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Discussion Starter · #1 ·
So the SQ5 was built in wk5 and I'm picking it up 1st March. All very exciting.

Decided to finance £25k of it for various reasons.

Oracle finance offering 6.99% for straight HP deal.

Audi's HP rates are huge, but they have come up with a twist and are offering PCP at 6.7% with a £2k balloon payment - actually works out cheaper than the HP deal overall.

Both seem to be able to be cancelled/paid off with minimal fuss.

I've never done PCP - is there a catch? I want to own the car outright at the end of the agreement.

Could probably get a cheaper personal loan I guess if I could be bothered. Both deals above are very quick and easy to arrange, which appeals.

Thoughts?
 

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PCP is flexible, pay it if whenever you like.

The point is at the end of the term you have 3 options;
1. Pay the outstanding balance (and the car is yours)
2. Give the car back and say see ya later (no strings)
3. Trade the car in for another Audi, usually the car is worth a few K more than the final payment so the difference can be used as a deposit on a new car (most people use it as a down payment on a new PCP). I say another Audi as BMW for example are never going to give you a trade in value to comfortably overpay the outstanding finance.

If you go with option 1 and then sell it privately you will have a few K to put down as a new deposit on another car.

Essentially its designed for a leasing style agreement, but with the flexibility to own the car whenever you want by paying it off, or just giving the car back if you want to treat it like a lease at the end.

Generally I would say only do it if you plan to swap the car at the end for another new one. Otherwise as you point out, a bank loan will beat PCP for pure cost out of your pocket - but if you can't be bothered to save a few hundred quid then PCP is nearly as cost effective as a good old fashioned loan.

I've also found that cash deals can attract bigger discounts, particularly if the PCP is a silly low APR (which 6.7 is not, I'm talking 2% and less). I am weighing up 14% discount cash deal and getting a 5 yr bank loan, vs 5% discount and 2.7% APR 42 month PCP - they both stack up to similar upfront and monthly costs and either way at 3 years I could pay the loan off as a lump and it would be the same as the lump at the end of PCP... (this is on a Skoda Octavia)
 

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Only catch is the smaller the deposit the better the deal. They are set up so you are left with a deposit to continue buying.

These are really rough to highlight what you have to watch for.

Big deposit
Car costs = £40,000
Customer deposit (trade in) £10,000
Monthly = £360 x 48
Balloon = £15,000
Trade value of car = £17,000
Deposit to use on next car = £2000

Small deposit
Car costs = £40,000
Customer deposit (trade in) £1000
Monthly = £556 x 48
Balloon = £15,000
Trade value of car = £17,000
Deposit to use on next car = £2000

Issue is you have had smaller payments every month but you lose your deposit for that benifit.
 

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PCP are set up really well now as they don't want you to hand back the car they want you to have a nice little amount to use as the deposit on another PCP.
When they first came out Ford got their fingers burnt as people were handing back cars worth less than their balloon.
 

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Also - you can usually only put up to 40% deposit in, so if you plan to finance 25K on an SQ5 (which I make to be ~50% of a sensible spec) you may be out of luck. You would be having to put slightly less in up front and financing more like 30K.
 

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Hi José,

I managed to put (as close as damn it) 50% down on my Audi PCP - I wanted to get the monthly payments to a particular figure and the dealer did it.

My advice is to ask questions (to the dealer or on here?) until you are happy with whatever you go with!

Justin
 

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Hi José,

I managed to put (as close as damn it) 50% down on my Audi PCP - I wanted to get the monthly payments to a particular figure and the dealer did it.

My advice is to ask questions (to the dealer or on here?) until you are happy with whatever you go with!

Justin
Interesting - I was going by the small print on my agreement. But terms only mean something if THEY want them too! The number of deals (be it mortgages, insurance etc) I've had over the years that go against the policy terms is silly!
 

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Tiny tip:
Am usually a cash buyer of vehicles but I took out Audi PCP deal to take advantage of the 2 year free servicing deal.
Original intention was to clear the full amount after a month but (helpful) dealer advised that I should make a minimum 3 month's payments or, the free servicing facility would be cancelled / removed.
Have heeded his advice.
 

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He has told you a little untruth there: They cannot cancel the free servicing whenever you cancel but the dealer gets the finance commission clawed back if you settle before you make three payments!
 

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Oh, I see..
Thanks.
And we wonder why car salesmen have an image reputation problem...
 

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Exactly! Unfortunately I have to work with the buggers day in, day out as I work in vehicle finance.
 

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Discussion Starter · #12 ·
Some interesting chat on here.

I'm mainly thinking of taking it as it seems mega convenient which helps as I'm too busy to sort out anything else at the mo.

So the main thing for me is, as long as I can cancel the PCP deal without too many penalties when I sort out the cash at a later date, then I'll probs just do it so I can pick the car up 1st March.

I hadn't thought about asking for free servicing...I'm not getting it from a local dealer though, so not sure how that would work.
 

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I'm doing a PCP on mine, 50% down in cash then £178 a month for 4 years with a balloon at the end (£23k I think) all in at 5.9% without going and looking for the agreement. I'm looking round for a used R8 too but I'm paying 100% cash for that.

MT
 

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Just dug out my paperwork:
Purchase price £48,534. Deposit of £22,500. 36 payments of £275 followed by a balloon payment of £22,097. Prices based on stated APR of 6.1% and 15,000 mileage allowance per annum.
2 years free servicing included but given comments from Booster above, am now looking into paying off the outstanding balance shortly.
 
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