New Car PCP - Agreed February, Car Delivered, Dealer now insisting on New % Rate Set at Huge Cost.

jumeriah64

macman said:

So it appears that they allowed you to order a car without any finance agreement being in place whatsoever.  Did you pay a deposit?
Without it, it could be argued that no contract to purchase even exists.

Knowing what I know now, I'd agree with that. For sure. And it under lines how little I understood about the arrangement at the outset.

Now for me and without sounding distasteful or conceited, it sort of doesn't matter. I can afford any of the options available ...  buy, PCP, lease, whatever. For me it was about (as you correctly say) not having a solid understanding and of course not wanting to be taken advantage of or be a total numpty. And it now transpires that I didn't have that understanding. 

But my concern is for those who cannot afford such a change, of which there must be many. Think I highlighted that in my last post. That would be grim for somewhat without the options.

Yes we agreed deposit of about £8.5k. I expected pay that at the outset but in reality they opted to only take £500. Again the setup sum not being a great deciding factor, I went with their steer.

The process whilst odd in retrospect, is in no way uncommon I believe. I very much got the impression this was the norm and for a brand that is supposed to be a premium brand. I've also never bought a car before. Been lucky enough to have had such things provided by way of remuneration for maybe in excess of 25+ years. So a first in both respects.

It's been a bewildering experience but one that has definitely improved at the later stages. For me, the error in the finance handling has been 100% corrected and compensated rather well. Have to speak as you find.

jumeriah64

Having had a few hours to reflect on this and although originally it was not the actual question asked, I'm now curious if I got a reasonable deal with the 5.9% originally offered and since returned to? It's still incredible to witness the impact of the increase to 9.9%.

As mentioned, I put only a very rudimentary amount of research into the 'best option'. My FA did say that PCP was an appropriate option for me at this time (Dec 2021) but I did not shop around further to that. I took the showroom offer. 

What might the alternatives have been had I done so? I'm curious from a personal perspective but even more so for others considering a new car purchase in these new world conditions? 

Is PCP still appropriate for the average new car purchase or does this significant hike in rates mean that now other options are better? 

I guess the summary conclusions based on my somewhat undisciplined dive into funding a car are:

1. Understand what documentation you are signing at the outset and the limitations on both parties. - It's less obvious than it might sound
2. Understand what aspects can change and whether they will hit you as the consumer - e.g. Interest Rates, Price Increases
3. Understand when the actual 'contract' or agreement becomes solid - I didn't & I should of. Maybe I've been lucky here.
4. Identify alternatives - again I didn't (hence the opening question above) .... what might those be and where do you source them?

But back to the new slant on my question .... did it end up a good or a 'meh' rate and deal?

DrEskimo

jumeriah64 said:

Having had a few hours to reflect on this and although originally it was not the actual question asked, I'm now curious if I got a reasonable deal with the 5.9% originally offered and since returned to? It's still incredible to witness the impact of the increase to 9.9%.

As mentioned, I put only a very rudimentary amount of research into the 'best option'. My FA did say that PCP was an appropriate option for me at this time (Dec 2021) but I did not shop around further to that. I took the showroom offer. 

What might the alternatives have been had I done so? I'm curious from a personal perspective but even more so for others considering a new car purchase in these new world conditions? 

Is PCP still appropriate for the average new car purchase or does this significant hike in rates mean that now other options are better? 

I guess the summary conclusions based on my somewhat undisciplined dive into funding a car are:

1. Understand what documentation you are signing at the outset and the limitations on both parties. - It's less obvious than it might sound
2. Understand what aspects can change and whether they will hit you as the consumer - e.g. Interest Rates, Price Increases
3. Understand when the actual 'contract' or agreement becomes solid - I didn't & I should of. Maybe I've been lucky here.
4. Identify alternatives - again I didn't (hence the opening question above) .... what might those be and where do you source them?

But back to the new slant on my question .... did it end up a good or a 'meh' rate and deal?

You're overcomplicating this.

PCP is a finance product, which in general results in additional costs to borrow money where you don't have the capital upfront. Same as any other finance product (whether that be cars, TV, sofas or insurance).

The exception is where 0% or very low interest rates are applied where you can stand to make a bit of money by stashing the savings in an interest bearing account whilst borrowing the money at no/low cost.

Where it gets a bit more complicated is where there are incentives attached to the finance, for example deposit contributions and free servicing.
Unless the interest rate is very low, you are better off taking the PCP and then just settling the finance early to save on any interest costs. If the finance has no incentives, then no need to bother with PCP in the first place.

For you, I would just settle the finance the next day, as you have the cash and the finance is likely costing you a lot of money. You have spent time negotiating a deal, so by settling the finance a bit after you collect you can save face and not lose out on those freebies they chucked in. The dealer and the finance aren't linked, so they won't know you settled a day, week or month later.

jumeriah64

DrEskimo said:

jumeriah64 said:

Having had a few hours to reflect on this and although originally it was not the actual question asked, I'm now curious if I got a reasonable deal with the 5.9% originally offered and since returned to? It's still incredible to witness the impact of the increase to 9.9%.

As mentioned, I put only a very rudimentary amount of research into the 'best option'. My FA did say that PCP was an appropriate option for me at this time (Dec 2021) but I did not shop around further to that. I took the showroom offer. 

What might the alternatives have been had I done so? I'm curious from a personal perspective but even more so for others considering a new car purchase in these new world conditions? 

Is PCP still appropriate for the average new car purchase or does this significant hike in rates mean that now other options are better? 

I guess the summary conclusions based on my somewhat undisciplined dive into funding a car are:

1. Understand what documentation you are signing at the outset and the limitations on both parties. - It's less obvious than it might sound
2. Understand what aspects can change and whether they will hit you as the consumer - e.g. Interest Rates, Price Increases
3. Understand when the actual 'contract' or agreement becomes solid - I didn't & I should of. Maybe I've been lucky here.
4. Identify alternatives - again I didn't (hence the opening question above) .... what might those be and where do you source them?

But back to the new slant on my question .... did it end up a good or a 'meh' rate and deal?

You're overcomplicating this.

PCP is a finance product, which in general results in additional costs to borrow money where you don't have the capital upfront. Same as any other finance product (whether that be cars, TV, sofas or insurance).

The exception is where 0% or very low interest rates are applied where you can stand to make a bit of money by stashing the savings in an interest bearing account whilst borrowing the money at no/low cost.

Where it gets a bit more complicated is where there are incentives attached to the finance, for example deposit contributions and free servicing.
Unless the interest rate is very low, you are better off taking the PCP and then just settling the finance early to save on any interest costs. If the finance has no incentives, then no need to bother with PCP in the first place.

For you, I would just settle the finance the next day, as you have the cash and the finance is likely costing you a lot of money. You have spent time negotiating a deal, so by settling the finance a bit after you collect you can save face and not lose out on those freebies they chucked in. The dealer and the finance aren't linked, so they won't know you settled a day, week or month later.

Interesting point you make and similar conversation has gone on, with the dealer as it goes. It seems taking the 'right' vehicle can be quite lucrative if done right and can buck trend in depreciation. It seems I accidently have the right vehicle.

Car is apparently worth more now than when the arrangement was entered into. It seems that this is something that folks can and do do ...  taking the car, getting a valuation, then ending it early if they have made on the deal. Then putting it into another option.

I read an article that JLR are getting customers to agree not to sell vehciles unless to JLR ....

https://www.autoexpress.co.uk/land-rover/359090/land-rover-buyers-refused-delivery-unless-they-agree-sell-clause

DrEskimo

jumeriah64 said:

DrEskimo said:

jumeriah64 said:

Having had a few hours to reflect on this and although originally it was not the actual question asked, I'm now curious if I got a reasonable deal with the 5.9% originally offered and since returned to? It's still incredible to witness the impact of the increase to 9.9%.

As mentioned, I put only a very rudimentary amount of research into the 'best option'. My FA did say that PCP was an appropriate option for me at this time (Dec 2021) but I did not shop around further to that. I took the showroom offer. 

What might the alternatives have been had I done so? I'm curious from a personal perspective but even more so for others considering a new car purchase in these new world conditions? 

Is PCP still appropriate for the average new car purchase or does this significant hike in rates mean that now other options are better? 

I guess the summary conclusions based on my somewhat undisciplined dive into funding a car are:

1. Understand what documentation you are signing at the outset and the limitations on both parties. - It's less obvious than it might sound
2. Understand what aspects can change and whether they will hit you as the consumer - e.g. Interest Rates, Price Increases
3. Understand when the actual 'contract' or agreement becomes solid - I didn't & I should of. Maybe I've been lucky here.
4. Identify alternatives - again I didn't (hence the opening question above) .... what might those be and where do you source them?

But back to the new slant on my question .... did it end up a good or a 'meh' rate and deal?

You're overcomplicating this.

PCP is a finance product, which in general results in additional costs to borrow money where you don't have the capital upfront. Same as any other finance product (whether that be cars, TV, sofas or insurance).

The exception is where 0% or very low interest rates are applied where you can stand to make a bit of money by stashing the savings in an interest bearing account whilst borrowing the money at no/low cost.

Where it gets a bit more complicated is where there are incentives attached to the finance, for example deposit contributions and free servicing.
Unless the interest rate is very low, you are better off taking the PCP and then just settling the finance early to save on any interest costs. If the finance has no incentives, then no need to bother with PCP in the first place.

For you, I would just settle the finance the next day, as you have the cash and the finance is likely costing you a lot of money. You have spent time negotiating a deal, so by settling the finance a bit after you collect you can save face and not lose out on those freebies they chucked in. The dealer and the finance aren't linked, so they won't know you settled a day, week or month later.

Interesting point you make and similar conversation has gone on, with the dealer as it goes. It seems taking the 'right' vehicle can be quite lucrative if done right and can buck trend in depreciation. It seems I accidently have the right vehicle.

Car is apparently worth more now than when the arrangement was entered into. It seems that this is something that folks can and do do ...  taking the car, getting a valuation, then ending it early if they have made on the deal. Then putting it into another option.

I read an article that JLR are getting customers to agree not to sell vehciles unless to JLR ....

https://www.autoexpress.co.uk/land-rover/359090/land-rover-buyers-refused-delivery-unless-they-agree-sell-clause

Sure, you can change it, but I was just suggesting to settle the finance so you don’t pay interest.

I understood you liked the car and weren’t considering swapping it for another?

redux

This has been an interesting read, on my first visit to the thread.

I have no expertise in buying cars or in such finance, but it strikes me that neither the original 5.9% nor the later 9.9% rates sound attractive compared to offers in other contexts, such as personal loans or credit card balance transfers, starting at or slightly below 3% back then. Still, I suppose car dealer loan rates have often sounded higher than average.

Of course there are balances in the other direction, with other details rolled in at possibly cheaper than real cost, such as the discounted servicing, which I assume the dealer could discount out of their other commission.

It just goes to show, add up all the details, but it is a bit surprising that the loan underwriters ducked out so hard, when it must have been traditional for them to know the typical delivery times and potential for market moves in that time. For that, I'd assume that might justify their 6% rather than 3% originally, thus already pricing in some of the risk, and I'm glad to see that eventually things have managed to get back to the same place.

jumeriah64

DrEskimo said:

jumeriah64 said:

DrEskimo said:

jumeriah64 said:

Having had a few hours to reflect on this and although originally it was not the actual question asked, I'm now curious if I got a reasonable deal with the 5.9% originally offered and since returned to? It's still incredible to witness the impact of the increase to 9.9%.

As mentioned, I put only a very rudimentary amount of research into the 'best option'. My FA did say that PCP was an appropriate option for me at this time (Dec 2021) but I did not shop around further to that. I took the showroom offer. 

What might the alternatives have been had I done so? I'm curious from a personal perspective but even more so for others considering a new car purchase in these new world conditions? 

Is PCP still appropriate for the average new car purchase or does this significant hike in rates mean that now other options are better? 

I guess the summary conclusions based on my somewhat undisciplined dive into funding a car are:

1. Understand what documentation you are signing at the outset and the limitations on both parties. - It's less obvious than it might sound
2. Understand what aspects can change and whether they will hit you as the consumer - e.g. Interest Rates, Price Increases
3. Understand when the actual 'contract' or agreement becomes solid - I didn't & I should of. Maybe I've been lucky here.
4. Identify alternatives - again I didn't (hence the opening question above) .... what might those be and where do you source them?

But back to the new slant on my question .... did it end up a good or a 'meh' rate and deal?

You're overcomplicating this.

PCP is a finance product, which in general results in additional costs to borrow money where you don't have the capital upfront. Same as any other finance product (whether that be cars, TV, sofas or insurance).

The exception is where 0% or very low interest rates are applied where you can stand to make a bit of money by stashing the savings in an interest bearing account whilst borrowing the money at no/low cost.

Where it gets a bit more complicated is where there are incentives attached to the finance, for example deposit contributions and free servicing.
Unless the interest rate is very low, you are better off taking the PCP and then just settling the finance early to save on any interest costs. If the finance has no incentives, then no need to bother with PCP in the first place.

For you, I would just settle the finance the next day, as you have the cash and the finance is likely costing you a lot of money. You have spent time negotiating a deal, so by settling the finance a bit after you collect you can save face and not lose out on those freebies they chucked in. The dealer and the finance aren't linked, so they won't know you settled a day, week or month later.

Interesting point you make and similar conversation has gone on, with the dealer as it goes. It seems taking the 'right' vehicle can be quite lucrative if done right and can buck trend in depreciation. It seems I accidently have the right vehicle.

Car is apparently worth more now than when the arrangement was entered into. It seems that this is something that folks can and do do ...  taking the car, getting a valuation, then ending it early if they have made on the deal. Then putting it into another option.

I read an article that JLR are getting customers to agree not to sell vehciles unless to JLR ....

https://www.autoexpress.co.uk/land-rover/359090/land-rover-buyers-refused-delivery-unless-they-agree-sell-clause

Sure, you can change it, but I was just suggesting to settle the finance so you don’t pay interest.

I understood you liked the car and weren’t considering swapping it for another?

Got you. And yes that point not entirely wasted on me. Will have a proper think on about that.

And yes car is super ... it should be for the price tag. But that said, I'm not wed to it. If I can haul £18-20k out of it and be sourcing another then why not. 

That said, the spoiler of course being the now somewhat hairy interest rate. But as you say, there is a case for buying, selling then (maybe) buying again. The dealer explained about a customer who did this every year and was covering costs of having a new car all the time. Not the same model, but one in niche demand and same brand. 

So many options that do not first present themselves. Think the take away from this is to have an open mind and also be open to alternatives. The conversation will continue and I'll update the thread how this ends up. Either way, this weekend, we are going to burn it in with a trip down to Lyon.

k3lvc

jumeriah64 said:

 Either way, this weekend, we are going to burn it in with a trip down to Lyon.

And there starts a whole other story about used of EV's for European trips - do let us know how your get on and how long you spend drinking coffee in Autogrill/Carrefour etc

jumeriah64

k3lvc said:

jumeriah64 said:

 Either way, this weekend, we are going to burn it in with a trip down to Lyon.

And there starts a whole other story about used of EV's for European trips - do let us know how your get on and how long you spend drinking coffee in Autogrill/Carrefour etc

Made me laugh. Yeah will do. Guess we will know more about the realities of running an EV in the coming weeks. I have no idea good or bad at this point.

It's going down to Istanbul in May via ferry from Italy and back up the Croatian side. That will be an EV tester for sure. Far from safe EV territory for sure.  And early year we are in the 'evening bottle of wine' phase of planning of a trip to Marrakesh with it. 

Can't take a car like this and watch it depreciating on the drive and use it just for going to Sainsburys

MrFrugalFever

DrEskimo said:

Ljumeriah64 said:

Having had a few hours to reflect on this and although originally it was not the actual question asked, I'm now curious if I got a reasonable deal with the 5.9% originally offered and since returned to? It's still incredible to witness the impact of the increase to 9.9%.

As mentioned, I put only a very rudimentary amount of research into the 'best option'. My FA did say that PCP was an appropriate option for me at this time (Dec 2021) but I did not shop around further to that. I took the showroom offer. 

What might the alternatives have been had I done so? I'm curious from a personal perspective but even more so for others considering a new car purchase in these new world conditions? 

Is PCP still appropriate for the average new car purchase or does this significant hike in rates mean that now other options are better? 

I guess the summary conclusions based on my somewhat undisciplined dive into funding a car are:

1. Understand what documentation you are signing at the outset and the limitations on both parties. - It's less obvious than it might sound
2. Understand what aspects can change and whether they will hit you as the consumer - e.g. Interest Rates, Price Increases
3. Understand when the actual 'contract' or agreement becomes solid - I didn't & I should of. Maybe I've been lucky here.
4. Identify alternatives - again I didn't (hence the opening question above) .... what might those be and where do you source them?

But back to the new slant on my question .... did it end up a good or a 'meh' rate and deal?

You're overcomplicating this.

PCP is a finance product, which in general results in additional costs to borrow money where you don't have the capital upfront. Same as any other finance product (whether that be cars, TV, sofas or insurance).

The exception is where 0% or very low interest rates are applied where you can stand to make a bit of money by stashing the savings in an interest bearing account whilst borrowing the money at no/low cost.

Where it gets a bit more complicated is where there are incentives attached to the finance, for example deposit contributions and free servicing.
Unless the interest rate is very low, you are better off taking the PCP and then just settling the finance early to save on any interest costs. If the finance has no incentives, then no need to bother with PCP in the first place.

For you, I would just settle the finance the next day, as you have the cash and the finance is likely costing you a lot of money. You have spent time negotiating a deal, so by settling the finance a bit after you collect you can save face and not lose out on those freebies they chucked in. The dealer and the finance aren't linked, so they won't know you settled a day, week or month later.

They absolutely will, they will be provided with notification and have commission pulled back.