£45.60 cost to finance a new car for 2 years? Is this true?

[alvinlwh]

Hi all

I am looking at buying a new car on Ford Options and the online finance quote comes up with this:

 

Finance plan Ford Options

Finance term 25

24 payments of £146.90

Cash price £15,765.00

Customer deposit £4,400.00

Deposit allowance £750.00

Finance facility fee £10.00

Amount of credit £10,615.00

Purchase fee £10.00

Total charge for credit £795.60

Total amount payable by customer £15,810.60

GMFV (optional final payment)£7,865.00

Mileage per annum 9000 miles

Excess mileage charge (pence per mile)7.2

 

So the cost of the car (before any negotiation, just list price) is £15765

Total cost to myself after 2 years (including deposit and GMFV) is £15810.60

Difference = £45.60

 

Was my calculation right? I am ignoring the £750 "deposit allowance" because it is not coming directly from my pocket but I did include the 2 x £10 fees. Basically I see this and other "dealer's discounts" as just smoke and mirrors to confuse the customer. They are charging me £795.60 in interest and they are giving me £750 to pay them.

 

If my calculation is right, then is this a good deal? I do know that I do not actually own the car on PCP and I need to find £7865 for the GMFV after 2 years.

 

P.S. I am interested to know where the 4.2% APR came from and where is it being applied to.

[blackknight]

You calculation is correct,but the car is only worth £8000 after 2 years and you will have paid £15810 for the car.

The 4.2% is the interest charge for borrowing the money and is applied to the £10615

[Raykay]

The difference is only £45.60, but two years later:

If you had bought it for £15,765, it would still be worth something - possibly around £7,000 - and if you sold it for that, it would only have cost you around £8,000 for the two years.

 

 

With the PCP plan, it will cost you £15,810.60 for the two years, and then give the car back and have nothing, or pay a further £7865 to keep it.

[alvinlwh]

Thanks to both. While it is true about it will worth less 2 years later, it will still be the same if I paid cash or use a bank loan instead. With a bank loan, the cost will be much more than £45.60.

 

Thanks for confirming my calculations!

[ericsbrother]

You are missing the bit about not actually owning the car after 2 years. To own the car it costs you a total of £23,675.10

[blackknight]

No,the final payment of £7865 is included in the £15810.60 total amount payable

[CraigMcK]

I believe you are incorrect. That fee is not included as part of the £15k if is optional and is in addition if you was to keep the car.

 

Check with them to be sure

[alvinlwh]

I believe you are incorrect. That fee is not included as part of the £15k if is optional and is in addition if you was to keep the car.

 

Check with them to be sure

 

Which part is incorrect???

[alvinlwh]

You are missing the bit about not actually owning the car after 2 years. To own the car it costs you a total of £23,675.10

 

How did you come up with £23,675.10???

[CraigMcK]

Which part is incorrect???

 

 

 

They will want another £8k if you want to keep the car, so total payable is £23k

[alvinlwh]

They will want another £8k if you want to keep the car, so total payable is £23k

 

I am sorry but are you sure you know how PCP works???

According to this http://www.thecarexpert.co.uk/car-finance-pcp-explained/

GMFV is optional, pay up and own the car -or- pay nothing and return the car.

 

"This final value then needs to be paid to settle the finance agreement, either by returning the car or paying out the remaining amount."

 

Therefore:

24 payments of £146.90 equals £3525.60

Plus deposit £4,400.00

Plus Finance facility fee £10.00

Equals £7935.60 according to my calulator.

 

If I decided to keep the car after 2 years

Add Purchase fee £10.00

Add GMFV (optional final payment)£7,865.00

Equals £15810.60 according to my calculator.

Which also equals to their figure of Total amount payable by customer £15,810.60.

Why the need to add the optional payment to the total again???

[i hate bailiffs]

You are missing the bit about not actually owning the car after 2 years. To own the car it costs you a total of £23,675.10

 

+1

[alvinlwh]

+1

Should be -1. Wish people will stop spewing out nonsense and misinformation about things they do not know.

 

I just came back from the dealer with a fully personalised quote after negotiation.

 

Cost of car: £14788

 

Deposit: £4000

24 monthly payment of: £121.84

Finance Facility Fee: £10

Total cost at 2 years: £6934.16 (£4000 + 24*£121.84 + £10)

 

Return the car after 2 years, walk away with no further cost.

Keep the car after 2 years, pay GMFV of £7865 and purchase fee of £10.

Total cost after 2 years: £14809.16 (£6934.16 + £7865 + £10)

GMFV is optional, not payable if returning the car after the end of term.

 

According to this Telegraph example: http://www.telegraph.co.uk/motoring/how-to/10339529/How-to-understand-PCP-finance-plans.html

It is the total of:

Deposit + Total of montly payment + Fees + Final payment

NOT Final payment * 2

[blackknight]

+1

[sequenci]

How confusing!

[blackknight]

Its not a further 8K, it is already included in the total amount payable.

[Conniff]

Not forgetting £700 per 1,000 miles over the mileage allowance.

[alvinlwh]

Not forgetting £700 per 1,000 miles over the mileage allowance.

 

Wrong, 1000 * 7.2p = £72.00

 

And this has nothing to do with the finance question other than to confuse the situation even more. What's next? 100,000 miles in 2 years means more added servicing and tyres costs as well? Maybe I should also add the cost of topping up the aircon as well?

 

My question is about finance cost for a new car for 2 years, not the running cost a car for 2 years. I know I do about 8000 miles a year and I entered the correct information on the form and there is no need to confuse the matter further.

[alvinlwh]

How confusing!

 

It is confusing because people who knows little or nothing about the topic start giving out nonsense and rubbish.

[Conniff]

Close

 

 

"Wrong, 1000 * 7.2p = £72.00"

[Conniff]

Wrong, 1000 * 7.2p = £72.00

 

And this has nothing to do with the finance question other than to confuse the situation even more. What's next? 100,000 miles in 2 years means more added servicing and tyres costs as well? Maybe I should also add the cost of topping up the aircon as well?

 

My question is about finance cost for a new car for 2 years, not the running cost a car for 2 years. I know I do about 8000 miles a year and I entered the correct information on the form and there is no need to confuse the matter further.

 

 

If you know so much why have you bother coming here and asking?

[alvinlwh]

If you know so much why have you bother coming here and asking?

 

I came here to ask to confirm if my calculations are correct, which blackknight did. I asked specifically about the cost of finance. I did not ask about the cost of mileage which is related to the use of the car, not the finance of the car. However I then get bombarded with misinformation and rubbish by people who know nothing about the subject (or do not know how to operate a calculator). The difference between £72.00 and £700 is quite huge don't you think? So is the difference between £23,675.10 and £15,810.60. I will expect a site that support the consumers at least be accurate and correct with calculations about money.

 

This forum was much better in 2006 where information was useful, simple and most importantly, accurate.

[Conniff]

My apologies.

[Raykay]

Another consideration is the excess mileage, are you likely to stay under 9000 per annum? (750 per month)

[alvinlwh]

Another consideration is the excess mileage, are you likely to stay under 9000 per annum? (750 per month)

 

Yes, I have my MOTs for the past 5 years and do around 8500 per year. Which is why I picked 9000.