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Discussion Starter #1
Hi

I bought a Mito in summer 2009 and I entered into a HP 3 choice option, so this year I can either take car back and walk away, buy it outright or get a new Alfa. Does anyone understand how the last option?
Mate at work said the dealership looks at the value of the car against what there is still to pay on it and give you the difference as a deposit on a new car, is that right?
 

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They will give you a value on your car, same as if you were part exchanging, the value should be above the "guaranteed minimum future value", and the difference would be your deposit. The variable is what they value your car at. You can always shop around and see what other value your car at. But as its a trade in price, it won't be as high as you'd hope. The idea is you walk in to the dealer and drive out in a new car and continue making payments. Advantages to them: more cars sold as you buy a new car every three years or so.

We are buying our Mito on a 4 year deal in that way, and the guaranteed future value is £2500ish and our plan is to buy it outright at that point and run it for a few years, passing it to our daughter eventually as her first car.
 

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Discussion Starter #3
Thanks, what would happen if they value it lower than the guaranteed value they gave me at the start of the 3 years. Would i still be able to arrange a new car on hp for a further 3 years? I suppose it makes sense to hand your car in, in the best condition possible then?
 

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The guarantee protects you against the shortfall in value and they plan to allow some equity for a deposit for the next one which I was told does not have to be the same make.
 

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My Mito Lusso 120, bought Sept 09, travelled 31k miles and is 2 years 3 months through its 3 year PCP.

My settlement figure is £7000 and if I upgrade to a Giulietta, a dealership has offered to take the car back and clear the finance.

If the dealership didn't consider my car to be worth at least £7000, I would have to pay the difference. Lets say it was only worth £6000, then I would owe the dealership £1000 (unless you negotiated a sweet deal with them!).

I think the Mito is doing really well for holding its value. Pricing for my model with that mileage is around £8000-£8500 if sold privately but I'd have to get the dents/scratches/chips fixed (approx. £400) and spend £500 to service it. So I'm not losing out too much in my case and the dealership can fix the problems and service the car for next to nothing.

The downside? The interest you pay is at its highest at the beginning of the agreement so I've paid a large sum of the interest and I'm selling my car with a loss in value of about £4k. This equates to a loss of £6k over two years which is a phenomenal amount to go down the drain in a very short period of time. But hey, that's the cost of owning a brand new car on finance.

I'm hoping my next car will be driven for longer than two years!
 

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Thanks, what would happen if they value it lower than the guaranteed value they gave me at the start of the 3 years. Would i still be able to arrange a new car on hp for a further 3 years? I suppose it makes sense to hand your car in, in the best condition possible then?
The value should not be lower than the guaranteed value unless you've exceeded your agreed mileage or there is serious damage to the car. If they value it lower than the guaranteed figure and neither of my points above apply then i'm pretty sure they're breaking the terms of the contract.

See what they offer you and then see what your car is worth as a private sale, ie look for similar examples on AutoTrader. If you could get more than £1000 more selling privately, if you can i'd clear the finance and keep the car & then sell it privately & start again. That way you'll have a bigger deposit for the new car & this should help make your monthly payments lower. Obviously not everyone can do this if they don't have the final payment amount in the bank, but if you do it could work out nicely.

Liam
 

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Discussion Starter #9
Would it be advisable to get a series of circular scratches repaired by Alfa before I

go trading it in? The scratches are on the bonnet. Obviously I wish to get the best possible valuation.
 

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When I bought my car few weeks ago (4 years contract) basically what he told me same as for u, either give the key to them and walk away or pay the difference in my case my final payment is nearly 5k and the car is mine or if I want to trade in (5k-what the car valued at=next deposit).

Anyway he said I can trade in my car in 3 years so basically the will be worth more and it should work out same.

But I'm not sure about it as maybe they have some tricks up their sleeve.
 

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I cant get my head round these PCP deals myself even though I have been considering due to the cost of HP and cars in general being sky high. Was considering it, however in my eyes it amounts to nothing more than paying interest on depreciation. Madness methinks . . . .
 

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When I bought my car few weeks ago (4 years contract) basically what he told me same as for u, either give the key to them and walk away or pay the difference in my case my final payment is nearly 5k and the car is mine or if I want to trade in (5k-what the car valued at=next deposit).

Anyway he said I can trade in my car in 3 years so basically the will be worth more and it should work out same.

But I'm not sure about it as maybe they have some tricks up their sleeve.
Think about it this way ,how many 3 year old Mitos are currently for sale around the 5k mark ?
Not many (if any) so I would think the dealer is correct and you should have something to put into another car at the end of the agreement.
 

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But how much would my car worth after 3 years tho??? If it's like 9k it would be awesome.

Btw they do deals with 0% interest free but I think on shorter period and higher monthly payments which I couldn't afford.
 

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I cant get my head round these PCP deals myself even though I have been considering due to the cost of HP and cars in general being sky high. Was considering it, however in my eyes it amounts to nothing more than paying interest on depreciation. Madness methinks . . . .
I have to agree, can't see how you the owner is better off than just a normal trade in and a personal loan.
The problem I see is that you aren't in a very strong negotiating position when buying another Alfa, you never own the car until the final payment. If you ever need to raise money quickly by selling a car that causes problems, whereas with a personal loan you have huge flexibility, you own the car from day one.
 

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It's actually the flexibility of a PCP deal that got me...

With a PCP I get a MUCH lower monthly payment than I would with a bank loan for a similar price, plus various options after and during the agreement. For example, my dealer told me today that once just over half (I can't remember the exact percent) is paid, ie: just after 2 years, you find yourself in a position where you can no longer afford the payments you can simply hand the car in and walk away. I think that's a great weight off the mind, especially in these economic times and especially for me as I will rely on 12 month fixed terms contracts for employment in the future.

There's also the option of re-financing the final payment if you want to keep the car too. I think it's perfect for someone like me who doesn't know exactly where they may be in 4 years time ie: kids/mortgage!
 

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well i feel that cars are always a waste of money and should never be seen as an investment. pcp deals are just a way of lowering monthly costs with low apr rates. then when you do come to change it you "should" have a good enough deposit for the new one with the extra value of the car vs the balloon payment.
 

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At the end of the agreement or towards the end i've heard about selling the car privately for what ever figure this is ok aslong as you make it clear to the buying what your intentions are, which would be as soon as they pay you maybe a % of the price you can clear the remaining finance meaning you now own the car then you can hand the car over to the buyer and collect the remaing funds.

does this sound right because this is what i'm considering at the moment
 

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I have been reading some of the comments and can no longer refrain from commenting.

I have worked in and around PCP / automotive finance for about 20 years so probably have a little knowledge / experience I can share.

I find it really frightening that so many people enter into PCP agreements when they clearly don't fully understand how they work.

Firstly, PCP is great for some customers and not so great for others - it depends entirely on the customers circumstances and requirements

It is completely wrong to say that the GMFV is always set low so that the customer as equity at the end. Recent experience with working with Mercedes is that very few customers have equity at the end, it depends on what manufacturers are trying to achieve. If they want to sell a lot of cars today, set the GMFV high so that payments are lower - deal looks attractive so more cars sold. If the manufacturer wants to play the long game and stand a chance of keeping the customer happy then the GMFV will be set lower. Whilst this increases the monthly payments it should enable customer to be left with some equity at the end thus increasing the ease / likelihood of retaining the customer

Most manufacturers support PCP deals more so than HP, rare to see things like deposit subsidies on HP deals but ten a penny on PCP

End of agreement - you can pay the GMFV and keep the car ( most manufacturers can offer HP to pay this off), hand it back to the manufacturer (only ever done if car is worth less than the GMFV) or p/x it against another car - the car can be p/x'd absolutely anywhere

If the car is handed back you are liable for any excess mileage over and above that agreed on day one and any damage that goes beyond reasonable fair wear and tear

If you p/x the car the dealer (remember this can be any dealer for any manufacturer) will value the car, whatever the car is worth over and above the GMFV is yours to use however you want, if the car is worth less than the GMFV then you simply hand it back to the finance house (NOT the dealer you bought the car from) with nothing to pay (unless undue wear and tear / excess mileage charges are applicable)

A PCP is just a HP deal with a different payment profile and therefore subject to exactly the same rules and regulations. You can VT (Voluntarily Terminate) the agreement once half the total amount payable as been paid. Usually with a PCP this point is very close to the end of agreement due to the payment profile. When a right to VT is exercised a customer is still legally bound to pay for any damage beyond fair wear and tear and excess mileage. Also, a VT never appears on a credit check as it is a legal entitlement to VT

Just like a HP agreement you can also settle a PCP at any point in the agreement.

Fair wear and tear is usually based on the BVRLA (British Vehicle Rental + Leasing Association) guidelines

In the current marketplace I would strongly advise that any customer looking to fund a new car looks at PCPas they are generally the most cost effective deals because of the amount of manufacturer that is offered. Examples - VW will give you £2k towards your deposit on a Golf if bought on PCP, Mercedes will give you circa 4.5k towards your deposit on a C Class if bought on PCP

If anyone wants some specific advice please feel free to PM me

Tommito - you can sell the car privately at any point in the agreement for whatever you want. Once you have a buyer the best process is this. Your buyer settles off the balance outstanding with your finance company and gives you any funds that are left over. It provides your buyer with complete peace of mind that there is no finance outstanding and also keeps you legal as you cannot sell a vehicle legally that has finance outstanding on it (unless its to a dealer who is fully aware of it and will be settling off the finance as part of the deal - this usually completed within a couple of days of them taking the car)
 
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