PCP Equity

facade

motorguy wrote: »

If you gave £16,851 for it 8 months ago, where does a valuation of £15,000 leave room for dealer profit and a saving for someone buying used not new?

Reads like he gave £19351 for it- he put £2500 deposit and borrowed another £16851.


£15k does still seem a bit high though unless it is against another new car with no discount.

thomas812

DrEskimo wrote: »

You won't have paid off £1,840 from the loan, as a large proportion of your monthly payment is currently going towards paying interest, unless you have 0% APR? What's the APR?

I suspect your settlement is closer to £16k, so if you can get £15k for it as a trade in, then you are ~£1k in negative equity.

I take it the invoice price was £19,351 (£16,851 + £2,500) when you bought the car new. After just 8months you have lost £4,351 in depreciation, and paid ~£1,000 in interest on the loan.....

New cars on PCP are expensive aren't they....

I believe the APR is 1.9% (It was definitely below 2%)
And yes, I essentially got it in a rush, but I dont exactly regret it, its a lovely car, just wish i took more time with deciding.

motorguy wrote: »

Be careful of a valuation against another car. A dealer can cover a multitude of sins with discount from the car you're buying.

Whats the exact model of car and miles?

If you plug the details in to webuyanycar they'll give you a raw auction price figure. A dealer will probably be really giving you maybe £500 more than that.

It might well be that he is, but a valuation of £15,000 against a new price 8 months ago of £19,351 seems a little high, given he'll want maybe £2,500 to £3,000 of a markup.

Model is Ford Fiesta ST-2 2019, with 8000 miles on.
Webuyanycar.com just gave an estimate of £14,000.

I will go back to him during the weekend and see and get him to calculate it all as it does seem to good to be true.

motorguy

facade wrote: »

Reads like he gave £19351 for it- he put £2500 deposit and borrowed another £16851.


£15k does still seem a bit high though unless it is against another new car with no discount.

Yeah i corrected myself in the next post, but you're right yes, £19,351.

motorguy

thomas812 wrote: »

I believe the APR is 1.9% (It was definitely below 2%)
And yes, I essentially got it in a rush, but I dont exactly regret it, its a lovely car, just wish i took more time with deciding.




Model is Ford Fiesta ST-2 2019, with 8000 miles on.
Webuyanycar.com just gave an estimate of £14,000.

I will go back to him during the weekend and see and get him to calculate it all as it does seem to good to be true.

Yeah so maybe £14,500 ish trade in price.

Why on earth would you want to change that? Probably the best small hot hatch around at the minute. Great cars. My brother in law has had 3 in a row, including a new ST-3 right now.

Enjoy your car!

thomas812

motorguy wrote: »

Yeah so maybe £14,500 ish trade in price.

Why on earth would you want to change that? Probably the best small hot hatch around at the minute. Great cars. My brother in law has had 3 in a row, including a new ST-3 right now.

Enjoy your car!

Haha I know. I love it, really. However I was just browsing and found some higher MPG cars, faster and 4WD which attracts me a lot. I will definitely stick through the contract, but i just wanted to know what'd happen if I did really want to switch.
I really appreciate your guys help though!

motorguy

thomas812 wrote: »

I believe the APR is 1.9% (It was definitely below 2%)
And yes, I essentially got it in a rush, but I dont exactly regret it, its a lovely car, just wish i took more time with deciding.




Model is Ford Fiesta ST-2 2019, with 8000 miles on.
Webuyanycar.com just gave an estimate of £14,000.

I will go back to him during the weekend and see and get him to calculate it all as it does seem to good to be true.

He'll be tweaking the figures on the new car to cover your negative equity - but it'll be discount you would otherwise have got off the other car.

If you dont need to change, dont go near him. Crazy to think of changing, especially in to another car thats going to depreciate heavily.

Oh, and if the BMW is USED, watch for their used car APR rates - they're scandalous.

motorguy

thomas812 wrote: »

Haha I know. I love it, really. However I was just browsing and found some higher MPG cars, faster and 4WD which attracts me a lot. I will definitely stick through the contract, but i just wanted to know what'd happen if I did really want to switch.
I really appreciate your guys help though!

Get a Mountune kit on your car if its not quick enough.

Amazing cars though.

Why do you need 4WD? Your car with winter tyres on will out perform a 4WD car with standard tyres.

thomas812

motorguy wrote: »

Get a Mountune kit on your car if its not quick enough.

Amazing cars though.

Why do you need 4WD? Your car with winter tyres on will out perform a 4WD car with standard tyres.

I was thinking of getting it remapped, however it's not really worth it considering I will hand it back in 2.5 years. and ALSO will void the warranty & have to tell insurance/would be voided?

Would increase it to about 240BHP and 350NM I believe (or similar)
I just like the idea of 4WD, being more safe and grippy. Just a personal thing I guess.

AdrianC

thomas812 wrote: »

Isnt the settlement figure £16,851? That is how much I owe them (or the loan)
So surely I owe them £16,851 - £1,840 = £15,011

Aren't you forgetting about the interest...?

You borrowed £16,851 eight months ago. You've paid 8x £230 repayments. But they aren't £230 off the debt. There's interest on the amount you still owe.

Assuming it's a 3yr PCP, then you're repaying the depreciation over the 36 x £230, plus the interest on the amount owed. When it gets to the end, you'll owe the balloon, which is set to be the expected value at the time. And you're paying interest on that balloon amount over the 36mo, because that's money you've borrowed...

Depreciation is steepest initially. You can easily see this, because you "paid" ~£19.5k for the car - £2,500 plus ~£17k which you borrowed. Now, just eight months later, it's already lost more than a quarter of that value - more than twice the up-front payment you made...

So you've paid £2,500 + (8 x £230) so far. Some of those repayments are interest, so of the £1,840 you've paid, maybe £1,250 is actual reduction in borrowings. That would put your settlement figure to be at least a grand more than the value.

DrEskimo

Only when you try to bail this early in to an agreement. Its hardly a surprise at this point in a 36 or 48 month agreement if you try to get out its going to cost you money.

Keep the car for the term committed to and it will cost precisely what the O/P signed up to - deposit + monthly payments and he'll have the option to purchase, trade it in or hand it back at the end of the term.

I know what you with regards to spreading the cost over a longer term to average out the cost, but strictly speaking, it doesn't matter how long he keeps the car. Whether he trades after 8months or 8years, the car has depreciated £4,500 in 8months and he's been charged £1,000 to borrow £15k over 8months.

It's just a fact of new car depreciation and interest on PCP finance...