GR86 Is 4.9% actually a good deal?

Swizzle

Swizzle

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Just looking for thoughts here, been looking at the finance deal and thinking that 4.9% isn't an amazing deal when a loan can be had at 2.8%

Ive been doing the sums and a straight 7 year loan is roughly 2k less than 42 months on pcp then another 42 month loan to pay off the lump sum

Is there any advantage to a pcp when the interest rate is high and the total needed is available on a standard loan?
 
Depending on your circumstances secured finance may be easier for some to obtain.

Most personal loans are rate for risk, so no guarantee you'll get the headline low rate.

If you want the best of both worlds do PCP with max deposit, 2 years and max mileage with the view you'll buy it. That'll give you the lowest total amount payable using Toyota's PCP.
 
Swizzle said:
Just looking for thoughts here, been looking at the finance deal and thinking that 4.9% isn't an amazing deal when a loan can be had at 2.8%

Ive been doing the sums and a straight 7 year loan is roughly 2k less than 42 months on pcp then another 42 month loan to pay off the lump sum

Is there any advantage to a pcp when the interest rate is high and the total needed is available on a standard loan?
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Personally the structure of the final payment works for me for PCP. Allows me to avoid financing the full amount at a longer term or put down a huge deposit now.

But, agreed, cheaper rates are available through your bank, just depends on your circumstances and personal preference.
 
The PCP finance works for me and IMO 4.9% isn't bad at all, especially as these rates are starting to eek there way up from different manufacturers.

I had been looking at a few Mercedes around the same price as the GR and they had been offering 6.9%. And I should say that I had been looking at the same car prior to the world getting turned on its head and remember it being 3.9%.
 
If it’s PCP is it 4.9% of the list price - GFV? Thus 4.9% of a smaller value? Rather than a loan that’s 2.8% of the full list price?

Or have I got that wrong?

With the Yaris I used the PCP time to save for GFV thus in total I pay less interest, but interest rates were much smaller
 
LU71KEE said:
The PCP finance works for me and IMO 4.9% isn't bad at all, especially as these rates are starting to eek there way up from different manufacturers.

I had been looking at a few Mercedes around the same price as the GR and they had been offering 6.9%. And I should say that I had been looking at the same car prior to the world getting turned on its head and remember it being 3.9%.
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BMW was 10.9%! Who are they using Wonga?!
 
The GRY deal with 0% was a strange one. Toyota probably didn't think they couldn't shift enough and needed to make sure. They probably played it too safe in hindsight.

4.9% is ok. German marques use much higher rates and higher GFVs as it means they earn more interest from you overall and they can also use this to support higher used prices. Some lucky people could get better rates elsewhere but it is not that simple and it's rare to find a PCP type product except with some specialists - ultimately it is much more difficult to underwrite GFV if you are not the manufacturer so it will be more expensive. You also need to remember that not everyone gets access to the best rates with the banks etc and getting an advance through your mortgage still costs you interest for the next 20 years!

You can find 0% deals from time to time but they are normally used to shift unpopular models or have inflated prices. Again, the GRY was an outlier. Both the car and finance rates should have been higher in my view. That said, it was also launched in a zero interest rate environment so it could be financed much cheaper in the back by Toyota than if it was launched now. The 4.9% for the GR86 also reflects that change.

Finally, you can still use the PCP product like a normal loan by overpaying instalments. That actually reduces the total interest you pay back. The trick is to reduce the GFV balance as early as possible. There's nothing to stop you doing that if you have the means.

We used to finance big pools of all sorts of vehicles and it's works quite differently for different cars, manufacturers and jurisdictions.
 
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Mintmansam said:
If it’s PCP is it 4.9% of the list price - GFV? Thus 4.9% of a smaller value? Rather than a loan that’s 2.8% of the full list price?

Or have I got that wrong?

With the Yaris I used the PCP time to save for GFV thus in total I pay less interest, but interest rates were much smaller
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4.9% is on the loan. The PCP product just has a different profile to a normal loan but both rates are applied to the amount you've borrowed. The GFV counts as an amount you've borrowed so will be charged interest.

The GFV is actually designed to end up costing you more interest. It just reduces your monthly instalments but not your overall cost!
 
My part exchange is worth roughly half of the purchase cost of the GR86, so I've chosen to use a bank loan at 2.8% for the remaining £15k as opposed to using the PCP option, which saves me around £1.5k in interest over 5 years and still keeps the monthlies under £300.

PCP can be a good option for various people, for example if you:
1) want the flexibility of returning the car at the end of the finance period with no strings attached (bonus if you don't want to own the car and believe the GFV is vastly under/over valued)
2) aren't eligible for a low interest bank loan
3) care about keeping the monthlies low
4) don't want a long term loan and haven't got cash to pay upfront

Mintmansam said:
If it’s PCP is it 4.9% of the list price - GFV? Thus 4.9% of a smaller value? Rather than a loan that’s 2.8% of the full list price?

Or have I got that wrong?

With the Yaris I used the PCP time to save for GFV thus in total I pay less interest, but interest rates were much smaller
Click to expand...
PCP interest is calculated annually on the total amount of outstanding credit, which includes the GFV as that is just an optional balloon payment.
 
In the context of current PCP rates 4.9% is a good deal. As posted above a good halfway house is to put a bigger deposit down and then the amount financed is less. The alternative way to think about it is whether or not you can beat a 4.9% return with cash in the bank - if you can then PCP is worth it. If you can get a 20k+ loan for under 5% then its something to consider but remember only 51% of people need to get the headline rate for it to be advertised - whether or not you’re in the 49% or 51% is only for you to know.

Also as far as I know, upping your monthlies to reduce GFV won’t reduce the total interest paid - please correct me if I’m wrong though. As far as I understand the only way to reduce the total interest paid is to increase the initial deposit, which counts as a cash contribution thus reducing the total financed amount.
 
beorg said:
My part exchange is worth roughly half of the purchase cost of the GR86, so I've chosen to use a bank loan at 2.8% for the remaining £15k as opposed to using the PCP option, which saves me around £1.5k in interest over 5 years and still keeps the monthlies under £300.

PCP can be a good option for various people, for example if you:
1) want the flexibility of returning the car at the end of the finance period with no strings attached (bonus if you don't want to own the car and believe the GFV is vastly under/over valued)
2) aren't eligible for a low interest bank loan
3) care about keeping the monthlies low
4) don't want a long term loan and haven't got cash to pay upfront


PCP interest is calculated annually on the total amount of outstanding credit, which includes the GFV as that is just an optional balloon payment.
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Ah thank you and thanks @Prestonese

For me I recall not being able to actually get cheaper than 1.9% (GR Yaris PCP) so it allowed me an easy way to get into the car, can’t believe it now but I thought if it’s not worth £15k I can hand it back.

I would say go for the loan in this market if you can then
 
gooly said:
In the context of current PCP rates 4.9% is a good deal. As posted above a good halfway house is to put a bigger deposit down and then the amount financed is less. The alternative way to think about it is whether or not you can beat a 4.9% return with cash in the bank - if you can then PCP is worth it. If you can get a 20k+ loan for under 5% then its something to consider but remember only 51% of people need to get the headline rate for it to be advertised - whether or not you’re in the 49% or 51% is only for you to know.
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The problem with some manufacturers is they don't typically allow you to change the GFV (you can actually do it by the way) so you end up only saving a little bit of interest even if your monthly amount is reduced. So either you take out a loan else where or make higher repayments to mimic a normal loan repayment profile. Both requires a bit more effort though and car dealers know this.....
 
Mintmansam said:
Ah thank you and thanks @Prestonese

For me I recall not being able to actually get cheaper than 1.9% (GR Yaris PCP) so it allowed me an easy way to get into the car, can’t believe it now but I thought if it’s not worth £15k I can hand it back.

I would say go for the loan in this market if you can then
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That depends if it was a balloon payment or GFV. A balloon doesn't guarantee your resale value so you have to stump up the difference if you can't sell the car for more. The GFV is underwritten by Toyota so if values fall off a cliff you can walk away and Toyota wears the risk - it's also why second hand cars for some brands are always so expensive!

These concepts are often so misunderstood.
 
Prestonese said:
That depends if it was a balloon payment or GFV. A balloon doesn't guarantee your resale value so you have to stump up the difference if you can't sell the car for more. The GFV is underwritten by Toyota so if values fall off a cliff you can walk away and Toyota wears the risk - it's also why second hand cars for some brands are always so expensive!

These concepts are often so misunderstood.
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You can always walk away at the end of a PCP deal.
 
beorg said:
You can always walk away at the end of a PCP deal.
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Be careful there. Some are not PCPs where the manufacturer guarantees the value. I think most new cars deals are these days but always read the fine print.
 
Prestonese said:
Be careful there. Some are not PCPs where the manufacturer guarantees the value. I think most new cars deals are these days but always read the fine print.
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Finance agreements are heavily regulated in the UK. You could walk away from one and return the car halfway through the agreement (providing half the owed amount has been repaid) under the voluntary termination agreement.

I am not aware of any PCP deals where the finance company (who owns the car until you've paid the optional GFV payment!) would be able force you to keep the car.
 
beorg said:
Finance agreements are heavily regulated in the UK. You could walk away from one and return the car halfway through the agreement (providing half the owed amount has been repaid) under the voluntary termination agreement.

I am not aware of any PCP deals where the finance company (who owns the car until you've paid the optional GFV payment!) would be able force you to keep the car.
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They do exist. Maybe not for new cars by the main manufacturers (I can't be sure without looking at each one) but they do exist in the broader car market. It's probably only about 5-10% of the market and probably shrinking. The obligation with these is for the borrower to repay any balloon at the end. It might be called a conditional sale or lease purchase agreement though and I'm convinced it has been missold to many!
 
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