Thinking of getting a new car on PCP but have a few questions i'm not sure on.

 

When the 3 years are up do i need to service it for the 3rd time and MOT it before i hand it back?

 

If the car is worth say £12,000 and i put that towards a new car but they only allow a deposit of £10,000, would i get £2000 back via cheque?

 

Probably a no for this one but if i bought a Seat on PCP and decided i wanted an Audi after the 3 years could i trade the car in at Audi or does it need to be the same car make forever as i wouldn't fancy having the same car all the time?

You can pcp a Skoda and then buy a Seat on pcp at the end of 3 years, or in the middle of the term.

Max deposit 'X' so in theory you could get a cheque back if your deposit was too big from the part ex.

Always arranged a new car before 3 years so not worried about the service - I'm sure the next buyer would negotiate it in the purchase of your old one.

Your gmfv is certified so will be accepted (less any penalties for excess mileage and the like) by any brand. Not just within vag. Pcp at vag dealer A and use as deposit at pcp ford dealer B. B sends A a cheque for the gmfv essentially buying it from A. A has their final payment, B has a pcp' new car plus a car on forecourt for sale, you have another new car. So everyone is happy

Remember if the car is worth 12k and the settlement (eg the GMFV) is 10k, you don't have a 12k deposit, you have a 2k deposit!

This ^^^^

I mention it because unless you're buying a Ferrari on PCP, there's no way in hell youre coming out of it with 12k equity. A lot of new car PCPs with headline grabbing low monthly payments don't have realistic GMFVs and are leaving people with NO equity - so be caution when entering any credit agreement, you've got to understand what you're signing up for

Thinking of getting a new car on PCP but have a few questions i'm not sure on.

 

When the 3 years are up do i need to service it for the 3rd time and MOT it before i hand it back?

 

If the car is worth say £12,000 and i put that towards a new car but they only allow a deposit of £10,000, would i get £2000 back via cheque?

 

Probably a no for this one but if i bought a Seat on PCP and decided i wanted an Audi after the 3 years could i trade the car in at Audi or does it need to be the same car make forever as i wouldn't fancy having the same car all the time?

1- you don't necessarily need to service/MOT it before the end of the deal. It's perfectly possible to trade the car in and start a new PCP at any point during the term, you don't need to wait until the 3years is up.

2- do you mean you own a car outright which is worth 12k now which you will be trading in? If so and the max PCP deposit is 10k then yes you will get a cheque back for 2k. If you are referring to the value of the PCP car at he end of the term then there is no way you will have 12k worth of equity as others have said. The car will likely be worth a small amount more than the outstanding balance (or MGFV) meaning you might have a small deposit to roll over onto another deal. Imho it doesn't make too much sense to chuck huge deposits into a PCP deal, especially if you think you might want to change early.

3- you are absolutely not tied into a particular manufacturer. You can trade the car in with another at any point you like :-)

Hope that helps!

A lot of new car PCPs with headline grabbing low monthly payments don't have realistic GMFVs and are leaving people with NO equity - so be caution when entering any credit agreement, you've got to understand what you're signing up for

High MGFVs and low monthly repayments are a risk for the finance company/manufacturer not necessarily the customer. It's the total cost to you over the term which is important not how much equity you have at the end. You can't have your cake and eat it i.e low monthlies and stacks of equity when you come out the other side.

If the manufacturer gets it wrong and sets the MGFV way too high so that the car is worth less at the end then in a way that's a major win for the customer - you've benefited from the rock bottom monthlies (I,e less then you should have been paying) then hand the car back and walk away leaving the finance company to take the hit on the negative equity :-)

The only snag is if you fancy changing before the term is up low monthlies will mean you are more likely to be in neg equity.

Like you say, people need to go into these things with eyes open and not expect a huge wedge of equity at the other end.

Reading your £12k headline figure...I'm truly worried you do not fully understand a PCP.

At the end of the term there is a "guaranteed" value referred to as GMFV, but nearly all of that value will be the outstanding finance!

As Furby says these GMFV are being set so close to the actual residuals, you will probably have no equity.

1. Pay a deposit.

2. Pay monthly amount( equals the depreciation based on miles etc)

3. End of PCP - car not yours and needs paying off the GMFV - you have choices:

1. Hand car back and walk away with nothing/no car, not even if the car was worth slightly more than the GMFV!

2. Negotiate paying off the GMFV (amount still owed) take a loan.

3. Trade car in For another and hope there is money between the GMFV and trade in value, that will be your deposit only! You cannot take the difference any other way.

Example price £10,000

Deposit £100.00

PCP 35x £150.00 (guess)

So you pay £5,350 (over 3 years)

GMFV £6,000 (you owe this)

Car worth £6,250.00 (estimate)

You take another car your new deposit is £250!

Also if you do not take out a service plan you must whilst under the PCP get it serviced in accordance with the manufactures requirements too!