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Old 25-02-2021, 04:25 PM   #61
andy665
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Originally Posted by Starbuck88 View Post
When I was selling, I'd always try and steer customers towards a deal we could do with a low initial deposit.

For example, If someone wanted to spend £250 a month, I'd point them at something that would cost that a month but would only require circa £250 - £500 deposit. Rather than point them at a vehicle and spec and say, sure you can have this for £250 a month but you will need to put in £5,000.

Genuinely I'd say 8 out 10 people were stretching as it was and I wanted to be able to sleep at night. Those that 'seemed' that way, I would always build in GAP to the quote and also build it in at the cheaper rate where I wouldn't get as much commission.

For those people, I know for a fact were extremely happy come change time and came back to me, they knew they could get a nice new car/new shape similar spec and wouldn't have to fork out 1,000s for the privilege to start again.

I saw colleagues customers come back in expecting that because they paid a hefty deposit beforehand, their replacement wouldn't need the same deposit as they thought once they were in a pcp cycle, when they came to change, their original deposit built equity in the deal. Which it doesn't.

If a person is within their means then do as they please, that's the bottom line of it and for car people like us, we're all a bit more attuned to this but for the everyday man or woman, far too easy to load themselves up and get in a position where they're a bit stumped when it comes to the end of the PCP.
Thats the difference between a salesperson who just wants to sell today versus a salesperson who thinks longer term and ease of repeat business - if everyone was like you I would not be in a job

I always used to say that if you sold to someone who you were then worried about bumping into in the middle of a supermarket or when out in the evening then you need to review how you are selling
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Old 25-02-2021, 04:46 PM   #62
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Originally Posted by andy665 View Post
Thats the difference between a salesperson who just wants to sell today versus a salesperson who thinks longer term and ease of repeat business - if everyone was like you I would not be in a job

I always used to say that if you sold to someone who you were then worried about bumping into in the middle of a supermarket or when out in the evening then you need to review how you are selling
This is it Andy. I always wanted to help people buy a car, rather than sell them a car. It meant I spent time with people who told me they had no intention of buying today, ending up making a purchase with me because they'd been around other dealers for different makes and being treated with utter contempt because they'd said such a thing. Had quite a few.

I saw so much going on during my selling years that it made me quit in the end. I won't say what straw broke the camels back so to speak but I fetched a black bag, sweeped my arm across my desk to empty all my belongings into it and off I went.

I'd go into sales again but only if I had my own car lot.
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Old 25-02-2021, 04:57 PM   #63
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With respect, I don't think you do understand the product based on that comment. The deposit isn't a refundable deposit like you might put down on a rented property to protect the landlord against damage. It's essentially a front-loaded payment against the depreciation.

PCP is really simple - the two figures that really matter are the list price of the car and the final 'balloon' payment, which is roughly what the value of the car will be at the end of the term. Your deposit and monthly payments have to cover the difference.

PCP works well for cars with good residuals, but it can be a trap for people who just see cheap monthly payments and don't understand that their £25,000 car will be worth £20,000 as soon as it leaves the forecourt. When you factor in interest, it's possible to be £7,000-£8,000 in negative equity very easily. Fine if you see the term through, but if you want to get out early you are effectively trapped in the contract.
I think you misread my comments. Firstly, I have worked in finance for 30+ years and fully understand how PCP works. I currently write commercial terms for various finance companies who specialise in retail credit lending. If you read my earlier post, I stated this was the first PCP agreement where I have been in a negative equity situation and lost my entire deposit. I understood and accepted that risk when I put down the deposit and took the car. I was not berating the way PCP works, or the finance provider or the fact I came out of the deal underwater.

I was simply stating that various types of agreement exist to suit the situation and the requirements of the borrower. On that particular deal, I lost out. It won't stop me using PCP because they are a great mechanism to permit me financing expensive cars at an affordable price.


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Old 27-02-2021, 12:24 AM   #64
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I think you misread my comments. Firstly, I have worked in finance for 30+ years and fully understand how PCP works. I currently write commercial terms for various finance companies who specialise in retail credit lending. If you read my earlier post, I stated this was the first PCP agreement where I have been in a negative equity situation and lost my entire deposit. I understood and accepted that risk when I put down the deposit and took the car. I was not berating the way PCP works, or the finance provider or the fact I came out of the deal underwater.

I was simply stating that various types of agreement exist to suit the situation and the requirements of the borrower. On that particular deal, I lost out. It won't stop me using PCP because they are a great mechanism to permit me financing expensive cars at an affordable price.
Sorry but regardless of your background or qualification I still don't agree with your second paragraph. You didn't lose out, you paid a deposit and then gave the car back at the end, exactly as PCP is intended to work.

The final payment in most PCP agreements is set to be just slightly higher than the car is expected to be worth at the end of the term, based on the mileage limit you specified at the start of the agreement. If the car has performed well residual wise and is in good condition and under the agreed mileage limit, you might come out with a tiny bit of equity, but rarely would you see your full deposit back.

All the deposit does is adjust your monthly payments. High deposit = low monthlies or low deposit = high monthlies - the final payment is still the same.
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