S3 DEPRECIATION

[S32B]

PCPs are a good way of purchasing a car if you don't have the cash available to purchase what you want.

I see them as a win win. Car costs £20k you pay £20k cash, after two years it's worth £8k you've lost £12k.
PCP it and if you owe £10k after two years and it's worth £8k you just VT it. Yes with interest it may have cost you the same, but you've had use of your lump sum to use on other things. I sold my car for £14,000 and put £1000 on the S3, then I bought a new kitchen and bathroom with the other money. I have a new car and the wife has a new kitchen & bathroom win win

My wife's dad was looking to buy an ASX for £20k cash, I asked him how long he wants to keep it for, he said 2 years. Assuming it will be worth £10k after two years, he has to save over £400 for the next 24 months to get back to £20k for the next one. He can lease one for for around £300 per month with £1000 down and still have his £19k cash to do as he pleases.

 

[pburv]

It's like I said in an earlier post....Man maths is 99.99% right..
Nice one S32B..

 

[DrEskimo]

I see them as a win win. Car costs £20k you pay £20k cash, after two years it's worth £8k you've lost £12k.
PCP it and if you owe £10k after two years and it's worth £8k you just VT it. Yes with interest it may have cost you the same, but you've had use of your lump sum to use on other things. I sold my car for £14,000 and put £1000 on the S3, then I bought a new kitchen and bathroom with the other money. I have a new car and the wife has a new kitchen & bathroom win win

My wife's dad was looking to buy an ASX for £20k cash, I asked him how long he wants to keep it for, he said 2 years. Assuming it will be worth £10k after two years, he has to save over £400 for the next 24 months to get back to £20k for the next one. He can lease one for for around £300 per month with £1000 down and still have his £19k cash to do as he pleases.

Until you consider that you can get a personal loan at a much cheaper rate from the bank.

You'll be paying up to three times as much on interest on the PCP since you are paying interest on the total amount of the car, not just the capital you are borrowing...

 

[pburv]

Until you consider that you can get a personal loan at a much cheaper rate from the bank.

You'll be paying up to three times as much on interest on the PCP since you are paying interest on the total amount of the car, not just the capital you are borrowing...

I guess that's the remaining 0.001% of the Man maths which doesn't compute...lol

 

[S32B]

But if you get a personal loan you don't get the dealer contribution a lot of the time...plus if you owe more than the car is worth you can't just walk away without making more loss...swings and roundabouts!

 

[DrEskimo]

But if you get a personal loan you don't get the dealer contribution a lot of the time...plus if you owe more than the car is worth you can't just walk away without making more loss...swings and roundabouts!

Ah that's were you can be sneaky and take out the finance for the deals, then settle it within 14days without any penalties!

Yea you may make a loss if the car suddenly plummets, but finance companies aren't too keen on making losses so imagine it's very rare your car will be worth less than the GFV. But yes, it does cover for that eventuality...

 

[DrEskimo]

I guess that's the remaining 0.001% of the Man maths which doesn't compute...lol

Haha yea I always forget it when I'm signing a new deal...funny that

 

[Soulboy]

I wonder what the depreciation will be like on a Golf R.
There are loads of them about (far more than GTI's). I have seen 7 already.this weekend just out and about.

And I bet almost all of them are on the cheap lease deals. Must be a mare shifting one second hand when people can get a new one for so little per month.

 

[pburv]

I wonder what the depreciation will be like on a Golf R.
There are loads of them about (far more than GTI's). I have seen 7 already.this weekend just out and about.

And I bet almost all of them are on the cheap lease deals. Must be a mare shifting one second hand when people can get a new one for so little per month.

I'm surprised they are selling at all...I tried buying one new from my local dealer and all the salesman wanted me to do was buy one second hand...Got so fed up after an hour of him doing the 'hard sell' I went across the road to Audi and bought an S3 saloon....Happy Days

 

[Soulboy]

And you always lose out trading a new car in early. The sooner you shift it, the worst it is.
Anything over 50% over 3 years doing average mileage (10-12k pa) is good going......however you fund it.

Just try and get the purchase price low and the APR low.
Everything else is smoke and mirrors......which is what PCP is good at.

 

[Pulp84]

Its not all doom and gloom.......I have been consistently offered part-ex £24k - £25k for my two year old S3.

It is in super mint condition and has an OK spec. 3k miles only on the clock in two years seems to make a slight difference to what I am getting offered.

I have 1 year on my finance agreement and my GFV is £19k. The worst case equity in the car is £1k so it's all about adding up for me. I put £1.7k in to the car and had £1k equity from my previous car.

I can stomach £1.7k cash loss every 2-3 years. I have learnt the hard way that 2 years is the minimum you need to keep a car on PCP........

BMW / MINI are the worst I have heard of depreciation wise at the moment. Big discounts and over supply to dealers. Mate bought a £28k Cooper S a year ago. Trade in is booking £14.5k. That's proper depreciation my friends.....

 

[RVP20]

So here is a question for you......if you had 33k in cash to buy the S3 outright or get a PCP deal what would you do?

 

[Scottyg]

Get a PCP deal and stick the rest in a ISA. Simples.

 

[DrEskimo]

Get a PCP deal and stick the rest in a ISA. Simples.

Borrow money at 5.8% and earn 0.5% in an ISA...yea sorry don't quite understand that one...!

 

[Scottyg]

Why give Audi 33k for a car when you can keep a large part of that and earn interest on it, rather than see the 33k turn into 23k in a year! You won't lose 10k in an ISA. You will in a car. As I said, simples.

 

[grimey121uk]

So here is a question for you......if you had 33k in cash to buy the S3 outright or get a PCP deal what would you do?

Pay 33k off the mortgage and then take out a PCP!

 

[Soulboy]

And it's certainly not all doom and gloom.
According to this article about depreciation from Car Buyer only last month.
http://www.carbuyer.co.uk/reviews/recommended/slowest-depreciating-cars-on-sale

The A3 ('PARTICULARLY THE S3') comes in 3rd highest.

 

[NickyF]

Neither do I. For the same reason I don't understand why large PCP deposits are viewed as a waste of money? My view is get the car as cheaply as possible, with only essential options (like LED headlights ). Then put down as much as you can. That results in the smallest outlay over the whole term.

 

[Soulboy]

Why give Audi 33k for a car when you can keep a large part of that and earn interest on it, rather than see the 33k turn into 23k in a year! You won't lose 10k in an ISA. You will in a car. As I said, simples.

Assuming it's a Cash ISA you will get about 1% pa.
The APR on the PCP is probably about 6%+.

If you bought the car cash, you would have no monthly payments.
The PCP you would be shelling out capital and a much higher level of interest each month.

Ultimately this would be more expensive, but you still might want to keep cash for other things (I would).
For instance investing in none cash assets.

 

[DrEskimo]

Why give Audi 33k for a car when you can keep a large part of that and earn interest on it, rather than see the 33k turn into 23k in a year! You won't lose 10k in an ISA. You will in a car. As I said, simples.

You're not thinking this through properly mate...

You'll be charged thousands on the PCP at 5.8% over 48months. ISA earn about 1% interest if you're lucky. The cost of the interest on the PCP will always far outweighs what you earn on the savings on an ISA.

Unless you can invest your money in something that earns more than the interest on the PCP (property in the South East for example, but that's not guaranteed) then it's always most cost effective to pay outright.

 

[SW14NY'S]

I'm surprised they are selling at all...I tried buying one new from my local dealer and all the salesman wanted me to do was buy one second hand...Got so fed up after an hour of him doing the 'hard sell' I went across the road to Audi and bought an S3 saloon....Happy Days

I was speaking to my salesman and he was saying that even though they have sold a lot of new cars recently...they're not getting any bonus if they don't hit their used car sales target...which is set higher than the new cars sales target, so that's why salesmen aren't interested in selling you a new car at the moment

 

[S32B]

Pay 33k off the mortgage and then take out a PCP!

Yep, interest saved on the mortgage almost covers the PCP % and if the worst were to happen and you lose your job, you can just let them take the car back, better than taking your house! Being in the lucky position of no mortgage I see it a bit more morbidly! If I were told tomorrow I have 6 months to live, all my cash isn't tied up in a car so I can go out with a bang, do a world cruise, Las Vegas, high class hookers etc. lol Imagine doing all that and then getting back and the doctors say "Sorry we made a mistake, you're perfectly healthy"

 

[RVP20]

You're not thinking this through properly mate...

You'll be charged thousands on the PCP at 5.8% over 48months. ISA earn about 1% interest if you're lucky. The cost of the interest on the PCP will always far outweighs what you earn on the savings on an ISA.

Unless you can invest your money in something that earns more than the interest on the PCP (property in the South East for example, but that's not guaranteed) then it's always most cost effective to pay outright.

Surely it makes more sense to pay for the car outright then begin to save money again each month in a savings account? After 3 years the car will have depreciated the same either if you own the car or PCP. Plus if you want to spec a car which will cost say £5k plus then you may want to keep it for longer than 3 years?!
If you were on a PCP then the balloon payment would contain interest and cost you say 6% more than list price or hand the car back and loose all your options!

 

[S32B]

Surely it makes more sense to pay for the car outright then begin to save money again each month in a savings account? After 3 years the car will have depreciated the same either if you own the car or PCP. Plus if you want to spec a car which will cost say £5k plus then you may want to keep it for longer than 3 years?!
If you were on a PCP then the balloon payment would contain interest and cost you say 6% more than list price or hand the car back and loose all your options!

It all depends on your financial circumstances and how you view life, if you've got £200,000 sitting there in a bank then yes pay out £30k as you still have £170k for anything else. BUT if you only have £30k saved and you pay out £30k you have nothing left for unforeseen things!
To get that £30k back you need to put away £833 per month for 3 years, £625 for 4 years or £500 for 5 years, why when you can get the car for less than £400 on a PCP and still have your £30k and switch the car every 3 years for another new one. For me I see the monthly payments as funding my hobby/enjoyment, the same as others spend each month on drink, smoking, gambling etc.

 

[Oyster]

Ah that's were you can be sneaky and take out the finance for the deals, then settle it within 14days without any penalties!

Can you really do this, before 14 day, what if Audi finance decides they want their contribution back?

 

[RVP20]

It all depends on your financial circumstances and how you view life, if you've got £200,000 sitting there in a bank then yes pay out £30k as you still have £170k for anything else. BUT if you only have £30k saved and you pay out £30k you have nothing left for unforeseen things!
To get that £30k back you need to put away £833 per month for 3 years, £625 for 4 years or £500 for 5 years, why when you can get the car for less than £400 on a PCP and still have your £30k and switch the car every 3 years for another new one. For me I see the monthly payments as funding my hobby/enjoyment, the same as others spend each month on drink, smoking, gambling etc.

You may have 30k in the bank and pay £400 on a PCP but ultimately you have speced £6k car which after 3 years you are giving it back! Plus if you wanted to keep the car then it would cost a balloon payment including interest.

 

[Oyster]

The last car dealer I spoke to said something along the lines of...."in 10 years no one will own a car", when we were discussing leases/pcp.

I thought it was a bit of an odd thing to say at the time, but I guess this is their goal.

The aasking prices for cars dont reflect the reality of what you can actually buy them for and hence their actual value.

It's just like the housing bubble.

 

[S32B]

but ultimately you have speced £6k car which after 3 years you are giving it back! Plus if you wanted to keep the car then it would cost a balloon payment including interest.

Not sure what you mean on the first bit?!?!

PCP or cash, you lose money on cars period. If you buy your car outright for £30k cash and in three years time sell it for £15k, you have still lost £15k and are left with £15k cash in your hand, so during those three years of ownership you have to put away £416 per month to save £15k to get you back up to your original £30k for your next one.

As said "For me I see the monthly payments as funding my hobby/enjoyment" I pay about £90 per week for a brand new Audi that will hit 60 in 5 seconds, looks good and is a pleasure to drive, in a years time I'll switch it for the facelift one and keep switching it every two-three years. I have no intension to keep it long term. I know people who spend £90 each week on gambling as that is their enjoyment, my enjoyment is the car.

 

[h5djr]

I see them as a win win. Car costs £20k you pay £20k cash, after two years it's worth £8k you've lost £12k.
PCP it and if you owe £10k after two years and it's worth £8k you just VT it. Yes with interest it may have cost you the same, but you've had use of your lump sum to use on other things. I sold my car for £14,000 and put £1000 on the S3, then I bought a new kitchen and bathroom with the other money. I have a new car and the wife has a new kitchen & bathroom win win

My wife's dad was looking to buy an ASX for £20k cash, I asked him how long he wants to keep it for, he said 2 years. Assuming it will be worth £10k after two years, he has to save over £400 for the next 24 months to get back to £20k for the next one. He can lease one for for around £300 per month with £1000 down and still have his £19k cash to do as he pleases.

On each A3s I've purchase the trade in value after almost 3 years has been around 55% of the purchase price, plus I've always got around 9% discount on the new car.
So with the purchase of my current car - trade-in of my 2012 2.0TDI-170 - s-tronic Sportback = £13,000 = 51% of the purchase price. Purchase of new A3 2014 2.0TDI-184 - s-tronic - quattro - Sportback less the 9% discount £29,960. Amount required to upgrade £16.960. I'm quite sure it would have cost me more using a PCP because the interest on the PCP is a lot more than the cash can earn at the moment.

As everyone says it depends on your financial circumstances. If dealers are offering good financial contributions to use a PCP then it makes sense to use that route. When I last spoke to my dealer he gave me the example of using a PCP for my next deal where he takes my car in trade-in ans I get a new car and a cheque for £10,000. £3,000 is used as a deposit for the PCP. He also said a PCP can work out OK id you keep the car for 2-3 years, which is my norm at the moment.

 

[Jassyo06]

I pay just under £400 a month for my S3,happy with that sum TTS yeah l would have paid more....maybe l went in a huff with the 4weeks depreciation thing l don't but l won't pay more than ££490 a month for any car,l would rather save up more and pay what l feel comfortable with,l will keep my next car for at least 3 years so

 

[NickyF]

The car manufacturers want you to take PCP with a low deposit for a long period like 4 years. They make the most money that way. If you pay cash you tend to want a discount, on PCP you just look at the monthly payment but add it all up and it's frightening.

My local dealer wouldn't offer me any discount so with options my car would have been almost exactly £40k. If I'd have put nothing down and pcpd over 48 months at 6% Apr then the car would have cost me £47k. That's £17k over base, that's how they make their money.

 

[Jassyo06]

The car manufacturers want you to take PCP with a low deposit for a long period like 4 years. They make the most money that way. If you pay cash you tend to want a discount, on PCP you just look at the monthly payment but add it all up and it's frightening.

My local dealer wouldn't offer me any discount so with options my car would have been almost exactly £40k. If I'd have put nothing down and pcpd over 48 months at 6% Apr then the car would have cost me £47k. That's £17k over base, that's how they make their money.

Cash or Pcp..you still get the same discount...minus the interest,Anyway car company's are just banks that sell car's...???Eh probably bordering on Loan Shark's...eh...lol...but thats the way of things

 

[RO65ERS]

just for the giggles, webuyanycar offered me 22k! . . .

i will be ringing VWFS tomorrow to find out when or where ables ill be at 50% for VT!
i haven't put a deposit down on this one, so I'm really not loosing out, i pay for what i use.

 

[RVP20]

The car manufacturers want you to take PCP with a low deposit for a long period like 4 years. They make the most money that way. If you pay cash you tend to want a discount, on PCP you just look at the monthly payment but add it all up and it's frightening.

My local dealer wouldn't offer me any discount so with options my car would have been almost exactly £40k. If I'd have put nothing down and pcpd over 48 months at 6% Apr then the car would have cost me £47k. That's £17k over base, that's how they make their money.

Exactly! So on a PCP you are paying 7k interest over the 48 months! Using cash you can pay the car off and begin to build your savings back up slowly each month.
With a PCP you are paying Audi interest each month and ultimately the car will still be worth the same value after 4 years whether you financed it via cash or PCP.

 

[pburv]

Yep, interest saved on the mortgage almost covers the PCP % and if the worst were to happen and you lose your job, you can just let them take the car back, better than taking your house! Being in the lucky position of no mortgage I see it a bit more morbidly! If I were told tomorrow I have 6 months to live, all my cash isn't tied up in a car so I can go out with a bang, do a world cruise, Las Vegas, high class hookers etc. lol Imagine doing all that and then getting back and the doctors say "Sorry we made a mistake, you're perfectly healthy"

I would be more concerned with explaining it to the missus about why you spent a few grand on hookers...lol

 

[Mark_E]

I went to the dealer today to sign the PCP agreement and got a nasty surprise. I personally value the ability to hand the car back at the end of the term and walk away if the car is worth less than the GFV. I know it's only one of many options but if the bottom falls out of the A3/S3/RS3 market in 4 years time then it could be a very handy option to have.

The nasty surprise was in the small print. If at the end of the term you have either exceeded the agreed mileage or Audi "consider it not to be in good repair and condition, commensurate with its age and mileage" then Audi have two choices (i) accept the return of the car with a payment for excess mileage plus a payment to cover the condition of the car (which is fine, as I expected) or (ii) not accept a return of the car at all which would force you to settle the outstanding finance amount by selling the car yourself and losing out on the difference.

So if you have done just 1 mile in excess, or the car has one scratch or dent then Audi can just say tough, we are not giving you the benefit of the GFV and put the loss on the customer. If the bottom has fallen out of the market (major recession, specific problem with the A3 range etc etc) and they were faced with lots of cars being returned it wouldn't take much for them to say let's avoid the losses of taking these cars back. Especially as Audi will likely have securitised the contracts and they would actually be owned by a Luxembourg finance company who would be the ones making the decisions and wouldn't give a damn about the customer.

I pointed this out to the business manager and he had no idea about this and said that no one in the last six years that he had worked for VAG Finance had even read the clause in the agreement let alone queried it. I am awaiting his reply tomorrow with interest.

 

[S32B]

He also said a PCP can work out OK id you keep the car for 2-3 years, which is my norm at the moment.

Indeed, you may find it works well for you!

I've always got around 9% discount on the new car.
trade-in of my 2012 2.0TDI-170 - s-tronic Sportback = £13,000 = 51% of the purchase price.

For arguments sake lets say 50% to keep it simple, so for the two years you had it you lost £13,000.
Similar car using 9% off the list price that you normally get and £1000 deposit =

A new 2.0 Tdi S tronic S-line Sportback is £28,115 - 9% and your £1000 deposit = £24,584 to finance over 24 months on a PCP:

23 payments of £487.92 = £11,222.16 + your initial £1000 deposit = It would cost £12,222.16 to have the car for two years.

You're about right with the % of what it holds. It's worth around 57% of it's price after the two years.

 

[S32B]

I would be more concerned with explaining it to the missus about why you spent a few grand on hookers...lol

It was typo love, it should have been Lookers, I bought a car to run around in whilst I was there

 

[Jassyo06]

just for the giggles, webuyanycar offered me 22k! . . .

i will be ringing VWFS tomorrow to find out when or where ables ill be at 50% for VT!
i haven't put a deposit down on this one, so I'm really not loosing out, i pay for what i use.

Not bad for a 3 door mate...lol

 

[veeeight]

There's a lot of man maths going on here, so far, nobody has actually mentioned that the settlement figure, given to you by VWFS, is very often considerably higher than the valuation of the car, especially in the first 2 years.