Kia EV6 Registration/Ordering Thread

EV8 said:

I think any of the quotes now will be a bit rubbish until next month, new quarter in July means they may well adjust the residual values to be more positive.

Residual values are set by Kia finance too and can’t be adjusted so all like for like quotes should be the same.

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Given the prices for a given car will be fixed, and the APR% will be the same (assuming dealer contribution is zero or the same), when you are saying quotes now will be rubbish, and quotes later may be better because of the following factor;
- A quote today may assume a lower residual value, so for a given deposit the amount financed (and hence amount to which APR% applies) will be a greater proportion of the breakdown?

Am I right in thinking a higher residual value is better for people who plan not to make the final payment and buy the car?

I'm trying to fully understand PCP so would appreciate some guidance. Ashamed to say despite doing 1 PCP previously I don't fully understand it, but I understand many people also do not

WarwickBoy said:

Am I right in thinking a higher residual value is better for people who plan not to make the final payment and buy the car?

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Think of it sort of like a mortgage.

Take the intial price and deduct the initial payment. The balance has to be financed and they apply their APR to calculate the interest. If you pay more per month then you are effectively paying off the capital faster, so the interest added in month 2 (etc) is less.
In addition to that, the amount of final payment attracts interest for the whole term. if you say you want the final payment higher, then you will pay more interest on that than if if were lower.
So, VERY crudely speaking:
Initial price - first payment = balance to fund
balance to fund - final payment = outstanding capital to be repaid over term plus interest
Outstanding capital * APR / number of payments= monthly capital payment (this is the bit that's like a mortgage calculation - at the outset you pay more interest and little capital repayment. As you progress that ratio changes)

Monthly payment = amount of capital to be repaid over term (averaged) / term PLUS interest charged over term on final payment PLUS interest on capital to be repaid over term (averaged).

The real killer on these deals is the APR. Even half a percent makes a huge difference and most companies have discretion to lower their rate if you haggle confidently.

WarwickBoy said:

Given the prices for a given car will be fixed, and the APR% will be the same (assuming dealer contribution is zero or the same), when you are saying quotes now will be rubbish, and quotes later may be better because of the following factor;
- A quote today may assume a lower residual value, so for a given deposit the amount financed (and hence amount to which APR% applies) will be a greater proportion of the breakdown?

Am I right in thinking a higher residual value is better for people who plan not to make the final payment and buy the car?

I'm trying to fully understand PCP so would appreciate some guidance. Ashamed to say despite doing 1 PCP previously I don't fully understand it, but I understand many people also do not

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I may have been misguided with that statement, doesn’t look like the residuals are too bad actually!

Yes you’re nearly right, a higher residual value means less to be financed across the 3 year payment term and therefore monthly payments are in turn lower. However, the APR rate applies to the whole PCP finance, so ironically a higher residual value means you’ll also pay more interest over the term as you have that balloon payment accruing interest over the whole 3 years, so in turn a lower residual means you’ll save (granted, only a small amount of) interest - but the payments will definitely be higher for it!

So yes you are correct, a higher residual value makes it more affordable over the 3 year term for someone who wants to only pay those 36 payments then px the car/hand it back. However a lower residual means a lower balloon payment if you wanted to purchase the car at the end.

If you wanted a lower balloon payment to pay at the end (and save yourself a small amount of interest in doing so), you can artificially lower the residual value by putting a higher mileage per year. The residual value is calculated from the car being 3 years old with ‘x’ miles on. Obviously, the higher the miles, the less the car will be worth and therefore the lower the residual.

in response to @toscal353 , Kia dealers have no ability to lower the APR on the new cars, this is set and fixed by Kia.