Finance Advice Please....

[cuke2u]

Hi, just really to see if anyone thinks there is anything wrong with these figures or could maybe comment whether I should put in £5000 instead? I guess that the 'Add Charges' is interest?

Vehicle AUDI A3 SAL 1.4 TFSI S-LINE 4D

Period of Hire 36 Months
Cash Price £27,000.00
Less: Advance payment/allowance £4,000.00
Balance of cash price/ amount of credit £23,000.00
Add Charges £3,099.00
Balance £26,099.00
Balance Payable by 35 monthly payments £397.35
Followed by a Final Rental of £12,316.75

 

[Saabman]

Hello..... How does this compare if you went on line and looked at a personal loan calculator over 3 and 4 years, borrowing £22,000? Just a thought....... I'm not a financial expert and depends on how long you wish to keep the car for, but I've never been a fan of balloon payments. I am sure that a financial boffin will correct me and let us know the benefits! I've always been a personal loan kind of guy, and the loan is not secured on the car, so it can be sold without grief at any time.... BUT I tend to keep my cars for at least 6 years.

 

[cuke2u]

Hi and thanks for your reply. I too have always purchased using personal loans since 2008, had two cars that way, which is why I am reticent about going into a PCP. I usually keep my cars around three years before replacing, but I feel I get the impression that the average Audi owner might keep their cars for longer, in this case it might be last car before I retire anyway. In looking at your suggestion my payments would be around £425 over five years, which does make some sense as it equals out the payments over the term.

 

[Saabman]

I have always been of the opinion that PCP contracts are set up for those that wish to change cats regularly and I have used them in my business in the past, but I prefer the freedom of a loan. The freedom to pay off early, the freedom to sell, the freedom to refinance if necessary. I hope this helps, but perhaps an accountant may shed some light on the matter. I've not got a calculator to hand, otherwise I would try and help work out the overall cost of the PCP against the loan. I hope this helps. I'm going for the loan option on my New A3 purchase, after I've sold the old Saab.

 

[Saabman]

Cats? Who mentioned anything about house pets! Ha ha!

 

[Saabman]

May I ask..... Are you self employed? Half the Vat can be claimed back on a lease plan, if you wish to explore that route...

 

[Anton5071]

My finance was similar but I pay slightly less than that. It's went a little like this:

Cost of car £26,500
My deposit £1500
48 monthly payments of £380 /10k a year
balloon around 10-12k

Just a rough estimate from memory. I have had PCP twice before and swapped the cars after 2 years because I wanted something new. Had a 1 series through a personal loan and lasted about 18 months with that. I think it's down to personal preference on how long you wish to keep the car

 

[yetirider]

With PCP deals you are free to settle when you want, you can now pay any amount off to the reduce the payments or final sum.
You can sell and settle the loan. The only draw back is if you want to hand back and have exceeded the contracted milage then you would have to pay the rate per mile.

 

[cuke2u]

Hi and thanks for all of your replies, no I am not self-employed, and neither do I have any pets, yet. My partner has always had her cars on a PCP, as she changes every three years, so I am kinda up upon what they represent. Your deal, Anton, looks very good compared to mine and I'll ask my dealership for a quote on 48 months to see how much of a difference it makes as I think I am putting too much of equity into the deal. I have a 2011 Mk3 focus 1.6 ecoboost that has about £7k left on finance and I really don't want to throw away all of its equity into a PCP, thus a personal loan or HP through Audi appeals to me more but I don't know what their rates are.

 

[c.grex]

PCP always works best with a small deposit.

I good tip when getting quotes at the dealer is always look at other models. For instant, you may think a diesel is £2000 more when new, but you may find it is worth £2000 more at the end of the term, making the payments just the same.

also remember in most cases adding extras doesn't alter the GFV at the end of the term. So you can add £3000 worth of extras, and it will just cost you more each month, and not make the car worth anymore at the end.

lastly, when you get your GFV, you can use this to input your own figures to see what smaller deposits make etc.
Car Finance PCP Calculator

i have aver used this once I have got the figures from Audi, and then just changed the on the road price to match a brokers price, then just gone back to dealer and see if they can match it!

oh and another, if you really are planning on getting a new car every few years, you can set the mileage low to get cheaper payments. If you end up doing more miles it doesn't have much effect on a trade value. I have always set my mileage at 5k, but do 7-8k. The price difference between a car at 3 year old with 20k on instead of 15k is nothing. But this is a risk to do it this way.

 

[chrismurray]

When doing a PCP always use a small deposit, also make sure when entering in to this type of agreement that it is a PCP and not a personal lease or personel contract paln as there is a big difference at the end of the agreement. On a PCP if the final figure is say £12000 and the car is worth £14000 then the extra is what you would use as deposit for your next car with a lease the car has to be handed back and normally they are very harsh with condition and you could suddenly be issued with an invoice for damage. There are lots of different types of Balloon agreements on the market and you do have to be careful as to what you are signing.

 

[Croftj]

May I ask..... Are you self employed? Half the Vat can be claimed back on a lease plan, if you wish to explore that route...

Hi SAABMAN, can you explain this to me pls? thanks

 

[cuke2u]

Hi guys, a diesel is not for me as I only do between 4-5k a year mileage and most of it is around town, so that means I can keep my mileage allowance down easily, and I'm not self-employed either. I have also used the PCP calculator and it is a very useful website and I also have got the dealership to match the discount from a internet broker, who is better than DTD.
The only extravagant option I've chosen is the technology pack, yes as a IT technician I like my geeky stuff. The rest is what I have found to be essential with my present car and all came as standard.

 

[dick wad]

PCP always works best with a small deposit.

Hi could you tell me why PCP always works best with a small deposit please.

 

[dick wad]

When doing a PCP always use a small deposit,

Can you explain why small deposit is best please.

 

[Saabman]

Hi Croftj. If you take out a lease plan on a car, Vat is normally added to the monthly amount. If you are self employed and registered for vat, you can reclaim half of the vat element back of the lease. You may recall that you could claim all the vat back on a commercial vehicle, like a Toyota hilux, but I'm not sure if this has now changed....

 

[Croftj]

Hi Croftj. If you take out a lease plan on a car, Vat is normally added to the monthly amount. If you are self employed and registered for vat, you can reclaim half of the vat element back of the lease. You may recall that you could claim all the vat back on a commercial vehicle, like a Toyota hilux, but I'm not sure if this has now changed....

If I'm flat rate vat registered will that affect whether I'm entitled to reclaim the vat back?

 

[Saabman]

Sadly, this question is beyond my limited knowledge..... Probably best to have a word with your accountant...

 

[c.grex]

PCP always works best with a small deposit.

Hi could you tell me why PCP always works best with a small deposit please.

Usually the GFV is set a little lower than trade value. This means that there should be 1-2k left over if you want start a new deal at the end of your PCP term. So you can start a new deal with 1-2k deposit.

if you put 4000 deposit in to start with, you will still have only 1-2k at the end. This means that to start a new deal, you would have to either find another 2000 or spread that out over the monthly payments. Better to start with 1-2k deposit, higher monthly payments, and then you can change your car regularly without finding more money each time.

 

[cuke2u]

Having thought about it a bit more I plan, hopefully, to do what you have suggested and that way I can also keep the difference between the deposit and the equity in my present car in my savings instead of it being lost. By my reckoning, over four years, my monthly payments will be the same as what I am paying out now, which was also over the same term. As my cars are usually returned in showroom condition and way less mileage than it should have, my present one is over two years old and only had 8500 on the clock, I should gain enough equity to put towards the next one...

 

[dick wad]

Usually the GFV is set a little lower than trade value. This means that there should be 1-2k left over if you want start a new deal at the end of your PCP term. So you can start a new deal with 1-2k deposit.
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if you put 4000 deposit in to start with, you will still have only 1-2k at the end. This means that to start a new deal, you would have
to either find another 2000 or spread that out over the monthly payments. Better to start with 1-2k deposit, higher monthly payments, and then you can change your car regularly without finding more money each time.

What if you would like to keep the car after three years and pay the GFV ? What would be your advice then c.grex

 

[cuke2u]

PCP always works best with a small deposit.


oh and another, if you really are planning on getting a new car every few years, you can set the mileage low to get cheaper payments. If you end up doing more miles it doesn't have much effect on a trade value. I have always set my mileage at 5k, but do 7-8k. The price difference between a car at 3 year old with 20k on instead of 15k is nothing. But this is a risk to do it this way.

Good advice as dropping the mileage allowance to 5k lowered the monthly amount by £30...

 

[c.grex]

What if you would like to keep the car after three years and pay the GFV ? What would be your advice then c.grex

I'd make sure that PCP is right for you. You may be better off with HP. But if you are sure you are going to buy the car at the end, a larger deposit may work.

Just remember that you loose a lot of money on new cars in within the first couple of years. I'm fine with this as I offset that against the fact I get a new car every couple of years, spend nothing on them other that a service and fuel.

 

[cuke2u]

Hi, I followed the advice of a smaller deposit in the end and only put in £2000. I end up no worse off than I am paying for my current car and I get to keep £2500 of equity towards my next purchase in three years time if need be..