PCP Ends Then...?

rhud

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Almost a year to the end of the 3 year PCP deal (my first) on my A Class - but already I am beginning to think about what happens then. As a low mileage owner (5k per annum) the obvious answer is to stump up the guaranteed future value sum to own the car.

Is it as simple as that - or are there alternative arguments?
 

*Thumper

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If you think the car is worth more than the final payment ............. have it ! ... or you can just hand the keys over and get another one.

Alternativly, your dealer will offer the difference (if it's worth more) .....and you can use the equity to offset against the next car ...... in one transaction.
 

Alex M Grieve

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Almost a year to the end of the 3 year PCP deal (my first) on my A Class - but already I am beginning to think about what happens then. As a low mileage owner (5k per annum) the obvious answer is to stump up the guaranteed future value sum to own the car.

Is it as simple as that - or are there alternative arguments?

If you like it, and you know it, and it is reliable and low mileage then it should be worth more than the agreed final value, especially to you, so keep it.

That is the benefit of AFV. Any other computations, even if the dealer does offer you more, will certainly benefit the dealer. If it suits you, then it is your choice, but in the situation you are in, keeping the car sounds best.

If, on the other hand, the low mileage and good condition would still price it on the open market at less than the AFV (and stranger things have happened), then you have the option to let it go at no cost and re-enter the market as and how you choose.
 

merc7

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only if you purchase the car outright ,if you finance the car again will be the most expensive A class you ever bought!!!:)
 

Rory

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Almost a year to the end of the 3 year PCP deal (my first) on my A Class - but already I am beginning to think about what happens then. As a low mileage owner (5k per annum) the obvious answer is to stump up the guaranteed future value sum to own the car.

Is it as simple as that - or are there alternative arguments?

The industry reckons most people roll into another PCP.

The reason is that of you borrow the money to pay the GFV over 3 years then the dealer will try to convince you that for a similar monthly payment you could have a brand new car.

Bear in mind that, however laid back the salesman seems, the dealer *really* wants you to do this - they want to sell another new car, they want the commission on the finance deal, and they want your car to sell as a good used car. If you simply pay the GFV and keep the car then that's a disaster on several levels for the dealer.

Bear in mind that as your current car gets older, the service & maintenance bills could get bigger with brakes and tyres being required and you may feel you want to buy an extended warranty. It's almost certainly still cheaper to run a car for a long period as the depreciation flattens out, but the depreciation say from 3-6 years, plus warranty cost and service and maint vs simply changing the car, are probably not far apart.
 

J400uk

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It depends really, how long would you want to keep it? How will you finance paying of the GFV?

Whatever you do end up doing, make sure to research thoroughly what the vehicle is actually worth at the end of contract, so you don't end up finding yourself in negative equity.

I suspect late next year the current A-Class will be nearing the end of its lifecycle and a new model should be due.
 

A180 Dream

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I suspect late next year the current A-Class will be nearing the end of its lifecycle and a new model should be due.

Do you base that on any factual evidence or is it just a rumour?
 

Rory

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Whatever you do end up doing, make sure to research thoroughly what the vehicle is actually worth at the end of contract, so you don't end up finding yourself in negative equity.

You can't be in negative equity at the end of a PCP deal - the GFV is guaranteed.

Hopefully the car will be worth some amount more than the GFV, especially, as I mentioned earlier, there are several reasons why the dealer will want to entice you into taking a new PCP on another new car.
 

J400uk

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Do you base that on any factual evidence or is it just a rumour?

Its not a rumor, look around on the internet, lots of articles about it, e.g. http://germancarscene.com/2009/10/2...astatt-plant-daimler-invests-eur-600-million/

Come February 2010 it will have been on sale in the UK for 5-years.

You can't be in negative equity at the end of a PCP deal - the GFV is guaranteed.

Surely you could be in negative equity if you were to chose to buy the car of the finance company for the GFV figure, when in actual fact its worth less? Its impossible to guarantee the future value of a car.
 
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Alex M Grieve

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Surely you could be in negative equity if you were to chose to buy the car of the finance company for the GFV figure, when in actual fact its worth less? Its impossible to guarantee the future value of a car.

A snippet from my post #3 above, which deals with your point:

If, on the other hand, the low mileage and good condition would still price it on the open market at less than the AFV (and stranger things have happened), then you have the option to let it go at no cost and re-enter the market as and how you choose.
 
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rhud

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Do you base that on any factual evidence or is it just a rumour?

It is widely reported that MB want to produce their small cars more cheaply. A Class - with its sandwich floor,oddly arranged engine etc - is allegedly expensive to produce and margins v slim.

Hence it is said a more conventional design - also capable of supporting more variants - will replace it, maybe late in 2011.
 

Rory

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Surely you could be in negative equity if you were to chose to buy the car of the finance company for the GFV figure, when in actual fact its worth less?
Why would you do that? One of the key points of a PCP is to protect you from unforeseen residual value losses.

You wouldn't necessarily be in negative "equity" anyway - that only happens when you owe more than the car is worth. So if paid part or all of the GFV in cash then you'd still owe less than the cars value.

Its impossible to guarantee the future value of a car.
I'm bemused by that statement - what do you think GFV stands for?

You may choose not to take up that guarantee, but, as asked above, why would you not to?
 

mastereng

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I am very interested in this thread as I have an A Class on a PCP which has just over 12 months to run and have been pondering whether to prepare to fund the buy out or just hand it back. I am also low miles (6K to 7K pa). What worries me most is the uncertainty on future servicing costs. My first service was just over £200 (basically an oil change) and I am anticipating anything up to £400 for year 2. These figures just don't stack up with owning a small car on low annual mileage. I have seen that BMW are offering the 1 series with 5 years free servicing (or heavily subsidised). It is not just the capital cost and depreciation but the servicing that has such a big influence. If I buy the car and keep it another say 3 years, what will Mercedes sting me for servicing? I know there are many threads on servicing costs but for low mileage people like myself the servicing costs are realatively astronomical. I compare to my wife's Mini - £150 for 5 years! For me I am inclined not to buy unless I get a fixed price service deal - which I won't of course since as others have said they don't want me to buy it.
 

Bolide

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I am very interested in this thread as I have an A Class on a PCP which has just over 12 months to run and have been pondering whether to prepare to fund the buy out or just hand it back. I am also low miles (6K to 7K pa). What worries me most is the uncertainty on future servicing costs. My first service was just over £200 (basically an oil change) and I am anticipating anything up to £400 for year 2. These figures just don't stack up with owning a small car on low annual mileage. I have seen that BMW are offering the 1 series with 5 years free servicing (or heavily subsidised). It is not just the capital cost and depreciation but the servicing that has such a big influence. If I buy the car and keep it another say 3 years, what will Mercedes sting me for servicing? I know there are many threads on servicing costs but for low mileage people like myself the servicing costs are realatively astronomical. I compare to my wife's Mini - £150 for 5 years! For me I am inclined not to buy unless I get a fixed price service deal - which I won't of course since as others have said they don't want me to buy it.

Buying a new car to get free/subsidised servicing seems bizarre to me. Depreciation is the single biggest motoring cost for buyers of new cars - at the beginning of your ownership your A Class was probably costing you £400 / month in depreciation so £400 for an annual service is a drop in the ocean. This situation is obscured by the PCP but it's still real

There's no reason to use Mercedes dealers for servicing. If you're doing 6-7k a year then you're paying huge amounts of depreciation for little mileage - I'd say just service it as needed at an independent and keep it for as long as it's reliable & meets your needs

Finally, you say "These figures just don't stack up with owning a small car on low annual mileage" - nor does buying a new car. Bangernomics makes much more sense than buying new

Nick Froome
www.w124.co.uk
 
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Rory

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Agree with the above but it's somehow painful handing over chunky amounts for servicing yet depreciation just seems to get "lost". There's also this ever present issue with a Mercedes that you're never really sure how much the service is going to cost.

Mercedes do really need to re-address their service package offerings. I looked at a new E Class and the current service package offers 3yrs/36K at £1530 - when the actual cost of a couple of A services and a B service plus brake fluid should be no more than about £1000 max. The package should save you money, not cost you 50% more. Ridiculous.

I just got 5 years servicing on wifey's new Honda Jazz for £340 (supposed to be £540 but Honda had an offer on for stock cars), and Hondas aren't known for cheap servicing.
 

*Thumper

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How can service cost's be "Lost" ..... don't you want your car to be cared for and reliable ....... it has lots of moving parts that need tlc, from time to time

I bet you dont likie having your Gas boiler serviced either ......... thats if you bother at all !
 

Rory

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How can service cost's be "Lost" ...

I said "yet depreciation just seems to get "lost" ".

ie, people just accept depreciation costs, yet get vexed about service costs.
 


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