Rust Issues

[Paul Colu]

Macadoodle has eyes and hands on the MG4. In my view he is merely pointing out areas he has concerns about and that information could be helpful for other owners whether they choose to ignore it or otherwise. I for one find it useful and worth noting. Not interested in other cars or manufacturers or build location just the MG4. Thanks Macadoodle for the info

Yes thank you Macadoodle for your views. Most informative. I still feel I would like to give the MG4 a go following the positive driving reviews I have read and my own test drive experience. However I am considering a PCP approach now rather than buying outright. I know this is more expensive but it does give me more options and in addition electric car evolution is moving at such a fast pace particularly in the area of batteries I may decide to change after 3 years or so.

 

[tsedge]

Yes thank you Macadoodle for your views. Most informative. I still feel I would like to give the MG4 a go following the positive driving reviews I have read and my own test drive experience. However I am considering a PCP approach now rather than buying outright. I know this is more expensive but it does give me more options and in addition electric car evolution is moving at such a fast pace particularly in the area of batteries I may decide to change after 3 years or so.

This is our main reason for using PCP, the MGFVs are good with MG and then no worries about whether it is a hit or a flop in the long run and flexibility to change. Avoids tying up capital too.

 

[Cocijo]

Has anyone ever experienced a pcp where the car is worth significantly less than the final value? It’s usually worth more and this is used as the hook to pull you in to another new car and another pcp.

 

[tsedge]

Has anyone ever experienced a pcp where the car is worth significantly less than the final value? It’s usually worth more and this is used as the hook to pull you in to another new car and another pcp.

No, always been worth more, but that is why a high MGFV is good as the amount financed is lower.

 

[Cocijo]

No, always been worth more, but that is why a high MGFV is good as the amount financed is lower.

Isn’t the interest paid on the full amount - that is purchase price less deposit? How does the FV affect this?

 

[the briggie]

Is it not this​

The amount you borrow​

With PCP the amount you’ll borrow is decided by the finance company’s prediction of how much the value of the car will drop over the term of the deal (usually 24 or 36 months), they also subtract the deposit from this to give them the total amount you’ll owe. You’ll then make monthly payments including interest.

The balloon payment​

Agreed at the start of your deal, this is how much the dealer thinks your car will be worth when your deal ends. It’s also often referred to as the Guaranteed Minimum Future Value (GMFV). You can either choose to pay it and keep the car, trade your car in for a replacement and start a new PCP contract, or give the car back and there won’t be anything to pay, providing you’ve honoured the terms of the agreement and the car isn’t damaged.

 

[tsedge]

Isn’t the interest paid on the full amount - that is purchase price less deposit? How does the FV affect this?

What the briggie said.

 

[Cocijo]

A lot of people misunderstand this. You pay interest on the full amount of the loan. For example Here is a typical illustration. Interest is charged on the purchase price less deposit amount.
Imagine that you want to finance a car that’s worth £15,000 over three years. The finance company calculates that the car will be worth £6,000 after the three years.
This is how your payments are likely look using a PCP agreement with this term:

• Your deposit would typically be around 10%, so in this case you’d pay £1,500.
• You’ll then owe £13,500. However, because the car is expected to be worth £6,000 at the end, you only need to repay £7,500 (plus interest on the £13,500) over three years.
• When you get to the end of your agreement, you can pay the £6,000 if you want to own the vehicle, or hand it back to the finance provider (providing it’s not damaged and you’ve stuck to your mileage limit).

The FV has no impact on the amount financed.

 

[tsedge]

A lot of people misunderstand this. You pay interest on the full amount of the loan. For example Here is a typical illustration. Interest is charged on the purchase price less deposit amount.
Imagine that you want to finance a car that’s worth £15,000 over three years. The finance company calculates that the car will be worth £6,000 after the three years.
This is how your payments are likely look using a PCP agreement with this term:

• Your deposit would typically be around 10%, so in this case you’d pay £1,500.
• You’ll then owe £13,500. However, because the car is expected to be worth £6,000 at the end, you only need to repay £7,500 (plus interest on the £13,500) over three years.
• When you get to the end of your agreement, you can pay the £6,000 if you want to own the vehicle, or hand it back to the finance provider (providing it’s not damaged and you’ve stuck to your mileage limit).

The FV has no impact on the amount financed.

Ok, but the payments are still less as the MGFV reduces the capital you have to pay off. Granted, the interest is on the whole.

 

[the briggie]

Is that not a bit of a double edged sword...OK lower monthly payments perhaps but higher balloon price if you want to keep it enticing you to take out a new pcp deal and stay on the treadmill?

 

[Cocijo]

It’s always worth checking the numbers. In many cases a personal loan Is a cheaper option. Unless you get concessions on the purchase. The APR on PCP’s is usually higher, and deposit amounts limited to make this more effective - unless again it is subject to a concession rate.
PCP’s are very clever and have effectively saved the motor industry new car market. But they are not a cheap way to buy a car.
It’s unfortunate that most people don’t really understand them and just look at the monthly repayment figure.

Is that not a bit of a double edged sword...OK lower monthly payments perhaps but higher balloon price if you want to keep it enticing you to take out a new pcp deal and stay on the treadmill?

Absolutely.

 

[tsedge]

Is that not a bit of a double edged sword...OK lower monthly payments perhaps but higher balloon price if you want to keep it enticing you to take out a new pcp deal and stay on the treadmill?

It is always tradeoffs. What this gives us is a low monthly price and no risk that our MG4 might collapse in value due to bad reputation etc... As you say, the tradeoff is a higher exit price or lower equity in the car at the end of the deal.

It’s always worth checking the numbers. In many cases a personal loan Is a cheaper option. Unless you get concessions on the purchase. The APR on PCP’s is usually higher, and deposit amounts limited to make this more effective - unless again it is subject to a concession rate.
PCP’s are very clever and have effectively saved the motor industry new car market. But they are not a cheap way to buy a car.
It’s unfortunate that most people don’t really understand them and just look at the monthly repayment figure.

A personal loan would be cheaper but we'd be 100% exposed to changes in the second hand value of the car. Tradeoffs.

Edit: only cheaper in terms of interest, not cheaper in terms of monthly payments, far higher there.

Edit 2: you could argue that cash would be even cheaper, but that is not considering the return that money could be making invested elsewhere.

Edit 3: another way of looking at it is that we are hedging against a collapse in used EV values, which I think is likely as by 2025 new EV prices will most likely drop dramatically (soon they should cost 30-50% less to make). We are paying for the hedge and if I am wrong, it won't be the best bet.

 

[Lovemyev]

It’s unfortunate that most people don’t really understand them and just look at the monthly repayment figure.

Agreed !.
This is the total focus now, fit the deal to what the customer has allowed in a monthly amount.

 

[tsedge]

Agreed !.
This is the total focus now, fit the deal to what the customer has allowed in a monthly amount.

Agreed that is often the motivation, but not always.

I would also say there is nothing wrong with people using PCP to get a new car they couldn't otherwise afford. Everyone has their own priorities and just because the total cost is higher doesn't make it the wrong decision. The amount some people spend on luxury holidays seems a total waste to me when there are far cheaper options, but fair enough if they enjoy them!

 

[Cocijo]

It’s not necessarily wrong - depending on your viewpoint. It is often misunderstood.

 

[tsedge]

It’s not necessarily wrong - depending on your viewpoint. It is often misunderstood.

Agreed, however I think most PCP users know it is more expensive in the long run, but they want that nice shiny new car anyway and this is their only way,

 

[Cocijo]

Yes. As I said it’s a very clever finance offering that has created many sales and generated much additional revenue. As well as of course providing to many a new car finance route with reduced monthly outlay (in some cases).

 

[wiz043]

Remember the VW Group make a very significant number of sales and profits from their Chinese-built cars and those cars are built by the same company Shanghai Motor Corporation Limited (SAIC) which owns the MG Brand and also builds MG cars. SAIC, which is owned by the Shanghai municipal government, in addition to the SAIC and MG brands, operates two major passenger car joint ventures: Shanghai Volkswagen (SVW) and Shanghai GM.

SAIC Motor's subordinate companies includes: SAIC Passenger Vehicle Branch, SAIC Maxus, IM MOTORS, Rising Auto, SAIC Volkswagen, SAIC General Motors, SAIC-GM-Wuling, NAVECO, SAIC-IVECO Hongyan and Sunwin.

It applies to just about everything, if we start to reject Chinese made cars due to fears regarding rust we may as well reject everything we use on a daily basis including TV's, washing machines, toasters, mobile phones, dishwashers, computers etc.
Just about everything is made in China these days or if assembled in other countries the components come from China.
Even many foods we get from supermarkets come from China even though we are able to produce the equivalent in our respective countries.
It all comes down to price sadly even though we are encouraged to buy food products produced in our own countries whether it be the UK, Australia, US or wherever.

 

[profdraper]

Australia he said

Well that's idiotic: the MG4 has not yet been released in Australia. Formal lauch to come at Sydney EV show on 11 March, shipping several years later we assume [at the same trade show, MG have also finally decided to release the long range MG ZS EV!].

The big, latest rust hoo-ha is concerning the BYD Atto 3 which has been out in AU for a little while now, eg:

 

[Ayoull]

Well that's idiotic: the MG4 has not yet been released in Australia. Formal lauch to come at Sydney EV show on 11 March, shipping several years later we assume [at the same trade show, MG have also finally decided to release the long range MG ZS EV!].

The big, latest rust hoo-ha is concerning the BYD Atto 3 which has been out in AU for a little while now, eg:

I'd ask that you reread the thread from start to the the point of my remark, before quoting out of context and denoting it idiotic.