sidicks Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] and enough of your derogatory actuarial comments...... Think you missed my sense of humour there maybe... [/ QUOTE ] Think you missed that I was also joking........... Link to comment Share on other sites More sharing options...
sidicks Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] Cost £16,480.00 Less: Net Deposit £1,500.00 (Amount Financed) £14,980.00 payable by (monthly) 36 payments of £318.39 1 payment of £8,686.00 Funding Cost 5.3200% LBF Margin 8.6497% Customer Nominal 13.9697% Customer PAF 11.1891% APR 14.9% Total Amount Payable 21648.04 Interest 5168.04 [/ QUOTE ] As above, you've used 36, not monthly payments and £318.39, not £318 as quoted in the original post. So my spreadsheet is correct , and would tie up with your numbers using your (different) assumptions. Also remember that the APR is defined as the effective interest rate over the period of the transaction, rounded down to the lower 0.1%, so that changing the monthly premium by a few pence won't necessarily change the APR. Hoever, this still does not explain why the £1,500 deposit is included in your total amount payable figure, as it's not part of the finance arrangement......., and while it doesn't affect the APR, it will affect the flat rate calculation. Sidicks Link to comment Share on other sites More sharing options...
Gareth Posted February 26, 2008 Report Share Posted February 26, 2008 The total amount paid on the finance is 35 payments of £318, plus the balloon of £8,686 to get £19,816. You seem to be adding an extra £318, plus the £1,500 (which shouldn't come into the calculation). As you can see I have worked on a 36 month term here. Dependent on the lender the normal profile is; Month one payment - £318, plus any credit facility fee Monthly payments - £318 x 35 Final payment - £8686 x 1 plus admin cost/option to purchase fee That is how the major lenders structure their loans. Also the £1,500 deposit DOES have to be added the overall cost of finance as he is not going to get it back Simon. The other major point here with PCP's that people forget is that the dealer is not obliged to give you a penny more than the GFV (guaranteed future value) that is put on the car at the start of the agreement. For example; If this GFV was £8686 after 36 months and the car was actually worth, say, £10,000.00 do you really think the dealer will tell you that or out of the kindness of his heart give you a cheque for £1,314? The answer in 99.9% of circumstances is a no. So therefore you would think you are in control to not take the GFV and sell the car for more to try and realise the £10k? Wrong again. These contracts give a very limited time for the GFV to be taken and as a result people just end up giving the car back and any equity that is in the car goes to the dealer/finance company. So in that case-and I can assure you it is 99.9% of the time-the Deposit of £1,500 has gone and has therefore funded the depreciation and interest in the car-and needs to be added to the overall cost of borrowing. Gareth Link to comment Share on other sites More sharing options...
Gareth Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] [ QUOTE ] Cost £16,480.00 Less: Net Deposit £1,500.00 (Amount Financed) £14,980.00 payable by (monthly) 36 payments of £318.39 1 payment of £8,686.00 Funding Cost 5.3200% LBF Margin 8.6497% Customer Nominal 13.9697% Customer PAF 11.1891% APR 14.9% Total Amount Payable 21648.04 Interest 5168.04 [/ QUOTE ] As above, you've used 36, not monthly payments and £318.39, not £318 as quoted in the original post. This still does not explain why the £1,500 deposit is included in your total amount payable figure, as it's not part of the finance arrangement....... Sidicks [/ QUOTE ] look at my two replies!!!! Also I don't think we are going to fall out over 39p a month are we??!?!?! It was as close as I could get to the £318 model. Link to comment Share on other sites More sharing options...
sidicks Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] As you can see I have worked on a 36 month term here. Dependent on the lender the normal profile is; Month one payment - £318, plus any credit facility fee Monthly payments - £318 x 35 Final payment - £8686 x 1 plus admin cost/option to purchase fee That is how the major lenders structure their loans. [/ QUOTE ] I agree - my point was that my spreadsheet is NOT wrong - it is accurate given the details supplied in the original post. [ QUOTE ] Also the £1,500 deposit DOES have to be added the overall cost of finance as he is not going to get it back Simon. [/ QUOTE ] But the amount being financed is £14,980 and surely the finance figures should all relate to the finance being provided? If the car was £10k more expensive, and the deposit paid was £11,500, then the amount being financed would be exactly the same, but by your reckoning the total cost of finance would be £10k more........... Surely that doesn't make sense? I assume that because of the nature of the PCP, then things have to be quoted this way? But I think you can agree that in the purest terms relating to the cost of the finance taken out, it is not relevant? Sidicks [ QUOTE ] Also I don't think we are going to fall out over 39p a month are we??!?!?! It was as close as I could get to the £318 model. [/ QUOTE ] I guess you are working backwards by changing the APR to get to the premium? As above, as APRs are only quoted to the lower 0.1%, that's why you can't get to £318 exactly. Don't worry though, you can give me the £0.39 next time I see you! Link to comment Share on other sites More sharing options...
Gareth Posted February 26, 2008 Report Share Posted February 26, 2008 I assume that because of the nature of the PCP, then things have to be quoted this way? But I think you can agree that in the purest terms relating to the cost of the finance taken out, it is not relevant? but the context here is a PCP so how cannot it not be relevent? This was a query about a specific finance product, not outright mathematical finance as you have expressed in some of your posts Not sure how far 39p goes these days though Link to comment Share on other sites More sharing options...
Gareth Posted February 26, 2008 Report Share Posted February 26, 2008 I guess you are working backwards by changing the APR to get to the premium? As above, as APRs are only quoted to the lower 0.1%, that's why you can't get to £318 exactly. No, not working backwards (or top down) but working from the add on percentage which drives every number in the finance agreement quoted. i.e. bottom up Link to comment Share on other sites More sharing options...
sidicks Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] but the context here is a PCP so how cannot it not be relevent? [/ QUOTE ] The point is, this implictly assumes that you just hand the car back at the end of the period, which would surely defeat the whole point of a PCP versus a hire purchase agreement?! By the time I see you (say 250 years), with compound interest, that 39p will be worth the price of a new Porsche 911 Turbo..... Link to comment Share on other sites More sharing options...
sidicks Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] No, not working backwards (or top down) but working from the add on percentage which drives every number in the finance agreement quoted. i.e. bottom up [/ QUOTE ] Surely 'bottom up' means looking at the known facts - premiums, loans, ballon etc and then calculating the APR from first principles...? Sidicks PS - You bored yet, shall we call it quits? Link to comment Share on other sites More sharing options...
Gareth Posted February 26, 2008 Report Share Posted February 26, 2008 The point is, this implictly assumes that you just hand the car back at the end of the period, which would surely defeat the whole point of a PCP versus a hire purchase agreement?! Yes, that is correct. I'm just stating the facts of the business Simon. That is one of the many reasons why PCP's are so bad for most people when they really understand how they work in truth. Link to comment Share on other sites More sharing options...
Gareth Posted February 26, 2008 Report Share Posted February 26, 2008 By the time I see you (say 250 years), with compound interest, that 39p will be worth the price of a new Porsche 911 Turbo..... Won't we both be pushing up daisies in 250 years?? If we take out the 39p (and yes, you really do need to get out more!!!) you are looking at this break down; Cost £16,480.00 Less: Net Deposit £1,500.00 (Amount Financed) £14,980.00 payable by (monthly) 1 payment of £418.00 - includes an assumed £100 doc fee 35 payments of £318.00 1 payment of £8,686.00 Funding Cost 5.3200% LBF Margin 8.6123% Customer Nominal 13.9323% Customer PAF 11.1587% APR 15.2% Total Amount Payable £21,734.00 Interest £5,154.00 Link to comment Share on other sites More sharing options...
Gareth Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] [ QUOTE ] No, not working backwards (or top down) but working from the add on percentage which drives every number in the finance agreement quoted. i.e. bottom up [/ QUOTE ] Surely 'bottom up' means looking at the known facts - premiums, loans, ballon etc and then calculating the APR from first principles...? Sidicks PS - You bored yet, shall we call it quits? [/ QUOTE ] No, you lost me there. I have worked this from the bottom up and that gives the correct APR's quoted. Not bored, but certainly thirsty Link to comment Share on other sites More sharing options...
sidicks Posted February 26, 2008 Report Share Posted February 26, 2008 [ QUOTE ] The point is, this implictly assumes that you just hand the car back at the end of the period, which would surely defeat the whole point of a PCP versus a hire purchase agreement?! Yes, that is correct. I'm just stating the facts of the business Simon. That is one of the many reasons why PCP's are so bad for most people when they really understand how they work in truth. [/ QUOTE ] This seems to confirm my previous comment that it is people's lack of understanding of PCPs, rather than the nature of the product, that causes the problem. If you know what's what in terms of finance, and understand how a PCP works, then it doesn't seem to imply that they are such a bad thing after all, for some people, in some circumstances etc etc. Sidicks Link to comment Share on other sites More sharing options...
gizze Posted February 27, 2008 Report Share Posted February 27, 2008 The only time I can see them being any good is when the dealer is throwing money into a car, like they do with A8's and 7 series, apart from that there is always a better option out there, or should I say cheaper option. Link to comment Share on other sites More sharing options...
Gareth Posted February 27, 2008 Report Share Posted February 27, 2008 [ QUOTE ] The only time I can see them being any good is when the dealer is throwing money into a car, like they do with A8's and 7 series, apart from that there is always a better option out there, or should I say cheaper option. [/ QUOTE ] Agreed. However this is never down to the dealer but the financial services arm of the brand in question. And it is designed to do one thing....shift metal that needs shifting! Link to comment Share on other sites More sharing options...
Gareth Posted February 27, 2008 Report Share Posted February 27, 2008 This seems to confirm my previous comment that it is people's lack of understanding of PCPs, rather than the nature of the product, that causes the problem. Not, not really Simon. What I am saying is when someone truly understands how a PCP works and takes a view on how it could suit them they nearly always choose not to go down the PCP route.I know that there are certain circumstances when a PCP would suit someone-even when they understand how it works-but that is in a total minority compared to the majority who are hearded into a PCP agreement. What specific circumstances are you thinking of where a PCP adds value for someone? Gareth Link to comment Share on other sites More sharing options...
gb110430 Posted February 27, 2008 Report Share Posted February 27, 2008 simon still waiting to hear from you.... Link to comment Share on other sites More sharing options...
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