S3 DEPRECIATION

[DangerS3]

Perhaps it'll be useful to add some real numbers to this discussion...

This is an example using real numbers from a quote I received from an Audi main dealer, and using a loan from sainsbury's bank.

The pcp is based on a price that incorporates a £2500 deposit from Audi. This at the time was the standard for a 3 door S3. The contribution was not offered if Audi finance wasn't used;
View attachment 84851

This is eye opening to know what it would cost you over 3 years as I didn't realise it would be that close, BUT the loan from Sainsburys would obviously see you actually owing nothing on the car after 3 years and being the owner. Whereas on the Audi one you would have the balloon payment to worry about at the end to be in the same position.

 

[DrEskimo]

This is eye opening to know what it would cost you over 3 years as I didn't realise it would be that close, BUT the loan from Sainsburys would obviously see you actually owing nothing on the car after 3 years and being the owner. Whereas on the Audi one you would have the balloon payment to worry about at the end to be in the same position.

The total cost for the PCP includes paying the balloon payment, so you would own the car outright at the end of the 36months in both scenarios.

The main reason the PCP isn't much more expensive is because it includes a £2.5k discount, whereas the personal loan doesn't.

 

[richinsoton]

This is eye opening to know what it would cost you over 3 years as I didn't realise it would be that close, BUT the loan from Sainsburys would obviously see you actually owing nothing on the car after 3 years and being the owner. Whereas on the Audi one you would have the balloon payment to worry about at the end to be in the same position.

Just to chuck my example in as well. My previous car an A1 - VWFS PCP over 4yrs left a £4k balloon payment at the end of the term, would I want to pay another £4k to keep a car with 100k+ miles on it at that point?... err NO!. Or a low rate personal loan from my bank with preferential rates for certain customers worked out at £7 p.m more over 48 months than the PCP payment but no additional balloon payment at the end which made it a no brainer for me.

I've also done a personal loan again with my current A3 as even with taking into account the two free services etc as an incentive to purchase the PCP the personal loan works out cheaper per month over the full term length. (Both examples are for 2yr old vehicles, would I pay £27k for my A3 new no, but 13.5k at just less than 2yrs old with 2yrs Audi warranty yes I would / did & spend the rest elsewhere. I can understand the attraction of a low monthly PCP if you want to have the minimum outlay p.m though).

 

[GSB]

This is eye opening to know what it would cost you over 3 years as I didn't realise it would be that close, BUT the loan from Sainsburys would obviously see you actually owing nothing on the car after 3 years and being the owner. Whereas on the Audi one you would have the balloon payment to worry about at the end to be in the same position.

Precisely. The PCP allows great flexibility in finances for the first x number of months. But then it twists the arm of the unprepared by forcing you to hand over 'your' car, pay a big bill, or go into another PCP deal.

I bought my last car on a PCP because it was geniuinely cheap (Mazda were offering zero%), but I made damn sure that I put away enough cash each month into a savings account to cover the GFV. This in itself has been a very useful ally in recent years, it's extremely comforting to have the security and flexibility that a decent wedge of savings can offer.

The current car is worth a great deal more than the GFV so it was an obvious choice to buy it outright. Had it been worth less, like the well publiciised examples of a fiat 500, Mini Cooper, or the entire vauxhall range, then I'd have sent it back and been glad of the protection the GVF affords us in such circumstances.

I'll do the same this time, as it worked out pretty well on the Mazda. I can do it on the S3, but couldn't afford to on the S4 that I actually wanted. If I weren't married to a very sensible accountant and let the man maths shine through unabated, then I'd have ordered the S4/RS4/C63AMG that I would actually like...

The PCP is a good product if used within the limits of what you can afford. However it's really really easy to end up with nothing and take on more than you can really afford to. This is why the PCP bubble will burst. In three years time, when I next look for a new car, I don't think these deals will exist in this form any longer.

 

[RVP20]

If you can afford to pay cash or take out a loan then that's the best option rather than a PCP. As people keep saying the main reason is that you will own the car as apposed to handing it back and leaving with nothing. Yes I understand that the dealer may offer a contribution but if you have already saved 10% for example by shopping around then that's your £3k off the cost of the car.

 

[DangerS3]

The total cost for the PCP includes paying the balloon payment, so you would own the car outright at the end of the 36months in both scenarios.

The main reason the PCP isn't much more expensive is because it includes a £2.5k discount, whereas the personal loan doesn't.

Do you know what threw me off, it's the 6.8% interest rate and the fact you only actually pay a total of £7300 over the course of 36 months on PCP monthly paymentw. But if you do intend on keeping the car, come the end of the three years you're going to be in a bit of a conundrum as to where you're going to find all that dosh to hand over.

Precisely. The PCP allows great flexibility in finances for the first x number of months. But then it twists the arm of the unprepared by forcing you to hand over 'your' car, pay a big bill, or go into another PCP deal.

I bought my last car on a PCP because it was geniuinely cheap (Mazda were offering zero%), but I made damn sure that I put away enough cash each month into a savings account to cover the GFV. This in itself has been a very useful ally in recent years, it's extremely comforting to have the security and flexibility that a decent wedge of savings can offer.

The current car is worth a great deal more than the GFV so it was an obvious choice to buy it outright. Had it been worth less, like the well publiciised examples of a fiat 500, Mini Cooper, or the entire vauxhall range, then I'd have sent it back and been glad of the protection the GVF affords us in such circumstances.

I'll do the same this time, as it worked out pretty well on the Mazda. I can do it on the S3, but couldn't afford to on the S4 that I actually wanted. If I weren't married to a very sensible accountant and let the man maths shine through unabated, then I'd have ordered the S4/RS4/C63AMG that I would actually like...

The PCP is a good product if used within the limits of what you can afford. However it's really really easy to end up with nothing and take on more than you can really afford to. This is why the PCP bubble will burst. In three years time, when I next look for a new car, I don't think these deals will exist in this form any longer.

Oh I totally appreciate what you're saying and I do agree. It's how you intend on playing the game so to speak.

The way I read your table threw me off a bit that was all. It's like my friends getting a house on the Government scheme where you pay them back after 10 years. And 5 years in they haven't actually saved a penny when in another 5 years time they're going to have to hand over £40k lol. Not saying it's what happens on here, but a lot of people tend to skim over what's going to happen come close of play where there's potential to lose a car that they may not have wanted to lose and end up back in the cycle of owning a new car that they didn't want.

 

[DrEskimo]

Do you know what threw me off, it's the 6.8% interest rate and the fact you only actually pay a total of £7300 over the course of 36 months on PCP monthly paymentw. But if you do intend on keeping the car, come the end of the three years you're going to be in a bit of a conundrum as to where you're going to find all that dosh to hand over.




Oh I totally appreciate what you're saying and I do agree. It's how you intend on playing the game so to speak.

The way I read your table threw me off a bit that was all. It's like my friends getting a house on the Government scheme where you pay them back after 10 years. And 5 years in they haven't actually saved a penny when in another 5 years time they're going to have to hand over £40k lol. Not saying it's what happens on here, but a lot of people tend to skim over what's going to happen come close of play where there's potential to lose a car that they may not have wanted to lose and end up back in the cycle of owning a new car that they didn't want.

Indeed, well if you are savvy enough and do want to ultimately own the car, you would put away the difference in monthly payments between the two methods (671-207) = £464 and you'll have the £16k odd to pay the balloon payment.

Assuming you can only get those contributions by taking finance (+maybe get some other bits thrown in like servicing to make it sweeter), then the PCP gives you slightly more flexibility in exactly how much you say month to month, while not costing much more in interest.

Of course there are still lots of ifs and buts. I do wonder how hard it is to get those discounts and dealer contributions as a cash buyer...bet if you do your homework, you can get the same sort of deal and end up saving a good few grand overall, rather than the small difference shown in the example highlighted...

 

[DangerS3]

Oh yeah, completely agree with you there.

When I attended the Tunbridge Wells Audi meet, a member was saying that when he bought his car brand new, the dealers were really happy and helpful but when they found out he was paying cash upfront, they actually tried to make him take it on a PCP deal. And when he refused they suddenly turned really unhelpful and offered no discounts on the car.

Funny old game.

 

[BobbyCS3]

A car loses most its money in the first year. If a car is purchased on pcp you are more than likely going to be in negative equity in the first year if a large deposit isn't put down. As the depreciation is spread over the term for whatever you have it over.

Its all relative so in the perfect workd if you want to get rid of a car after a year then a 1 year pcp if what you want however you will have a massive monthly payment due to the depreciation. If on a 3 year pcp I have found that 2 years is a good time to replace.

As for paying cash for a car, you obviously wont be in negative equity but your in the same boat as you've been daft enough to shell out the capital. If on pcp you put a large deposit down you wont be in negative equity if you put small deposit youll have negative equity but its all relative.

 

[S32B]

Maybe Audi isn't so bad after all

Had this quote from my local Volvo dealership, no other discount was forthcoming!:

Volvo V40 T5 R Design Auto

Cost price

£ 31,270.00

Less deposit

£ 5,000.00

Less Manufacturer Deposit

£ 750.00

48 monthly payments of

£ 382.19

Guaranteed Future Value

*£ 9,980.00

Total amount payable

£ 34,075.12

* Excess mileage charged at 14.9 pence per mile

 

[Bristle Hound]

There is a couple of threads running at the mo in the 8V section on this topic at the mo
http://www.audi-sport.net/xf/threads/12-months-depreciation.264331/page-2#post-2681546

I remember my Father & Brother, who were both in the motor trade selling new an used cars for over 60 years between them said said to me on this topic -
'If your worried about a new car depreciating, don't buy a new one'

As always, just my opinion of course ...

 

[DrEskimo]

There is a couple of threads running at the mo in the 8V section on this topic at the mo
http://www.audi-sport.net/xf/threads/12-months-depreciation.264331/page-2#post-2681546

I remember my Father & Brother, who were both in the motor trade selling new an used cars for over 60 years between them said said to me on this topic -
'If your worried about a new car depreciating, don't buy a new one'

As always, just my opinion of course ...

Haha I was waiting for someone to point out that out...

I'll go start a 'new car vs used car' thread....

 

[Flibble]

My settlement figure is £27,800 Audi offered £24,000 that's after exactly 12 months ideally l would want £26k for my car happy to except £1800 negative equity,not nearly £4000 that's the deal breaker on my TTS even with £7000 to hand

That's pretty low really. I got 24k for mine after 18 months and with over 20k on the clock, and I thought that was a low valuation at the time!

 

[Oyster]

As a nation, we are addicted to consumer credit (debt). It's like a drug.

In UK 2015 (FLA figures)
Retail & Online credit grew by 2%
Credit Cards & Personal Loans grew by 4%
Car Finance grew by 15% !!!





And this is where I've spoken to quite a few "less sharp", more mature sales people, who regale me with tales of having to sit down with Mrs. Trellis to explain why, after years of buying her cars on HP, after her first couple of PCP contracts, her monthly payments, suddenly, doesn't give her a car to "own" at the end of the term.......

It's is horses for courses, but you do need to go in with your eyes wide open. I'm neither advocating nor condoning PCP, it has its pro and cons, there is no such thing as a free lunch, at the end of the day when all said and done, the finance company will be making money.

People who can't afford those new PCP deals will now be able to afford the 2nd hand PCP deals...effectively controlling the cost of 2nd hand cars and keeping prices up.



It's the UK housing market in miniature

 

[veeeight]

The interest rate on a used Audi PCP is around double that of a new car PCP !!

New Audi PCP 6.8%
Used Audi PCP 14.7%

(Although the monthlies will be lower, thus more "affordable" on a monthly basis)

 

[Oyster]

Oh yeah, completely agree with you there.

When I attended the Tunbridge Wells Audi meet, a member was saying that when he bought his car brand new, the dealers were really happy and helpful but when they found out he was paying cash upfront, they actually tried to make him take it on a PCP deal. And when he refused they suddenly turned really unhelpful and offered no discounts on the car.

Funny old game.

When the selling price of a brand new car is actually 6K less than the asking price, some questions should be getting asked.



For me it's llike the experience of someone recently buying a new build....the buyign price was not even close to the asking price....but they had to agree to the figures being massaged so it appeared they'd bouught at full asking price.....which of course goes on the land registry.

Paper work, or fraud...you decide.

 

[A3_Rider]

Barely financial sense when you lease an S/RS model! I've heard the first 12 months are bad but I reckon it's more the first 24 months plus how you agreed the deal.

All comes down to your situation and how you plan it. I keep mine 5 years at least (maybe 10 years now jassy hahaha Bristle will be in a crazy home by then!) I wonder if I can live with Sepang that long...maybe should have kept it as a dream colour.

...anyway, I went against outright purchase because I'd rather retain the numbers and calculating the "premium" I felt it was worth it. As for resale values, tbh don't get PCP or even a new car if that's what you're focusing on, the market can switch on you easy! Though I understand reasonable expectations, just be happy man, you're in an S3!!!!

 

[Jassyo06]

Barely financial sense when you lease an S/RS model! I've heard the first 12 months are bad but I reckon it's more the first 24 months plus how you agreed the deal.

All comes down to your situation and how you plan it. I keep mine 5 years at least (maybe 10 years now jassy hahaha Bristle will be in a crazy home by then!) I wonder if I can live with Sepang that long...maybe should have kept it as a dream colour.

...anyway, I went against outright purchase because I'd rather retain the numbers and calculating the "premium" I felt it was worth it. As for resale values, tbh don't get PCP or even a new car if that's what you're focusing on, the market can switch on you easy! Though I understand reasonable expectations, just be happy man, you're in an S3!!!!

No mate no crazy home for me lol l have been offered £25,500 first offer £26k is more likely achievable but no,,a lot of debate as usual on payment methods on a car,personal circumstances they all figure in,l don't have a mortgage or any other forms of debt bar my car, lve read on here guy's paying £500-£600 a month for there cars putting down a minimum deposit that's not my bag, l could easily do a fully loaded RS3 or TTS and keep the payment around £440 but no discount on Rs3 annoyed me greatly so on principal no to that,residuals are gash on a S3 first year full stop,and common sense EVENTUALLY has prevailed,l will keep this car till next March, order something special come November for March delivery in the interim l will fix my little dent on the passenger door and then give it another seeing to with some ceramic coating, bit bored with cars now sickened me self off them really

 

[Jassyo06]

Wee foot note after 23 months owning a Ford l was in the black to the sum £1000 l actually got £17k for that car,so l made £3000 on that car.....There's not a hope in hells chance that will happen with the Audi

 

[veeeight]

Wee foot note after 23 months owning a Ford l was in the black to the sum £1000 l actually got £17k for that car,so l made £3000 on that car.....There's not a hope in hells chance that will happen with the Audi

Audi / VWFS do tend to set the GMFV (unrealistically) higher to give you lower monthly payments to suck you into the VWFS PCP system, so the settlement figures are higher for longer.

If a dealer gets you "renewed" on a VWFS PCP for the next car, they get around £1.2k bonus for keeping you on VWFS finance.

Everything is geared to keep you in the scheme for as long as possible

 

[Soulboy]

A good thread this one. Lots of useful info on PCP, rather than people just concentrating on monthly payments.

If you keep the car the full term, you should do well with an A3/S3 compared to other cars (3rd best depreciating mainstream car over 3 years/35000 miles according to recent survey by Car Buyer).

This is the first car I have ever bought using PCP, but only as I hadn't sold my last car privately (which i usually do) when I got this one.

Would I use PCP again? Maybe.

By the time S3 is 3 years old (full term) next Jan, I will pay off the balloon and expect it to be worth about £4-5k more due to lower mileage than PCP agreement and A1 condition, and not going mad with the extras.

In addition, I have been bunging a good chunk into savings over the 3 years to recoup the deposit and then some.

So when the M2 is ready, I could put a large chunk down and get a loan for the rest.
Or, more likely, keep the majority of the cash and invest it (not cash) and do a PCP again.

 

[Jassyo06]

Audi / VWFS do tend to set the GMFV (unrealistically) higher to give you lower monthly payments to suck you into the VWFS PCP system, so the settlement figures are higher for longer.

If a dealer gets you "renewed" on a VWFS PCP for the next car, they get around £1.2k bonus for keeping you on VWFS finance.

Everything is geared to keep you in the scheme for as long as possible

Yeah l realise this and know come 2 years into the agreement the situation will still be the same some guys can keep there car's till whenever they like same applies to me

 

[Snake Pliskin]

wow just caught up on this thread mate

Jeees didn't realise the position was as it was and you were that miffed with your S3 ... is it really THAT bad ?

I also believe that a major part of the negativty equity is cars "loaded with options" as you see very little of these re-valued for part ex other than sat nav and pano roof you mentioned recently. Other than that narda, so if you spec £10k on options you will kiss goodbye to at least £7k of that straight away. The other £3k in nav & pano may be worth say £1k on residual ? So a huge chunk of your initial "loss" could be refelected in extras not reflecting in value now ?

This is why I agonised over extras as I begrudge paying more than 10% of the cars base value in extras. However, I had to push the boat out with the RS - and glad I did - otherwise I could have regretted not speccing the things I now have. And that is part of the problem again IMO, these S & RS cars are not specced to a standard they really should be and Audi offer shed loads of desirable options and extras, which can easily add up to silly money. I mentioned recently that you can easily add £10k to a new A4 s line with ease, more so with further expensive extras being introduced such as virtual dash, matrix lights etc.

The TTS on the other hand is an unusual car in the Audi range as (in addition to it being a great car) not only is it well equipped and specced but Audi are offering this incredible discount on it at the moment so it makes it a frickin bargain right now. If you are feeling that a TTS is the car for you then my only comment would be "how long is the huge contribution going to last for ?" ... I fully appreciate you saying you will wait to change till March next year, but what if the big discounts are over by then ? Although I appreciate your car should have in theory clawed back some of its negative equity ... what a dilemma !

And with the TT there is no face lift or spec changes due for a few years so the car will be identical this time next year to now. Hmmm a difficult one pal. I hope you can get the figures to stack up somehow or come to terms with waiting another year as you have now mentioned.

 

[Rob2k68]

Think me and Snake went to the same school for man maths LoL. Only way I'd get out of my PCP this early is if the contribution on the next car allowed that to happen almost cancelling one another out.

Prob more complex than this long term but that's how my mind works.

 

[Bainie]

I have never had Pcp , always paid for my cars and bought them at a few years old when they had shed a lot of their cash (Had a couple of new ones) . I was looking at a pcp , to the point of ordering an A3 saloon, then cancelling it a couple of weeks later !

This thread has clarified a few things and made me reconsider , man maths can get you into trouble ! Bought my S3 last year thinking it would not lose as much as my previous 3 series and Mini , how wrong I was , even the 8p`s are dropping like a stone !

 

[Bristle Hound]

wow just caught up on this thread mate

Jeees didn't realise the position was as it was and you were that miffed with your S3 ... is it really THAT bad ?

I also believe that a major part of the negativty equity is cars "loaded with options" as you see very little of these re-valued for part ex other than sat nav and pano roof you mentioned recently. Other than that narda, so if you spec £10k on options you will kiss goodbye to at least £7k of that straight away. The other £3k in nav & pano may be worth say £1k on residual ? So a huge chunk of your initial "loss" could be refelected in extras not reflecting in value now ?

This is why I agonised over extras as I begrudge paying more than 10% of the cars base value in extras. However, I had to push the boat out with the RS - and glad I did - otherwise I could have regretted not speccing the things I now have. And that is part of the problem again IMO, these S & RS cars are not specced to a standard they really should be and Audi offer shed loads of desirable options and extras, which can easily add up to silly money. I mentioned recently that you can easily add £10k to a new A4 s line with ease, more so with further expensive extras being introduced such as virtual dash, matrix lights etc.

The TTS on the other hand is an unusual car in the Audi range as (in addition to it being a great car) not only is it well equipped and specced but Audi are offering this incredible discount on it at the moment so it makes it a frickin bargain right now. If you are feeling that a TTS is the car for you then my only comment would be "how long is the huge contribution going to last for ?" ... I fully appreciate you saying you will wait to change till March next year, but what if the big discounts are over by then ? Although I appreciate your car should have in theory clawed back some of its negative equity ... what a dilemma !

And with the TT there is no face lift or spec changes due for a few years so the car will be identical this time next year to now. Hmmm a difficult one pal. I hope you can get the figures to stack up somehow or come to terms with waiting another year as you have now mentioned.

@Snake Pliskin - Wise words

 

[45bvtc]

Paid for my 8P RS3 in 2011, it was a lot of £ss and I had sleepless nights from both excitement and the thought of paying out soooo many £sss; however; plan was/is to keep the car for 10-years and in 2021 it'll be worth '0' £s so that's £5k per year; and as I'm not at all interested in facelifts or Mk 1 to 2 to 3, etc., I can sleep contentedly; and who knows, BLUEY may after all be worth a few £s in 2021 anyway, or not, but I'll have had 10-years of magic RS3 ownership and fun - and having met and contributed to and with a lot of like minded people

GREAT car the Audi RS3, and the S3: GREAT Forum is ASN... and Sandra

 

[Jassyo06]

This man math thing,l don't really get it,l have known what my settlement figure was in the first place back in February and even roughly know what it will be this time next year,it was the car's depreciation in one month that really hacked me off, add that to no discount on the Rs3,it has really,really annoyed me to say the least,l am nobody's fool and won't change cars unless l feel l am being given a reasonable deal,there's no TTS available for me in stock to my liking anyway and l can't sell my car and wait for a factory order can't do without my car, so time out for me big time

 

[Simonb1975]

As a side issue, has anyone encounted any problems of any sort when taking a car on PCP finance to another manufacturer to Px ?
Does an Audi PCP (Or anyone else for that matter) have any conditions attached that might hinder ?

 

[Jassyo06]

Audi wouldn't accept my Ford l had to sell it then Audi cleared the finance for me,it depends on the other marquee your changing too....best to sell it and settle you're pcp,then take ownership of another pcp.

 

[Simonb1975]

The buggers !
When I chopped the Focus in (With no finance) I went to 2 Audi dealerships and got 2 Px values, both much higher than WBAC and 1 was 1K more than the other.

Wasn't sure as Audi would in this case set the GMFV so thought it might not apply to other manufacturers but then it's just a number I guess and numbers can be massaged !

 

[Jassyo06]

The buggers !
When I chopped the Focus in (With no finance) I went to 2 Audi dealerships and got 2 Px values, both much higher than WBAC and 1 was 1K more than the other.

Wasn't sure as Audi would in this case set the GMFV so thought it might not apply to other manufacturers but then it's just a number I guess and numbers can be massaged !

A privately owned showroom has offered me £26000 Audi £24000 best to sell privately and clear the it,take on the new deal,anyway the new marquees finance company will need to know what's happening with your current pcp deal before they accept your contract with them,best not to overlap them at all.....sell and move on

 

[Beery]

As a side issue, has anyone encounted any problems of any sort when taking a car on PCP finance to another manufacturer to Px ?
Does an Audi PCP (Or anyone else for that matter) have any conditions attached that might hinder ?

When i bought my S3 - I took my Land Rover in part exchange which had outstanding PCP on it and it was no different to any other car I've part exchanged.

They offered me (cant remember exact figures now) £20k for my Land Rover and I had £17.5k left on PCP - Audi cleared the finance and used the rest as deposit towards my S3....probably not the most efficient way of doing things finance wise but the easiest!

 

[Rob2k68]

My Leon was a year old on PCP when I traded in in for my S3 they gave me the balance of the PCP so no collateral after 1/4 term as expected so I waved goodbye to my £4K deposit and 12 monthly payments.

Luckily it was a pre-reg with 5 miles on the clock and about £7k off list price otherwise the hit would have been unbearable and I'd probably still be in it now.

 

[veeeight]

This is one of the downsides of a large deposit if you are a serial car changer, and change cars regularly before the end of a PCP term.

You will never see those deposits ever again.

(But, as Jassy says, it does help you sleep at night with smaller monthly payments)

 

[Bainie]

It makes no difference, as if he had paid no deposit then you would have to put money in the next one . High deposit&low payments or Low Deposit and high payments , all adds up to the same at the end of the day . The cars worth what it is worth , and you have paid what you have paid . Take one from tother and voila !

 

[DrEskimo]

It makes no difference, as if he had paid no deposit then you would have to put money in the next one . High deposit&low payments or Low Deposit and high payments , all adds up to the same at the end of the day . The cars worth what it is worth , and you have paid what you have paid . Take one from tother and voila !

Thank you!

Did you not see my post earlier in the thread (no. 40 something..). Putting in a bigger deposit makes no difference, even if you change early.

Paid off more with a bigger deposit, so you get back more at trade in. Pay less deposit and get less at trade in. Same amount of money changes hands.

I think if there is one thing you can take away from this massive thread is that 'deposits' are no indication of a deal without factoring in the monthly payments.

 

[veeeight]

It makes no difference, as if he had paid no deposit then you would have to put money in the next one . High deposit&low payments or Low Deposit and high payments , all adds up to the same at the end of the day . The cars worth what it is worth , and you have paid what you have paid . Take one from tother and voila !

You sure about that?

A serial car changer will have sunk say £4k, £4k, £4k into his 3 successive cars that he has changed 12 months per PCP. And we've seen the variance of the finance settlement figure vs value of the car.

Remember also that the residual balloon does not necessarily change proportionally on your deposit either.

The inference of a "deposit" is that you can get it back, in reality, you will never get it back, it's just the amount sunk into a car to reduce the monthly payments!

Taking a view of 3 successive PCP's for someone going from say an A3 to S3 to RS3, if you keep going back every 12-18 months to get another new car, then you will have to put down successive substantial deposits in order to keep these monthly payments under control (not to mention the amount to overcome the negative equity required). Your original "deposits" are lost.

 

[veeeight]

What a small "deposit" gives you is options - even if you don't run the full PCP term.

Lets say the car is £12000 and you look at a 3 year PCP with a GFV of £4000. Lets also say that the vehicle ends up being worth £4500 at the end, leaving you £500 equity (being positive).

Your two options are put £3,000 in, or put £200 in. In essence you are funding an extra £2800 at a low interest rate, and you always have your £2800 in the bank to use for a rainy day.

If you get to the end of the agreement and the you look at your options then you have £2800 in the bank, which will go a long way to buying the car for the GFV at £4000 if you want. You could use the £500 equity as a deposit on a new vehicle. The equity does not change no matter what you have put in as a deposit, and you have always got access to the £2800 if you ever need it. Put it down as a deposit, and yes less interest but you will never have access to that money again.

 

[DrEskimo]

What a small "deposit" gives you is options - even if you don't run the full PCP term.

Lets say the car is £12000 and you look at a 3 year PCP with a GFV of £4000. Lets also say that the vehicle ends up being worth £4500 at the end, leaving you £500 equity (being positive).

Your two options are put £3,000 in, or put £200 in. In essence you are funding an extra £2800 at a low interest rate, and you always have your £2800 in the bank to use for a rainy day.

If you get to the end of the agreement and the you look at your options then you have £2800 in the bank, which will go a long way to buying the car for the GFV at £4000 if you want. You could use the £500 equity as a deposit on a new vehicle. The equity does not change no matter what you have put in as a deposit, and you have always got access to the £2800 if you ever need it. Put it down as a deposit, and yes less interest but you will never have access to that money again.

But you are saving the difference in monthly payments between the high deposit amount and low deposit amount....so the £2800 is there just in a different form.

As you said before, the only two numbers that matter are the the settlement figure and the trade in value.

Putting in a larger or smaller deposit will not make you any better/worse off. It's just different. You pay exactly the same amount of money (more or less, slightly less with higher deposit).

In the same way the term 'equity' is misleading and shouldn't be used, the term 'deposit' is misleading and shouldn't be used.