XC90 GFV on PCP

[volvocamper]

I usually PCH my cars over 4 years (6k miles/year) so hand them back and have another having paid the lease payments - simple solution.
New MY22 B5 D XC90 due Mar/early April, likely retire in 4 years so initial thought is this will be last one the I will downsize when I retire but, having a thought that in 4 years time and with so few miles on it may want to keep it - so have looked into PCP. GFV on PCP is £28k in 4 years time (24k miles) BUT over the 4 years it will cost £8k more on PCP than PCH. Question is do Volvo set the GFV low on these cars and if so by what sort of margin? If I decide to let it go back it will have cost an additional £8k unless the FV is £8k more than the GFV in which case I could settle the balloon payment and ‘retrieve’ the £8k if I sold it or just keep it (having paid the additional £8k over the 4 years + the £28k balloon. Surely Volvo Financial Services would not set the GFV £8k below likely FV would they to build in some equity?
Thoughts/experiences of these on recent PCP pls?

[XC90Mk1]

All alien to me. I simply buy cars with cash and keep them until they are not reliable. That includes the current XC90 I have had that I bought from Volvo for 1/3 of its new cost and has never broken down.

Can’t believe anyone would spend that much on a car as a private buyer but each to their own.

I assume you have not thought of just buying one for 28k then owning it outright and not having these future considerations?

[MikeGMT]

You can’t really compare a PCH to PCP. True the monthly payments will be higher on a PCP but this reflects the options at the end of the term, and as you have pointed out, the option to buy or P/X. In effect you are paying off part of the balance of the car, more in line with a normal finance deal. To turn it round slightly quoting your figures of £8k more on a PCP; if you paid the same monthly payment as for leasing, the GMFV at the end of the PCP would be somewhere around £36k.

Having gone the PCP route on a few vehicles (Volvo) I have always found the GMFV to be set low to ensure their is positive equity at the end of the term, which I have always found to be the case.

Looking at 4 year old XC90’s at my local Volvo Dealership, depending on model they are somewhere in the region of £38K to £42k for 17/18 model years. So as a rough idea you would possibly break even depending on the dealer valuation, but of course a lot of other factors come into play depending on what you plan to do.

[Director76]

Another option, as you PCH rather than BCH, would be to buy the car from the lease co after 4 years if you still want it.

You don’t have to decide for 3.5 years, you stick with what you know in the meantime on the PCH route, your £8k is safe and if the car turns out to be a dog, or you end up having to have it crash repaired you can hand it back and walk.

I’ve leased (PCH and BCH) our cars for the last 7 years or so and I too like the simplicity, I’ve asked for quotes to buy the PCH cars each time, but always leased again. You don’t get a great deal any more, maybe a bit less than forecourt, but not much, but your getting a car with 100% history, and I know you look after your cars so it would be ‘showroom’
D76

[volvocamper]

Originally Posted by Director76

Another option, as you PCH rather than BCH, would be to buy the car from the lease co after 4 years if you still want it.

You don’t have to decide for 3.5 years, you stick with what you know in the meantime on the PCH route, your £8k is safe and if the car turns out to be a dog, or you end up having to have it crash repaired you can hand it back and walk.

I’ve leased (PCH and BCH) our cars for the last 7 years or so and I too like the simplicity, I’ve asked for quotes to buy the PCH cars each time, but always leased again. You don’t get a great deal any more, maybe a bit less than forecourt, but not much, but your getting a car with 100% history, and I know you look after your cars so it would be ‘showroom’
D76

Hi D76, nice to hear from you. Like you I have always PCH as like the simplicity and over 4 years has been imho lower cost than PCP. I have bought some in the past but resold to friends/family, never kept one myself.
However, the regs seem to have changed in recent few years - I tried to buy my wife’s Mazda in Oct last year and my XC90 earlier this month but you can no longer buy them on PCH, they HAVE to go to the collection agent for the finance company (Mazda and Volvo own Financial Services in my 2 examples) and go on to usually BCA outlets it seems. The dealer supplying my soon to arrive new XC90 tried to buy it from Volvo FS but even they couldnt! I bought my Touareg in 2018 from VWFS for friend but VWFS now state categorically there is no way to buy from them a PCH car.
I guess only way to buy is to go to the auction (or online) for the day my car is being sold but it is a faff and I know has done 200+ miles since it left me 10 days ago. As you have said I do indeed really cherish my cars (the collection agent said he could only declare my car as concourse condition) hence my thought to go PCP so I could buy if i wished but the £8k premium for this could pay a deposit on the next car perhaps - in 4 years time low mileage diesel XC90’s could be in huge demand or no interest (perhaps depending upon and additional RFL taxation between now and then) and i just did not feel I could take that risk so PCH it is I think as I know the cost then. It is a lot of money to spend over 4 years on a car but we use it for our hobby (heavy caravan) + company will pay about 1/3 of the cost as company car opt out, another 1/3 would be BIK tax if I had a company XC40 for example if diesel so final 1/3 will be down to me but hey ho i like them, dont drink/smoke/shoot/golf/gym etc and you only live once!!!!
Electric option would mean vvvv low BIK tax but wont tow 2000kg caravan very far and would be an XC40 not a 90.
How are you getting on with your car, do you like it as much/more than the last one?
I had to order the Nappa leather seats as did not want to have any vinyl in the rear seats and have ordered PS on this one (seems last of the R Design Pro diesels and not possible to have air suspension and diesel in MY23 XC90).

[chrisrixy]

I'm not sure PCP is designed for someone who actually wants to pay the final payment and keep the car.
If you are certain to keep the car and could consider the 'balloon' payment up front then don't forget there is a 0% apr Conditional sale deal from Volvo Finance - requires a 50% deposit (although the £4k Volvo Finance contribution on an xc90 can be included in this) and then pay the balance over 36 months with no interest . Does require a large initial outlay so not ideal, but avoids any interest payments and still gets the finance contribution.

[Director76]

Originally Posted by volvocamper

Hi D76, nice to hear from you. Like you I have always PCH as like the simplicity and over 4 years has been imho lower cost than PCP. I have bought some in the past but resold to friends/family, never kept one myself.
However, the regs seem to have changed in recent few years - I tried to buy my wife’s Mazda in Oct last year and my XC90 earlier this month but you can no longer buy them on PCH, they HAVE to go to the collection agent for the finance company (Mazda and Volvo own Financial Services in my 2 examples) and go on to usually BCA outlets it seems. The dealer supplying my soon to arrive new XC90 tried to buy it from Volvo FS but even they couldnt! I bought my Touareg in 2018 from VWFS for friend but VWFS now state categorically there is no way to buy from them a PCH car.
I guess only way to buy is to go to the auction (or online) for the day my car is being sold but it is a faff and I know has done 200+ miles since it left me 10 days ago. As you have said I do indeed really cherish my cars (the collection agent said he could only declare my car as concourse condition) hence my thought to go PCP so I could buy if i wished but the £8k premium for this could pay a deposit on the next car perhaps - in 4 years time low mileage diesel XC90’s could be in huge demand or no interest (perhaps depending upon and additional RFL taxation between now and then) and i just did not feel I could take that risk so PCH it is I think as I know the cost then. It is a lot of money to spend over 4 years on a car but we use it for our hobby (heavy caravan) + company will pay about 1/3 of the cost as company car opt out, another 1/3 would be BIK tax if I had a company XC40 for example if diesel so final 1/3 will be down to me but hey ho i like them, dont drink/smoke/shoot/golf/gym etc and you only live once!!!!
Electric option would mean vvvv low BIK tax but wont tow 2000kg caravan very far and would be an XC40 not a 90.
How are you getting on with your car, do you like it as much/more than the last one?
I had to order the Nappa leather seats as did not want to have any vinyl in the rear seats and have ordered PS on this one (seems last of the R Design Pro diesels and not possible to have air suspension and diesel in MY23 XC90).

Good to hear from you too! Interesting stuff…we were offered our PCH Tiguan by VWFS back in November 2020, but due to COVID our need for two cars largely evaporated and we’ve managed with one since.

As for old XC vs current, it’s swings and roundabouts really. I’m liking the HK audio and CarPlay a lot, the larger hybrid battery and bigger fuel tank is really useful, and somehow the overall fuel efficiency is better and it sounds better. Plus the silver with piano black has really grown on me. I do notice the cost cutting here and there though and miss my crystal knob!
D76

[bluey_xc90]

Originally Posted by chrisrixy

I'm not sure PCP is designed for someone who actually wants to pay the final payment and keep the car.
If you are certain to keep the car and could consider the 'balloon' payment up front then don't forget there is a 0% apr Conditional sale deal from Volvo Finance - requires a 50% deposit (although the £4k Volvo Finance contribution on an xc90 can be included in this) and then pay the balance over 36 months with no interest . Does require a large initial outlay so not ideal, but avoids any interest payments and still gets the finance contribution.

Depends on the situation - when I bought my xc90 last June with a £5k contribution for taking the PCP it meant that I am effectively paying £1k in interest over 48 months and then have GFV of £22k which I will then payout.

The 0% option meant I'd have to have found £29k cash immediately (rather than just £10k from my older car which I sold) but had to be cleared in 24 months so outgoings of over £1k a month rather than under half of that.

Normally buy second hand at 1-4 years old but buying new worked out cheaper in this case, especially due to lack of interest if borrowing full amount to buy car at £40-50k..... (6-7% apr for anything over £25k, vs 4.9% on PCP then with £5k kickback). Also got a very good discount on the list price of about £10k off before the finance contribution. Shows I timed it right at start of last year!

[Frankiee]

Hi All,

I’m a car finance broker and extensive Volvo owner. I’m on my 4th Volvo in 7 years.
Here’s my take....
I believe Volvo set the GFV’s on there PCP products conservatively, and in line with the model age cycle. I’ve had both PCP and PCH with Volvo, as I just look at usership rather than ownership. There is no right or wrong answer here, it’s whatever is comfortable for your particular situation. Happy to help where I can www.octanefinance.co.uk

[volvocamper]

Thanks very much for all of the responses so far.
I am encouraged to hear from you that it seems to be swings and roundabouts re which way to go between PCH a PCP on my upcoming XC90. I have thought and thought about it and am exactly 50/50 re which way is best. Dealer wants to know though so am inclined towards PCH with an upfront saving of £8k over PCP and no risk of me wanting to sell it in 4 years and FV not being £8k over GFV so just cost up to £8k more. These cars are slightly older tech now being 7 years since launch and perhaps will want to switch to a newer model in 4 years rather than keep the xc90.
Will know in 4 years time if my decision was right or wrong!