PCP with BMW - Any way to get out?

co-op_lover

Oakdene wrote: »

Did you buy Gap insurance??

lol
:rotfl:

oldhand

HiToAll wrote: »

Surely wouldn't be suggesting pushing it off a cliff?

Certainly not going to drive it off...........:eek:

tidds

Just for reference point, I bought a 43k Audi on PCP, put down a 10k deposit - I sold it exactly 12 months and 14 days later for 27k (because I wanted a bigger house so wanted to give myself the best possible affordability)- I worked out with the monthly payments the cost of ownership was £1400 a month...and I had to pay £1000 to clear the finance when I sold it. I would do it again... but i'm mad. PCP is never a good idea to get into a car you can't really afford.. (I never had issues with the payment and only sold it for mortgage affordability so not sure whether I could afford it..)

Anyway... my point is - you'll always take a big hit on PCP and there isn't a way around it.

Cornucopia

I'd question whether (in reality) anyone is substantially worse off with a PCP than if buying the same car by any other means.

I'd also question buying these kinds of cars in the £30k+ price bracket, unless you really do have so much money that 30-60% depreciation over 1-4 years really doesn't bother you. (60% of £43k is nearly £26k, or £537 per month over 48 months).

What the PCP does (possibly) is give a false sense of security about depreciation and the present value of the vehicle (but that is what it's supposed to do, and will do, but only if you keep to the terms of the agreement).

There's a lot of PCP-bashing around, and I'm not convinced it's fully justified.

foxy-stoat

Cornucopia wrote: »

It's an interesting point, for these kinds of deals - what the graph of shortfall over time looks like.

The key point about it is that the deal is structured to get to zero shortfall after 48 months, so it's somewhat logical to assume that it doesn't arrive at that point abruptly overnight (though I suppose it could do), but rather that it gradually heads in that direction over a prolonged period of time.

This is where I feel one of the only ways that the salesperson can sneakily mis-sell a car on PCP on a 4 year contract where they do not ask for a large enough deposit - knowing that at month 35ish is the soonest point where they can VT the agreement - so effectively they are selling the 4 year agreement knowing that there is no easy/reasonable way the customer can end it early.

As in this case, the OP thought that he would only be liable for 50% of the "loan" not 50% of the total agreement, which are two different things - over £12500 difference, nearly 38% of the retail purchase price.

Obviously it is up to the customer to actually read the agreement and understand and crunch the numbers accordingly, but I get that this is the last thing they will be thinking about when they are being offered the opportunity to drive a £34K car that they would never be able to afford to own.

PCP works for some folk - but people should sign up to these agreements with their eyes wide open and have an exit plan should circumstances change.

tidds

Cornucopia wrote: »

I'd question whether (in reality) anyone is substantially worse off with a PCP than if buying the same car by any other means.

I'd also question buying these kinds of cars in the £30k+ price bracket, unless you really do have so much money that 30-60% depreciation over 1-4 years really doesn't bother you. (60% of £43k is nearly £26k, or £537 per month over 48 months).

What the PCP does (possibly) is give a false sense of security about depreciation and the present value of the vehicle (but that is what it's supposed to do, and will do, but only if you keep to the terms of the agreement).

There's a lot of PCP-bashing around, and I'm not convinced it's fully justified.

To an extent that was my point, the depreciation didn't and doesn't bother me. But, some people don't go in with their eyes quite so wide open!

Cornucopia

foxy-stoat wrote: »

This is where I feel one of the only ways that the salesperson can sneakily mis-sell a car on PCP on a 4 year contract where they do not ask for a large enough deposit - knowing that at month 35ish is the soonest point where they can VT the agreement - so effectively they are selling the 4 year agreement knowing that there is no easy/reasonable way the customer can end it early.

I've never been convinced that VT is the easy option that it is sometimes portrayed as. Paying 50% of the cost of the car and then walking away doesn't seem that sensible to me.

For me, that seems much more the definition of unfair terms than anything I've yet to see on a PCP deal, and in fact the issues (of paying a lot of money and then walking away) are similar.

If, in the case of a PCP, the VT option doesn't kick-in until nearly full-term, then that's a good thing, isn't it - giving you nearly the value out of the car and the agreement that you originally signed-up to.

pvt

Cornucopia wrote: »

There's a lot of PCP-bashing around, and I'm not convinced it's fully justified.

Basically it is a lease agreement with an ability to buy the car for its nominal value (give or take a small margin) at the end of the lease. You pay out loads of money and have virtually nothing to show for it at any time, except the use of a car you otherwise couldn't afford.

Notwithstanding that, there are a whole raft of conditions regarding how and when the vehicle must be serviced, what condition it must be in when returned, and how many miles it can be driven.

In most cases the buyer cannot afford the balloon payment at the end of the term, so the only way they can realise any residual value (where the car is worth more than the balloon payment) is by trading it in with a dealer - and thus the circle starts again (probably with a chunky deposit to shell out).

!!!!!! save up and buy things once you can afford them, instead of spending your entire life buying today's things with tomorrow's money.

Cornucopia

pvt wrote: »

Basically it is a lease agreement with an ability to buy the car for its nominal value (give or take a small margin) at the end of the lease. You pay out loads of money and have virtually nothing to show for it at any time, except the use of a car you otherwise couldn't afford.

You pay the money, you use the car, what else is there?

Notwithstanding that, there are a whole raft of conditions regarding how and when the vehicle must be serviced, what condition it must be in when returned, and how many miles it can be driven.

Or you can ignore the rules and dispose of the car in some other way.

In most cases the buyer cannot afford the balloon payment at the end of the term, so the only way they can realise any residual value (where the car is worth more than the balloon payment) is by trading it in with a dealer - and thus the circle starts again (probably with a chunky deposit to shell out).

Anyone who goes through 36-48 months intending to buy the car and then finds that they don't have the money hasn't really planned things very well.

!!!!!! save up and pay for things when you can afford them instead of spending your entire life buying today's things with tomorrow's money.

So you're opposed to all forms of credit?

With a car that's inevitably going to lose thousands of pounds in value, it becomes a valid financial planning to consider buying as you go rather than digging may be £20k or more out of your savings (assuming you have it).

At the end of the day, it's all about the numbers and it's only about the numbers. A PCP is just a different way of structuring them.

pvt

Cornucopia wrote: »

So you're opposed to all forms of credit?

No. Just the use of credit to buy assets that depreciate like a brick.

Cornucopia wrote: »

With a car that's inevitably going to lose thousands of pounds in value, it becomes a valid financial planning to consider buying as you go rather than digging may be £20k or more out of your savings (assuming you have it).

Reread what you have just written there and consider what a profoundly stupid financial proposition that is. At no point, except possibly at the very end of the term, are you in a position to exit from that arrangement without finding yet more money in order to do so.