PCP question

[robtt09]

Looking to get new A4 next March. Usually buy outright but garage pushing pcp.But they seem to base figures on full list and will not budge from that saying it is irrelevant to my payments. I have an internet quote for the car, from another garage , for cash, with a £3500 discount.Surely ,if I get pcp, I should get a similar discount and lower payments ? I hate changing cars !!!

[lozzermo]

My understanding is the PCP is just another finance package. Therefore you should agree the discount plus any part ex and then get the pcp quote on the balance. They may have provided a simple example quote based on list.

[John140]

PCP is just another fancy wrapping for finance or hire purchase. The only selling point that I can see is convenience.
If you really dont like negotiating or shopping around etc etc, it is for you, but IMHO it is throwing tenners in the fire !

[dts439]

I was a serial cash buyer of cars until we bought our latest (used) A4 from a main dealer (using VW Financial Services).

What I found virtually impossible was to compare the PCP deals against the cash equivalent.

Eventually I was comfortable with the amount per month/year and we had some extra 'incentives' with a couple of free services and an extra discount off the car. Going PCP also allowed us to keep the cash in the bank which I was more comfortable with in the current climate. I'm likely to replace this car before the end of the term like most people (I think very few deals ever go to the baloon payment) and so it will just go into the next deal.

Best figures I got to were that over the 3 year term it might cost an extra £1-2,000 .

[legendamongus]

With PCP, I found that most of the cost of options etc goes straight to the 'balloon' payment at the end so only affects your payments by a couple of pounds a month. Going from an SE to an S LIne Black Edition put my monthly costs up by £3/month, even though the 'price' of the car went up by a good few thousand. This is probably the logic that your dealer is using. If they are saying that it'll make no difference, then try another dealer or simply wait them out. They become quite receptive when ignored for a few days in my experience.

If you change cars on a regular basis, I'm in the PCP camp. Although it's not technically 'your' car, you're paying a fraction of the cost that you would under HP/cash payment, and you get a predicted value for it after the agreement is up. Sounds like a winner to me...

[John140]

PCP may be okay if you are self employed or a small business owner, but I still can't see otherwise how it stacks up. Finance easily becomes a complex area with many variables, for instance I have got customers (in the telecoms industry) that hate CAPEX, ie up-front costs but are willing to pay a premium for an OPEX, ie rental style deal.
it may be that dealers will sweeten the PCP deal wheer a part-ex is involved only to claw back the margin on the part-ex payment.

I still think that most times a cash deal holding a gun to their head with no frills is the only logical way, after all saving are worthless now but finance is relatively expensive considering the base-rate, as long as it doesn't clean those savings out.

[Hammy969]

Guys

This is always based on personal circumstances.
I always compare all ways when buying a car.

My Thoughts

If you are in the fortunate position to have the cash to pay the car, if you chose PCP can you get a better return for your money elsewhere?
If you do not buy cash the PCP are usually fairly competitive.
PCP also garantee the future value, which if I had done this on my last car would have been in my favour.

Ham

[theskyfox]

Horses for courses chaps. Im using the PCP system..and it gives you the option to get a higher spec car whilst having lower payments. It may cost a little more in the long run, but I was lucky and got just 6% interest. If your feeling a bit flush later on, you can always over-pay on it (VW Financial services let you do this now) and you can always buy the car outright. (You can ask for a final settlement figure which will be the amount you owe without any additional interest on top).

Works well for me :).

-Andrew

[Pauls898]

Yes I had my Audi QSE 3.0L TDI on a 3 year PCP with about an £8000 balloon payment at the end, I had paid this for 18 months then I took early retirement, I didn't want to carry on paying this monthly payment whilst retired so I used some of my lump some to settle the car in full. But be warned I got my finally settlement from Audi UK, the lady on the phone said I didn't need to pay this till my next payment date was due? However it transpired that when I went to settle this PCP with the amount I was given, I had missed the expiry date of the quote by one day, and Audi tried to add on another months interest of some £157.00 as you can imagine I wasn't happy. I wrote to the general manager of Audi UK and got it dropped as a good will gesture. So a word of warning if your thinking of settling your PCP early CHECK the expiry date of the settlement figure and allow time for the funds to reach your account!!! and by the way you have to pay a small penalty for settling early of a few hundred on top! But still I saved about £2000 on interest alone settling early so more than I would have got if I had left the money in the bank as saving interest rates are so low.

[robtt09]

Once again thanks to you all for your helpful thoughts and comments.Still not come to any decision but waiting for a week or two as the dealers were all really busy with !st January busines

[Geordie Amanda]

I sold cars for a couple of years and spent a bit of time sorting the finance on my own PCP sales. PCPs are a form of HP payment really. They have the advantages of protection with the rule of halves and thirds, just like a HP agreement. That is the bit that states once you have paid off a third of the cost of the car they would probably need a court order to take the car from you and once you have paid off a half of the cars total cost (this includes your deposit payment) you can hand the car back to the finance company and walk away. I actually did this with a SEAT I had as it was worth about £3,000 less than I owed. I thought why should I pay all that money for a car that wasn't worth it? VW finance were very polite, came along, picked the car up and said goodbye. Painless (I then bought an Octavia!)

But the best bit of a PCP (usually) is there are incentives from the manufacturer to buy a car on PCP. The reason is they like the idea of a car coming back to them every 2 or 3 years and so not only having decent used stock, but also having a chance to change your car for another. So often you will see a good finance rate (ignore the APR figure as it is impossible to compare to other APR figures, but get the 'Flat rate' if possible- that is the figure that makes more sense to people who aren't maths professors and is easier to compare with other 'flat rates'). Or even better, just compare how much the total deal will cost you by adding up all the future payments, plus your deposit and final payment (if you think you might want to keep the car). I PCP'd my current car and there was a 'Dealer' incentive to take the PCP. As it turns out, part of the Dealer Incentive, was money from the Manufacturer (Audi) so I knew how much discount I was receiving in this incentive. I then haggled a bit more from the car. Partly because a dealer will also receive some back end money for selling their PCP and also some more if they hit their targets for selling PCPs. For example, when I sold Nissan PCPs, we had an automatic £500 given to the dealership for the sale of the PCP and also we had over £1,000 incentive for selling a PCP on a Nissan Primera whiich we handed to the customer in the form of a discount. We could then also add the £500 to that discount if we had to and even drop the rate slightly. this meant the customer would get a repayment schedule similar to a 0% interest deal and we would still have all the profit left in the car. In other words we used the free money available to us from the manufacturer to sell the car and made our profit through the actual 'car' part of the sale. This why I would say if you can stand your salesperson's 'patter' then let them talk you through the PCP options and haggle hard of those figures. Sometimes everyone can win.

There is on some finance systems, a way of reading the profit margin on a PCP deal. This is usually done by looking at the screen that the salesperson is using and somewhere on the top or bottom there is what looks like a bit of code. There will be a changing figure that goes up or down as you haggle on the money and will have a letter at the beginning telling the salesperson that they are in profit or loss (possibly a C or P for profit or credit). The numbers are usually a simple representation of the pounds sterling left in the deal for the dealer. It makes more sense once you have visually locked on to this code and seen it move, but if you can find it and pick out the number part, you will see exactly how you are doing on the finance part of the deal :)