# Any car finance/sales experts?



## donnyboy (Oct 27, 2005)

Trading the wifes car in and it has HP left on it. Going with a PCP deal on next car.

We only owe half what the trade price is, so are left with a good chunk of cash.

The PCP deal only needs a small deposit, so the dealer says we will get the rest back in cash/payment after they clear the finance settlement.

Just want to know what to look out for, and has anyone done this before?


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## lick0the0fish (Feb 29, 2016)

In the trade myself

Recommend putting a comfortable amount that you can find each time you want to change. 

Don't expect to get any of your deposit back. 

If you can manage the payments with nil deposit then do it. 

Be prepared to be in negative equity for perhaps 2/3 > 3/4 of the agreement at least. 

Enjoy a new car every three/four years!


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## donnyboy (Oct 27, 2005)

Yeah we wont be putting too much in incase we don't get it out. We got a good discount on car and also a deposit contribution form the manufacturer.

I just want to make sure that what they are saying about clearing the finance on the old car and paying us the extra is legit and they are not doing something strange.


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## lick0the0fish (Feb 29, 2016)

donnyboy said:


> Yeah we wont be putting too much in incase we don't get it out. We got a good discount on car and also a deposit contribution form the manufacturer.
> 
> I just want to make sure that what they are saying about clearing the finance on the old car and paying us the extra is legit and they are not doing something strange.


Not strange at all mate standard practice and at least they're not trying to tell you to put it all in as a deposit on a pcp.

You should prepare to have NO equity at the end then if you have a small amount (£500-£1000) then all the better.

If you don't mind me asking what manufacturer is it?


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## donnyboy (Oct 27, 2005)

Its a Nissan. Not the below deal or figures, but gives an idea of the offers of APR and deposit contribution. We got a better contribution for customer loyalty.

http://www.nissan-offers.co.uk/new-vehicles/qashqai/nmgb-q4-2015-qashqai-pcp-p5sb/541

Also got a discount through carwow


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## lick0the0fish (Feb 29, 2016)

Seems fair if you got more off as well. 

Like I said just be prepared for zero equity at the end. 

I wouldn't put more than 10% down on a pcp personally. But that's cos I am in the industry selling them!


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## donnyboy (Oct 27, 2005)

We're putting down less than 10% so all sounds good.


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## lick0the0fish (Feb 29, 2016)

Perfect mate enjoy your new car are you getting it in March?

Keep on top of the detailing!!! Even if it is a Datsun ;-)


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## donnyboy (Oct 27, 2005)

Should be here May or beginning of June.

Wife has one just now and really likes them. Its her car at the end of the day. She wasn't interested in the A6 black Edition I wanted.!! lol


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## DrEskimo (Jan 7, 2016)

Might be good to get confirmation that they have cleared the finance on your behalf. Unlikely to have any issues, but always good to be safe.

Few points on PCP:

1/ Its not a deposit. Its just a payment upfront to tailor the monthlies.

2/ The amount of money you put in upfront has very little effect on the overall paid. I say very little, as in fact putting a higher amount up front actually reduces the amount you pay overall slightly, as you are paying interest on a smaller amount (talking £10s maybe £100s at most on 48month term, nothing major). If you have £10k and decide to only put £5k in, you are effectively borrowing £5k from the finance company at the APR and term of the PCP. Might work for you, might not. Its different, but not better or worse.

3/ The concept of 'equity' is rubbish. If you come to the end of the deal and the car is valued at more than the GVF, you are just getting back what you've overpaid for during the PCP deal. If the GVF was set to the higher amount that it actually was, you would of paid less per month....

4/ The only way to get a cheaper deal, is to make sure you get a good discount on the RRP. Use websites like CarWow and OrangeWheels to get a good quote, and then use that to negotiate a discount.

5/ Even if you trade the car in early, putting in a higher deposit does not mean you 'lose' more money. If you put in a higher deposit, you have paid off more of the loan, and therefore the difference between trade in and amount owed will be lower (typically it will be what the dealerships like to call 'positive equity'). If you put in a lower deposit, you would of paid less over the same period, but the difference between the trade in and amount owed will be higher (you will be in 'negative equity'). If you total the amount paid and the positive/equity of the two examples, you get exactly the same figure.

Hope that helps!


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## lick0the0fish (Feb 29, 2016)

Of course it's equity. I agree with all of your other points but not to call it equity is just incorrect. 

It's a piece of property (car) with a finance agreement secured on it. 

If you owe more than it's worth then you've got negative equity and if it's worth more then it's positive.

Same as houses, or in fact any item you can secure finance against. The fact it's a depreciating asset is the reason pcp was invented. You're guaranteed not to be in negative equity at the end. Not owe the difference. Only if you trade early could you be in negative and even then, so long as you're more than 50% of the total amount payable, you can terminate the agreement anyway.


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## DrEskimo (Jan 7, 2016)

lick0the0fish said:


> Of course it's equity. I agree with all of your other points but not to call it equity is just incorrect.
> 
> It's a piece of property (car) with a finance agreement secured on it.
> 
> ...


Maybe I'm just arguing semantics, but the GFV is just an arbitrary number that the finance company uses to estimate the value of the car at the end of the term.

I guess my point wasn't what its called, but rather that it is sometimes made out to be something that it isn't. Its not free money. To me, it's not positive equity in the same sense as a appreciating asset, like a house, were you actually have made money. Its just you have overpaid in the confines of that particular finance agreement....I am far from a financial expert so perhaps I have a misunderstanding of the definitions...!

As I mentioned, if the GFV was actually accurate, the amount of finance would be less, and therefore you would of paid less over the term. If I end up in £1,000 'positive equity' I am just getting back £1,000 from what I over paid every month over the deal...

Is this not correct?


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## lick0the0fish (Feb 29, 2016)

Not quite

You would pay less. For example:

Car - £20k
GFV - £10k
Payments @ 3% - £311 this includes interest on the GFV. 

Total - £21,200 if you buy the car. 

But if the car is worth £11,000 you can take that off the total payable which would leave £10,200 essentially meaning you have "made" £1000 but I see where you are coming from if the GFV was higher. 

Also "equity" is a financial term it's not been "made up" by dealerships


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## DrEskimo (Jan 7, 2016)

lick0the0fish said:


> Not quite
> 
> You would pay less. For example:
> 
> ...


Makes sense.

Yes sorry I fully aware that equity is a well known term. My use of it in quotations was to signify that I didn't think it was used in the strictest sense of the word. A bit like the way its called a deposit. While it can mean an upfront payment, its typical meaning is a sum of money that is payable back at a later date. I'm sure you sometimes get people wondering where the deposit is at the end of the term...!

I can see I am incorrect for questioning the use of the term equity. I still think its misleading, but I'll move on


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## lick0the0fish (Feb 29, 2016)

DrEskimo said:


> Makes sense.
> 
> Yes sorry I fully aware that equity is a well known term. My use of it in quotations was to signify that I didn't think it was used in the strictest sense of the word. A bit like the way its called a deposit. While it can mean an upfront payment, its typical meaning is a sum of money that is payable back at a later date. I'm sure you sometimes get people wondering where the deposit is at the end of the term...!
> 
> I can see I am incorrect for questioning the use of the term equity. I still think its misleading, but I'll move on


No harm - apologies OP for hijacking thread!

You are 100% right it is just a sum of money to reduce the interest payable


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## SteveTDCi (Feb 8, 2006)

With non franchise pcp schemes you will sometimes find that larger the deposit the less you borrow which can mean a higher Apr rate.

As mentioned above I would strongly recommend you get a letter from your finance company saying they no longer hold any financial interest in the car. I would also agree on putting a smaller deposit in the car and that you won't be out of negative equity for at least 24/30 months. You should see some equity out of the car at the end but don't expect much after all finance companies are out there to make money for themselves not you.

If you are after a Nissan try Carlow and see what Nissan Leicester come up with they blew everyone out of the water when we were looking at leafs. 

Skoda have 0% pcp's and also have a look at what a personal loan would work out at on a used car, sometimes when you calculate the interest paid on a pcp against a 4% loan from testosterone the monthly payments might not be that much different although a pcp will usually be cheaper.


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## lick0the0fish (Feb 29, 2016)

The only thing to consider with a personal loan is it's secured on you and not the car and there's a £25k limit...


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## SteveTDCi (Feb 8, 2006)

Personal loans work out cheaper though and for a 10-15k car are probably the cheapest way to go. Motonovo dropped their rates to us the last few months and the lowest we saw was 5.0% APR.


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## donnyboy (Oct 27, 2005)

Thanks for all the info.

We spoke to a couple of other garages and none could match the deal we got. One even questioned how they could do it at that price. That's what made me question it abit. Maybe they are just giving us a good deal and I'm looking into to too much.

The carwow price they gave was very good. Plus the Nissan contribution and our payment makes it look a good deal. Trade in price was also good.

If they work it so we get some of our payment (deposit)  back at the end for a new deal, then even better.

Will will definitely be checking with the finance company that it gets cleared.


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