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Agility finance

Discussion in 'General Mercedes-Benz Related Discussion' started by skyeceltic, Jan 23, 2011.

  1. hawk20

    hawk20 Senior Member

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    Arguing with you Rory is like shooting at a goal that keeps moving. Instead of accepting that the point you made was not valid you make another point entirely.
     
  2. Jamboo

    Jamboo Active Senior Members

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    E200 SE - 2012
    Thanks Hawk
    As I say, its just the GFV that is making me wary, what will a E200 CDI SE be worth in 3 years with 60k on the clock...will there be enough to help a chunk of the next deposit..??...gamble as no-one knows what the market will be like in 3 years I guess.

    Need to make a decision now as I said I would get back to the dealer tomorrow to get the car for start of next week if I am doing it....
     
  3. television

    television Always remembered RIP

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    Your Mercedes:
    2002 SL500, 216 CL500, all fully loaded
    Prices have fallen faster this year that I can ever recall,,,,3 years is a very hard prediction
     
  4. hawk20

    hawk20 Senior Member

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    My view is that you don't need to worry about the residual in 3 years time. That is the beauty of a PCP deal. They are guaranteeing you a residual in 3 years time. They take the risk.

    But you probably need to save for a deposit in three years time. You may be lucky and get a part ex value above the GFV but probably best not to bank on it.
     
  5. Xtractorfan

    Xtractorfan Senior Member

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    Before this thread started I was completely sane and knew all about finance ..now I'm on the waccy baccy and 2 bottles of vodka a day and totally confused ..
    Would I be better paying cash for my addictions or taking out a PCP ..Oh someone just told me that PCP is a drug as well ha..
     
  6. Jamboo

    Jamboo Active Senior Members

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    Cheers, when I say worry...I mean will there be any money left on it to put towards another deposit, as you say there may be ...may be not...dealer at least takes the car if the bottom has fallen out the market by then.

    Think I will go for it, it is a company opt out as well so they are making the payments to me [only downside is my E class is paid off so the current car payments to me have been like a wage rise so will have to adjust living expenses back to what they were...!!]

    Ta for all the info chaps
     
  7. Xtractorfan

    Xtractorfan Senior Member

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    What you have to do with all finance deals is first and foremost make sure you can afford them... then ask lots of questions.. Remember another dealer of a different brand will always give you a good insight into the deal you are looking at..then try and sell you his ..its a good reference point for picking up the downsides of any deal..
     
  8. sw20gts

    sw20gts Member

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    NISSAN GTR
    Well lucky I didn't trade my car in for £28k as it seems the value of the car has slightly appreciated with all the interest in GTRs. I know of a similar (albeit non nav/older but lower mileage) GTR selling for just below £40k!

    Imagine the markup the dealer would have and combined with the commission/profit from the lease deal...
     
  9. wi-fi

    wi-fi Senior Member

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    Nice to see some MODERATIONS been carried out:D
     
    Last edited: Aug 31, 2012
  10. Jamboo

    Jamboo Active Senior Members

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    Well....the bullet has been bit..
    Went for the 3 year PCP on the E class....pick it up tomorrow

    You're only young [ish] once so why not......:cool:
     
  11. MBDevotee

    MBDevotee Active Senior Members

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    RIGHT:-

    It's pretty clear that some people understand a PCP and some don't so I'll try and help and throw in my four-penneth....

    Firstly I was a Business Manager (for which read Finance and Warranty salesman at Peugeot when PCP's (Called Passport with Peugeot but they are all called something different) came out) so I know a bit about the principles behind them.

    If you understand a PCP you can make them work for you, but always understand why the dealer pushes them so hard.

    Ok - Firstly lets remove a myth.

    No car finance is in any way similar to any kind of Mortgage for the simple 2 reasons that
    a) Over the life of the loan (that's important) a car will be worth a lot less at the end than when you buy it whereas a house should be worth more, often far more.

    and

    b) You HAVE to have a roof over your head, so for many / most a mortgage is essential whereas a brand new (or nearly new) car is a pure indulgence (nothing wrong with that if you can afford it)

    So lets do some examples:-

    If the car is £30,000 and you put down £3000 you are borrowing £27000 - someone here said you are only borrowing the balance less the GFV - you are NOT, you are borrowing the full balance, but the repayment of the GFV is deferred to the end (normally month 36) instead of being spread throughout the loan (hence the potentially lower repayment).

    So why do the dealers push PCP so hard (often with subsidies etc)? It's about control. If you buy a car on HP, or Cash, the dealer sees you at point of sale, and then perhaps for servicing, but they have no control over you at all. You are free to go anywhere for your servicing, you can keep the car as long as you like and you can sell it whenever you want (assuming if it's on HP you settle off the finance first).

    This is bad for car dealers. Yes you might come back when the car is 3 years old, but then again you may not, so a cracking scheme was developed where the dealer forces you to make a decision at 2 or 3 years old. Whilst they cannot force what decision you make they can write to you when you're about 3 months away (re-establish contact with customer) and explain most kindly your options, and also suggest that perhaps that shiny new car that you saw the other week sitting on the forecourt might just be available to you at minimally more than you're currently paying and why don't you just pop in to see them.....

    But how can they force you to make that decision? Simple, bundle up all the remaining payments of a 5 year deal into one nice big shiny lump sum that falls due on month 36 (or 24). Most people don't have £4000 (or lets be honest with Merc more like £12000) sat waiting in a bank account, so they have to go with the other options available to them.

    The monthly payment on a 5 year HP agreement would be almost identical to the payment on a 3 year PCP BUT that wouldn't suit manufacturers so they often "adjust" the parameters to make PCP more attractive than HP. raising GFV's, subsidsed deposits and APR's etc - PLUS a "3 year deal" is more attractive to buyers than a "5 year deal" even though few bother to work out what those other 2 years HP payments would come to if you wanted to settle at 3 years - that is a calculation you must ALWAYS make.

    I am not saying a PCP is bad - given subsidised APR's and Manufacturer support, they can be excellent, but you have to make them work FOR YOU.

    Rules of a PCP.

    1) At the end of the term, the car will usually be worth a little bit more than the GFV. The difference between the cars value and the GFV is your deposit on the next car - therefore do not be fooled that paying more deposit will lower your monthly COST it will NOT. It will lower your monthly PAYMENT - that is not the same.
    e.g – Car £30,000 deposit £3000 = Payment of £495 per month (totally made up figure for this example)
    Dealer tells you that by paying a £10,000 deposit instead your monthly payment will drop to £299 which is far better – right??
    NO – no different, because at the end of the agreement your car will be worth the same and the GFV will be the same, so your deposit on the car will be the same – so the car has cost you the deposit and the monthly payments, and I can assure you that these two figures on the two deals will be exactly the same bar a few pounds interest difference – on the car with the higher deposit, the payments plus the lost deposit will be the same as the payments would have been.

    Why is this important? Simple – If you put down the £3000 the monthly payment is paying the depreciation – but if you put down the £10,000 then the payment is totally unrepresentative of the TRUE cost of motoring in that given car. Come the third year (and we had this a LOT) the customer is told that they have £3000 equity (for example) so if they want to drive an equivalent car they need to find another £7000 deposit, their payments will almost double or they will have to give up that nice creamy CLK V6 and settle for an A Class with a 1.0 engine and wind up windows (ok I exaggerate but you get my point). When I was doing this for Peugeot, and we got the GFV’s BADLY wrong, I had a customer driving a 406 Coupe 3.0 for £199 per month (he’d paid a £12,000 deposit, his GFV was £12,000 and the car had been £36000). When he came to renew, his car was worth £11,000 so he had no deposit at all. He couldn’t see where on earth his £12,000 deposit had gone (he’d thought he’d automatically carry the same deposit through to the next deal) and ended up having to pay £399 per month to drive a 306 2.0TD fairly basic model. He’d lost his deposit – his life savings – and had really only got about £200 per month to spend on a car – he had bought way beyond his means and it had bitten him hard.
    When I was selling finance we used this lower payment to sell more profitable cars.
    So we’d have someone come in with decent equity, they’d have a budget of say £400 per month which on HP would get them a decent mid-range 306 or a basic 406. We could put them in a top of the range 406 Exec with all the toys and probably be below their monthly budget, but they lost all (or most of their deposit) – we even called it “deposit burn” it was so common.
    Just because you can afford the payment doesn’t mean you can afford the car.
    To make it clear, I am not knocking Peugeot or Mercedes here – every single manufacturer does this now – I am merely using them as examples.

    2) Do not think that because the payment is lower, the cost is lower. As mentioned above, just because the monthly payment is lower do NOT assume that you can run a more expensive car than you could on HP if you use a higher deposit..... However, if you are using a sensible deposit (for a PCP around 10%) then you can afford to run whatever your monthly budget will stretch to (don’t forget to allow for the other costs – fuel etc).
    3) You will still pay for depreciation – therefore, OVERALL, buying an ex-demo or lightly used will be cheaper than new – unless you can work out for yourself that what you save in interest will be significantly more than what you pay in depreciation on the new car vs a nearly new. For example, if a new one costs £40k, and you put £10k down and the GFV is £15k then your PAYMENTS may be lower than a used one costing £30k with £10k down on a 3 year deal with a £9k GFV – however believe me, a 1 owner 3 year old car will not be worth £6k more than a 3 and a half year old car with one owner + a dealer demo (for example) so you will have a LOT more deposit next time round buying the used one....
    4) Don’t be fooled by subsidised finance rate on a new car vs lightly used. If you’re being offered 6% APR on a new one on a PCP on a new car, you should be able to get 8% APR from a high street lender to use on a nearly new one. 2% APR difference on a £20k loan over 3 years is only around £5-600, the rest of the difference in payments is the higher GFV (which you still owe don’t forget) – A nearly new car will have lost an awful lot more than that in depreciation already....
    Other things to be mindful of.

    Glass’s guide – if a salesman shows you a GG to show you what your model should be worth in 3 years time, don’t forget that to achieve GG top book price your car will need Leather, Nice Alloys and Metallic Paint – if you’re getting a PCP quote remember your car may be worth less than book without these choice extras – add them in, and there’s another £50 per month.

    Overall then am I against PCP??

    No, but only if the purchaser enters into it FULLY knowing what the heck they are doing – if they don’t then they will almost certainly get a nasty shock come three years hence....
     
  12. Peter De La Mare

    Peter De La Mare Senior Member

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    Nice explanation, thanks for typing it up. :)
     
  13. Jamboo

    Jamboo Active Senior Members

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    Cheers, thats the only sticky point, what will happen in 3 years....but I believe you can't worry too much about it, life is really too short.

    May be an age thing, I have just hit 40...!!
    Anyhoo, it's done and I will bring a nice shiny piece of metal home tomorrow that my compnay [opt out] will pay....just hope I can keep my job for the next 3 years at least now..!!
     
  14. sw20gts

    sw20gts Member

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    Very nice explanation, thanks MBDevotee! Sounds like PCP would be good for someone who changes car often and picks the right car with right specs :)

    Still I believe the PCP "offer" given to be has too high an APR though now once I start to shop around...
     
  15. Fady

    Fady Member

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    E350 CDI Sport S212 Estate
    Very informative post by MBDevotee. I'm old fashioned in my views and with the wholesale offer of PCP everywhere you look, I just smell a big fat rat and can't believe anyone is out to do me a favour without at the same time somehow lining there pockets. No such thing as a free luncjh and if it's too good to be true then it is! I stick to my principle of buying nearly new - letting someone else take the hit as regards depreciation and VAT on the new car, and not going anywhere near dealer finance but making my own arrangements. But then we are all different, and each to their own. Still have a nice and shiny well appointed car on my drive and no one to tell me how many miles I am allowed to drive it :)

    SW20GTS - I used to have one a bit like that. A Jap import turbo. Loads of fun!
     
  16. Dringo

    Dringo Senior Member

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    Your Mercedes:
    G230 > C240T > SL320 > CLK320 > A180CDi > E320CDi
    Thanks for the excellent info above.
    I had an MB agility PCP 4 years ago and will never do again.
    It worked ok for me (i had a nice A-Class) but the MB Finance guys screwed me over for another 800 on return of a very nice car based on small print abt what was not wear and tear.
    I had to resist and got some concessions but those MB folk are nasty and go legal very quickly.
    Never again.
    Advice - keep your deposit small because you lose it. Watch out for car park dings! And video the condition of the car when you return it.


    Sent from my HTC Desire HD A9191 using Tapatalk
     
  17. orb the Impaler

    orb the Impaler Senior Member

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    Your Mercedes:
    2012 SLK 250 CDi AMG | Volvo V70 2.5T AWD | MV Agusta F4 | 1999 YZF-R1
    The post above is interesting and I'm pretty shocked at the figures - 12000 deposit up in smoke :shock:

    I look at the overall cost of running the vehicle.
    My SLK cost me just over 1200 deposit and is 400/month for 2 years at 15K miles/pa.
    (3+23).

    400 a month is less than I had been lashing out for parts for my SL500 (by some margin) - and for that I have peace of mind - and I'm saving a considerable amount in fuel (half the cost).

    At the end of the 2 years I can give the car back. Whether or not I have enough over the GFV to put toward the deposit on another car is not really a big issue - 1200 is hardly 12000, is it?

    I honestly cannot see the disadvantage in the finance I've got. I've got a spiffy shiny new car, it has a warranty (no more SL500 sleepless nights! - I cannot tell you how much having that warranty means to me), my money is in the bank and here's the big one: I don't have to worry about selling it! I never ever get anything close to the book value of cars or bikes when I sell them - and they are always immaculate, FSH etc. So there is another few thousand pounds to put into the equation.
     
  18. Rory

    Rory Senior Member

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    I don't know what went on with the SLK but there were some astonishing deals around - business lease for £185/mth etc.

    Mercedes UK must have over-ordered them, or something.
     
  19. lwbnick

    lwbnick Senior Member

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    In a double dip recession, how else can they "sell" cars here other than knocking them out on cheepo contract rental deals?
     
  20. Frontstep

    Frontstep Senior Member

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    Well I have read some of these posts and got some good tips, mainly I have worked out I need a forensic accountant and a seer to buy a new car on finance.
     

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