RS3 Saloon PCP Advice

[dxl]

I’m looking for some advice on a PCP offer from a dealer and I’m struggling to work out if it’s a good deal. I’ve never done a PCP before and have always gone the PCH route.

It’s for a RS3 saloon with over 8k options so nicely specced. I was offered £5k deposit over 4 years @ £700pm on 5k mileage. Reason for the low deposit is I’ll look to change every 2 years (as I usually go the pch route and have become use to this!)

How does this sound given my plans to change every 2 years or so?

The dealer was also quite assuring that I’ll be in positive equitity around 2 years due to the car is an RS and the specs, is this a fair assumption? (I know there’s no guarantees for this, but they mentioned £5k+ equity possible in 2 years which I thought sounded high?).

Any advice on this will be very much appreciated.

 

[billymc92]

Only 5k miles a year

 

[dxl]

Only 5k miles a year

Haha, that’s what I thought. Apparently if you’re looking to change in around two years time, it’s not so important as you pay no excess mileage, so payments work cheaper this way as I’ll be doing over this anyway.

 

[NevMan]

I’m looking for some advice on a PCP offer from a dealer and I’m struggling to work out if it’s a good deal. I’ve never done a PCP before and have always gone the PCH route.

It’s for a RS3 saloon with over 8k options so nicely specced. I was offered £5k deposit over 4 years @ £700pm on 5k mileage. Reason for the low deposit is I’ll look to change every 2 years (as I usually go the pch route and have become use to this!)

How does this sound given my plans to change every 2 years or so?

The dealer was also quite assuring that I’ll be in positive equitity around 2 years due to the car is an RS and the specs, is this a fair assumption? (I know there’s no guarantees for this, but they mentioned £5k+ equity possible in 2 years which I thought sounded high?).

Any advice on this will be very much appreciated.

I would say. 3 year PCP best chance of getting out with some equity, but then more on the monthlies

 

[dxl]

I would say. 3 year PCP best chance of getting out with some equity, but then more on the monthlies

Interesting, but even after 3 years, surely 5k equity still sounds optimistic by the dealer, must be the sales patter to get me to commit?

 

[NevMan]

Interesting, but even after 3 years, surely 5k equity still sounds optimistic by the dealer, must be the sales patter to get me to commit?

I would say so mate. RS’s do hold value, but chucking all the interest on will negate I would have thought

 

[Flowrider99]

PCP's are only a good deal for the dealers so ask him to put anything he says in writing, I bet he wont.

 

[dxl]

PCP's are only a good deal for the dealers so ask him to put anything he says in writing, I bet he wont.

They did mention that after 2 years, the optional final payment will be around £27k but isn’t this the GFV as he said I won’t be able to buy at this price, the finance company will value it first and provide an actual price. Does this mean if it’s valued higher (which seems very likely for a two year old RS3 with around 16k miles), this figure minus the £27k will be the equity I receive?

 

[Terminator x]

They did mention that after 2 years, the optional final payment will be around £27k but isn’t this the GFV as he said I won’t be able to buy at this price, the finance company will value it first and provide an actual price. Does this mean if it’s valued higher (which seems very likely for a two year old RS3 with around 16k miles), this figure minus the £27k will be the equity I receive?

If you settle the finance though the car is yours no matter what "value" the car is at that time. You won't have any equity imho dealers just say that to hook you in.

TX.

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[dxl]

If you settle the finance though the car is yours no matter what "value" the car is at that time. You won't have any equity imho dealers just say that to hook you in.

TX.

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I’m starting to think that this equity pretty much going to amount to nothing come two years. If what the sales guys says is true (and that’s a big if), the value of the car minus £27k is likely to put me in a nice sum of positive equity but feedback from the forum is overwhelming suggests otherwise!

Would be good to hear if there are any RS3 owners who have handed the car back in 2 years to have some equity to put towards another car, that was my plan when/if the new 2021 model gets released!

 

[Evil Derboy]

Forget about equity. At 2 years you’ll be lucky to have any.

Based on your numbers. It’s costing you £21,800 to drive the car for 2 years.
As a comparison the list price on my car is £72k. I paid no deposit and £845 per month. It’s costing me £1520 less to drive my RS5 for two years and I get to do 3000 miles a year more than you.

 

[NevMan]

I’m starting to think that this equity pretty much going to amount to nothing come two years. If what the sales guys says is true (and that’s a big if), the value of the car minus £27k is likely to put me in a nice sum of positive equity but feedback from the forum is overwhelming suggests otherwise!

Would be good to hear if there are any RS3 owners who have handed the car back in 2 years to have some equity to put towards another car, that was my plan when/if the new 2021 model gets released!

The GFV ONLY comes into play at the end of the 4 year term and not halfway through. So, if after 2 years the settlement figure will be what is outstanding in total less the interest for the remaining term. Which will be A LOT more than £27k trust me!

 

[zaka7]

£5k mid way through is in my opinion never going to happen, It would of course be nice if it did, but PCP's just do not work like that. They're designed to get us into cars more affordably, and allow dealers to make essentially double the dough!

 

[RGBARGEE]

I have definitely come to the conclusion that PCP isn’t always the best way to go. If you get a deposit contribution you can always start PCP and withdraw within 14 days keeping the contribution. M&S and JL car loans are sub 3% . If Audi APR was lower it’s worth considering to get a guaranteed future value maybe but paying 6-10% interest per annum is ott when BoE base rate is so low. Just my 2p. Of course running a cheaper car for a few years and saving £700 a month is another option. Personal choice as always.

 

[Evil Derboy]

APR is also negotiable. I got a very minimal discount to 4.8%

Bank loans are all well and good but no providers will lend you £75k at the rates you you describe unless you stick it against your house.

The biggest problem with PCP is many folk don’t understand it. Either treat it as a lease or be comfortable that the optional final payment (no such thing as GFV) is comparable to the value of the car at the end of the term.

Never go into a PCP looking for equity before the end of the term.

 

[RGBARGEE]

APR is also negotiable. I got a very minimal discount to 4.8%

Bank loans are all well and good but no providers will lend you £75k at the rates you you describe unless you stick it against your house.

The biggest problem with PCP is many folk don’t understand it. Either treat it as a lease or be comfortable that the optional final payment (no such thing as GFV) is comparable to the value of the car at the end of the term.

Never go into a PCP looking for equity before the end of the term.

All very true. Entering a PCP expecting to have huge equity isn't going to happen these days. Halifax do a car loan PCP at low rates! By GFV I refer to the ability to hand back without being thousands of pounds in negative equity. The PCP actually guarantee a final figure to buy/px if you want to which in the current dodgy financial climate may be a reassurance to some. My route is usually secure a big discount, sell privately or via dealer rather than PX and consider the most appropriate way to finance. My point is that it's often cheaper finance outside the dealer network.. even 4.8% is too high when 2.9% is available to many of us and I don't think I would ever borrow £75k to buy a car as clearly the repayments would be greater than many mortgages!

 

[D0C]

You have to bank with Halifax to get their rates.

@Evil Derboy is spot on, treat PCP as a lease and don't expect equity.

 

[RGBARGEE]

You have to bank with Halifax to get their rates.

@Evil Derboy is spot on, treat PCP as a lease and don't expect equity.

Lloyd’s do it too, not sure about others. I know you can borrow over a longer period and hope Residual Value exceeds debt but as always ‘let the buyer beware’ and talk to someone who knows what they are talking about rather than someone trying to sell you something.


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[msdmjb]

Just to check my man maths..........4years contract, 20k miles, just shy of £40k?
You must really want one for those numbers.

 

[dxl]

Very good points everyone and it pretty much confirmed my initial thoughts. Seems I’ve been blindsided from the dealer and wanted to hear what I wanted to hear!

On the basis of potentially driving a loaded spec RS3 for two years for the sum of £21,800 (which will cover around 16kmiles during this period) and walk away with nothing does not sound great at all...

 

[RGBARGEE]

Very good points everyone and it pretty much confirmed my initial thoughts. Seems I’ve been blindsided from the dealer and wanted to hear what I wanted to hear!

On the basis of potentially driving a loaded spec RS3 for two years for the sum of £21,800 (which will cover around 16kmiles during this period) and walk away with nothing does not sound great at all...

I ran a fairly well specd RS3 for 2 years and 23000 miles from Mar 2016 to Mar 2018 for the sum of £7800 depreciation. I can't see the interest (if you have to have a loan) on £42k (price after discount) being much more than £2000 a year so circa £14000 less than £400 a month.


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[Spinstorm]

Forget about equity. At 2 years you’ll be lucky to have any.

Based on your numbers. It’s costing you £21,800 to drive the car for 2 years.
As a comparison the list price on my car is £72k. I paid no deposit and £845 per month. It’s costing me £1520 less to drive my RS5 for two years and I get to do 3000 miles a year more than you.

No deposit?

As for the thread started as I said on the other thread do you really want to pay a deposit and wait 9 months or longer to get a car that isn’t in production and it’s anyone’s guess if that will change and when?!

I wouldn’t. Pick up a new not used or low mileage model now or get something else. Not an RS3.

 

[Evil Derboy]

No deposit?

No deposit. Why stick £5000 etc into what is essentially a lease deal with no guarantee of releasing any money from the car at the end?

This is my first PCP. I usually lease new or outright buy used. I’ve no desire to keep the asset so I just consider my monthly cost to have the car. Don’t care if on paper I own it or a finance house does.

I’ve no brand loyalty and will happily move across brands for a product I’m interested in that I can secure the biggest discount on. In this case I got £10k discount off the list price. I have a habit of changing car too early and then losing thousands in deprecation so a lease/PCP effectively stops me from chopping in too quick. I plan to keep the RS5 till the end of the term, hand it back and move on to the next shiney new toy.

 

[Flowrider99]

My days of buying new cars are over, i have no desire to lose money in such large quantities.

 

[Evil Derboy]

My days of buying new cars are over, i have no desire to lose money in such large quantities.

It's all relative. There are folk out there that are PCPing Mclarens and Lambourghinis.

 

[teslaboy]

I've got 2.5yrs left on a 4yr PCP, 10k down on 50k car with APR 6% thru Audi, monthlies 450. GFV is 23k. 7k miles a year.

So am paying 22k ish of 4yrs accounting for the depreciation plus the interest which includes interest on the GFV as well.

We all know, including Audi, the motor will be worth more after 4yrs than 23k if in good nick! Thats where any equity will come in, i might get 2k maybe a bit more on the next car.
I think if your prepared to keep the car for the term, look after it and get the right balance between deposit and monthlies then these PCPs are worthwhile.

However if you buy outright your still loosing, on a 50k car over 4yrs, at least 5k a year thats 420ish a month.
So the PCP is at least plus another 10k on top!
But who's got 50k burning a hole in their pocket !!

Owning a motor is never cheap especially the RS.
A few years back i decided to buy a shxt car 1k renault clio 4door 1.1 white! Great for parking anywhere no worries no problem, absolutely no hassle driving.
But i just couldn't, after months, carrying on driving it, had to get back in a decent motor, but sold it for 1k after a year.
Alternatively you buy yourself a classic which might actually increase in value.
Which brings me on to the next motor which, depending on job circumstances, will be the new Mk3 RS which will probably be the last batch of 2.5s before it all goes electric.
Then it will be a real classic worth keeping.
As someone else said on here I'm getting bored of shelling out every month on PCPs for someone else's benefit.

Right thats it rant over gentlemen.

 

[infernox]

I've got 2.5yrs left on a 4yr PCP, 10k down on 50k car with APR 6% thru Audi, monthlies 450. GFV is 23k. 7k miles a year.

So am paying 22k ish of 4yrs accounting for the depreciation plus the interest which includes interest on the GFV as well.

We all know, including Audi, the motor will be worth more after 4yrs than 23k if in good nick! Thats where any equity will come in, i might get 2k maybe a bit more on the next car.
I think if your prepared to keep the car for the term, look after it and get the right balance between deposit and monthlies then these PCPs are worthwhile.

However if you buy outright your still loosing, on a 50k car over 4yrs, at least 5k a year thats 420ish a month.
So the PCP is at least plus another 10k on top!
But who's got 50k burning a hole in their pocket !!

Owning a motor is never cheap especially the RS.
A few years back i decided to buy a shxt car 1k renault clio 4door 1.1 white! Great for parking anywhere no worries no problem, absolutely no hassle driving.
But i just couldn't, after months, carrying on driving it, had to get back in a decent motor, but sold it for 1k after a year.
Alternatively you buy yourself a classic which might actually increase in value.
Which brings me on to the next motor which, depending on job circumstances, will be the new Mk3 RS which will probably be the last batch of 2.5s before it all goes electric.
Then it will be a real classic worth keeping.
As someone else said on here I'm getting bored of shelling out every month on PCPs for someone else's benefit.

Right thats it rant over gentlemen.

Wouldn't that be £31600 you're spending over 4 years including the deposit?

I actually did some calculations for you dxl. You said it has 8k options so I used price of £53k with £2k discount = £51k. 5k deposit, 4 years @ £700pm, which would be 6.7% APR and £22,100 OFP. So straight out of the door, you'll have a settlement value of around £55k, each £700 payment brings that down. Some of it though will be in interest, out of that £55k, £9k is the interest you're paying and £46k is the cars balance. 48 months PCP means you have 47 payments of £700 = £32900 total monthly payments. £55k - £32900 = the £22,100 OFP at the end of the term. So if you kept the car for the 4 years, you'd pay £32900 plus the 5k deposit = £37900 total, so about £9,500 a year. If you bought the car for £51k cash and traded it in for the same £22,100, you'd have paid £28,900 or £7,225 a year, which means you'd be losing £9k by going PCP (same as the interest amount).

You said you'd want to sell it after 2 years. That means out of the £9k interest, you'd have paid £4.5k so far. £700 x 24 = £16,800 monthly payments paid, so your settlement value would be £55k - £16800 = £38,200. However you'd also take out the £4.5k interest you haven't paid yet, so £33,700 would be the total amount payable. So you have to think, would a 2 year old RS3 with 16k miles as you mentioned in other posts, be worth £33,700? Keep in mind that it would be its P/X value if you were trading it in for another car, or private value if you're selling it privately. Also by then the new A3 series would be out too, could reduce the RS3's value. You'd also be paying total amount of £21,800 for those 2 years, or £11.9k a year.

Personally also looking to get an RS3, it's why I've been stubborn on what price to pay. I don't want to pay more than I can comfortably afford.

 

[Spinstorm]

No deposit. Why stick £5000 etc into what is essentially a lease deal with no guarantee of releasing any money from the car at the end?

This is my first PCP. I usually lease new or outright buy used. I’ve no desire to keep the asset so I just consider my monthly cost to have the car. Don’t care if on paper I own it or a finance house does.

I’ve no brand loyalty and will happily move across brands for a product I’m interested in that I can secure the biggest discount on. In this case I got £10k discount off the list price. I have a habit of changing car too early and then losing thousands in deprecation so a lease/PCP effectively stops me from chopping in too quick. I plan to keep the RS5 till the end of the term, hand it back and move on to the next shiney new toy.

What I meant was how did you get a dealer to accept no deposit? They always say 10% on an RS model. And I went to 6/7 dealers when ordering my car last year and all said the same.

 

[NevMan]

Wouldn't that be £31600 you're spending over 4 years including the deposit?

I actually did some calculations for you dxl. You said it has 8k options so I used price of £53k with £2k discount = £51k. 5k deposit, 4 years @ £700pm, which would be 6.7% APR and £22,100 OFP. So straight out of the door, you'll have a settlement value of around £55k, each £700 payment brings that down. Some of it though will be in interest, out of that £55k, £9k is the interest you're paying and £46k is the cars balance. 48 months PCP means you have 47 payments of £700 = £32900 total monthly payments. £55k - £32900 = the £22,100 OFP at the end of the term. So if you kept the car for the 4 years, you'd pay £32900 plus the 5k deposit = £37900 total, so about £9,500 a year. If you bought the car for £51k cash and traded it in for the same £22,100, you'd have paid £28,900 or £7,225 a year, which means you'd be losing £9k by going PCP (same as the interest amount).

You said you'd want to sell it after 2 years. That means out of the £9k interest, you'd have paid £4.5k so far. £700 x 24 = £16,800 monthly payments paid, so your settlement value would be £55k - £16800 = £38,200. However you'd also take out the £4.5k interest you haven't paid yet, so £33,700 would be the total amount payable. So you have to think, would a 2 year old RS3 with 16k miles as you mentioned in other posts, be worth £33,700? Keep in mind that it would be its P/X value if you were trading it in for another car, or private value if you're selling it privately. Also by then the new A3 series would be out too, could reduce the RS3's value. You'd also be paying total amount of £21,800 for those 2 years, or £11.9k a year.

Personally also looking to get an RS3, it's why I've been stubborn on what price to pay. I don't want to pay more than I can comfortably afford.

Some proper maths there @infernox

 

[Evil Derboy]

What I meant was how did you get a dealer to accept no deposit? They always say 10% on an RS model. And I went to 6/7 dealers when ordering my car last year and all said the same.

Me: “I don’t want to pay a deposit”
Dealer: “OK.”
Dealer: “Can you pay £1000 by debit card to secure the deal and I’ll pay you it back on collection?”
Me: “OK”

 

[dxl]

I've got 2.5yrs left on a 4yr PCP, 10k down on 50k car with APR 6% thru Audi, monthlies 450. GFV is 23k. 7k miles a year.

So am paying 22k ish of 4yrs accounting for the depreciation plus the interest which includes interest on the GFV as well.

We all know, including Audi, the motor will be worth more after 4yrs than 23k if in good nick! Thats where any equity will come in, i might get 2k maybe a bit more on the next car.
I think if your prepared to keep the car for the term, look after it and get the right balance between deposit and monthlies then these PCPs are worthwhile.

However if you buy outright your still loosing, on a 50k car over 4yrs, at least 5k a year thats 420ish a month.
So the PCP is at least plus another 10k on top!
But who's got 50k burning a hole in their pocket !!

Owning a motor is never cheap especially the RS.
A few years back i decided to buy a shxt car 1k renault clio 4door 1.1 white! Great for parking anywhere no worries no problem, absolutely no hassle driving.
But i just couldn't, after months, carrying on driving it, had to get back in a decent motor, but sold it for 1k after a year.
Alternatively you buy yourself a classic which might actually increase in value.
Which brings me on to the next motor which, depending on job circumstances, will be the new Mk3 RS which will probably be the last batch of 2.5s before it all goes electric.
Then it will be a real classic worth keeping.
As someone else said on here I'm getting bored of shelling out every month on PCPs for someone else's benefit.

Right thats it rant over gentlemen.

Isn’t there a point in time in a PCP term where it’s optimal to move onto a new PCP for a new car rather than wait all the way until the end or is this another myth?

 

[dxl]

Wouldn't that be £31600 you're spending over 4 years including the deposit?

I actually did some calculations for you dxl. You said it has 8k options so I used price of £53k with £2k discount = £51k. 5k deposit, 4 years @ £700pm, which would be 6.7% APR and £22,100 OFP. So straight out of the door, you'll have a settlement value of around £55k, each £700 payment brings that down. Some of it though will be in interest, out of that £55k, £9k is the interest you're paying and £46k is the cars balance. 48 months PCP means you have 47 payments of £700 = £32900 total monthly payments. £55k - £32900 = the £22,100 OFP at the end of the term. So if you kept the car for the 4 years, you'd pay £32900 plus the 5k deposit = £37900 total, so about £9,500 a year. If you bought the car for £51k cash and traded it in for the same £22,100, you'd have paid £28,900 or £7,225 a year, which means you'd be losing £9k by going PCP (same as the interest amount).

You said you'd want to sell it after 2 years. That means out of the £9k interest, you'd have paid £4.5k so far. £700 x 24 = £16,800 monthly payments paid, so your settlement value would be £55k - £16800 = £38,200. However you'd also take out the £4.5k interest you haven't paid yet, so £33,700 would be the total amount payable. So you have to think, would a 2 year old RS3 with 16k miles as you mentioned in other posts, be worth £33,700? Keep in mind that it would be its P/X value if you were trading it in for another car, or private value if you're selling it privately. Also by then the new A3 series would be out too, could reduce the RS3's value. You'd also be paying total amount of £21,800 for those 2 years, or £11.9k a year.

Personally also looking to get an RS3, it's why I've been stubborn on what price to pay. I don't want to pay more than I can comfortably afford.

Appreciate the effort here to go through the calculations. The numbers you’ve used are pretty spot on, I ended with over £9k options looking back and got around £3.5 discount so it was around £51k for the car.

You arrived at £33,700 as an estimation where it would be value wise in 2 years time - how does the dealers reference to £27k GFV in 2 years come into play with all this?

Sounds like I’m going round in circles a bit, apologies if I’m doing your heads in!

 

[RGBARGEE]

I sold my 2 yr old RS3 at 2 years for nearly £35k. Pano, black &black comfort and sound etc. Got 6% discount new plus a bit. Actual depreciation was £7800 over 2 years. Big cost is financing it but as mentioned in earlier post £2k a year interest is possible for some, cash plus px etc for others.


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[wab172uk]

Interesting that my posts have been removed. Not sure why, as I didn't use bad language or ridicule the OP?

 

[D0C]

Interesting that my posts have been removed. Not sure why, as I didn't use bad language or ridicule the OP?

Dictatorship @wab172uk

 

[Terminator x]

Dictatorship @wab172uk

#banhammer for you @D0C

TX.

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[infernox]

Appreciate the effort here to go through the calculations. The numbers you’ve used are pretty spot on, I ended with over £9k options looking back and got around £3.5 discount so it was around £51k for the car.

You arrived at £33,700 as an estimation where it would be value wise in 2 years time - how does the dealers reference to £27k GFV in 2 years come into play with all this?

Sounds like I’m going round in circles a bit, apologies if I’m doing your heads in!

No the £33,700 is the total amount payable value at 2 years in, i.e. how much you'd have to pay if you wanted to buy the car. If you part exchange or sell your car, they'd have to pay that off and give you what's left, if there is some equity, or you'd have to pay the negative equity. E.G. if you sold it for £35k after 2 years like RGBARGEE did, you'd get £1.3k towards your next car.

 

[jaysrs4]

I put 6k in on a 3 year deal and pay £365pm @ 5.5% Bought the car right at the end of Q1 too.

List price for the car was £45, I settled at 37k. Deals are there, you just gotta find them. 57 plate Saloon and it was an ex-demo with 3k on the clock.

However the sales manager is now not my friend. I tried it on with the finance rate too but nearly got chinned.

 

[NevMan]

I put 6k in on a 3 year deal and pay £365pm @ 5.5% Bought the car right at the end of Q1 too.

List price for the car was £45, I settled at 37k. Deals are there, you just gotta find them. 57 plate Saloon and it was an ex-demo with 3k on the clock.

However the sales manager is now not my friend. I tried it on with the finance rate too but nearly got chinned.

Good deal there mate, but gather you mean 67 plate. Otherwise not such a good deal

 

[jaysrs4]

Good deal there mate, but gather you mean 67 plate. Otherwise not such a good deal

Lmfao yes you’re quite correct my friend. Now too late to correct my stupidity. I actually have no idea what the original Reg is as I’ve been running my plate on it since I bought it. Maybe it’s actually P reg?!