PCP Question

Cornucopia

istabraq wrote: »

I'm not being naive at all. It was a simple question of if I owe the garage £3k would they mind if they got that straight from me or if they got it from me via a finance company. I actually thought they'd be more secure if they had already got the money from me.

It's a completely legitimate question and no on has yet explained why it's ridiculous other than the usual "are you dumb" crap.

The issues are:-

1. The car dealer gets a commission from the finance company when he sells a car on finance. That is why you can sometimes push the deal further in your favour when you take finance than when you don't.

2. You are not considering the whole picture. The companies can afford to offer a GMFV because of the amount of money to be made from selling a PCP. No PCP, no GMFV.

3. You can do what you want with a Lease. You could even try offering them all the payments up-front. They might say yes or no, but they almost certainly won't give you a discount.

Although Leases and PCPs are similar, I think a Lease is closer to what you want, and the simplicity of it will help you determine whether it is a good deal or not.

almillar

If the garage give you the car, they'll want £9,000 for it.
If you take it on PCP, the garage will be given 'the cost of the car' by the finance company (not as much as £9k obviously).
You then owe the BANK £9,000, NOT £3,000. You would be agreeing at the start to hand back at 2 years, you can change this if you want, but you're agreeing to not pay it back in full.
Your deal is with the finance company, not the garage from here, and they won't hear tell of not MAKING MONEY off you through the INTEREST that you're trying to AVOID.
And that INTEREST will be CHARGED on the £9,000 at the start, and then go down every month as you pay it off, NOT on the £3,000 you think you can drive around in a new car for 2 years.
HINT - it costs more than that!

rs65

I don't think this is as far fetched as everyone thinks.

No regular monthly repayments, just a single initial upfront payment and a deferred Final Payment based on the vehicle’s Guaranteed Minimum Future Value (GMFV)


There are options about what to do at the end of the term.


OP, might not suit your budget but Jaguar do an Advance Payment Plan as per quoted text.

System

almillar wrote: »

If the garage give you the car, they'll want £9,000 for it.
If you take it on PCP, the garage will be given 'the cost of the car' by the finance company (not as much as £9k obviously).
You then owe the BANK £9,000, NOT £3,000. You would be agreeing at the start to hand back at 2 years, you can change this if you want, but you're agreeing to not pay it back in full.
Your deal is with the finance company, not the garage from here, and they won't hear tell of not MAKING MONEY off you through the INTEREST that you're trying to AVOID.
And that INTEREST will be CHARGED on the £9,000 at the start, and then go down every month as you pay it off, NOT on the £3,000 you think you can drive around in a new car for 2 years.
HINT - it costs more than that!

0% PCP deals exist and car manufacturers do have in-house finance companies, so if a model isn't moving, they can use finance deals to give it a push and not have to worry about 'bank' profits. The devil is in the detail on what it costs, PCP isn't always evil, cash purchases aren't always wise.

That said I can't imagine the benefit of arrangement the OP is asking about, but he's not really been clear on his objective and PCP might be perfect for him, where a lease isn't.

Can he just give a dealer £3k and have a pretend PCP arrangement? Not likely.

Can he take a PCP deal and pay off (as a partial early settlement) the value of the monthly payments? Yes, but take care on the costs: fees and any interest.

almillar

0% PCP deals exist and car manufacturers do have in-house finance companies, so if a model isn't moving, they can use finance deals to give it a push and not have to worry about 'bank' profits. The devil is in the detail on what it costs, PCP isn't always evil, cash purchases aren't always wise.

Never called PCP evil, have done it myself. Like you say, if they're doing a 0% deal, it's because they need to. Either they've got a good 'straight price' on it already and they'll still make a profit, or they really do need to move the stock.
OP wants to drive a new car (value £9,000) for 2 years for £3,000. If anyone can get that for him, I'm sure plenty of people in here would like to see that deal.

OddballJamie

OP there are plenty of lease companies that will take a hefty initial payment in return for tiny monthly payments. I saw one last month that worked out at about £5 a month.

I think the issue here is why do you not want to apply for finance. If it's down to a low income or bad credit then chances are the dealer or leasing company won't play ball anyway.

Why not just take the £3000 and buy a car for £3000 that you will own and not have to hand back in 2 years.

Cornucopia

What about...

Nissan Micra 3+23 x £93.68 inc vat. (8k miles pa)

Chevrolet Spark 3+47 x £85.00 inc vat. (10k miles pa)

Peugeot 107 3+47 x £89.00 inc vat. (10k miles pa)

These are leases.

almillar

Cornucopia - You're talking about a deposit of £3,000 there, plus the monthly payments? OP wants to not have the deposit, and bundle up the (2 years of) monthly payments into 1 payment at the start.
So your example shows that him thinkinghe can pay £3,000 to drive a car for 2 years is 23x £93.68 - £2,154.64 - short!
£5,154.64 to drive a Micra for two years - OP, this is what it costs!

Cornucopia

No. That's the entire outlay. Leases are generally expressed that way. d + p (deposit number of payments + period number of payments). For something a bit more elaborate, you might see e.g. 6 + 47 x £199.

In this case, the deposit is 3 payments, not £3000.

So the Micra is just over £2400 all in. The others are a bit more, but they are 4 year deals.

heronbommie

I'm currently researching the best option for my car 'purchase' and lease seems appealing.

I won't hijack this thread but my advice to the OP is to look at the personal lease options as it fits their needs as described.