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21MY Kings Red Up! GTI
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But then if you finance the car with a loan is that not a rental with a finance company until you pay it off?
 

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Depends on the type of loan... If it's a non-specific personal loan, you are actually renting the money as it were, and the car, or whatever you buy with money, is yours to do what you like with. If circumstances change you can sell the car and pay down the debt - I suspect with a contract, they sting you to get out early, but I don't know.... Extending a mortgage might be do-able, or even better, getting an offset mortgage.

And just make it clear to me: "4yr PCP deal on a 5dr UP GTI with cruise & park and seat height adjustment. So with a £2500 deposit its coming out at £240 per mth in tornado red" [that's a specific deal quoted above] - that's 48 x £240, which is £11,520 to pay. But, do you get the £2500 back? If not that is £14,020 to pay.... In either case, what are you left with after 4 years? Do you get to sell the car as if it were your own? If not, let's say the car worth £8k, so it has cost you maybe £22k... (genuine questions as I've never PCP'd !)
 

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21MY Kings Red Up! GTI
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I have just done mine on a pcp - from memory £~3k down, £211 for 36 months 0%apr £6600 balloon at the end. Can pay off early or put lump sum in with no penalties.

Sold my last one that was on pcp a couple months early to WBAC for £750 more than was left to pay ( dealers offered much less). No different to selling car that would of been on personal loan and paying loan off
 

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Starlight, I don't know what a 'balloon' represents - but assuming it's money you get back on your deal when selling the car, the cost over 3 years was £211 x 36 (=£7596), plus the deposit of £3k, and that gave you a new car for £10,596... but then you also got £6000 back on selling the car, so the total cost to you was only £4,596 ? That's an annual ownership cost of £1532 per year, right?
 

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I've never had a car on PCP, but Isn't the balloon payment what you have to pay if you want to buy the car outright ?
 
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I've never had a car on PCP, but Isn't the balloon payment what you have to pay if you want to buy the car outright ?


Yes that is correct.

Dealers love PCP as most customers hand the car back without paying the Balloon and take out another PCP on a new car, so the dealer has a new car sale every 2 or 3 years and a customer for life.
 

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I see - in which case my last set of sums make the example above a total cost of £16,596 and the car is then an owned 'asset'.

Clearly, a cash buyer could save £3k odd, depending on the actual purchase price of the car on the day (say it was £13K, three years ago?), but not everyone has that cash, so the debate is really about what is the cheapest way to borrow £13K....

Even at 15% APR, the cost of a £13K/3year loan is about £3K - so you could argue that the PCP deal above is about the same as a loan at 15% (and that is way more than you need to pay these days, I reckon). Is there something I've missed?
 

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I see - in which case my last set of sums make the example above a total cost of £16,596 and the car is then an owned 'asset'.

Clearly, a cash buyer could save £3k odd, depending on the actual purchase price of the car on the day (say it was £13K, three years ago?), but not everyone has that cash, so the debate is really about what is the cheapest way to borrow £13K....

Even at 15% APR, the cost of a £13K/3year loan is about £3K - so you could argue that the PCP deal above is about the same as a loan at 15% (and that is way more than you need to pay these days, I reckon). Is there something I've missed?


Yes it could be £16 596 as the cost to buy, but you would be paying this amount for a 3 year old car that is now worth perhaps £8000. Does that sound like a good deal? Thats why most customers just hand the car back.

I think it would be better to buy a new car or pre reg with a massive discount and get a bank loan if you cant pay for the car upfront, or only buy what you can afford and dont get into debt as my old and wise Gran used to say.
 

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Discussion Starter · #29 ·
Well its done on PCP and I specified it in such a way because I intend buying it at the end of the term.
 

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dont get into debt as my old and wise Gran used to say.
I'd like to have bought a house without being in debt!
But anyone needing a mortgage, an offset one is an excellent way to fund cars and anything that needs a big chunk of cash in one go - and it's very cheap money at present.
 

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Discussion Starter · #31 ·
Interesting discussion folks. But am I correct in thinking that on or just before collection the dealer will need a new settlement figure from us. The thought being that in 3mths time or whatever the settlement figure will be less as we will have made another 3 or so payments.
 

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21MY Kings Red Up! GTI
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Starlight, I don't know what a 'balloon' represents - but assuming it's money you get back on your deal when selling the car, the cost over 3 years was £211 x 36 (=£7596), plus the deposit of £3k, and that gave you a new car for £10,596... but then you also got £6000 back on selling the car, so the total cost to you was only £4,596 ? That's an annual ownership cost of £1532 per year, right?
I can get the actual figures as they were from my memory… the thing is this was with 0%apr, and I am not sure where you can get £3k off a new GTI unless you go basic on the spec, how this equates to 15%apr not quite sure??
 

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Discussion Starter · #34 ·
Ok it’s all sorted we just give them the new settlement figure nearer to collection and the dealer pays it off before collection.
 

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"I am not sure where you can get £3k off a new GTI unless you go basic on the spec, how this equates to 15%apr not quite sure?? "

I didn't say you can get £3k off the price. I used example figures to illustrate the point, which is that a PCP deal is roughly the cost of a very expensive loan. If you borrow £13k over 3 years at 15%, the cost of that loan is about £3k - and nobody is paying as much as 15% on a normal loan....
 

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21MY Kings Red Up! GTI
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I view PCPs like interest only mortgages… You pay a lot less money every month but you never actually own anything. ….
Not really… I am not paying any interest on my pcp as it is 0%apr. Essentially it is a partial loan on the car that I’m 3 years I can choose to finance the outstanding amount - balloon payment - or sell car that would pay outstanding balance off. Essentially saving 3 years worth of interest that is better in my pocket than with a finance company. Just because you may choose to finance a car through a loan may mean you ‘own’ the car but you still owe the finance - and how would you settle that without selling the car or other asset? It is still your name on the V5 in either case.
 

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21MY Kings Red Up! GTI
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"I am not sure where you can get £3k off a new GTI unless you go basic on the spec, how this equates to 15%apr not quite sure?? "

I didn't say you can get £3k off the price. I used example figures to illustrate the point, which is that a PCP deal is roughly the cost of a very expensive loan. If you borrow £13k over 3 years at 15%, the cost of that loan is about £3k - and nobody is paying a much as 15% on a normal loan....
Still don’t see where the pcp costs £3k more. If I had bought my GTI for cash I would of paid the same amount. I would look at my pcp as a discounted (0%) interest period that is not available elsewhere.
Happy to disagree as I am happy and the car is great 😊
 

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When you bought the car (was it 3 years ago?), what would the cash price have been on the day?

This will tell us the actual cost of the PCP deal, which is what I'm interested in. With the precise sums, it is then possible to compare it with other ways of funding a car. If I can see a saving, I might be tempted for a future car!

The thing with a money deal being sold as "0% APR", is that, in the end, all that counts is the total amount you are committed to pay back - the profit to the lender is built into that.
 

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21MY Kings Red Up! GTI
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Only just bought the GTI, so not made first payment yet! I did check options to buy and this current 0% deal was most cost effective. Cash price was same as pcp price, hence why I am a fan of the pcp option in this particular case at this interest rate, otherwise I would of financed by other means. Cheapest personal loan was about 6%apr and VW hp was 6.5% as I recall.
At end of day I am happy with my deal - you pays your money, you takes your choice as the old saying goes.
 

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Discussion Starter · #40 ·
Only just bought the GTI, so not made first payment yet! I did check options to buy and this current 0% deal was most cost effective. Cash price was same as pcp price, hence why I am a fan of the pcp option in this particular case at this interest rate, otherwise I would of financed by other means. Cheapest personal loan was about 6%apr and VW hp was 6.5% as I recall.
At end of day I am happy with my deal - you pays your money, you takes your choice as the old saying goes.
Its exactly how we feel. We have walked away having ordered a full spec brand new GTI which is more fun and does not feel like a stepdown in anyway. And we are better off by around 30 to 40 quid per month.
 
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