When will I be offered a new car on PCP?

ScottishA4B9

ScottishA4B9

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Hello all.

Well I am 2.5 years into a 4 year PCP on my car. I was told that around the 2 year point I would be contacted and offered the chance to get into a new car for the same or similar payments as I currently pay.

I enquired just before the 2 year point and was told my car was still in negative equity. When roughly will I be offered a new car?

I see other people on here that have had their car for around the same period as mine have been contacted about getting a new car.

Thanks in advance!
 
Tricky - you can escape a PCP when you have made half the payments in the term - just walk away. With negative equity you will have zero deposit for the next car. The trick to grasp on a PCP is to buy a used car that's 9-12 months old where it's already taken the 1st brutal hit of depreciation - the numbers for a swap at 2 years tend to stack up better then.
 
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cosmicblue said:
Tricky - you can escape a PCP when you have made half the payments in the term - just walk away. With negative equity you will have zero deposit for the next car. The trick to grasp on a PCP is to buy a used car that's 9-12 months old where it's already taken the 1st brutal hit of depreciation - the numbers for a swap at 2 years tend to stack up better then.
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Problems with a used car is that the interest is alot higher so alot of the time the payments per month are MORE!
 
Audi Finance are always having a laugh - once you say 'No' the business manager offers the alternative lenders. I took a PCP this time in Audi dealer because the rate was only marginally above the bank's lending rate.

The high Audi Finance rates are the reason they will add free servicing in the deal - we are being ripped off.
 
On a 4 year PCP imho you may start to see some equity during the final 6 months. Be lucky to see any at all though again imho, the "you will have some equity in the car to roll on to the next one" is Lie Nr 01 of a very long list!

TX.
 
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ScottishA4B9 said:
Hello all.

Well I am 2.5 years into a 4 year PCP on my car. I was told that around the 2 year point I would be contacted and offered the chance to get into a new car for the same or similar payments as I currently pay.

I enquired just before the 2 year point and was told my car was still in negative equity. When roughly will I be offered a new car?

I see other people on here that have had their car for around the same period as mine have been contacted about getting a new car.

Thanks in advance!
Click to expand...
It depends on the terms of your PCP i.e. how much deposit, GFV and monthly payments.
 
2k neg, over say 6 months + intrest on your current pcp & further depreciation, I think you would need to be paying around £600 + a month to start get to 0 equity. If your only paying £300-£400 you will have a while to wait.
 
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terminator x said:
On a 4 year PCP imho you may start to see some equity during the final 6 months. Be lucky to see any at all though again imho, the "you will have some equity in the car to roll on to the next one" is Lie Nr 01 of a very long list!

TX.
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Yes I think I fell for that exact line. Also thought I'd be upgrading after 2 years but the numbers don't stack up so will probably keep the car for the full 4 years.
 
Sometimes a dealership will take the car off your hands before the end of a pcp because they can settle the finance at a lower amount than the owner can. But more than likely only if buying another new one from them...
 
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Do remember that the UK finance regulations mean you can walk away once half the term payments have been made - no blemish on your credit history. If the car is sitting with a big pile of negative equity and you will never get much back as deposit for the next one then why wait. Diesel car residuals have taken a pounding recently and that's unlikely to change looking forward either.

My wife's 'dream car' was a Mini in 2013 - turned out to be a very disappointing purchase. After half the payments had been made we terminated the PCP, gave it back and walked away. There was about £4k of negative equity in it due to some imaginative residual value speculation by the dealer business manager at the time of purchase.

Life is too short - get rid and move on. Most people should never look upon a PCP as an option to purchase but rather think of the monthly payment as a rental fee with no equity expectation at the end - often the payment barely/if at all covers the depreciation. Let's face it for most of us at the end of 4 (2.5 is my personal record :anguished:) years we are either bored of it or scared of the lack of warranty implications.
 
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cosmicblue said:
Do remember that the UK finance regulations mean you can walk away once half the term payments have been made - no blemish on your credit history. If the car is sitting with a big pile of negative equity and you will never get much back as deposit for the next one then why wait. Diesel car residuals have taken a pounding recently and that's unlikely to change looking forward either.

My wife's 'dream car' was a Mini in 2013 - turned out to be a very disappointing purchase. After half the payments had been made we terminated the PCP, gave it back and walked away.
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Just to be clear. You can only VT (voluntary terminate) a hire purchase agreement when half of the TOTAL AMOUNT PAYABLE has been paid. That means on a PCP it’s half of the total including the optional final payment NOT half of the payments on the agreement.
 
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Funnily enough we were told exactly the same thing from the salesman, that they would contact us after 2 years as that was the most beneficial time for US to change the car. But no one ever contacted us...

The amount of equity you have remaining will very much depend on the agreed deal. If you pay a large upfront deposit, since there is less capital in the loan, you will have equity much earlier than if you paid a lower deposit.

However in terms of numbers I can cite a specific example as I have literally just been through it. Car was purchased for 34K. A 5K deposit left 27K loan @4.84% over 48 months. After exactly 30 months, there was still 19K remaining on the loan, but the dealer valued the car at 17K. If I had kept the car I would never have been in a situation with positive equity as the negative equity would have worsened as the car would devalue quicker than the capital was decreasing on the loan! Clearly however, if my initial deposit had been say, 10K, then the loan would have only been 22K, so I would have positive equity to take away.

Ironically, we just received a flyer through the post from Audi Finance saying "Now is the best time to change your car, you can take the equity you've built up and use it to buy a new car". Yeah, right....
 
cosmicblue said:
Audi Finance are always having a laugh - once you say 'No' the business manager offers the alternative lenders. I took a PCP this time in Audi dealer because the rate was only marginally above the bank's lending rate.

The high Audi Finance rates are the reason they will add free servicing in the deal - we are being ripped off.
Click to expand...
The Audi dealer shouldn't be able to do that. A franchised Audi dealer can only offer finance from "Audi finance", and their rates and deals are set nationally. This is so that you can't get one finance deal from one dealer and then play it off against a different deal from a different dealer. Of course, there is nothing to stop a dealer from making a "contribution" to the deposit, and different dealers will contribute more (or less), which is why different prices can be found from different dealers...
 
cosmicblue said:
Do remember that the UK finance regulations mean you can walk away once half the term payments have been made - no blemish on your credit history.
Click to expand...
I don't understand that? You can end a PCP contract at any point in the life by paying off the remaining capital. There is no restriction about having to wait a certain period.

cosmicblue said:
Most people should never look upon a PCP as an option to purchase but rather think of the monthly payment as a rental fee with no equity expectation at the end - often the payment barely/if at all covers the depreciation. Let's face it for most of us at the end of 4 (2.5 is my personal record ) years we are either bored of it or scared of the lack of warranty implications.
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Totally agree with that. The PCP plan is never for the benefit of the buyer, so it should be just viewed as a means to an end.
 
He means you don’t pay the remaining finance once you have paid half the value you can VT volantary terminate the agreement and hand it back and pay nothing further
 
Spaceman_RS3 said:
He means you don’t pay the remaining finance once you have paid half the value you can VT volantary terminate the agreement and hand it back and pay nothing further
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Thanks. I didn't know that was an option.
 
DotNetDude said:
The Audi dealer shouldn't be able to do that. A franchised Audi dealer can only offer finance from "Audi finance", and their rates and deals are set nationally. This is so that you can't get one finance deal from one dealer and then play it off against a different deal from a different dealer. Of course, there is nothing to stop a dealer from making a "contribution" to the deposit, and different dealers will contribute more (or less), which is why different prices can be found from different dealers...
Click to expand...

I'm with Audi Finance and my dealer cut the APR by 1% lower than another. There's obviously scope to maneuver on this.
 
I have just completed a Voluntary Termination on a 30 month old A7 as I was in nearly £3k negative equity. There was no way I was going to make that up over the remaining 18 months of the 48 month deal so I have just walked away and started a new deal on a new A7. No point carrying on. Funnily enough my previous A6 had £2k equity after 2 years which is unusual. I always assume I'll have no equity when replacing the car so if there is any then it's a bonus. I rarely stay for the full 48 month term though.
 
Wippers said:
I have just completed a Voluntary Termination on a 30 month old A7 as I was in nearly £3k negative equity. There was no way I was going to make that up over the remaining 18 months of the 48 month deal so I have just walked away and started a new deal on a new A7. No point carrying on. Funnily enough my previous A6 had £2k equity after 2 years which is unusual. I always assume I'll have no equity when replacing the car so if there is any then it's a bonus. I rarely stay for the full 48 month term though.
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This is really interesting. So as long as you've passed the minimum term, if you are in negative equity you literally just cancel the agreement and hand it back. I had no idea you could do that.
 
DotNetDude said:
This is really interesting. So as long as you've passed the minimum term, if you are in negative equity you literally just cancel the agreement and hand it back. I had no idea you could do that.
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Yes they don't make you aware of this when buying the car. I only found out a few weeks ago when I took my old A7 for its service. Whilst waiting I was shown the new A7 and told I could habd mine back as I'd paid half already. I checked with Audi Finance and they agreed. Job done new car on the drive.
One thing you need to be mindful of is the charges they can make based on the condition of the car. They send an inspector out who goes over the car with a fine tooth comb (it's an app so he has no say) and any faults, marks etc etc will be billed at a set rate. They take into account the age though. Another thing is any excess mileage will be charged.
 
@Wippers afaik they can't charge you for any excess mileage on a VT albeit they will try it on if you are over the agreed mileage count.

https://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

"To be very clear, the finance company cannot charge you for excess mileage, only any costs if “the debtor has contravened an obligation to take reasonable care of the goods” (The Car Expert)."

TX.
 
DotNetDude said:
The Audi dealer shouldn't be able to do that. A franchised Audi dealer can only offer finance from "Audi finance", and their rates and deals are set nationally. This is so that you can't get one finance deal from one dealer and then play it off against a different deal from a different dealer. Of course, there is nothing to stop a dealer from making a "contribution" to the deposit, and different dealers will contribute more (or less), which is why different prices can be found from different dealers...
Click to expand...

I would have to beg to differ there - maybe an Audi dealer shouldn't deviate from the standard Audi Finance offering however in the last 20 or so years of buying Audi vehicles cars I have never encountered one that doesn't do it. If there wasn't a free choice of finance companies to be used wouldn't Audi run the risk of being accused of 'fixing' the market and running a cartel? Finance funding is actually a product like a tin of beans - you buy the product you require and that meets your needs at the time.

You absolutely can play one dealer off against another if you wish - we live in a free market.
 
terminator x said:
@Wippers afaik they can't charge you for any excess mileage on a VT albeit they will try it on if you are over the agreed mileage count.

https://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

"To be very clear, the finance company cannot charge you for excess mileage, only any costs if “the debtor has contravened an obligation to take reasonable care of the goods” (The Car Expert)."

TX.
Click to expand...

Excess mileage is charged if you have gone over your mileage stated at the time of the agreement (hence the name excess). I stated I would do 13k pa but ended up doing 15k pa so have nearly 600 miles excess.
 
Wippers said:
Excess mileage is charged if you have gone over your mileage stated at the time of the agreement (hence the name excess). I stated I would do 13k pa but ended up doing 15k pa so have nearly 600 miles excess.
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Nope see the link, even over the agreed limit they can't recover it.

TX.
 
cosmicblue said:
I would have to beg to differ there - maybe an Audi dealer shouldn't deviate from the standard Audi Finance offering however in the last 20 or so years of buying Audi vehicles cars I have never encountered one that doesn't do it. If there wasn't a free choice of finance companies to be used wouldn't Audi run the risk of being accused of 'fixing' the market and running a cartel? Finance funding is actually a product like a tin of beans - you buy the product you require and that meets your needs at the time.

You absolutely can play one dealer off against another if you wish - we live in a free market.
Click to expand...

I was under the impression Audi dealers could only offer Audi Finance but they can increase dealer contributions etc to lower the payments? All dealers can offer different deals (I had some huge differences on quotes from various dealers all around the UK) but the same finance company (ie Audi Finance)?
 
Wippers said:
I was under the impression Audi dealers could only offer Audi Finance but they can increase dealer contributions etc to lower the payments? All dealers can offer different deals (I had some huge differences on quotes from various dealers all around the UK) but the same finance company (ie Audi Finance)?
Click to expand...

Nope - that's just the BS some dealer Business Managers give you as the Audi Finance generates the largest commission. I know that the commission earned by the Audi dealer that provided my RS from alternative finance company was tiny. They had an incentive to move a unit as the vehicle was becoming a permanent forecourt fixture.
 
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Wippers said:
Yes they don't make you aware of this when buying the car. I only found out a few weeks ago when I took my old A7 for its service. Whilst waiting I was shown the new A7 and told I could habd mine back as I'd paid half already. I checked with Audi Finance and they agreed. Job done new car on the drive.
One thing you need to be mindful of is the charges they can make based on the condition of the car. They send an inspector out who goes over the car with a fine tooth comb (it's an app so he has no say) and any faults, marks etc etc will be billed at a set rate. They take into account the age though. Another thing is any excess mileage will be charged.
Click to expand...
Audi follow the BVRLA fair wear and tear guidelines as stated here https://issuu.com/bfwsn67/docs/cars_-_audi_fs_2018?e=2001091/59002873
 
cuke2u said:
Audi finance is very much more on used, around 12-15%
Click to expand...

Not always. Often high advertised rate, but dealers can access lower rates and offers if you ask/negotiate.

DotNetDude said:
The Audi dealer shouldn't be able to do that. A franchised Audi dealer can only offer finance from "Audi finance", and their rates and deals are set nationally. This is so that you can't get one finance deal from one dealer and then play it off against a different deal from a different dealer. Of course, there is nothing to stop a dealer from making a "contribution" to the deposit, and different dealers will contribute more (or less), which is why different prices can be found from different dealers...
Click to expand...

Audi dealers do offer different finance rates and deposit contributions. Sometimes this is linked to their volumes (larger groups get better rates) and other times groups not wanting to sacrifice profit by offering the better value (thus reduced commission) finance deals.
 
I am going on the main Audi website but I doubt if any fully franchaised audi dealership has any movement on the interest rate figures set by Audi Finance themselves.
I remember my first visit to a Audi dealership in 2012 to be informed by them they don't do discounts, of course that has changed, but they like to call it 'dealer contribution' instead, and there is some flexibility there but with apr it is the same rule for all. Even Ford cannot deviate from their options or acquire plans..
 
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