Brain leak..pcp v hp help

WellKnownSid

Moley27272 said:

From everything I have read about PCP its never the favoured option over HP. 

"All things being equal" - those things including APR.  In this case you're comparing an expensive PCP deal - with a low final value - against a hideously more expensive HP deal.  

Or to put it another way your 48 month PCP deal is almost the equivalent of a 51 month HP deal but at an APR which is significantly lower than the HP rate you quoted and a £500 contribution.

Goudy

I read that as 47 months @ £373.78, not 48.
So:
£8500 deposit plus 47x£373.78 (£17567.66) plus one month @ £1230 plus £10 admin fee to pay for the car outright.
Total £27307.66

Veteransaver said:

It's more of an HP than a PCP deal. Tiny final payment.

It's a PCP alright but the tiny final payment is a reflection of the confidence the industry has in the used prices of EV's.

They are saying that in 4 years time, after 40,000 miles it's pretty much worthless with a predicted value (GFV) of only £1,230.

£23990 - £1230 is £22760 depreciation or 95.5% or 65p a mile before running costs.
That's quite shocking.

At £23.990 it's obviously used rather than new, still that figure is whooping.

Have you tried a configuring a deal on a new Id3 with the same deposit?
Ok new they cost more but if a new one holds more value over 4 years and your monthlies stay roughly the same, you'd be better off. You'd at least have a new car with a full warranty.

Moley27272

 Few weeks ago I had a similar quote, with a 7k deposit , 49 monthly payments of only £169 and a GMFV of £14,535.
Horses for courses ?  To own the car outright at the end is a little higher total cost £29,166 - this is less the dealer cashback of £500. 

My bank quoted an APR 16.9% for me to loan from them. 

As for the new car idea, I will have full  7 year warranty on this used car, instead of 8 on new.  Its only done 11,000 miles. So I don't see new as an option. 
One other calculation to consider I will save around £200 a month of fuel costs compared to electricity cost. 

I'm still procrastinating over this !

daveyjp

PCP ties you into dealer servicing and repairs for the duration, HP doesn't.

Goudy

Moley27272 said:

  
I'm still procrastinating over this !

I wouldn't, I'd be walking away but I'd check this GFV figure (£1230) with them first.
95.5% deprecation is a large slice over 4 years

Your monthly payments on a PCP are typically depreciation + interest divided by the length of term.

So a car with low depreciation will have a higher GFV, which would normally have lower monthly payments.

A car with higher depreciation (in this case eye wateringly high) will have larger monthly payments as the GFV is low.

The biggest bonus of a PCP is when you get towards the end of the term.
You have options on what you'd like to do and the trick is to balance those options vs costs.

You can pay the GFV.
Hand the car back to the finance company and not pay the GFV.
Trade it in.

A low GFV makes this easier to settle the GFV, but you've paid for that in the monthly payments.
That might be a option if you want to keep the car, but who knows in 4 years time.
The way things are moving, your ID3 might look like a Penny Farthing compared to newer EV's.

Handing the car back has a few caveats but generally costs nothing and you make nothing.
You have basically leased the car for the deposit and monthlies.

Trading it in has some advantages.
You can negotiate a value based on the GFV. If they won't meet what you owe (the GFV) you still have the option of handing it back but quite often you can shop around and haggle.
The salesperson knows the score that you can hand it back and will often work in a slice of equity in the trade in value.

Personally if I was to take out another PCP I would be looking for some more value in the GFV and as such, lower monthlies.

I also know I wouldn't be happy closer to the end of the contract.
Imagine how you'd feel in the last year of your contract.
You'd still be paying £373 a month for a car that will be getting on for 5 or 6 years old and knowing it would be only worth £1230 or so in a few months.
That would twist my guts!

BTW, the 8 year warranty is for the battery not the whole car.
This has some charging rules, like not charging above 80% for short trips.
It also has some limitations, they only warranty 70% of the battery capacity, so it must fall below that before they consider it a warranty claim.

Electric Battery Maintenance and Warranty | Volkswagen UK

Herzlos

It sounds like they are offering a PCP deal but don't really want to since they've pretty much regarded the car as worthless at the end of the term. But it's hugely unlikely the car will be worth that little at 4 years.

Also, 9.9% APR is huge, you should be able to get a £15k bank loan for nearer 5%.

Goudy

Herzlos said:

It sounds like they are offering a PCP deal but don't really want to since they've pretty much regarded the car as worthless at the end of the term. But it's hugely unlikely the car will be worth that little at 4 years.

Also, 9.9% APR is huge, you should be able to get a £15k bank loan for nearer 5%.

I agree with most of that but the cars value after 4 years finance is actually it's value after it's 5 or 6 years old as it's used already.

Finance companies very rarely get this GFV wrong, but of course the salesperson might have.
The only notable time I recalled they did drop a banger with GFV's was when the likes of Citroen and Peugeot got it wrong with the C1 and 107's as prices at auction were well under GFV's.

I admit it doesn't look right but I would hope before anyone took the plunge, they'd want a bit more evidence rather than speculation of the value of an ID3 after 5 or 6 years with 51,000 miles on it with a couple of owners. 


The ID3 has a sister car, the Seat Born.
Run the figures on a new one gives this.

35 Monthly Payments of

£ 299.39

Total Deposit

£ 8,500.25

Cash Price (MDP‡)

£ 34,125.00

Optional Final Payment

£ 15,146.10

Option to Purchase Fee

£ 0.00

Total Amount of Credit

£ 25,625.00

Total Amount Payable

£ 34,125.00

Representative APR

0 % APR

Rate of Interest

0.00 % Fixed

Take it over 47 months and they'll give you £4000 deposit contribution (£12500 in total) but the APR goes to 3.9%.
Monthlies drop to £225.
The GFV to £13,690
And they want the £10 option to buy fee if you do buy it.

Create your perfect car with the CUPRA configurator | CUPRA UK (cupraofficial.co.uk)

Moley27272

The value in the car is made up from my high  monthly payments, made over 49 months. 
As far as I know I have the option to reduce monthly payment to say £273  month then the balloon payment will be much higher.  
As for the interest of 9.9% being huge. Well I've tried 3 different lenders, including Tesco, and they are all higher or the same @ 9.9%. Even tried a different dealer and the were 10.9%. My bank have quoted 16.9 %. So I dont see it as huge. My circumstances are what they are, I cant change them. My income is made up from 2 pensions I receive.

Moley27272

daveyjp said:

PCP ties you into dealer servicing and repairs for the duration, HP doesn't.

I get two years servicing with an option to extend . 

Moley27272

Goudy said:

Moley27272 said:

  
I'm still procrastinating over this !

I wouldn't, I'd be walking away but I'd check this GFV figure (£1230) with them first.
95.5% deprecation is a large slice over 4 years

Your monthly payments on a PCP are typically depreciation + interest divided by the length of term.

So a car with low depreciation will have a higher GFV, which would normally have lower monthly payments.

A car with higher depreciation (in this case eye wateringly high) will have larger monthly payments as the GFV is low.

The biggest bonus of a PCP is when you get towards the end of the term.
You have options on what you'd like to do and the trick is to balance those options vs costs.

You can pay the GFV.
Hand the car back to the finance company and not pay the GFV.
Trade it in.

A low GFV makes this easier to settle the GFV, but you've paid for that in the monthly payments.
That might be a option if you want to keep the car, but who knows in 4 years time.
The way things are moving, your ID3 might look like a Penny Farthing compared to newer EV's.

Handing the car back has a few caveats but generally costs nothing and you make nothing.
You have basically leased the car for the deposit and monthlies.

Trading it in has some advantages.
You can negotiate a value based on the GFV. If they won't meet what you owe (the GFV) you still have the option of handing it back but quite often you can shop around and haggle.
The salesperson knows the score that you can hand it back and will often work in a slice of equity in the trade in value.

Personally if I was to take out another PCP I would be looking for some more value in the GFV and as such, lower monthlies.

I also know I wouldn't be happy closer to the end of the contract.
Imagine how you'd feel in the last year of your contract.
You'd still be paying £373 a month for a car that will be getting on for 5 or 6 years old and knowing it would be only worth £1230 or so in a few months.
That would twist my guts!

BTW, the 8 year warranty is for the battery not the whole car.
This has some charging rules, like not charging above 80% for short trips.
It also has some limitations, they only warranty 70% of the battery capacity, so it must fall below that before they consider it a warranty claim.

Electric Battery Maintenance and Warranty | Volkswagen UK

if you don't mind me asking, what arrangement have you got , if not PCP ? Lease is out as I don't do long mileage.
I agree the GFV needs to be more in balance with monthly payments, I will get re quoted, cheers.
I realise the EV market is new and who knows what direction its heading. Once the hire companies flood the market, used price, I think will go down .