I have tried all the finance calculators going, including Audi's own on their website, and found the calculations widely optimistic and inaccurate to any offer the dealerships have made. Even the head salesperson stated to me you would be wrong to put in a high equity because you do not get it back.
That particular pcp calculator I found to be amongst the worst for thinking you'll get the payments cheaper..
If the way interest calculations have changed on a pcp, and I don't know, then please tell me when this happened. When I purchased my A3 in 2013 I was actually quite shocked to see the interest being calculated on the total amount of £27,000. The article from What Car I took the quote from was dated the 2nd May 2017...
Who's interests is the dealer serving by telling you that? His own of course, as you'll be paying more interest into his pocket.
There is no getting around what you will pay in base terms - the price of the car you've specced minus the guaranteed value. After that, it's up to you how much you put down on deposit or pay monthly, but the more you deposit, the less interest you pay. Either way, you're paying back a sum of money to arrive at the GFV after X months payments.
Say the car costs £10k, you agree that it's worth £4k after 3 years, so you owe £6k over 3 years. You could:
- put no deposit down and pay £2k + interest * 3 years.
- put £3k deposit in and pay £1k + interest * 3 years
- put £6k deposit in and pay £0 + interest * 3 years
As you put more deposit in, your interest goes down. Whichever way you pay it, you arrive at £4K after 3 years, at which point you've paid X interest. The only variable is the X.
There is no mention of equity anywhere in a car sale - this would be misselling if there is. Equity is the difference between what you owe and what the car is worth; you always know what you owe, you don't always know what the car is worth due to market forces.
A salesperson discouraging you to pay less deposit is like a credit card company telling you to only pay off the minimum payment every month, even if you can afford to settle the balance. As you reduce your debt, you reduce your interest liability. This has always been the principal for credit.
Can totally understand how this is a confusing product to understand; I'm fortunate enough to work in financial services where I've got a cohort who are up to thrashing these things out over a couple of pints! I'll see if I can get some examples from the Audi finance calculator to put up with screenshots.