|
|
Post by johnc on Jan 23, 2018 10:27:41 GMT
Drive the Deal have the S4 Avant with 18% off but more importantly 3.2% apr finance and only a 5% deposit - that suggests Audi will use strong residuals to keep the monthlies down. No RS4 listed yet!
|
|
|
|
Post by racingteatray on Jan 23, 2018 11:03:50 GMT
I still find it iniquitous how much certain car companies charge in interest rates for private customers.
3.2% seems reasonable in today's interest rate climate. But for an RS3, Audi wants 6.3% interest. That's just price-gouging. 3.2% does not represent "manufacturer support" unless you think that 6% represents some arbitrary profit point.
Auto manufacturer's finance arms generally fund themselves from the debt capital markets through (i) issuing medium term debt (2-5yrs as a rule) and (ii) securitising (ie selling) the loans that they write. I had a quick look to see what Volkswagen Finance's headline rates on its bond are and the answer is that it generally appears to vary between 0.75% for 2yr notes and 2% for longer-dated notes.
No wonder they are keen on PCP.
|
|
|
|
Post by Martin on Jan 23, 2018 11:20:35 GMT
Drive the Deal have the S4 Avant with 18% off but more importantly 3.2% apr finance and only a 5% deposit - that suggests Audi will use strong residuals to keep the monthlies down. No RS4 listed yet!
About £500 a month based on a adding £5k options, £5k deposit and 15k miles over 48 months. Broadly the same as a Golf R and slightly more than a 440i GC. Agree that interest rates on PCP can be a rip off. I couldn’t bring myself to pay any more than 3% ish. |
|
|
|
Post by PG on Jan 23, 2018 12:02:54 GMT
I still find it iniquitous how much certain car companies charge in interest rates for private customers. 3.2% seems reasonable in today's interest rate climate. But for an RS3, Audi wants 6.3% interest. That's just price-gouging. 3.2% does not represent "manufacturer support" unless you think that 6% represents some arbitrary profit point. Auto manufacturer's finance arms generally fund themselves from the debt capital markets through (i) issuing medium term debt (2-5yrs as a rule) and (ii) securitising (ie selling) the loans that they write. I had a quick look to see what Volkswagen Finance's headline rates on its bond are and the answer is that it generally appears to vary between 0.75% for 2yr notes and 2% for longer-dated notes. No wonder they are keen on PCP. It is almost as if the cars are now secondary. They have become finance companies that use cars to facilitate selling us loans. |
|
|
|
Post by Big Blue on Jan 23, 2018 12:23:28 GMT
As they say: follow the money.
Be thankful car companies can make money this way or there’d be a dearth of cars, with those available hugely unaffordable.
|
|
|
|
Post by johnc on Jan 23, 2018 13:54:56 GMT
No wonder they are keen on PCP. As you might imagine, I have a spreadsheet for calculating leasing payments etc and the total cost differences can be massive if buying on PCP V HP even though the PCP monthlies are considerably less.
They must make a fortune on PCP deals.
I can't cut and paste from a spreadsheet to here but here are two photos, one with 5.9%apr and one with 7.9%apr which show the total interest costs etc - the two top ones are the examples, the bottom ones are just other calculations based on a daily interest rate instead of an averaged monthly one. The examples with a nil balloon payment are the HP examples and the balloon payment ones are the PCP
  |
|
|
|
Post by PG on Jan 23, 2018 17:12:34 GMT
Your figures are right John, in that the loan is a cheaper way to finance the car - less interest, less overall paid. But the key difference and the reason that people go PCP is that in the PCP approach (top photo), the punter has to find a £15k deposit and pay £450 per month. Whereas for the loan the same punter has the same £15k deposit and then find £796 per month. Yes they get that back at the end (if the residual value holds or they keep the car a 5th year etc), but "mentally" the loan is more expensive to people as it is £346 per month more. £346 per month is a lot of wonga - enough for the wife to have anew car on PCP too......
|
|
|
|
Post by racingteatray on Jan 23, 2018 18:25:36 GMT
Exactly.
I went PCP on the M135i when I needed to divert all my available capital into that infamous black hole known as a house purchase and renovations, followed swiftly by marriage, which comes with its own special set of financial impositions and constraints. Prior to that I was a cash buyer.
It's the logical option if you have a relatively high monthly income but no available capital and don't want to knock about playing bangernomics (which wives tend not to be keen on).
|
|
|
|
Post by johnc on Jan 23, 2018 18:36:33 GMT
At the wrong interest rate, PCP is a great way to massively increase profit and look as though you have done the customer a great deal. The perfect product for conmen. However at low manufacturer rates c3.99% apr and less, they make a lot of sense. |
|
