somewhere in the middle. But regardless of how the car was financed, you'll stand the same loss. However, as pointed out earlier, that loss is pretty much a sunk cost. Better to accept and swallow the loss now than continue paying out for something you aren't using which is continuing to depreciate.
The loss isn't going to be the same if it was a cash purchase.

Remember that although the PCP deals might have low interest rates, you're still paying a lot of interest back as it's based on the entire borrowed borrowed including the balloon payment.

The car is in negative equity as the payments have to cover interest and well as depreciation.

Taking TRL's quote

BMW M140 Shadow Edition 5 door Automatic
List Price £37,440 OTR
Dealer contribution £4475
BMW contribution £4000
Customer balance £28,965.
Customer deposit £1500 then 47 x £374.23 plus optional final payment of £13,873.61.

(All of the above based on 8000 miles PA and 4.9% APR). Terms and conditions apply. Subject to status

37,440-4000-4475=28965

374.23x47+1500+13,873.61=32,961

You're paying £4000 of interest. £19,088 of payment of which 21% is interest.
 
#22 ·
Kerr said:
Uncle Tupelo said:
Regardless of how you bought the car, selling a car bought new so soon after purchase means you swallow a significant loss. On a PCP, it's negative equity, on a cash buy, it's getting much less back than you paid for it which is only slightly less painful as you've already paid for the loss - and a loan would tend to be somewhere in the middle. But regardless of how the car was financed, you'll stand the same loss. However, as pointed out earlier, that loss is pretty much a sunk cost. Better to accept and swallow the loss now than continue paying out for something you aren't using which is continuing to depreciate.
The loss isn't going to be the same if it was a cash purchase.

Remember that although the PCP deals might have low interest rates, you're still paying a lot of interest back as it's based on the entire borrowed borrowed including the balloon payment.

The car is in negative equity as the payments have to cover interest and well as depreciation.

Taking TRL's quote

BMW M140 Shadow Edition 5 door Automatic
List Price £37,440 OTR
Dealer contribution £4475
BMW contribution £4000
Customer balance £28,965.
Customer deposit £1500 then 47 x £374.23 plus optional final payment of £13,873.61.

(All of the above based on 8000 miles PA and 4.9% APR). Terms and conditions apply. Subject to status

37,440-4000-4475=28965

374.23x47+1500+13,873.61=32,961

You're paying £4000 of interest. £19,088 of payment of which 21% is interest.
Fair point, rather than same loss I should have said significant loss. Although, if we are getting into that degree of analysis, you really need to factor in the opportunity cost for a cash purchase, which isn't enormous at today's interest rates but still matters.

Regardless, my point was that no matter how you finance a new car, you still swallow a significant chunk of depreciation the moment you drive it off the forecourt.
 
#23 ·
Your best option is have the car stolen or write it off :lol2:

Return to invoice gap insurance you'll walk away with a tidy lump sum and no longer be paying for a car you don't use :lol2:
 
#24 ·
There is one other option, keep the car for another 10 months until you get to 50% of the finance then Voluntarily terminate the finance agreement.

At that point once you have VT'd the agreement you hand the car back and walk away as long as you have taken "reasonable" care of the vehicle there will be nothing further to pay.

Your finance agreement will tell you what the termination value is but it'll be around the 24 month mark on a 4year deal or you can terminate now, immediately and just pay the balance.

This will be 10 x £359 so £3590 which is less than your £4k neg equity.

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#26 ·
Williams327 said:
Your best option is have the car stolen or write it off :lol2:

Return to invoice gap insurance you'll walk away with a tidy lump sum and no longer be paying for a car you don't use :lol2:
Heard of a guy who decided to drive his car into a wall to claim on his gap insurance. He didn't do a good enough job and it got repaired.
Ended up costing him more money!
 
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