Saturday 17 March 2018

My PCP plight; nine-month wait; SUV or hot hatch?

One reader is considering opting for a SUV
One reader is considering opting for a SUV

Aidan Timmons and Motoring Editor Eddie Cunningham team up to help readers make the right choice with their next car. Aidan visits dealers all over the country to produce a monthly guidebook on the values of used cars. He is co-editor of Motor Trade Publishers, who supply a car-valuing service to the motor trade, insurance companies and finance houses. Eddie is author of former bestseller 'Clever Car Buying'.

I'm thinking of changing my car for January and I'm hoping you can give me some advice. My current car is a 142 Mazda3 executive SE spec saloon (2.2 diesel). The issue is, I've a finance balance of €16,000 (4-year PCP) and most garages are only offering €16-€17k trade-in value. So there is almost no equity as a deposit for the next car. One garage has even advised me to try to hand the car back to Mazda under the PCP terms and start again as a straight-sale customer. 

By January, I will have invested in the region of €14,000 in the car (monthly payments + initial deposit paid). This was the first time I bought a brand new car, but based on original cost of approx €28,000 before interest, to walk away with so little equity feels like an expensive two-and-a-half years of driving.

One option I have considered is whether waiting another six months will put me in a more equitable position to trade. I'm currently paying approx €400 a month. So, in six months time, the balance will have dropped by about €2,500. But in that time, the mileage will likely have increased from 51,000km to 65,000km-70,000km, so I am not sure what the likely value will be?

Another option is to just keep the car until the four years are up but by then I'll be so far above the original allowance of 60,000km, that I've no idea what the trade-in value would be.

My circumstances have changed since I bought the car, so I'm now averaging 20,000km-25,000km a year. So maybe I'm best avoiding PCP deals entirely. But having looked around at other sources of finance, €400 a month isn't going to get me very much. After 10 years and five car changes, gradually getting a newer car with each change to get to a situation where I could buy brand new, I really don't want to go back to having a car that's out of warranty, or needs an NCT.

I do have some money to put in as a deposit towards any change (up to €5,000) but would like to put in as little as possible, as there are other things I'd like to do with these savings.

In terms of the next car, I'd like to change to something different, just to keep things interesting but the Mazda is so well specced (and delivering decent power), it's difficult to get anything similar without spending a fortune on extras and upgrades.

Any advice would be much appreciated.

Editor's note: This is a big, big issue and we're highlighting it this week to show how PCP deals, while fine for many, don't necessarily work for some.

Aidan: Let's get down to brass tacks from the get-go. The price of your car was €28,145. You had a deposit of €4,750, and your GMFV was set at €9,160 (30pc of full invoice cost). So, you financed €14,235 at 6.9pc over 48 months. Your PCP deal is not due to expire until the 182-plate period but you are considering an early settlement. This is not uncommon and it might suit some deals but it doesn't work in your case. You haven't paid enough off the capital of your loan to provide you with adequate equity to change yet.

Your mileage allowance of 15,000km/year does not suit your present circumstances. Your deal is based on a four-year-old car returning with 60,000km. However, you are only 2.5 years through the deal and you have covered 51,000km. So, excess mileage penalties could be hurting your value. I don't know by how much because I think your trade-in allowances of €16,000 to €17,000 sounds about right.

I thought there was more to this question when I first read it but now I think it is just a case of now not being the right time to change. Assess the situation again in July, at the 172-plate change. However, think about holding off until the end of your loan agreement. At that point, you might buy the car outright (either from savings or a loan or a mixture of both) at the €9,160 settlement figure. Don't trade it in under the PCP terms, as you will pay a mileage penalty. If, by that time your car has amassed around 95,000km, then this is still a perfectly acceptable odometer for a four-year-old car. Assess any existence of equity if you were to trade-in the car under a new deal, with you as the owner, or what you can get by selling it privately.

Eddie: I hope people take notice of this. It goes to show how the devil can be in the detail. Your APR is high enough but you could handle that; your mileage allowance is too low for you now. You can't handle that. I'm going to suggest two routes:

1. Go to your dealer and outline your situation. See what they can come up with. If not happy, go to another brand/dealer, and another brand or dealer if needs be. You are NOT tied to the dealer you bought from, nor the brand you currently have. Don't forget that. Yes, you have to repay the outstanding monies, of course, but you are entitled to go to other dealers to get the best deal so you get as much as possible for this car and have as low an outlay as possible on the next one. NB: You still owe the outstanding PCP money to the credit outlet but you are entitled to get as much as you can for the car - from wherever - before clearing your debt.

Tell the dealer(s) what you can afford to repay and what mileage you need. Also, tell your current dealer you can (and I believe you can) get a better APR elsewhere. Keep cool on this. You have options: you have outlined most of them yourself. What you need, if possible, is to get off the merry-go-round of racking up mileage penalties on a depreciating car. I think if you set out your stall clearly and honestly you will be surprised at the reaction. You represent a business proposition and this is a good time to test the water.

2. If that does not work out, you should consider running the full length of the PCP term and doing exactly what Aidan says. I would like to think sense will prevail. We will be most interested to see how you get on. Shopping around will most likely guide you to the best route to take.

I bought a 2011 Ford Focus Titanium 1.6 diesel last year. Nice car and I like it. I like the spec and the comfortable motorway driving (drive home to Cavan from Dublin every second weekend). I currently do around 10,000km a year. However, I'm being sent to France for nine months with my job and don't know if I should get rid of the car. I really need something to travel to Cavan when I come home but I'm worried about leaving a diesel car sitting, probably only being driven once a month. Is this a problem? Should I change to a petrol? If so, what? I may like to change it again when I come back and don't want to lose a lot of money. I don't have a lot of money to play with, (€2,000-€3,000 along with my current car). Any advice appreciated.

Aidan: You like your car and if you weren't going to France, you would keep it. Then I don't think you need to change just yet. You don't need a diesel car as your annual mileage is low but you travel mostly on motorways, so you can still justify it for the moment. I don't see any major problem from a mechanical perspective with driving your car from Dublin to Cavan once a month for the next while. The battery might drain, so consider disconnecting it every time you leave or putting it on trickle charge if it's an option. Just be sure to exercise the car through the gears when you get the opportunity to drive it. Also, get a full service on it before you leave to ensure the fluids are topped up. Maybe even give the car to someone at home to drive every now and then if you are really worried. They can collect you from the airport in it. If you buy a different car, you won't properly get the benefit of it until you return and maybe lose out on any remaining warranty period. Depreciation on your own car will be somewhat offset by your mileage remaining fairly static as all other cars in the market cover more ground. Service the car, hold tight, and get back in touch when you return.

Eddie: Sit tight. You'll lose more money by changing now than in a year's time or so. Consider getting a car cover if it's not going to be garaged. Worth it to keep it clean and protected, partially, from any potential big freeze.

I have a 2009 VW Passat, 2-litre diesel Bluemotion; 90km on the clock. I want to upgrade to either a SUV or reasonably high-powered car, secondhand. Annual mileage is 15,000km. Budget is trade-in value of Passat, plus €15k/€20k. I'm torn between SUV, such as Tucson or Tiguan (due to styling, height etc) but on the other hand would love an RS Octavia, or similar-powered Audi A4. Would love to hear your recommendations or advice on these or other options. I don't have kids, so seating/size are not considerations.

Aidan: You still need to determine whether your preference is for an SUV or a higher-powered hatch/saloon. The Tiguan might go close enough on all fronts. The old Tiguan in 'Sport and Style' trim comes with VW's 2.0 litre diesel 140bhp engine as standard. See if you can drive a hard bargain on a 150bhp version on a 152-plate. It should be plenty powerful and you get the SUV style that you seek. As for the Tucson, you know that it ticks your SUV box but not the high-power diesel engine one. You've got to determine which carries more weight; but that's a personal decision. I drove the Octavia RS 2.0 TDi DSG around Moll's Gap in Kerry. Effortless power. Smashing car. Get the DSG version and shoot for a 141/142 model. Same goes for a 177bhp version of the Passat CC. However, considering your mileage, I think the Golf GTi is screaming for your attention.

Eddie: Forget the SUVs and buy yourself something with a bit of performance. Normally I'd include the Octavia RS in my options but seeing as room is not a priority go for the refined Golf GTi, or the better-value and more driver engaging SEAT Leon Cupra. Two crackers. Enjoy.


We love getting your enquiries but can't reply to all queries in as full a manner as this due to time and space restraints. We try to deal with as many as possible via email. But you can help us help you if you make sure to include the following critical elements in your query:

* Total budget.

* Annual mileage.

* Size of car required (number of seats).

* Present car (make, model, year and mileage).

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