Sorry another PCP question - but i have no clue!

motorguy

Nasqueron wrote: »

It's not a matter of a bunfight, it's pointing out not only is gap cheaper elsewhere but also the level of cover you get.

Knocking £200 off the price is fine but if it's return to invoice gap or 3 years then it's going to leave you worse off than replacement gap for say 5 years.

It's crucial even if you get a deal at the dealership that you confirm what the cover actually is and thus making sure people are aware that there are different kinds with different periods - dealerships commonly sell return to invoice. If there is a total write off, if the car was bought at a discount or the same model has gone up in price you'll be out of pocket with the invoice policy

Agreed. Well worth noting.

neilmcl

Nasqueron wrote: »

It's crucial even if you get a deal at the dealership that you confirm what the cover actually is and thus making sure people are aware that there are different kinds with different periods - dealerships commonly sell return to invoice. If there is a total write off, if the car was bought at a discount or the same model has gone up in price you'll be out of pocket with the invoice policy

Another reason, apart from the cost, I didn't go with BMW's own policy, as RTI only it just didn't give the cover I was after.

AdrianC

easy_tiger wrote: »

Am I correct in thinking.. as long as I change my car within the four year period I won't be at a loss?

Well, except for the interest payments for the money you're financing.

I've looked at examples and the car *could* be worth around £9,000 in two years time and I would have paid approx 6,800 (24 payments of £200 plus £2,000 deposit.)

You're buying a car for £13,000, right?
In that example, you're financing £11,000 of it, and paying £2,000 towards it.
You're then repaying £200/mo for two years - £4,800.
You will then have a choice.
1. Hand the car back and walk away empty handed.
2. Pay £9,000 and drive away in the same car, having paid a total of £15,800 for it.
3. Do a deal to stay on the finance treadmill.

If the figures you give are accurate, that's an APR of just under 14%, according to http://www.pcp-calculator.com/PCP-loan-calculator.html

From what I understand I can : a) use that difference of £2,200 towards another car from Audi,

What "difference"? You're misunderstanding. The £9,000 is money you will still owe at the end of two years. The £6,800 is what you will have paid over the two years.

Cornucopia

AdrianC wrote: »

What "difference"? You're misunderstanding. The £9,000 is money you will still owe at the end of two years. The £6,800 is what you will have paid over the two years.

AFAICS, the OP did not state the Balloon payment. He said £9,000 could be the value after 2 years.

There are a couple of points from the OP's OP, one of which is that: he didn't tell us what the Balloon payment was, or maybe was confused about what it is. Either way, it's difficult to determine VFM without it, and without firm figures generally.

Also, he seems confused about the duration of the deal, stating 4 years initially and then 2 years later on.

The options are different mid-deal on PCP from the options at the end of the term.

In mid-deal, it works like any other car finance - albeit with smaller payments, so your settlement figure may be larger. If you trade the car - this is the only basis on which to do so and the Balloon payment and fees for mileage and condition have no relevance.

At the end of the term, there are typically 5 options:-

- Walk away, giving back the car with nothing more to pay, subject to condition and mileage.

- Trade the car with the same Manufacturer, if the Balloon payment is more than the car's present market value. The Manufacturer will honour the Balloon payment figure for its value when buying another car from them, less deductions under the contract for condition & mileage.

- Trade the car anywhere, and obtain market price for it, without being liable for excess fees for mileage & condition.

- Sell the car anywhere and settle the Balloon payment with the proceeds of the sale (or where the buyer is a car dealer, they will do this for you).

- Pay the Balloon payment and keep the car.

AdrianC

Cornucopia wrote: »

AFAICS, the OP did not state the Balloon payment. He said £9,000 could be the value after 2 years.

Which is why I was assuming that was the balloon - because that's the only "It might be worth..." figure that's going to get waved about.

Cornucopia

AdrianC wrote: »

Which is why I was assuming that was the balloon - because that's the only "It might be worth..." figure that's going to get waved about.

Difficult to tell - he also talked about "PCP option spread over four years". I assumed that it was the OP who was waving the figure around, rather than the Dealer, and £9K after 4 years seems like an ambitious figure, too, although £9k after 2 years is not great, either.

Just to add my view on the GAP insurance - there is no point, as long at the OP has cash to cover any shortfall arising from the car being written-off.

motorguy

Cornucopia wrote: »

- Trade the car with the same Manufacturer, if the Balloon payment is more than the car's present market value. The Manufacturer will honour the Balloon payment figure for its value when buying another car from them, less deductions under the contract for condition & mileage.

Nope.

Effectively you're just handing the car back in this instance, though the franchised dealer would probably facilite it.

This would be the same if you went to any other manufacturer too.

Cornucopia

Yes, I suppose so. It doesn't sound as useful as the way I put it, though.

daveyjp

Also to note is it will probably be a requirement of a PCP deal to have the car serviced at a main dealer and they will do the work needed to ensure it is good condition should it be handed back.

Even though the car will be out of warranty you are still tied to the main dealer and they aren't cheap.

If a cambelt change is required at any point you could be looking at a service bill of £1,000-1,500.

bigadaj

Sounded to me like the dealer had suggested to the OP that the six year old car would be worth £9k, which is a stretch.