Porsche PCP calculations

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Miopyk
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Post by Miopyk »

Why do you think ICE car values will tank in the next 3-4 years which is I assume how long you will finance the car for? If anything I think it's more likely the ownership model will change more rapidly to renting/leasing rather than buying through HP/PCP but I can't see that or the growth in EVs on the roads having much of an impact on the market over that period or probably a lot longer.
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kmacuk
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Post by kmacuk »

I think I will be in a stronger position when I look to change if I don’t have a take it or leave it GFV depending on my next car choice. I have spoken to dealers and they indicated that a 15% over GFV was not unusual, however this is not a given so if the dealer decides not to go to the max, if I own the car and can go elsewhere I can negotiate the best trade in value or sell it and I think this gives me a stronger position - maybe not.
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PaulR
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Post by PaulR »

MCDK wrote: Sat Jan 25, 2020 10:07 am Why do feel you have more negotiating ability at car change time with a self financed car rather than PCP. The car is worth whatever it’s worth no matter how it was initially paid for and at that stage of no interest to the dealer how it was paid for as it’s just either they pay you for the car or your finance company.
Because after three/fours years of screwing you over a PCP contract, the dealer will try and screw you again at the end of contract. If you look to change the car, the dealer will offer you more than the GMV but less than the car's actually worth.

This happened to a friend last week. His car had a GMV of £7,000. The dealer offered him £8,500, and suggested that was great as he had £1,500 equity to put towards the next car. However the car is actually worth £12,000.

Luckily he's able to buy the car for £7,000 cash, and sell privately. However, many people on PCPs these days aren't in the lucky situation to do this. You're getting shafted if you just hand the car back to the finance company. And you're getting shafted if you 'trade in' as the dealer won't offer you what it's really worth.

As I've documented elsewhere, PCP is full of issues from beginning to end. It's without doubt the most expensive way to run a car.
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kmacuk
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Post by kmacuk »

PaulR wrote: Sat Jan 25, 2020 6:12 pm
MCDK wrote: Sat Jan 25, 2020 10:07 am Why do feel you have more negotiating ability at car change time with a self financed car rather than PCP. The car is worth whatever it’s worth no matter how it was initially paid for and at that stage of no interest to the dealer how it was paid for as it’s just either they pay you for the car or your finance company.
Because after three/fours years of screwing you over a PCP contract, the dealer will try and screw you again at the end of contract. If you look to change the car, the dealer will offer you more than the GMV but less than the car's actually worth.

This happened to a friend last week. His car had a GMV of £7,000. The dealer offered him £8,500, and suggested that was great as he had £1,500 equity to put towards the next car. However the car is actually worth £12,000.

Luckily he's able to buy the car for £7,000 cash, and sell privately. However, many people on PCPs these days aren't in the lucky situation to do this. You're getting shafted if you just hand the car back to the finance company. And you're getting shafted if you 'trade in' as the dealer won't offer you what it's really worth.

As I've documented elsewhere, PCP is full of issues from beginning to end. It's without doubt the most expensive way to run a car.
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Post by MCDK »

But you have plenty of choices at the end. You guys are talking as if you are forced to trade I n your PCP car to the supplying dealer for whatever they offer you. That is very far from the truth. You can sell private or trade to another dealer whatever you fancy and so long as you pay Porsche finance whatever the figure is that is all good. As regards the getting shafted on a trade in that is dealer policy and won't matter whatever way your car was bought.

And of course you are negating the upside of PCP in that their is a guaranteed final value. Yes underwriters do rarely get it wrong but unexpected crashes do happen as did occur back at the start of the financial crisis with fuel hungry 4x4 vehicles crashed in value. There were many returned at that time worth way less than their GFV and the financiers took the hit not the drivers. I bought a total bargain X5 at that time in a BMW Finance auction.
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PaulR
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Post by PaulR »

Ideally you want the GMV as low as possible, as that reduces the TCO. The less the GMV, the less interest you will pay. Make the GMV £0 for the least amount of interest!!
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Post by jk88 »

PaulR wrote: Sat Jan 25, 2020 7:29 pm Ideally you want the GMV as low as possible, as that reduces the TCO. The less the GMV, the less interest you will pay. Make the GMV £0 for the least amount of interest!!
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Post by mcnallys »

jk88 wrote: Mon Jan 27, 2020 6:50 am
PaulR wrote: Sat Jan 25, 2020 7:29 pm Ideally you want the GMV as low as possible, as that reduces the TCO. The less the GMV, the less interest you will pay. Make the GMV £0 for the least amount of interest!!
AKA Hire Purchase?
This is the best dealer option I think, big deposit, GFV not an issue was car will be kept. Monthlies manageable and it seems you can pay chunks to clear it - all meaning less interest.

Can you stipulate zero GFV? Does mileage matter if a keeper, lower better for the interest?

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Post by Alfanut »

PaulR wrote: Sat Jan 25, 2020 6:12 pm
MCDK wrote: Sat Jan 25, 2020 10:07 am

As I've documented elsewhere, PCP is full of issues from beginning to end. It's without doubt the most expensive way to run a car.
100% correct. Porsche still get their profit, the dealership gets their profit, the salesman probably makes even more if you opt for finance and of course the finance company don’t provide the service for free.

However the original post does pose an interesting question about where 2nd hand prices will go. I suspect the poster is actually correct but that at some point ICE 2nd hand prices will plummet, but I doubt if the time frame of that happening will even remotely affect the price of his nice Macan turbo in 3 years. Going short on future 2nd hand prices is a bit of a long shot.
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Miopyk
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Post by Miopyk »

Alfanut wrote: Mon Jan 27, 2020 4:28 pm
PaulR wrote: Sat Jan 25, 2020 6:12 pm
MCDK wrote: Sat Jan 25, 2020 10:07 am

As I've documented elsewhere, PCP is full of issues from beginning to end. It's without doubt the most expensive way to run a car.
100% correct. Porsche still get their profit, the dealership gets their profit, the salesman probably makes even more if you opt for finance and of course the finance company don’t provide the service for free.

However the original post does pose an interesting question about where 2nd hand prices will go. I suspect the poster is actually correct but that at some point ICE 2nd hand prices will plummet, but I doubt if the time frame of that happening will even remotely affect the price of his nice Macan turbo in 3 years. Going short on future 2nd hand prices is a bit of a long shot.

That was my point too. If there was even a hint that future values were going to plummet you can bet the finance companies would have reflected that in the GFVs already which so far they haven't.
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