End of Finance

Familyman01

My PCP deal for an S-Max is coming to the end after 3 years.

I like the peace of mind of a new car and full warranty, so the below is what I am thinking of doing, is this sensible?

Baloon payment - £10.6k
Private sale value - about £16k

I am thinking of paying the balloon payment, then selling the car for about £16k. Then paying the maximum deposit on a new PCP for the same car (but new), which will have the following payments:
Deposit - £10k
Monthly payments - £211
Balloon Payment - £12k

I will use the £6k equity a release by selling the old car to cover the 38 monthly payments of £211 (£8,018 in total), leaving a £2,018 gap.

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

I don't really see many draw backs, thoughts appreciated! The fact Ford are 0% right now helps.

The alternative is I just pay the £10k, and drive the car.

AdrianC

Familyman01 said:

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

Amortise that £10k over 36 months, and that nice cheap £53/mo suddenly becomes £330/mo.

And that's assuming you really CAN sell the car for 50% more than the balloon. Good luck with that.
Trade retail asking prices look around £16k, maybe a little lower, depending on spec. Private sale price? Nah.

Buy your current car off PCP, throw it away in three years time, and it's cost you less than the PCP on a replacement - and that's assuming your "£6k profit" wheeze pays off. If you take that out the equation, you're paying £18k over three years to rent that new one. You could throw the old one away at the end of summer 2022, and be ahead.

DrEskimo

The new car will depreciate by an expected £18k. How much do you expect your current car to deprecate if you bought it and kept it for the same period? Maybe £5k?

That gives you £13k in extended warranties or repair bills before the new car made more economic sense for the 'peace of mind'.

I'll wager that you won't even have a single out of warranty repair, making keeping your current car cheaper by a sum of around £4k/year. 

So the real question is, putting aside the peace of mind aspect, us the new car worth an extra £4k/year to you personally? What does it do that your current one can't?

Familyman01

AdrianC said:

Familyman01 said:

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

Amortise that £10k over 36 months, and that nice cheap £53/mo suddenly becomes £330/mo.

And that's assuming you really CAN sell the car for 50% more than the balloon. Good luck with that.
Trade retail asking prices look around £16k, maybe a little lower, depending on spec. Private sale price? Nah.

Buy your current car off PCP, throw it away in three years time, and it's cost you less than the PCP on a replacement - and that's assuming your "£6k profit" wheeze pays off. If you take that out the equation, you're paying £18k over three years to rent that new one. You could throw the old one away at the end of summer 2022, and be ahead.

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k, so yea I am confident on my 'wheeze' of getting more that the balloon payment (which is common).

Educate me here because I feel like I m missing something obvious. Cash flow is what is important to me.

Ignoring the time effect of money (DCF) over the 38 months in question (for now):

New PCP

Cash In - Sell car for £16k, Sell new car in 38 months for £15k (assumed) - Total £31k.

Cash Out - Balloon Payment (£10,600), Deposit (£10,760), monthly payments (£8,051), future balloon payment (£11,993) - Total (41,344)

Net Cash Flow over the 38 months with no asset at the end - (£10,344)

Keep My Car:

Cash In - £0 now, sell car for £5k in 38 months - £5k

Cash Out - Balloon Payment - £10,600

Net Cash Flow - (£5,600)

Saving from keeping car - £4744 over 38 months (£124 per month), ignoring annual MOT, repairs, something big going wrong.

Genuine questions here as I feel like I am missing something obvious! 

Grumpy_chap

Familyman01 said:

Private sale value - about £16k

Familyman01 said:

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k

Given those figures, is it worth the hassle of a private sale?
A private sale will never realise the retail value of £17-18k.
For the sake of £500, take the £15.5k from WBAC and move on.  All the hassle of advertising, viewings, test drives, time-wasters and possible scammers.  Trade sale seems just so much simpler and straight-forward.

Familyman01

Grumpy_chap said:

Familyman01 said:

Private sale value - about £16k

Familyman01 said:

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k

Given those figures, is it worth the hassle of a private sale?
A private sale will never realise the retail value of £17-18k.
For the sake of £500, take the £15.5k from WBAC and move on.  All the hassle of advertising, viewings, test drives, time-wasters and possible scammers.  Trade sale seems just so much simpler and straight-forward.

I agree - I just put it on my fist post so to say it was a true value, although WBAC have not seen the car so I expect to try and talk me down, so for an extra £1k private I might put up wit a bit of hassle.

DrEskimo

Familyman01 said:

AdrianC said:

Familyman01 said:

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

Amortise that £10k over 36 months, and that nice cheap £53/mo suddenly becomes £330/mo.

And that's assuming you really CAN sell the car for 50% more than the balloon. Good luck with that.
Trade retail asking prices look around £16k, maybe a little lower, depending on spec. Private sale price? Nah.

Buy your current car off PCP, throw it away in three years time, and it's cost you less than the PCP on a replacement - and that's assuming your "£6k profit" wheeze pays off. If you take that out the equation, you're paying £18k over three years to rent that new one. You could throw the old one away at the end of summer 2022, and be ahead.

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k, so yea I am confident on my 'wheeze' of getting more that the balloon payment (which is common).

Educate me here because I feel like I m missing something obvious. Cash flow is what is important to me.

Ignoring the time effect of money (DCF) over the 38 months in question (for now):

New PCP

Cash In - Sell car for £16k, Sell new car in 38 months for £15k (assumed) - Total £31k.

Cash Out - Balloon Payment (£10,600), Deposit (£10,760), monthly payments (£8,051), future balloon payment (£11,993) - Total (41,344)

Net Cash Flow over the 38 months with no asset at the end - (£10,344)

Keep My Car:

Cash In - £0 now, sell car for £5k in 38 months - £5k

Cash Out - Balloon Payment - £10,600

Net Cash Flow - (£5,600)

Saving from keeping car - £4744 over 38 months (£124 per month), ignoring annual MOT, repairs, something big going wrong.

Genuine questions here as I feel like I am missing something obvious! 

You think your current car worth £15k trade value is going to only be worth £5k in 3yrs time?

Surely that's too steep? That assumes nearly the same level of depreciation from brand new (from a dealer) to trade value in years 1-3 as it does for a trade value at 3yrs to a trade value at 6yrs.

Closer to £10k I would have thought? Now the difference is £10k over a new car, or £263 per month.

A £40 MOT a year doesn't exactly tip the scales does it. My partners 10yr old Mini has passed each of its last 6 MOTs with no problem.....you are grossly overestimating the potential repair bills of this still very new and reliable car.

Servicing will probably be cheaper too as you can use a trusted indie garage instead of the dealership (which is required under a PCP typically....).

Familyman01

DrEskimo said:

Familyman01 said:

AdrianC said:

Familyman01 said:

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

Amortise that £10k over 36 months, and that nice cheap £53/mo suddenly becomes £330/mo.

And that's assuming you really CAN sell the car for 50% more than the balloon. Good luck with that.
Trade retail asking prices look around £16k, maybe a little lower, depending on spec. Private sale price? Nah.

Buy your current car off PCP, throw it away in three years time, and it's cost you less than the PCP on a replacement - and that's assuming your "£6k profit" wheeze pays off. If you take that out the equation, you're paying £18k over three years to rent that new one. You could throw the old one away at the end of summer 2022, and be ahead.

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k, so yea I am confident on my 'wheeze' of getting more that the balloon payment (which is common).

Educate me here because I feel like I m missing something obvious. Cash flow is what is important to me.

Ignoring the time effect of money (DCF) over the 38 months in question (for now):

New PCP

Cash In - Sell car for £16k, Sell new car in 38 months for £15k (assumed) - Total £31k.

Cash Out - Balloon Payment (£10,600), Deposit (£10,760), monthly payments (£8,051), future balloon payment (£11,993) - Total (41,344)

Net Cash Flow over the 38 months with no asset at the end - (£10,344)

Keep My Car:

Cash In - £0 now, sell car for £5k in 38 months - £5k

Cash Out - Balloon Payment - £10,600

Net Cash Flow - (£5,600)

Saving from keeping car - £4744 over 38 months (£124 per month), ignoring annual MOT, repairs, something big going wrong.

Genuine questions here as I feel like I am missing something obvious! 

You think your current car worth £15k trade value is going to only be worth £5k in 3yrs time?

Surely that's too steep? That assumes nearly the same level of depreciation from brand new (from a dealer) to trade value in years 1-3 as it does for a trade value at 3yrs to a trade value at 6yrs.

Closer to £10k I would have thought? Now the difference is £10k over a new car, or £263 per month.

A £40 MOT a year doesn't exactly tip the scales does it. My partners 10yr old Mini has passed each of its last 6 MOTs with no problem.....you are grossly overestimating the potential repair bills of this still very new and reliable car.

Servicing will probably be cheaper too as you can use a trusted indie garage instead of the dealership (which is required under a PCP typically....).

Thanks for that - it helps my calculations.
I had a C-Max in the past that had a major gearbox issue that cost thousands (was only 6 years old) and a Mondeo had a LOT of warranty work done on it, so I might be getting swayed by these.

DrEskimo

Familyman01 said:

DrEskimo said:

Familyman01 said:

AdrianC said:

Familyman01 said:

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

Amortise that £10k over 36 months, and that nice cheap £53/mo suddenly becomes £330/mo.

And that's assuming you really CAN sell the car for 50% more than the balloon. Good luck with that.
Trade retail asking prices look around £16k, maybe a little lower, depending on spec. Private sale price? Nah.

Buy your current car off PCP, throw it away in three years time, and it's cost you less than the PCP on a replacement - and that's assuming your "£6k profit" wheeze pays off. If you take that out the equation, you're paying £18k over three years to rent that new one. You could throw the old one away at the end of summer 2022, and be ahead.

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k, so yea I am confident on my 'wheeze' of getting more that the balloon payment (which is common).

Educate me here because I feel like I m missing something obvious. Cash flow is what is important to me.

Ignoring the time effect of money (DCF) over the 38 months in question (for now):

New PCP

Cash In - Sell car for £16k, Sell new car in 38 months for £15k (assumed) - Total £31k.

Cash Out - Balloon Payment (£10,600), Deposit (£10,760), monthly payments (£8,051), future balloon payment (£11,993) - Total (41,344)

Net Cash Flow over the 38 months with no asset at the end - (£10,344)

Keep My Car:

Cash In - £0 now, sell car for £5k in 38 months - £5k

Cash Out - Balloon Payment - £10,600

Net Cash Flow - (£5,600)

Saving from keeping car - £4744 over 38 months (£124 per month), ignoring annual MOT, repairs, something big going wrong.

Genuine questions here as I feel like I am missing something obvious! 

You think your current car worth £15k trade value is going to only be worth £5k in 3yrs time?

Surely that's too steep? That assumes nearly the same level of depreciation from brand new (from a dealer) to trade value in years 1-3 as it does for a trade value at 3yrs to a trade value at 6yrs.

Closer to £10k I would have thought? Now the difference is £10k over a new car, or £263 per month.

A £40 MOT a year doesn't exactly tip the scales does it. My partners 10yr old Mini has passed each of its last 6 MOTs with no problem.....you are grossly overestimating the potential repair bills of this still very new and reliable car.

Servicing will probably be cheaper too as you can use a trusted indie garage instead of the dealership (which is required under a PCP typically....).

Thanks for that - it helps my calculations.
I had a C-Max in the past that had a major gearbox issue that cost thousands (was only 6 years old) and a Mondeo had a LOT of warranty work done on it, so I might be getting swayed by these.

Lol...then maybe stop buying Ford's

Take the £6k equity and put it towards another used car.

Familyman01

DrEskimo said:

Familyman01 said:

DrEskimo said:

Familyman01 said:

AdrianC said:

Familyman01 said:

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

Amortise that £10k over 36 months, and that nice cheap £53/mo suddenly becomes £330/mo.

And that's assuming you really CAN sell the car for 50% more than the balloon. Good luck with that.
Trade retail asking prices look around £16k, maybe a little lower, depending on spec. Private sale price? Nah.

Buy your current car off PCP, throw it away in three years time, and it's cost you less than the PCP on a replacement - and that's assuming your "£6k profit" wheeze pays off. If you take that out the equation, you're paying £18k over three years to rent that new one. You could throw the old one away at the end of summer 2022, and be ahead.

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k, so yea I am confident on my 'wheeze' of getting more that the balloon payment (which is common).

Educate me here because I feel like I m missing something obvious. Cash flow is what is important to me.

Ignoring the time effect of money (DCF) over the 38 months in question (for now):

New PCP

Cash In - Sell car for £16k, Sell new car in 38 months for £15k (assumed) - Total £31k.

Cash Out - Balloon Payment (£10,600), Deposit (£10,760), monthly payments (£8,051), future balloon payment (£11,993) - Total (41,344)

Net Cash Flow over the 38 months with no asset at the end - (£10,344)

Keep My Car:

Cash In - £0 now, sell car for £5k in 38 months - £5k

Cash Out - Balloon Payment - £10,600

Net Cash Flow - (£5,600)

Saving from keeping car - £4744 over 38 months (£124 per month), ignoring annual MOT, repairs, something big going wrong.

Genuine questions here as I feel like I am missing something obvious! 

You think your current car worth £15k trade value is going to only be worth £5k in 3yrs time?

Surely that's too steep? That assumes nearly the same level of depreciation from brand new (from a dealer) to trade value in years 1-3 as it does for a trade value at 3yrs to a trade value at 6yrs.

Closer to £10k I would have thought? Now the difference is £10k over a new car, or £263 per month.

A £40 MOT a year doesn't exactly tip the scales does it. My partners 10yr old Mini has passed each of its last 6 MOTs with no problem.....you are grossly overestimating the potential repair bills of this still very new and reliable car.

Servicing will probably be cheaper too as you can use a trusted indie garage instead of the dealership (which is required under a PCP typically....).

Thanks for that - it helps my calculations.
I had a C-Max in the past that had a major gearbox issue that cost thousands (was only 6 years old) and a Mondeo had a LOT of warranty work done on it, so I might be getting swayed by these.

Lol...then maybe stop buying Ford's

Take the £6k equity and put it towards another used car.

Wife wants what the wife wants!!!! S-Max is the family bus. BIK friendly Tycan for me soon....to replace an Audi.

Firmly on the side of keeping the S-Max now, and thinking about it in a few years.

DrEskimo

Familyman01 said:

DrEskimo said:

Familyman01 said:

DrEskimo said:

Familyman01 said:

AdrianC said:

Familyman01 said:

So I will end up paying £53 a month effectively to have the new car (as well as put in £10k in equity).

Amortise that £10k over 36 months, and that nice cheap £53/mo suddenly becomes £330/mo.

And that's assuming you really CAN sell the car for 50% more than the balloon. Good luck with that.
Trade retail asking prices look around £16k, maybe a little lower, depending on spec. Private sale price? Nah.

Buy your current car off PCP, throw it away in three years time, and it's cost you less than the PCP on a replacement - and that's assuming your "£6k profit" wheeze pays off. If you take that out the equation, you're paying £18k over three years to rent that new one. You could throw the old one away at the end of summer 2022, and be ahead.

Ford have offered me £15k (seen the car) WBAC £15.5k and trade seems to be about £17k - £18k, so yea I am confident on my 'wheeze' of getting more that the balloon payment (which is common).

Educate me here because I feel like I m missing something obvious. Cash flow is what is important to me.

Ignoring the time effect of money (DCF) over the 38 months in question (for now):

New PCP

Cash In - Sell car for £16k, Sell new car in 38 months for £15k (assumed) - Total £31k.

Cash Out - Balloon Payment (£10,600), Deposit (£10,760), monthly payments (£8,051), future balloon payment (£11,993) - Total (41,344)

Net Cash Flow over the 38 months with no asset at the end - (£10,344)

Keep My Car:

Cash In - £0 now, sell car for £5k in 38 months - £5k

Cash Out - Balloon Payment - £10,600

Net Cash Flow - (£5,600)

Saving from keeping car - £4744 over 38 months (£124 per month), ignoring annual MOT, repairs, something big going wrong.

Genuine questions here as I feel like I am missing something obvious! 

You think your current car worth £15k trade value is going to only be worth £5k in 3yrs time?

Surely that's too steep? That assumes nearly the same level of depreciation from brand new (from a dealer) to trade value in years 1-3 as it does for a trade value at 3yrs to a trade value at 6yrs.

Closer to £10k I would have thought? Now the difference is £10k over a new car, or £263 per month.

A £40 MOT a year doesn't exactly tip the scales does it. My partners 10yr old Mini has passed each of its last 6 MOTs with no problem.....you are grossly overestimating the potential repair bills of this still very new and reliable car.

Servicing will probably be cheaper too as you can use a trusted indie garage instead of the dealership (which is required under a PCP typically....).

Thanks for that - it helps my calculations.
I had a C-Max in the past that had a major gearbox issue that cost thousands (was only 6 years old) and a Mondeo had a LOT of warranty work done on it, so I might be getting swayed by these.

Lol...then maybe stop buying Ford's

Take the £6k equity and put it towards another used car.

Wife wants what the wife wants!!!! S-Max is the family bus. BIK friendly Tycan for me soon....to replace an Audi.

Firmly on the side of keeping the S-Max now, and thinking about it in a few years.

Yea I was all set to get a Model 3 under a salary sacrifice scheme, but that was back when I thought I was going to do 80mile round commutes to the office...now I can work from home as long as I want, it suddenly doesn't make much sense!

Will stick with my cheap and cheerful Renault Zoe....