Personal contract purchases!

N0name_2

Hi all, :wave:

I’m new to the forums but I’ve often used this site for information so decided to get involved. I have a question that I’m hoping to get opinions on and draw on someone’s experience perhaps.

I currently have a car through a PCP contract, personal contract purchase.

I previously had a Fiesta Titanium 2011 model, which I paid a £2000 deposit for, this cost me £220 a month. I got the option to upgrade to a newer model.

I now currently have a Fiesta Titanium, 2013 model. I now pay £290 a month for this and have had this just for a year. At the time I talked myself into it and it seemed good to me, a new car for an extra £60 amonth. However, I now regret this decision and I’m paying £290 a month for a Fiesta. I realise this is my own fault and I exercised poor judgment. At the time I didn’t have much constraints, circumstances change however!

I also thought the previous value of the car was deducted from a new contract but looking at my new contract and I can’t see this deduction taken into account.

I would like to get rid of this contract, for two reasons mainly. Lower my bills and I grudge giving this car retailer any more money due to poor customer service. I can afford it though.

I have looked at the small print and worked out that I can give the car back in December, 2015, which is half the contract value.

So is there any way out of this or do I serve my sentence and give my car back when able? I’ve noticed that we buy any car gives the option…

wewantanycar.com/sell-car-with-outstanding-finance.aspx

I would appreciate anyone’s thoughts and advice please.

motorguy

N0name wrote: »

Hi all, :wave:

I’m new to the forums but I’ve often used this site for information so decided to get involved. I have a question that I’m hoping to get opinions on and draw on someone’s experience perhaps.

I currently have a car through a PCP contract, personal contract purchase.

I previously had a Fiesta Titanium 2011 model, which I paid a £2000 deposit for, this cost me £220 a month. I got the option to upgrade to a newer model.

I now currently have a Fiesta Titanium, 2013 model. I now pay £290 a month for this and have had this just for a year. At the time I talked myself into it and it seemed good to me, a new car for an extra £60 amonth. However, I now regret this decision and I’m paying £290 a month for a Fiesta. I realise this is my own fault and I exercised poor judgment. At the time I didn’t have much constraints, circumstances change however!

I also thought the previous value of the car was deducted from a new contract but looking at my new contract and I can’t see this deduction taken into account.

I would like to get rid of this contract, for two reasons mainly. Lower my bills and I grudge giving this car retailer any more money due to poor customer service. I can afford it though.

I have looked at the small print and worked out that I can give the car back in December, 2015, which is half the contract value.

So is there any way out of this or do I serve my sentence and give my car back when able? I’ve noticed that we buy any car gives the option…

wewantanycar.com/sell-car-with-outstanding-finance.aspx

I would appreciate anyone’s thoughts and advice please.

You could yes, sell the car on, and clear the finance.

You could also hand the car back with nothing more to pay, once you've paid 50% of the total contractual value.

Either way you will blow your brains out on a massive loss.

Personally, i'd pay the extra every month and chalk it up to experience. I've done a LOT worse.

N0name_2

Thanks for the reply. I'm not sure by what you mean by loss, because I would lose out on the money I've already invested?

Atleast it's an option for me. I don't have much love the car and I'll need a more family type car soon.. . I have a 3 DR at the moment.

Cheers,
Andy

cre8toruk

I've been doing some research recently in preparing to buy a new / used car... I thought PCP was the answer to my prayers but then some really funny numbers started coming out of the PCP providers.... Here's what I've discovered....

The issue is around the deposit and the value of risk around the GMFV, which is reflected in the monthly payment.

It is all about the magic 40%

Technically, if I were to use the following example...

Purchase Price: 23,000 (give or take)... but since PCP only allows a 40% deposit;
40% Deposit: 9198

Leaving a balance to finance of 13,797.00.

However this isn't technically true since you're actually defferring (40%) £5,517.75 of that £13,797.00 so the balance to finance is in reality only £8,279.25 + the interest that you would then charge on the £5,517.75.

So on the face of it £207.50 for a loan of £13,797.00 sounds cheap. The reality is that £207.50 is expensive for a loan of £8,279.25.

My Car (and deposit) is worth between £13,000 and £14,000 but I can only use £9000 of that as a deposit, were I able to use the full amount (e.g. 60%) then we might be talking about a better deal.

We can talk about risk etc etc until we're blue in the face, the fact is GMFV are always conservative and from my research rarely yield any type of surplus at the end of the deal oh and add to that part of what I'd be paying for is that GMFV or the interest on it anyway, I mean seriously 8.7%? I've seen 11% too, bank loans are all around the 4.5 - 5% mark. Given that at the end of the deal I have to pay that GMFV or refinance it then the lender gets double bubble so to speak... sounds good for the lender and not so much the lendee :-)

The reality is that PCP / Balloon deals might be better for people without deposits or large deposits or car allowance buyers who don't car what they're spending a month, but they aren't the panacea they're cracked up to be imho. They are at best a bit murky imho and at worst a complete con trick!

A much more sensible way for me to proceed I believe is to get a straight bank loan for £10,000 (£170 - 180 per month) + car and come in as a cash+ car buyer, I pay less a month, less interest and at the end of the term the car is mine, with nothing more to pay, no brainer or what?!?.

motorguy

N0name wrote: »

Thanks for the reply. I'm not sure by what you mean by loss, because I would lose out on the money I've already invested?

Atleast it's an option for me. I don't have much love the car and I'll need a more family type car soon.. . I have a 3 DR at the moment.

Cheers,
Andy

Yes, loss of money you've already put in, relative to the "value" you've had out of the car.

If its a baby on the way i wouldnt get too hung up on changing the car because its a 3 door, or even for more space.

motorguy

cre8toruk wrote: »

I've been doing some research recently in preparing to buy a new / used car... I thought PCP was the answer to my prayers but then some really funny numbers started coming out of the PCP providers.... Here's what I've discovered....

The issue is around the deposit and the value of risk around the GMFV, which is reflected in the monthly payment.

It is all about the magic 40%

Technically, if I were to use the following example...

Purchase Price: 23,000 (give or take)... but since PCP only allows a 40% deposit;
40% Deposit: 9198

Leaving a balance to finance of 13,797.00.

However this isn't technically true since you're actually defferring (40%) £5,517.75 of that £13,797.00 so the balance to finance is in reality only £8,279.25 + the interest that you would then charge on the £5,517.75.

So on the face of it £207.50 for a loan of £13,797.00 sounds cheap. The reality is that £207.50 is expensive for a loan of £8,279.25.

My Car (and deposit) is worth between £13,000 and £14,000 but I can only use £9000 of that as a deposit, were I able to use the full amount (e.g. 60%) then we might be talking about a better deal.

We can talk about risk etc etc until we're blue in the face, the fact is GMFV are always conservative and from my research rarely yield any type of surplus at the end of the deal oh and add to that part of what I'd be paying for is that GMFV or the interest on it anyway, I mean seriously 8.7%? I've seen 11% too, bank loans are all around the 4.5 - 5% mark. Given that at the end of the deal I have to pay that GMFV or refinance it then the lender gets double bubble so to speak... sounds good for the lender and not so much the lendee :-)

The reality is that PCP / Balloon deals might be better for people without deposits or large deposits or car allowance buyers who don't car what they're spending a month, but they aren't the panacea they're cracked up to be imho. They are at best a bit murky imho and at worst a complete con trick!

A much more sensible way for me to proceed I believe is to get a straight bank loan for £10,000 (£170 - 180 per month) + car and come in as a cash+ car buyer, I pay less a month, less interest and at the end of the term the car is mine, with nothing more to pay, no brainer or what?!?.

Putting in a big deposit into a PCP is generally considered A Bad Idea.

You have a big enough deposit there in the value of your current car just to pay off the balance on a regular finance deal.

PCP works best with smallish deposits and on premium brand cars that hold their value best.

oscarward

motorguy wrote: »

If its a baby on the way i wouldnt get too hung up on changing the car because its a 3 door, or even for more space.

When our son was born my wife had a 1985 mini, the original BL one.

Fitting son in car seat in the front, her mother and push chair in the back, baby bits bag in the boot was an exercise in ingenuity to say the least.


But she managed until she went back to work after maternity leave and was able to afford a bigger car.

She bought a 1988 Proton hatchback and thought it was luxury in comparison. :j

N0name_2

Thanks guys. I'm going to book an appointment with We Buy Any Car and see if they can get me out the PCP contract b buying the car. I'm not overly optimistic though. I've had this car for a year now. I've paid about £3500, the car is valued at £10,000. My total PCP contact is £16,000.

However, if the car is being bought by we buy any car, then there's no need for the finance as the value of the car would've been repaid so this might eliminate the interest? It's basically like, paying it off early. I'm not sure it's that easy though. There's probably legalities involved and I'm no expert. As I say, I've only had my current contract a year, so it might not balance out yet and I could simply owe too much. Anyway, I'll book an appointment and see what we buy any car.com say.

I'm going to be a dad...in about November so a more suitable car probably should be sought! Btw, my first car, I ended up spending £2000 on a deposit on a PCP contract. I do feel like I threw this money away. I had the car for about 2 years so I've been trying to convince myself that I probably saved £2000 over that period, instead of higher payments. I know the truth though!!

Cornucopia

The truth is that most new cars depreciate heavily. Even the prestige brands are not the sure thing that they used to be, and of course they cost more in the first place.

Whilst there is some devilment in the detail, the basic principle is pretty straightforward: the more you borrow, the more you pay in interest. The higher the APR, the more you pay in interest.

PCPs are useful if you want the reassurance of the MGFV, but unfortunately you are paying interest on the whole of that amount for the duration of the agreement. Low-rate or 0% "normal" finance is a better bet, as long as you still haggle for the appropriate discount on the vehicle.

I've heard the mantra that putting down a large deposit on a PCP is a bad idea from car industry people before. Whilst I suspect they are talking psychology rather than maths, it doesn't really make much sense. The agreement overall is still targeting the MGFV. Putting down a larger deposit simply means paying less interest. Apart from reduced interest, the figures ought to work out the same.

PCPs are like other consumer finance contracts in that they (generally) have options for early settlement without heavy penalty. However, if the equity in the car is insufficient to cover the finance settlement figure, then you may be forced to choose between making up the difference and keeping the car. You can ask for an early settlement figure yourself at any time. (This may give you a better negotiating position than if you let the car dealer do it).

In my experience webuyanycar/carcraft offer reasonable trade-in values but overprice sale prices. If you simply trade-in and walk away, then you may be okay.

N0name_2

My goal is trade-in and walk away. I may then look to buy a car, possibly with a combination of a loan for a decent deposit and a hcp contract to eventually own the vehicle.

I will look at loans and play with figures. Maybe it would be better simply getting a minimum deposit together and going hcp. It just depends on the minimum payments and interest rates between the two.

Thanks guys, I will speak to we buy any car and update this thread.

vibrantcolour

I am selling my 2013 Fiesta too, so can give advice.

Find your original finance paperwork, find the Ford credit account number and go to this page: http://www.ford.co.uk/OwnerServices/FinanceandProtectionforOwners/ManageYourAccountOnline

The site will then give you a settlement figure. This is how much you owe Ford.

Then try and sell the car.

1. Webuyanycar/similar
2. your local friendly ford dealer
3. Private sale

Ford credit allow you 7 days to clear the finance after the sale of the vehicle. That settlement figure includes any reductions for unpaid interest, so it's fair.

If your car is a good spec and good condition, a dealer is the way to go. They'll give you more than the car buying sites, and clear your finance for you. If the car's worth less than you owe, they'll simply take a card payment from you for the difference. With me, it would be £650.

Try a range of dealers - nearly-new private stock is often in demand.

If yours is a titanium, try little village dealers who sell to old people. Old people like Titaniums

Instead, i've listed mine on eBay to try and recoup the £10250 i need to settle.


Avoid WBAC unless they offer you more than the dealers, as then you still have to do the finance legwork yourself!