Car PCP Example

Gangster

Gangster

Gangster

Soldato
Joined
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Hi all,

Take for example, a BMW 4 Series.

Deposit: £5,599
Monthly: £309
Term: 48 Months

Benefits of a PCP being that after the term is up, you can 'change into' a new car. My question is, lets fast forward 4 years. New 4 series (for example). Would I need to cough up an additional £5,599 deposit plus £309 of monthly payments again?

Or would it be, you can upgrade your 4 series if you would like to for £320 per month with no deposit needed.

Is that scenario realistic of what happens, generally? Or are people coughing up £3-6k for these cars each renewal?

Thanks
 
It depends how well the manufacturer has forecast the GMFV and how accurately you estimate your annual mileage that determines whether you'll have any equity in the car at the end of the term.

Typically the deals tend to be set up so that you'll have a small amount of equity at the end, but you're not likely to have anything like your deposit amount back to put towards the next car. This is how manufactures keep you tied in, because they'll say "for just an extra £xx per month we can get you into a brand new car".
 
The "trick" to PCP is keeping the deposit low (look for manufacturer deposit contributions), and getting the GMFV right (combination of anticipating if the car will be in desire come the end of your term, and making sure you over-estimate your mileage a bit).

I was almost £4k in equity when my A4 went back.

It's still not going to have a lower TCO than either HP or buying outright, but will cost you less per month and has the potential for you to have at least "something" left at the end (ie a small amount of equity).

Leasing will cost less per month, but you never actually "have" anything.
 
As others have said, if you want to 'not pay' a deposit again at the end of the term, you have to rely on having equity in the car.

So in your example; when you come to px the car, you will owe let's say £15000 on the car to the finance company. If the car is worth £17000 then the difference is yours to put against the new car. If however, the car is only worth £15000 then you'll have to either find a deposit yourself or take out a new finance arrangement with no deposit (and higher payments).
 
You never actually 'have' anything with a PCP, you borrow more, pay interest on it then get it back later.....

PCP is all about getting a car for a lower monthly cost at the expense of overall cost.
 
Last edited:
Gangster said:
Or would it be, you can upgrade your 4 series if you would like to for £320 per month with no deposit needed.
Click to expand...

If they want you're car for whatever reason then yes, they might/will ring you up halfway through you're PCP term and make an offer.

I had got a used mk2 TT diesel on PCP and when the Mk3 TT came out I was offered one with near identical spec for the same price per month. However definitely don't let them talk you into, only change if that is truly what you want and don't accept the first offer/deal the garage give you.

They act like they are doing you a favour...but actually its the other way round. :o :p
 
In as far as he's getting some money back vs his payments over the term. But it's not always the case you'll get anything 'back', it's not like a deposit you get returned at the end of the deal.
 
Exactly, I mean, we don't know the figures here, but if you paid £4k deposit and the car was worth £4k more than the GFV, then you've not got equity at all. You've got your deposit back. If it was worth £8k more, then we're talking.
 
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