PCP Deposit

[iambu]

Hi all

I've never had a PCP car finance before, but strongly planning to order a B9 A4 Avant soon.

My desired spec comes to a RRP of £39550.

I plan to sell my current car privately, and should get at least £10k for it. I have been to Audi and obtained Audi Finance quotes (also used CarWow), and a monthly payment of around £315 is what I'm aiming for.

To reach this figure, I would need to pay a deposit of around £8000, and Audi / dealer would contribute around £4000. So total deposit £12000.

This PCP would be over 3 or 4 years, with an annual mileage of 10,000.

My question is, is it sensible to pay so much cash into a PCP agreement? £8000 is obviously a lot of cash, which I will only have from selling my current car privately.

I'm aware that at the end of the term I will have 3 options. Obviously I wouldn't hand the key back and walk away!! I would very likely exchange the car for another new one.

Thanks

 

[ScottishA4B9]

I'm in the same boat as you. I've never had pcp before and about to order a new b9.
The salesmen keep telling me that it's not the best idea to out over £5000 down in a deposit. Although the more you out down, the lower the monthly payments so it seems to me to be six and half a dozen!

Im putting down £5k on mine. £2500 from me and £2500 from Audi contributions.

My spec is £38k and I've got a price of £31885 from carwow with monthly payments of £358.

 

[DrEskimo]

For me, it makes absolutely no difference whether you put a large deposit or a small one. Calculate the overall cost of the deposit and the monthly payments and it's more or less the same. If anything, putting more deposit down reduces the amount that you're paying interest on, so will be slightly cheaper.

The difference with putting less down at the beginning is you have that money in your pocket straight away. If you put more in and pay less per month, you will have to actively save the difference in the monthly payments each month to ensure you have the same amount of cash at the end.

My aim was to put down roughly the same amount I expected to get at the end of the deal (usually have 'equity' at the end, although I loathe to call it that....), minus any options I add. For mine, I put down £6k and that includes £1500 of options. If I get around £3.5/4K at the end to start a new deal on a new car, I'll be happy.

 

[cuke2u]

If you are planning to P/X the car at the end of the deal then set the mileage to 5k, you should not be penalised that way..

 

[ScottishA4B9]

I'm planning on P/X mine in at the 2 year point and see my annual mileage at 12k and was thinking of upping it to 15k to be on the safe side.

So your saying that it's better to set at 5k?
But what about the penalties you have to pay for going over?

 

[DrEskimo]

If you are planning to P/X the car at the end of the deal then set the mileage to 5k, you should not be penalised that way..

But the GFV will be lower than what they quote you for 5k miles, so the difference between the settlement figure and what they give you will be less. Pay less per month but will get less back in 'equity' at the end. Swings and roundabouts....

 

[cuke2u]

Correct but at least it is a figure you have at the end of the deal as opposed to a higher monthly payment. As you say, swings and roundabouts..

 

[cuke2u]

I'm planning on P/X mine in at the 2 year point and see my annual mileage at 12k and was thinking of upping it to 15k to be on the safe side.

So your saying that it's better to set at 5k?
But what about the penalties you have to pay for going over?

There are no penalties unless you just give the car back..

 

[A4 SJC]

PCP works best with minimal deposit. The GFV is realistic so if you stick £8k in and expect to see it come trade in time, you'll be very disappointed. The flip side is you've had a benefit of lower monthlies.

And as for mileage, the only penalties you'll face is if you decide to hand the car back. There is always a risk of negative equity in this scenario, but you may be able to VT without penalty (a whole other can of worms)

 

[junglemusic]

I went for 2k deposit, 48 months @ £306 per month 10k miles per year, and just give the car back after 4 years.

Think the book price was around £34k

 

[Simonb1975]

If your into the whole car every 3 years on PCP thing then a minimal deposit can help (If playing by the PCP system)
If, like me you are using PCP to keep the monthlies lower than HP finance then chuck in as much as you want I guess.

I will set my mileage low on my next car and to hell with it. Although on a 4 year PCP the finance calculator shows a £30 per month difference between 5K and 10K. So after 4 years if I've done 40K instead of 20K I reckon there might be some difference in value (£1440), but as I've said, I'll deal with that in 4 years