# PCP's??



## james_19742000 (May 8, 2008)

Ok chaps, justbeen doing some reading on car PCP's, what are people thoughts etc on them, anyone got one etc?

I have had bad credit in the past, but am considering upgrading the car, can afford the payments with no issue, so it seems suited to me, but would I get it??

Any been in a similar situation etc, has it worked, not worked, been good, been poor etc etc etc??

Thanks in advance, James.


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## t1mmy (Dec 9, 2006)

We have our car on a PCP, for the low % it was offered at it was definately better to use Toyota's money than our own. I sold cars for a few years and have seen loads of cars handed back under PCP's because they lost more value than anticipated, at this point you are losing nothing yourself.

I would advise not to put much more, if any more, than the minimum deposit, unless you are trying to achieve a certain monthly payment that requires £x deposit.

Any questions just fire away.

In terms of if you will pass the credit check, I have no idea how bad yours was and how good it is now. I suppose you would have to get them to run a prop through and see.


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## james_19742000 (May 8, 2008)

Thanks for that, interesting stuff, we have had our eye on a car for a while now and I poped into the dealer this afternoon and had a chat, anyway, with the discount on the car they were offering, the good PX they were offering on mine, 3 years free servicing, 12 months tax and the stupid low APR and the silly low monthly payment, I would almost be stupid not to change, so I asked them to put me through so I could see if I would be accepted or not and I was!

So, am thinking about it overnight and if I do decide to do it then the car is in stock ready to go, so could be in a new car in a few days!

Couldnt believe how tempting the deal is, so am going to be thinking this through overnight, the monthly payments are easily within my budget, I would put down the minimum amount of deposit and the balloon payment at the end is not too bad to be honest, I was just surprised how easy it has all been!

Definately one to think about overnight, out of interest if I got half way through and was struggling or something, what do you do just give them back the car and walk away, are you eligible for costs or something, I know each one probably differs, but as a general rule of thumb??

Thanks, James.


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## andy665 (Nov 1, 2005)

Perhaps I can give my opinion as I have sold PCPs as a Business Manager and for the last ten years worked with manufacturer finance houses in developing the PCP part of their business.

They are ideal for some people, not for others, depends what your requirements are - despite the way that most are sold they are not best for people who are merely looking for the lowest possible monthly payment.

I would advise a low a deposit as possible - that way if the cars value does not exceed the GMFV (Guaranteed Minimum Future Value) and you simply hand your car back then you have minimsied your loss.

A high GMFV is not necessarily the best PCP - a properly designed PCP should give you a chance of having some equity at the end of the agreement - the higher the GMFV is (as a % of the cars new price) then the lower the chance of equity

With the current climate a PCP will eliminate the risk of negative equity which is a point well worth considering

Remember that a PCP does not tie you to that dealer / manufacturer - you can p/x your car anywhere or sell privately if you wish

Your rights with a PCP are exactly the same as with a HP agreement - it is classed as a HP agreement, merely one with a different payment profile and benefits

If you want to return the car at any point you will have the Rule of 78 applied, basically if you have paid back more than half the total amount payable (not borrowed) then you can walk away, if you have not reached this point then you will be provided with a settlement figure, if the cars value exceeds this then you will have equity, if it doesn't then you have to make up the shortfall - exactly the same scenario as a HP agreement 

Choose your mileage band carefully, better to be safe than sorry and select a slightly higher mileage than you will probably do, it will lower the GMFV and slightly increase payments but you will avoid excess mileage charges - NEVER go for a lower mileage in order to reduce monthly payments

Hope this helps


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## Nanoman (Jan 17, 2009)

I bought a new audi A3 on a PCP because audi were subsidising the finance down to stupid money. Like some of the others on here I have worked in the trade and did plenty checking around first. Was originally looking at a golf but it was a lot cheaper to get a higher spec A3 so went for that instead.

Check out the excess mileage charge. Mine is 6p per mile... so £600 per 10k miles if I go over the limit. Also double check that it is secured on the car and future value is guaranteed.

I would definitely do it again but you need to keep your eye out for the different manufacturer offers as it can sometimes be cheaper to get a better or more expensive car. Do your maths carefully though. I agree with the others posts above as well low deposit is the way to go.


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## james_19742000 (May 8, 2008)

Brilliant, many thanks for the replies, much appreciate that, its a car for the wife, what she wants and no other make or model is any good (women!!!), so we are tied to this particular car, the deposit is very low, the mileage we have said is 8K per year, she currently does around 5K so plenty of safety there and the GMFV is approx £2500 below the book price of the same car that is three years old now, so does that sound like we are doing things right??


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## andy665 (Nov 1, 2005)

Sounds like a well structured deal - its good to have a level of equity at the end of the agreement that is similar or better than the initial deposit


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## james_19742000 (May 8, 2008)

Thanks, just having never looked at these before its good to get an idea on them and what we should be looking for in the deal


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## t1mmy (Dec 9, 2006)

If you go for it you will get offers from the garage after 1-2 years to say they can usually put you in an identical spec new car for the same or very similar monthly payments as you are currently paying. I would advise running to the end of your 3-4 year agreement or near to it as that is when you will see most benefit from any potential equity above the gmfv.

I'd be interested to know if others who have posted in this thread agree?


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## james_19742000 (May 8, 2008)

Good point, so resist temptation then is the best bet then!


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## Nanoman (Jan 17, 2009)

I've had mine for two years this month so I'll see if I get a call from audi... I don't think it's any more common to be offered a new car under a PCP than any other time.

When I was in the business I used to make a few sales by talking to the punters whose car were in for service. If they were sitting about waiting I'd speak to them and see if they were interested (everybody wants to know what their car is worth). Even if they dropped their car off for a service I'd look over their car and work out a wee deal to tempt them to change. It worked more often than you'd think.

As above though, resist the temptation if you can... if not you get a new car for the same as you're paying now!


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## andy665 (Nov 1, 2005)

I have spent most of my time over the last two years rolling out a "Parity" system for a major dealer group. Its a piece of software that I have helped to develop that allows customers to be contacted when they have reached their parity point. 

It looks at the customer having an equivalent specced car to their current one and takes into account what they are driving, current rate availability, finance offers, stock availability etc.

In essence the dealers contact the customer when the proposition is:

Same spec car

Minimal or no deposit over and above equity in current car

Same term

Same monthly payment

Its working really well, last year it helped sell an additional 1800+ cars and most importantly retained customers.

Every customers agreement needs to be looked at in isolation, there are so many variables that its impossible to make sweeping assumptions on when the most cost effective time to change is - sadly, the motor industry nearly always makes such assumptions


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## Frothey (Apr 30, 2007)

Retention seems more important than conquest with a few manufacturers at the moment....


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## Nanoman (Jan 17, 2009)

Frothey said:


> Retention seems more important than conquest with a few manufacturers at the moment....


I'm not surprised - it's far easier and has a higher close rate. Getting a new customer takes a lot more effort/expense than keeping one.


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## james_19742000 (May 8, 2008)

Very interesting what you are all saying, really has been enlightening to see how it all works.

Many thanks


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## centenary (Sep 5, 2010)

What's the script if you have a car on a PCP but want to sell it privately before the plan ends?

Do you have to pay the PCP off or will most manufacturers agree to you selling the car on if you contact them (as you should never sell a car on finance without the finance house's permission)?

The convertible is on a PCP and I fancy having a new X3 (X6 would be nicer :thumb when I have 6 months left on the PCP (which should fall nicely for the summer months!)

Beep, beep:driver:


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## Nanoman (Jan 17, 2009)

centenary said:


> What's the script if you have a car on a PCP but want to sell it privately before the plan ends?
> 
> Do you have to pay the PCP off or will most manufacturers agree to you selling the car on if you contact them (as you should never sell a car on finance without the finance house's permission)?
> 
> ...


As long as you notify the finance company in advance and settle any credit you are fine - bear in mind many will have clauses that make this difficult but if it's the manufacturers own finance they may try and encourage you to change as they're better off selling a new car.


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## centenary (Sep 5, 2010)

grantwils said:


> As long as you notify the finance company in advance and settle any credit you are fine - bear in mind many will have clauses that make this difficult but if it's the manufacturers own finance they may try and encourage you to change as they're better off selling a new car.


LOL! Yeah, BMW phoned me while travelling home on friday. Said it was a 'good time to change' and their system had just notified them I was at the 2 year point of the deal.

Not looking to change the E93 convertible just yet although the new X3 or even X1 look tempting!

Beep, beep :driver:


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