I'll shut up then.
So the new was a PCP and the used a normal finance deal?
If so what was the total price of the used car including any extras warranty service deal and such, and how long was the deal over?
General Looking at buying options
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General Looking at buying options
So the new was a PCP and the used a normal finance deal?
If so what was the total price of the used car including any extras warranty service deal and such, and how long was the deal over?
ClareBear701
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Scrogg,
I have no problem talking about finance options on the forum, but I wouldn't want to quote specific rates for somebody here.
PCP is a good product if you want to own the vehicle at the end of the contract, however if you want to change after a period (say 3 years) you may do better to look at a PCH - Personal Contract Hire. However the penalties for cutting out of that contract are higher than for a PCP, so it is best to be sure about the likelihood of completing the term.
We rarely find that a used vehicle provides a better monthly payment on a PCP as we get manufacturer discounts for new cars that are not available on used and the finance companies are more likely to give a sensible residual value for a vehicle that they have 'known' from new, particularly if service has been included in the contract.
Finance provided by the manufacturers do have a few pitfalls to look out for - admin/doc fees, unreasonable balloon payments to tempt you into a new car at the end of the contract and unreasonable damage recharges.
Like all finance options - the unwary can be tripped up by not understanding the ramifications of the contract they are entering into, simply because they do not know what questions should be asked.
How is it?
How many people enter a PCP knowing that at the end of the term they are going to have the GFV amount available to pay it off and own the car?
PCP was specifically designed to give people a similar monthly payment to longer-term HP agreements with the added benefit of not feeling forced to keep the car for longer than they would normally want to.
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ClareBear701
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I'm happy to discuss the relative merits of different finance options on the forum, but wouldn't want to discuss individual quotes here.
PCP is a good product if you want to own the vehicle at the end of the term, however if you know you want a change then a PCH (Personal Contract Hire) might be a better option. However the penalties for cutting out of a PCH are generally higher than those on a PCP as ithe PCP is a bit more flexible in that regard.
I am rarely able to provide a competitive quote used against new as the manufacturers offer discounts on new vehicles and the finance companies offer better residual values on new vehicles as well.
Manufacturer finance companies often offer good rates (0% and lower monthly payments) but throw in extra costs to bump up their profit - admin fees, unreasonable residual values and high damage recharges. It is very easy to be tempted by a low headline rate without realising the whole picture - until it is too late.
Generally retail sales guys do not understand the ins and outs of finance - it is simply not their job or area of expertise - just as I do not know all the features of every vehicle I can supply. That's life, and the sooner we all accept that the sooner we can find an expert who can answer those questions.
Enough rambling - those are my thoughts and now it's time for me go and sell some finance.....
ClareBear
I was only able to get a printed out quote on a 500c which I decided was too much anyway and thier system fell over at the point where I wanted to get info on the new 1.2 lounge and used 1.4 sport.
For the moment I can only reference to whats on AC's website for the 1.2 pop (Compared to fiat i-deal it looks rather sucky)
Price £9265
Deposit - £139
Dealer contribution - £377
47 monthly - £139
Balance - £8749
APR - 7.6%
Admin - £285
Final payment - £3861
total payable - £11,195
6000 miles per year
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Gotta agree with Scrogg. If you want to own the car, anything with a huge balloon payment at the end is not ideal.
ClareBear701
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How is it?
How many people enter a PCP knowing that at the end of the term they are going to have the GFV amount available to pay it off and own the car?
PCP was specifically designed to give people a similar monthly payment to longer-term HP agreements with the added benefit of not feeling forced to keep the car for longer than they would normally want to.
Quite true - not everyone can afford to pay the GFV at the end, but if it has been correctly set thay should be able to sell the vehicle for that value or more and start a new contract, or if the GFV is too high they can hand the car back and start a new contract.
As I mentioned in the second post ('cos I didn't think the first had been saved - dumb newbie!!) these are the sort of issues that should be clearly explained before entering into a contract. It is possible to refinance the GFV for an addition 12/24 months if needs be. tHere are lots of options, but you have to go into any finance contract with your eyes wide open.
ClareBear701
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I completely agree with you - but if the balloon is set at a realistic amount, then it it less of a problem. Given that the baloon can be set at any level thenthe consumer shouldn't be left in a bad position. However as mentioned before the manufacturers finance companies have a tendency to set the balloon too high for their own benefit.
Now you're just contradicting yourself. You are now saying PCP is not a good product if you want to own the vehicle at the end of the contract?
It is, but what's the point? If you are going to sign up to a 36 month PCP with the intention of re-financing the GFV for a further 12-24 months in order to own the car you may as well start off with a 48-60 month HP agreement.
ClareBear701
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I don't mean to contradict myself - perhaps it would be better to say that a PCP gives you the option to return, keep or sell the car at the end of the term without having to make that decision at the outset. This means that it can cater for a change of circumstance without causing too many problems. No finance product is perfect, but if it has been properly explained then you shouldn't be caught in a difficult situation.
ClareBear701
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As a comparison:
Price £8844
Deposit £509
47 monthly £169
Final £2,675
Total £11,125
10,000 miles per annum
Thanks Clare
That is a surprise there, overall lower, although with a lower final payment, the monthly comes in at a higher rate.
That is a surprise there, overall lower, although with a lower final payment, the monthly comes in at a higher rate.
Your quote requires £370 more upfront from the customer, plus £30 more per month.
£370 + (47 x £30) = £1,780 more but your GFV is only £1,186 less.
Over the full term (including settling GFV) he will pay £11,127 for the car with you but only £10,818 with AC.
How is your quote better?
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ClareBear701
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The lower final payment means that you have a more realistic value for the car and don't get caught in a difficult financial situation at the end of the contract....
It also means you pay more deposit and a higher monthly payment.
(See what I mean about offering advice in public vs private?)
ClareBear701
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Happy to show that as the total paid overall is still less.
No it's not, it's £309 more
AC
£139 + (47 x £139) + £285 + £3861 = £10,818.00
Yours
£509 + (47 x £169) + £2,675 = £11,127.00
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ClareBear701
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Oops - That was based on the numbers shown on the quote and I didn't check those figures...
We can't always be the cheapest - that can never be guaranteed but we are quoting on 10 as opposed to 6k which is a consideration.
My other thought is maybe putting say 30% or 40% deposit down on a £9k 2 year old model and pay via HP for it, but it is difficault to say if thats really cost effective or not.
