Remapping on PCP

Kenai · 17 Mar 2018 at 18:38

muon said:
I'm not 100% sure that is true. Even if the loan is secured against the vehicle you are still the owner.

I don't think this is correct, whilst you may be the registered keeper, the owner will be the finance company until the point at which you pay it off.

My understanding is that it's a different setup to a mortgage, so it's not a loan secured against the car, they own the car and hire it to you.

muon · 17 Mar 2018 at 18:39

Kenai said:
I don't think this is correct, whilst you may be the registered keeper, the owner will be the finance company until the point at which you pay it off.

My understanding is that it's a different setup to a mortgage, so it's not a loan secured against the car, they own the car and hire it to you.

I think you both have a financial interest in the car. When that happens, just like in a house, the term "owner" becomes vague.

I think it is more a credit agreement or loan. Hence why there is an APR and falls under the same regulations. The balloon payment is even termed as a GFV, i.e. a value the finance company are promising to buy the vehicle from you back at wiping out any remaining loan. Otherwise you have to settle the loan yourself. Interest is calculated on the entire amount.

A lease with an option to buy I reckon would be different.

tamzzy · 17 Mar 2018 at 18:55

as an owner of a 428i, I'd suggest getting a 440i (new) or 435i (AUC)
(although 245hp isn't anything to be sniffed at lol - for day-to-day usage...)

I read somewhere that there were piston changes on the 420i vs the 428i, although they were both 2L N20 turbocharged engines with different maps.
this influenced my decision to get a 428i, rather than a 420i + remap thereby invalidating bmw warranty.
it's highly likely there would be some hardware difference with the B48 engines too, which i'd suspect, you'd be wearing something out faster with a remapped 420i compared to a 430i.

[TW]Fox · 17 Mar 2018 at 19:53

muon said:
I'm not 100% sure that is true. Even if the loan is secured against the vehicle you are still the owner?

No, you are not the owner and it's not like a mortgage. The finance company owns the vehicle and the documentation and terms of any offers clearly state 'You do not own the vehicle'.

There is no technically about it, until such time as you make the final payment on HP or elect to pay the balloon on a PCP it just isn't your car.

muon · 17 Mar 2018 at 20:03

[TW]Fox said:
No, you are not the owner and it's not like a mortgage. The finance company owns the vehicle and the documentation and terms of any offers clearly state 'You do not own the vehicle'.

There is no technically about it, until such time as you make the final payment on HP or elect to pay the balloon on a PCP it just isn't your car.

We'll see. Going through a PCP right now. Everything suggests I am the owner so far. The finance side looks exactly like a loan so far.

As far as BMW are concerned I am the purchaser and customer. Not BMW Financial Services, apart from the finance document nothing else would even give a clue that there is a PCP behind it.

200sols · 17 Mar 2018 at 20:14

You only own the car if you pay the baloon at end.

muon · 17 Mar 2018 at 20:16

200sols said:
You only own the car if you pay the baloon at end.

Similarly BMW Financial Services don't own the car unless they pay the GFV to wipe the loan and complete the contract. So who owns the car?

In a secured loan, the concept of who owns the car isn't as simple as that.

On Holiday · 17 Mar 2018 at 20:17

Just read my own PCP agreement from Honda;

"We agree to hire the Goods to you...."
"We own the Goods and until you buy them...."
"Tell the insurers that we are the owner...."

Doesn't mention not to modify it though(!)

muon · 17 Mar 2018 at 20:23

Plenty O'Toole said:
Just read my own PCP agreement from Honda;

"We agree to hire the Goods to you...."
"We own the Goods and until you buy them...."
"Tell the insurers that we are the owner...."

Doesn't mention not to modify it though(!)

BMW will happily fit M Performance parts on PCP cars afterwards for example.

Ownership is pretty unambiguous in your PCP contract though.

Kenai · 17 Mar 2018 at 20:28

Plenty O'Toole said:
Just read my own PCP agreement from Honda;

"We agree to hire the Goods to you...."
"We own the Goods and until you buy them...."
"Tell the insurers that we are the owner...."

Doesn't mention not to modify it though(!)

This is how I understand PCP to work, it's a hire purchase with a mechanism to reduce monthly payments by shuffling the majority of the repayment into one final lump.

That doesn't change its fundamental nature of being a hire purchase product, that being the finance company buy the vehicle and are the owners, with an agreement that you hire it for x months at an agreed rate, after which they will transfer ownership to you.

muon · 17 Mar 2018 at 20:32

Kenai said:
This is how I understand PCP to work, it's a hire purchase with a mechanism to reduce monthly payments by shuffling the majority of the repayment into one final lump.

That doesn't change its fundamental nature of being a hire purchase product, that being the finance company buy the vehicle and are the owners, with an agreement that you hire it for x months at an agreed rate, after which they will transfer ownership to you.

If as you say it is a hire purchase under a different name that would make sense. Going through an example document I have, there are actually a couple of lines which suggest it might be that, but then they might be generic lines to also cover PCH.

I should find out when I get the complete contract.

Kenai · 17 Mar 2018 at 20:36

It is hire purchase under a different name, it's just hire purchase engineered so you can pay £300 per month instead of £600 and then roll you into new deals every 3 years because no one wants to pay the final balloon amount.

muon · 17 Mar 2018 at 20:40

Kenai said:
It is hire purchase under a different name, it's just hire purchase engineered so you can pay £300 per month instead of £600 and then roll you into new deals every 3 years because no one wants to pay the final balloon amount.

I understand the mechanics I don't get why the balloon payment gets called a GFV if structured that way. No one is guaranteeing anything. It is simply the final optional payment. It's like if at the end of the lease the owner turned round and offered to sell you the car (although you own the option).

Kenai · 17 Mar 2018 at 20:47

muon said:
I understand the mechanics I don't get why the balloon payment gets called a GFV if structured that way. No one is guaranteeing anything. It is simply the final optional payment.

It's called that because if your GFV is £20,000 but after your 36 months of payments the car is actually only worth £15,000, you aren't expected to stump up this shortfall in value if you wish to simply hand it back. In that sense they guarantee the value.

Since they got burnt on this years ago though, now the GFV will almost always be a couple of thousand less than what they expect the value to be. This also means you have 'equity' in the car after the 36 months, which they'll encourage you to use as a deposit for your next PCP deal instead of just concluding the current deal by handing back or paying off.

muon · 17 Mar 2018 at 20:52

But the value of the car is irrelevant. It is a hire purchase with exactly defined payments. They could never have expected you to stump up any difference, you don't own a car + loan.

Obviously they do it in a way to ensure they don't lose money. But there is no guaranteed value in any hire purchase. I just think it is a poor term unless it was structured as you owning a car and a secured loan against it with a promise to purchase the car from you at £x..

Kenai · 17 Mar 2018 at 20:56

muon said:
But the value of the car is irrelevant. It is a hire purchase with exactly defined payments.

It's not irrelevant when it comes to encouraging you to take out your next PCP deal.

muon · 17 Mar 2018 at 21:00

Kenai said:
It's not irrelevant when it comes to encouraging you to take out your next PCP deal.

Why would someone's next PCP deal depend on the GFV? It could be a 20% residual or 50% residual for the GFV, it makes no difference other than affecting your monthly payments and you either build up significant equity or you don't.

What should someone be looking for? A high or low GFV? Most people look for high GFV but you likely build less equity that way (although if you save up from the lower monthly payments, then even then not much of a difference).

Kenai · 17 Mar 2018 at 21:07

Quick correction - you're right in that you wouldn't be expected to stump up any shortfall but the rest of what I was describing is why they use that terminology.

muon said:
Why would someone's next PCP deal depend on the GFV? It could be a 20% residual or 50% residual, it makes no difference other than affecting your monthly payments and you either build up significant equity or you don't.

What should someone be looking for? A high or low GFV? Most people look for high GFV but you likely build less equity that way.

It affects your next PCP because if you have lots of 'equity' due to the car being worth more than the GFV then they'll allow you to use this as a larger deposit on the next deal and reduce the monthlies on that. If you just hand it back though, you won't get that equity as a cash return.

So you get to the end of deal 1 and they're pointing at this £2000 you've 'built up' that you can use or lose, unless of course you are paying the final balloon to keep the car, where its irrelevant.

A high GFV will give you low monthlies, a low GFV will give you more 'deposit' if you're intending to stay in 3 yearly rolling PCP chain. They're unlikely to give you a very high GFV though because it encourages hand backs with no continuity into a new deal and they want your repeat business.

Edit - I don't claim to be an expert in car finances but it's definitely something to research carefully before committing to. They are designed to get you signed up into a perpetual repetitive purchasing situation that it becomes increasingly difficult to justify dropping out of because of the pseudo equity that the deals are structured to give you but is only 'real' if you keep taking new deals.

[TW]Fox · 17 Mar 2018 at 21:31

muon said:
We'll see. Going through a PCP right now. Everything suggests I am the owner so far. The finance side looks exactly like a loan so far.

As far as BMW are concerned I am the purchaser and customer. Not BMW Financial Services, apart from the finance document nothing else would even give a clue that there is a PCP behind it.

From BMW themselves on the terms of the BMW select product:

'We remain the owner of the vehicle during the agreement '

Put simply you are wrong. The finance company owns the vehicle. There is no ambiguity, it really is that simple.

ExoMale · 17 Mar 2018 at 23:18

dont buy a car if you not happy with the performance, going from a 200hp light fiesta hatch to a heavy 2ltr coupe was never going to be a huge impact really just because its a well handling rwd car.

admittingly my first finance car when i was 20 i did alter, but aftermarket audio system, cone filter, 17" alloys within the first couple years of a 4yr contract, but i managed to pay off the car before the end so was no problem.