Financing your Macan

All Porsche Macan Related Discussion
GMAN75
Posts: 463
Joined: Wed May 09, 2018 11:21 am

Post by GMAN75 »

PaulR wrote: Mon Dec 17, 2018 7:50 pm Here's a real example showing the difference in financing a car on PCP versus a repayment loan. It assumes a £70K car, a £10K deposit and a 9.6% interest rate over four years (as quoted from a Porsche dealer). Also a £36,000 GMV.

The point of this is to illustrate just how expensive PCP is versus other types of loan - even when the interest rate and other parameters are the same.

PCP
Price: £70,000
Deposit: £10,000
Financed amount: £60,000
- Interest only portion: £36,000
- Repayment portion: £24,000
Monthly cost: £902
- Interest only portion: £288
- Repayment portion: £614
Total payable (excluding final payment): £52,424
Final payment: £36,000
Total payable (including final payment): £88,424
Total interest: £18,424

Repayment/HP
Price: £70,000
Deposit: £10,000
Financed amount: £60,000
- Interest only portion: £0
- Repayment portion: £60,000
Monthly cost: £1,536
- Interest only portion: £0
- Repayment portion: £1,536
Total payable (excluding final payment): £82,222
Final payment: £0
Total payable (including final payment): £82,222
Total interest: £12,222

So PCP costs £902 pm with total interest payable of £18,424. The repayment is £1,536 pm with total interest payable of £12,222.

The PCP looks cheaper if you only focus on the monthly amount. But you pay much more in interest. Not only that, you end up with nothing at the end of the term. If you want to buy the car, you need to find £36,000. The worst thing you could possibly do is finance that, as you'll pay even more in interest.

Which is why most people, once on a PCP deal, are stuck on them car after car. All other options considered, it really is a terrible way to finance a car.

As has been mentioned, those of us with the cash to buy outright might want to finance on the basis our cash (or investments) can earn more than the car interest. When compared to a repayment (or HP), then it's a case of ensuring our cash is getting a higher interest rate. However, when compared to PCP, as I've alluded to above, our cash needs to get a significantly higher rate in order for it to work out better.
Not to be picky, but your PCP example ignores completely your mileage which then significantly affects your balloon which then significantly affects your monthly payment which then significantly impacts your deposit. PCP has a lot more flex than you give it credit for.

Deleted User 1874

Post by Deleted User 1874 »

GMAN75 wrote: Tue Dec 18, 2018 10:51 am
PaulR wrote: Mon Dec 17, 2018 7:50 pm Here's a real example showing the difference in financing a car on PCP versus a repayment loan. It assumes a £70K car, a £10K deposit and a 9.6% interest rate over four years (as quoted from a Porsche dealer). Also a £36,000 GMV.

The point of this is to illustrate just how expensive PCP is versus other types of loan - even when the interest rate and other parameters are the same.

PCP
Price: £70,000
Deposit: £10,000
Financed amount: £60,000
- Interest only portion: £36,000
- Repayment portion: £24,000
Monthly cost: £902
- Interest only portion: £288
- Repayment portion: £614
Total payable (excluding final payment): £52,424
Final payment: £36,000
Total payable (including final payment): £88,424
Total interest: £18,424

Repayment/HP
Price: £70,000
Deposit: £10,000
Financed amount: £60,000
- Interest only portion: £0
- Repayment portion: £60,000
Monthly cost: £1,536
- Interest only portion: £0
- Repayment portion: £1,536
Total payable (excluding final payment): £82,222
Final payment: £0
Total payable (including final payment): £82,222
Total interest: £12,222

So PCP costs £902 pm with total interest payable of £18,424. The repayment is £1,536 pm with total interest payable of £12,222.

The PCP looks cheaper if you only focus on the monthly amount. But you pay much more in interest. Not only that, you end up with nothing at the end of the term. If you want to buy the car, you need to find £36,000. The worst thing you could possibly do is finance that, as you'll pay even more in interest.

Which is why most people, once on a PCP deal, are stuck on them car after car. All other options considered, it really is a terrible way to finance a car.

As has been mentioned, those of us with the cash to buy outright might want to finance on the basis our cash (or investments) can earn more than the car interest. When compared to a repayment (or HP), then it's a case of ensuring our cash is getting a higher interest rate. However, when compared to PCP, as I've alluded to above, our cash needs to get a significantly higher rate in order for it to work out better.
Not to be picky, but your PCP example ignores completely your mileage which then significantly affects your balloon which then significantly affects your monthly payment which then significantly impacts your deposit. PCP has a lot more flex than you give it credit for.
True, it doesn't show the mileage on that PCP. But looking at the quoted residual, I'll bet it's no more than about 10K miles per annum and so there will be an additional cost/mile for excess mileage making it even more expensive. But yeah, mileage does need to be taken into account when considering PCP.
User avatar
goron59
Posts: 5788
Joined: Sun Aug 09, 2015 10:15 am

Post by goron59 »

I always thought PCP/finance is for people that can't actually afford the thing in the first place.
But if your money is illiquid or better off tied up elsewhere, then it's fair option.
Cash will generally be cheaper though.
Used to have 2016 Macan Turbo PHCKCL70
Previously a 2014 Macan Turbo.
Now a 2021 Tesla Model 3 LR
User avatar
PaulR
Posts: 436
Joined: Sat Dec 15, 2018 11:22 am
Location: Scotland

Post by PaulR »

GMAN75 wrote: Tue Dec 18, 2018 10:51 am Not to be picky, but your PCP example ignores completely your mileage which then significantly affects your balloon which then significantly affects your monthly payment which then significantly impacts your deposit. PCP has a lot more flex than you give it credit for.
It's from an Excel spreadsheet so I can change any of the inputs, including the balloon payment. This particular example was just to illustrate how PCP has a much higher cost than a traditional loan or HP.

My own opinion though is that PCP is the finance of the devil! I reckon most people don't really understand how expensive it is. Or they don't care. Car dealers love it because they sell more cars. Customers love it because they can 'buy' cars they cannot otherwise afford. Finance companies love it because they make loads of money out of the customer.

However, I wouldn't be surprised if PCP becomes the next mis-selling scandal. It will give the PPI companies something to do once the deadline for PPI claims has passed!
Current - Macan III GTS
Previous - Macan II GTS, Macan I GTS
dvearn
Posts: 29
Joined: Sat Jun 15, 2019 5:33 pm

Post by dvearn »

Peteski wrote: Fri Dec 14, 2018 10:28 am
Pivot wrote: Fri Dec 14, 2018 7:42 am
My objective is to keep the car for the next 10 years, but when my guard is down, another new car might leap at me after 4-6 years.
Cash buy is your cheapest option in the long run and gives you the most flexibility in when to sell. Only downside is tying up a load of cash at the very start, all the way until you eventually sell it.

PCP finance is very popular and gives you a guaranteed minimum residual value at the end of the term, typically 3-4 years. It's not so good if you intend to keep the car any longer as you would have to pay up or re-finance the large balloon payment at the end. There's also the cost of the finance interest of course. The only time I've gone down this route is when manufacturers have been heavily subsidising the interest rate (like down to 1 or 2% APR, which I've never seen with Porsche). Otherwise it tends to work out expensive compared to a straight cash buy.

Straight forward hire purchase finance is the other obvious choice, which would probably work out better than PCP if you intended to keep the car long term. But all depends on the comparative interest rate. Manufacturers tend to favour PCP, so those deals are sometimes more subsidised, but Porsche finance tends to be expensive.

The maths is easy enough in all cases. With a Porsche I've never seen any point in taking their expensive finance unless you don't have enough cash to buy outright.
The other consideration is if your capital is making more than the PCP interest. So whilst it might gall you paying 7% on Porsche finance, it’s better than taking cash out of a well performing Stock, for example.
Why not shop around for an independent car finance offer, I’ve found one for 2% less than Porsche were offering.
User avatar
Wing Commander
Posts: 19876
Joined: Tue Oct 06, 2015 5:43 pm
Location: Wiltshire

Post by Wing Commander »

^^^ That’s what many of us did - Clydesdale and other companies with flat rates & APRs much lower than Porsche/VW finance.
Simon

Sold: 2016 Rhodium Silver Macan 2.0
Sold: 2013 Platinum Silver 911 (991.1) C2
Sold: 2017 Carmine Red Panamera 4
Mine: 991.2 Carrera T Racing Yellow 06/04/2018
lgb1969
Posts: 25
Joined: Tue Jun 25, 2019 10:16 am
Location: Stonehaven, UK
Contact:

Post by lgb1969 »

Tescobank is 3% APR for £25k just now and 7% APR for >£25k which is just below the standard 7.4% that Porsche Financing is offering just now.
The problem I have with PCP is that you have to pay the full interest on the Balloon Payment with no scope to overpay which the HP offers allow you to do. I can understand why some people think this will come up as mis-selling but I think they are pretty clear on explaining that and hence why I shy away from it as you are paying 7.4%APR on a big whack of money (usually £30k+) for a set period of time. Only options are to pay the Balloon or use the capital between balloon payment and what the car is still worth to fund your next PCP deposit - the salemen are there to make it sound like a brilliant setup in which you never lose but in effect you are paying lots of interest and have no asset to show for it at the end.
This is great if that is what you are looking for but if I am paying serious money for 3 to 4 years then I want to know I have at least something to show for it at the end even though the depreciation will probably not be too far off the interest you pay so it really is swings and roundabouts - depends your financial strategies but either way you are never going to "make money" on a depreciating asset.
MY20 Cayenne E-Hybrid S - Quartzite Grey Metal
MY17 Macan SD - Volcano Grey (Sold on)
neilj007
Posts: 397
Joined: Sat Oct 28, 2017 6:22 pm

Post by neilj007 »

You can repay early....you should have the option to either reduce monthly payments, reduce the term, or reduce the balloon
Macan
Taycan Turbo
lgb1969
Posts: 25
Joined: Tue Jun 25, 2019 10:16 am
Location: Stonehaven, UK
Contact:

Post by lgb1969 »

Ok - agree to differ in that if I want to repay early or get an unexpected lump sum I just have to credit transfer it - with PCP you need to go back and renegotiate with OPC as you explain above
MY20 Cayenne E-Hybrid S - Quartzite Grey Metal
MY17 Macan SD - Volcano Grey (Sold on)
User avatar
Paul
Posts: 8603
Joined: Fri Sep 05, 2014 6:19 pm
Location: Bristol
Contact:

Post by Paul »

lgb1969 wrote: Thu Jul 04, 2019 12:30 pm Ok - agree to differ in that if I want to repay early or get an unexpected lump sum I just have to credit transfer it - with PCP you need to go back and renegotiate with OPC as you explain above
..or just talk directly to the finance company; that’s all the dealership will do - it’s not their money. There’s no negotiation involved during the contract and early redemptions etc are highly regulated with “ penalties” strictly forbidden.

Talk of PCP on this forum is really to misunderstand the true, original target audience. We (forum members) probably represent the top 1/2 % of the car buying public. PCP was devised by manufacturers and their finance arms to sell more new cars, more often to more people.

Monthly payments are key to a significant majority of the population and it was the attractive contrast between typical 4 or 5 year on a a 3 year old used car compared with similar monthly payments on a brand new car that led to the success and popularity of PCP. The additional overall cost, clearly explained at point of sale (but probably not understood by many) was not a factor in the choice.

A bit like renting your house or paying a mortgage; low deposit and low monthly payments mean you get the use of the house but never own it - just like PCP.
1st Sapphire SD
2nd Sapphire GTS
viewtopic.php?f=23&t=4296
Current 992 S Cab
viewtopic.php?f=23&t=9845&p=196465#p196465
Post Reply

  • Similar Topics
    Replies
    Views
    Last post