Anybody Actually Got Any PCP Equity?

[andyvee]

PCP Equity LOL!

 

The whole idea of PCP is that the GFV is the market value so neither you or the finance company lose.

 

Anyone who entered into a PCP thinking they were going to get more than 1K deposit against full list price on their next car lives on a different planet to most of us. Skoda had the GFVs set way too high 3 1/2 years ago at launch, and it took them a long time to re adjust them to something more realistic.

[spacenase]

Skoda had the GFVs set way too high 3 1/2 years ago at launch, and it took them a long time to re adjust them to something more realistic.

 

I see what you mean, my 2013 Octavia 2.0TDI DSG Elegance hatch has a GFV of £10,575 (36 months @ 12k per annum). The current equivalent SEL is £9,225 @ 10k per annum according to the finance calculator.

 

I'm not expecting any equity in my car when the PCP ends in October. Still lesson learnt, I'll allow for the future deposit in the monthly payments for my next car. If I'm fortunate enough to get some equity from that it'll be a bonus.

 

It looks to me as if PCPs and PCHs should be treated the same from a financial perspective. You're effectively hiring the car for 3 years with both products although there are different legal conditions for each.

[k3vkr]

PCP Equity LOL!

 

The whole idea of PCP is that the GFV is the market value so neither you or the finance company lose.

 

Anyone who entered into a PCP thinking they were going to get more than 1K deposit against full list price on their next car lives on a different planet to most of us. Skoda had the GFVs set way too high 3 1/2 years ago at launch, and it took them a long time to re adjust them to something more realistic.

This.

 

Investing in a new car.... Unless its a BMW I8, why?

Edited 4 July, 2016 by k3vkr

[SkodaVRS1963]

Anyone who entered into a PCP thinking they were going to get more than 1K deposit against full list price on their next car lives on a different planet to most of us. Skoda had the GFVs set way too high 3 1/2 years ago at launch, and it took them a long time to re adjust them to something more realistic.

 

I'm trying to look at my own situation like this: 42 x £200 with a £5,200 deposit means I've leased a fairly decently specced vehicle for £324 a month over 3.5 years with the servicing thrown in for free.

 

Not too shabby?  Or do you think it's overpriced?

[andyvee]

I'm not commenting on anyones individual deal, but there is too much mis-selling of PCP in the car trade - If people put £2k+ deposit in then it should be made perfectly clear to them that they won't see that money again at the back end, and if they want similar repayments next time round they need to be putting something away each month for the deposit in 3 years time.

[Dodgy]

Just divide the deposit by the number of months in the deal, then add that to the monthly outgoings, that's the real monthly cost. For my last and current PCP, I paid £0 deposit. It seemed obvious to me to not put my own cash in when it was 0% PCP.

[andyvee]

Just divide the deposit by the number of months in the deal, then add that to the monthly outgoings, that's the real monthly cost. For my last and current PCP, I paid £0 deposit. It seemed obvious to me to not put my own cash in when it was 0% PCP.

Exactly - but how many people turn up with a £3-4k part ex and drive off in a VRS for a reasonable monthly repayment, then in 3 years time can't afford another VRS as it is £100 a month more .........

[SimonD316]

Exactly - but how many people turn up with a £3-4k part ex and drive off in a VRS for a reasonable monthly repayment, then in 3 years time can't afford another VRS as it is £100 a month more .........

Agreed, although I'm the other way around. £500 deposit, £2k negative equity from my old Insignia so I'm hoping for slightly lower payments next time around.

[silver1011]

To be fair it is in the interests of the selling dealer to ensure the market value of the car is higher than the final balloon payment.

 

This then paves the way for them to more easily roll you into another finance deal using the equity as a deposit.

 

It's no good to them if you hand the car back and walk away or buy it, either way they'll never likely see you again. Their ultimate (massively incentivised) goal is to get you into another brand new financed car.

 

I appreciate this doesn't always happen, hardly ever with the Octavia by the looks of it.

 

The key is to do your homework, which is not so easy on a brand new model, but take a look at 3.5 year old examples and how much they are selling for. If the discounted list price minus the total cost of your deal (deposit + monthly payments) is less then the total amount borrowed then you've paid less than the car will depreciate over the same term and therefore have had a good deal.

Edited 4 July, 2016 by silver1011

[Dr Zoidberg]

I know the sales chap I dealt with was quite sure that the car would be worth more than the GFV at the end.

I assumed that he was saying anything to make a sale and didn't trust that (and I plan to keep the car anyway) but plenty will have done.

[AllanDJ]

If I'm understanding everything correctly ( I think!) it is that the PCP deals are usually set against standard manufacturers RRP, off which you may get a discount if you're lucky. The deal being you usually pay more than a PCH deal but with the understanding that you can buy the car at the end of the deal (if that suits you) or trade it in against another car (which is what Skoda really, really want you to do) or hand it back in a fit of disgust to Skoda Finance as your local Skoda dealer, really, really doesn't want your nice, shiny low mileage Octavia and in fact will charge you for the privilege of daring to trade it in. These deals are always intended to allow some equity in them, otherwise people will struggle to afford to trade that first PCP car against the next one. The million dollar question being how much is reasonable to expect as fair equity in such a deal, assuming you do your part and the car is well looked after and within the agreed mileage?

 

With my own situation I could buy that car at the end of the deal if I wanted but with some of the PCH deals on offer just now, you could have a brand new car for the next 3 to 4 years for the same sort of money as buying my current car outright and if I kept that car and ran it for 4 years after the end of the PCP deal it would be 7.5 years old and virtually worthless. I've nothing against keeping a car for that length of time if it is a car that I really like, however with this particular car I didn't get anything like the car that I wanted, wrong engine, wrong colour and no heated seats! Although to be fair the fuel economy is pretty good in the 53mpg bracket on average, which is rather a lot less than their claimed figures but you can get 60mpg or so on longer trips at constant speeds.

 

The PCH option was briefly explained at the time of purchase to me and I honestly can't remember the exact numbers given to me on that by the salesman, I know that it was a bit cheaper but with no option to purchase but the PCP deal was really pushed as being a safe deal with the quoted circa £2000 equity at the end of the deal. Given these false claims being made by a main dealership for Skoda, I can easily see this kind of scenario leading to a series of PPI style claims against manufacturers/ dealerships who have mis-sold these deals. I'm guessing the salesmen might have earned higher commissions from selling a car on PCP than PCH perhaps? High time for Skoda to offer up some sort of a deal to those customers who have been affected by this situation. If they can transport Octavia Estate cars to Australia and sell them from circa £12,500, then it rather looks like we've all paid far too much money for our cars in Europe!

[tigermad]

I'm between a rock and a hard place. My PCP is due to finish the end of next year (42 months). I had a very small deposit so I don't own half the car until nearly the end of the agreement. Plus I am over miles by about 10k at present, will be over 15k at the end. I was thinking of going the VT route but I won't be able to until near the very end.

 

Do you think its possible that Skoda would do me a deal now to swap for a new car (would love an estate) or do I have to sit it out until towards the end of next year?

[k3vkr]

I'm between a rock and a hard place. My PCP is due to finish the end of next year (42 months). I had a very small deposit so I don't own half the car until nearly the end of the agreement. Plus I am over miles by about 10k at present, will be over 15k at the end. I was thinking of going the VT route but I won't be able to until near the very end.

 

Do you think its possible that Skoda would do me a deal now to swap for a new car (would love an estate) or do I have to sit it out until towards the end of next year?

 

Only one way to find out I suppose...?

Go in and see them, although, its not that far off the new reg coming out, again... (1st Sept), so maybe sit tight til august and see if you can grab a deal towards the end of that month when they try to shift cars?

[Dodgy]

I'm between a rock and a hard place. My PCP is due to finish the end of next year (42 months). I had a very small deposit so I don't own half the car until nearly the end of the agreement. Plus I am over miles by about 10k at present, will be over 15k at the end. I was thinking of going the VT route but I won't be able to until near the very end.

 

Do you think its possible that Skoda would do me a deal now to swap for a new car (would love an estate) or do I have to sit it out until towards the end of next year?

 

You could always invoke the rule of halves and thirds. Note, I am Not an expert in these matters, but for further reading http://forums.moneysavingexpert.com/showthread.php?t=437346

 

Edit, I think you have intimated you are already aware of the halves and thirds rule. So apologies if I'm teaching you to suck eggs

Edited 5 July, 2016 by Dodgy

[tigermad]

You could always invoke the rule of halves and thirds. Note, I am Not an expert in these matters, but for further reading http://forums.moneysavingexpert.com/showthread.php?t=437346

Edit, I think you have intimated you are already aware of the halves and thirds rule. So apologies if I'm teaching you to suck eggs

is it worth asking the skoda dealer?

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[cheezemonkhai]

It's just long term car rental, I just accept that a few hundred quid a month is the cost of having access to a car that I don't have to do any work on.

 

Once you accept this mindset, the world becomes a better place

Once you accept this, you should accept you're better off on PCH as it's cheaper.

[tigermad]

Once you accept this, you should accept you're better off on PCH as it's cheaper.

 

Do all Skoda dealers offer PCH? Mine doesn't seem to list it on their payment options.

Edited 5 July, 2016 by tigermad

[Dodgy]

Once you accept this, you should accept you're better off on PCH as it's cheaper.

 

I agree, next car will be PCH. Almost certainly a Golf R, deals are still surfacing from time to time.

[Dodgy]

is it worth asking the skoda dealer?

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yes, but do your research first. Make them know you're in full possession of the facts and you've read the Ts&Cs of your own agreement with the dealer. I think it's only much older finance agreements where the rules of halves and thirds does NOT apply.

[Dodgy]

Do all Skoda dealers offer PCH? Mine doesn't seem to list it on their payment options.

 

Generally you need to speak to the fleet manager, that's the guy who deals with PCH normally.

[999rigger]

Go to Audi next time. That's what i am doing. You pay more per month but you are in positive equity after 2 years and fantastic quality cars!

[philbes]

I buy cars for cash that are 1 year old and change when they are 3 years old, so always under warranty.

 

I did a comparison (using the Seat Leon FR ST TDi 184) as the base car comparing the total cost of 2 new cars on PCP over 6 years against 3 x 1 year old cars bought for cash.

 

Total cost on PCP is £29,356 with both cars handed back at end of PCP so no residual value.

 

Total cost of 3 x 1 year old cars is £34K (allowing for the first two trade-in values), but still have a car worth about £10 (trade-in, probably more for a private sale) at the end.  So if car sold total cost was £24K.

 

Over the 6 years the average age of the new cars is 1½ years and the average age of the bought cars is 2 years, but it is interesting that the purchased car is actually newer than the PCP car for the third year and the same age for last two years.  So PCP provides a newer car for half of the period for an extra cost of just over £5K (£830/year = £16/week).  Of course PCP also requires less of a capital outlay and allows you to have a new car and hence a choice of the spec and extras.

 

The above figures obviously include some assumptions.

Edited 5 July, 2016 by philbes

[tigermad]

yes, but do your research first. Make them know you're in full possession of the facts and you've read the Ts&Cs of your own agreement with the dealer. I think it's only much older finance agreements where the rules of halves and thirds does NOT apply.

This halves thing, I am 2 years in to a 3.5 year Pcp. Does this mean I have paid over half or is it supposed to be half the value of the car? So if the car is 23k I need to have paid 11.5k off?

[tigermad]

The only advantage a PCP has over a PCH is the VT option, which due to supermarket car park ****s mine will be doing.

You are doing the VT route? I've got a dealer appointment Saturday to discuss my options. Can someone explain the differences between Pcp and Pch and why Pch is better? I don't have any deposit.

[Neily03]

You are doing the VT route? I've got a dealer appointment Saturday to discuss my options. Can someone explain the differences between Pcp and Pch and why Pch is better? I don't have any deposit.

 

PCH is a hire agreement, you're renting the car and have to give it back at the end of the term