Q3 PCP on Audi Q3

I though the whole point of PCP was you would never be in negative equity because you can just walk away and give the car back, granted you won’t have any equity so will need to find a deposit. Your best speaking with the dealer to see if there will be any equity or not

That’s at the end of the deal not half way through.

You’ll find they will offer you closer to the part ex price I’m afraid so you’re going to have some negative equity to deal with. Best off speaking to the dealer

Gary_LB said:

That’s at the end of the deal not half way through.

You’ll find they will offer you closer to the part ex price I’m afraid so you’re going to have some negative equity to deal with. Best off speaking to the dealer

Click to expand...

You can VT the car as long as half of contract been paid. Consumer right

Correct however OP is 2 years through a 4 year deal so is unlikely to be at VT point. Unless he put down a massive deposit of course

My wife VT'd a Mini a couple of years back (BMW finance), specifically it has to be half the total payments - and then they pro-rata the agreed total mileage back to a monthly rate - and then charge you a penalty for the excess. The PCP finance rates are really poor too - I let the dealer quote, throw all the incentives in, collect the car and then within 30 days pay the PCP loan off...it's totally legal.

cosmicblue said:

The PCP finance rates are really poor too - I let the dealer quote, throw all the incentives in, collect the car and then within 30 days pay the PCP loan off...it's totally legal.

Click to expand...

I've done that with my last couple of cars and like you say is totally legit.
The problem is you either have to have enough funds to pay off the debt or a loan in place to pay it off (or a mixture of the two). You cant take out another pcp on the car to pay off the first so it has to be a straight loan which can be very high on the monthlies depending on the outstanding debt.
You can however get some great interest rates over a used pcp rate which ultimately means paying less interest and gathering more equity in the car quicker!

Ive changed about 2-2.5 years into a PCP - talk to a couple of dealers, they will be keen to get or keep your custom (in the case of your current one). It's not in their interest to not offer you anything bad, otherwise you wont buy from them
The damage will knock off some equity, but I'm sure they will come up with something. Make sure you get new Q5 prices from Carwow first, as a starting point

A personal loan from the bank is usually waaay cheaper than PCP....trouble is its easy to do it all in the dealership and not have to faff around with filling forms in etc.

If you ever sit down and do the sums - bank loan for the whole value of the car and an asset with a real value at the end vs. a PCP for a vehicle you'll just pay interest for and never recover any value from....it's a total no-brainer.

Same goes for buying nearly new vs. brand new. Remember buying a new car is crazy - the moment you drive that new car off the forecourt you will lose:

The VAT (20% of the value)
Delivery and PDI charges
Almost all the cost of the options.

When you buy a used car the dealer only pays VAT on the profit element in the deal....so my previous RS4 had lost £25k in 10 months, I lost £850 on it in six months (I can live with that) , I bought my previous RSQ3 at 9 months old/3,000 miles and it had lost £17k of it's purchase price....

cosmicblue said:

A personal loan from the bank is usually waaay cheaper than PCP....trouble is its easy to do it all in the dealership and not have to faff around with filling forms in etc.

If you ever sit down and do the sums - bank loan for the whole value of the car and an asset with a real value at the end vs. a PCP for a vehicle you'll just pay interest for and never recover any value from....it's a total no-brainer.

Same goes for buying nearly new vs. brand new. Remember buying a new car is crazy - the moment you drive that new car off the forecourt you will lose:

The VAT (20% of the value)
Delivery and PDI charges
Almost all the cost of the options.

When you buy a used car the dealer only pays VAT on the profit element in the deal....so my previous RS4 had lost £25k in 10 months, I lost £850 on it in six months (I can live with that) , I bought my previous RSQ3 at 9 months old/3,000 miles and it had lost £17k of it's purchase price....

Click to expand...

That's not quite true is it? A secondhand car isnt automatically worth 20% less on the used car market the moment you drive off because you lose the VAT, as if it was bought by a trader working under their VAT rules, then different rules apply. A secondhand car is valued according to the market - which is why some can be worth more secondhand than new....

And PCP may be cheaper than a bank loan depending on whether the manufacturer is offering support on the deal. I know people who have bought BMW on 0% PCP, and my car is at 3.9% APR, which I would struggle to match on that value. And my investments normally earn more so PCP is cheapest...

Buying new is invariably a way to set fire to money but if you want a car that has the spec you want, or are picking a model where you would be concerned about how it may have been treated previously, then new is a good option if you are eyes open to the costs.

My station car I buy secondhand as all that really matters is that it is small and works...

Thanks isleaiw. You missed something vital - the 20%+ loss applies to new cars - nearly new used cars are often much cheaper than brand new vehicles because the initial VAT value and probably most of the options cost has evaporated.

On the PCP vs a loan. The APR rate is immaterial because with the PCP whilst it appears that you are financing the whole car you are in fact only covering part of it - when you make the final monthly payment you are still facing a balloon payment or give the car back. If you take a loan for the car when you pay the final payment then it's yours, owned outright - an asset with some kind of value.

cosmicblue said:

Thanks isleaiw. You missed something vital - the 20%+ loss applies to new cars - nearly new used cars are often much cheaper than brand new vehicles because the initial VAT value and probably most of the options cost has evaporated.

On the PCP vs a loan. The APR rate is immaterial because with the PCP whilst it appears that you are financing the whole car you are in fact only covering part of it - when you make the final monthly payment you are still facing a balloon payment or give the car back. If you take a loan for the car when you pay the final payment then it's yours, owned outright - an asset with some kind of value.

Click to expand...

I know that you meant new cars - but you cannot say that you lose the VAT value as soon as you drive off, as the second hand market is based on supply and demand, some traders can recover VAT on the new or used car (in the right circumstances and only pay on the profit element) and so a used car doesnt have to be 20% cheaper (technically 16.66% as its 1/6th of the purchase price inc VAT) just because it is used.

Agreed, that's how they work. I'll stick take 0% on the whole amount versus 3% on a bank loan. Your argument about asset matters for those who consider owning it at the end important. I get a car allowance (paid monthly) which funds (part) of my car cost. I get that every month and I am happy to pay every month towards my car. I have owned cars outright and I have rented them via PCP. I use whatever works for me at the time and dont just think one is the solution for everyone. As long as you know what you are doing and the pros and cons then consider each on its merits each time.

If I really wanted to save money I would stick to the 4k Fiesta I used to use for the station. Great little car and did pretty much everything you need of a car most of the time. But I consider it partly a hobby so I spend the cash to have what I want, whether that is capital or interest isnt really a concern as long as it is affordable (and I have 6 months net pay in liquidatable investments should I need funds in an emergency).