Yeti Value

[Silly Old Hector]

Will be punting in our Yeti in March. As our eldest daughter is learning to drive, I'm thinking Polo for The family runaround.

Trade-in value is about the same as the Balloon payment, so with no equity after looking after it, I will leave the keys with VWFS (who sell it to BCA).

How can such a low mileage, well looked after car be worth no more than the Balloon ?

Last time, Yeti for Yeti, I had quite a bit of equity, but not this time against a Polo ....

[Mikhail]

Mostly because there are more Yetis, stronger offers on new cars and also more PRE REG yetis. This knocks on the residual value of your car. Hence your car wiping its nose.. just!

Spoken by a salesman... (Not Skoda) (Yeti Owner)

[Ryeman]

If the average fleet age of a nation decreases it's going to mean an increase in used vehicles for sale unless they can be exported which is unlikely.

It's the white goods era we are in now with cars effectively cheaper to buy but not overall motoring expense

[AllanDJ]

This happens with lots of cars, it is just perhaps more of an issue with makes like Skoda which whilst making very good cars, don't tend to hang onto much of their value after the first three to four years. I'm in the very same situation with my current car, an Octavia Estate, Elegance spec, just approaching 27000 miles, in near mint condition but not a penny in equity at just over three years old, pretty sickening really as the whole point of these deals is that they are calculated to leave some equity in the old car to allow the owner to get at least some part exchange on his next car. It rather makes Skoda's PCP deals a reckless gamble for those with loads of money to burn unless you absolutely, definitely are going to buy the car at the end of the deal, otherwise just take a car on PCH, which is what I am doing with my next car, a Yeti L & K, at the current lease prices it makes no sense to even dream of buying the car outright.

[domhnall]

my wife used to work in motor finance designing PCPs for VW, Toyota etc. She made it very clear to me years ago that buying on PCP was a complete rip off and to be avoided

[Ryeman]

my wife used to work in motor finance designing PCPs for VW, Toyota etc. She made it very clear to me years ago that buying on PCP was a complete rip off and to be avoided

In house increased profit margin surely

[Mikhail]

Profit margin is no different, it's just an easier way to get people into cars at nearly half the price of HP over the same term monthly.

And dealers are targeted on PCP and on the renewals 2/3 years through.

Domhnall.. PCP isn't a "complete" rip off if you think that you pay no interest on a Yeti PCP atm and get effectively £1000 fda, if you plan on keeping the car you're £1000 up and you've paid no interest over 3/4 years while you decide if you want to keep the car or not? Plus PCP accounts for around 90% of new car sales.

[Ryeman]

Profit margin is no different, it's just an easier way to get people into cars at nearly half the price of HP over the same term monthly.

And dealers are targeted on PCP and on the renewals 2/3 years through.

Domhnall.. PCP isn't a "complete" rip off if you think that you pay no interest on a Yeti PCP atm and get effectively £1000 fda, if you plan on keeping the car you're £1000 up and you've paid no interest over 3/4 years while you decide if you want to keep the car or not? Plus PCP accounts for around 90% of new car sales.

So who is getting a 'cut of the action' , the finance company/dealer?.

[Mikhail]

Finance company is and also the subsidised rate at 0% is worth it for a new car registration. Dealerships are rewarded if they hit their new car target monthly and on top are rewarded on PCP cases if they achieve both hand in hand.

Though they are also rewarded in bonuses for "normal" HP finance. It's just something a lot of people don't bother with now because of the higher monthly payments compared with PCP.

[SurreyJohn]

When PCPs first came out, they were pitched as a way to reduce monthly payments compared to HP, and were normally 3 or 4 years

 

What has happened, is that competition drove the payments so low, there is no equity at the end, and nothing for a subsequent deposit.

The market is distorted badly, so that it makes a new car (with all its incentives) easier to buy than the secondhand one.  

Some deals are also now short, 18 months, 2 years etc.

 

PCP was never the way to go if you intended to keep the car, as financing the balloon payment is usually at a rubbish rate, which kills any savings made on the initial low (or zero) rate years.

 

The market has become self destructing, can buy new and get £1.5-2k off and nil percent, or pre registered, get 20% off, but pay extra £2k in finance, or buy 2-3 years old and feel ripped off.

 

In my view PCP has had its day (as people are now seeing through headlines and realise it only benefits the manufacturers finance Co, and makes them money at your expense) and people will go back to owning cars for 5 years with conventional HP, or cheap loans from internet.

[Falmouthboy]

When PCPs first came out, they were pitched as a way to reduce monthly payments compared to HP, and were normally 3 or 4 years

 

What has happened, is that competition drove the payments so low, there is no equity at the end, and nothing for a subsequent deposit.

The market is distorted badly, so that it makes a new car (with all its incentives) easier to buy than the secondhand one.  

Some deals are also now short, 18 months, 2 years etc.

 

PCP was never the way to go if you intended to keep the car, as financing the balloon payment is usually at a rubbish rate, which kills any savings made on the initial low (or zero) rate years.

 

The market has become self destructing, can buy new and get £1.5-2k off and nil percent, or pre registered, get 20% off, but pay extra £2k in finance, or buy 2-3 years old and feel ripped off.

 

In my view PCP has had its day (as people are now seeing through headlines and realise it only benefits the manufacturers finance Co, and makes them money at your expense) and people will go back to owning cars for 5 years with conventional HP, or cheap loans from internet.

Worth adding that if you buy a new car 'cash' or with a non PCP finance deal you have no guarantee of what it will be worth in the future. When PCP was a fairly new product, manufacturers were far more cautious about residual values but have now become less cautious. Add to this, as there are now plenty of 3+ year old Yeti's on the market residual value is 'fact' not educated guesswork. There are still a few instances where manufacturers have been burned by overestimated GFVs. So even with no equity the GFV remains a safety net and the cost of ownership over the period known.

I think we are seeing the demise of PCP towards Personal Lease now. The deals are particularly attractive at the moment, but the reduced flexibility may not be for all.

[Silly Old Hector]

Deal done and Yeti now going to dealer as a trade in against a 2016 Polo SEL (a light 110bhp).

Swapped Winters back to Summer Annapurnas, valeted interior and exterior - looks brand new !

 

Edited 22 January, 2017 by Gizmo68
please join Freedom if you wish to sell on Briskoda

[eribaMotters]

I can see the pcp route of buying a new car continue, why shouldn't it. It is just one of many ways that you and I the punter can get behind the wheel of a new car and feel good. Let's face it the motor industry wants to sell cars and they will come up with as many ways as possible to make that possible for as many punters as it can.

My balloon payment is due in June, and it looks like being what the car will actually be worth, so no deposit for a new one. But I don't want another new one.

In effect I have rented a car for three years at a price I can afford, with exactly the spec I wanted. I now have the chance to buy that car and why shouldn't I. It is still exactly the spec I want, the price is fair and I know it's history. To me it's a no brainer.

 

Colin

[eribaMotters]

Deal done and Yeti now going to dealer as a trade in against a 2016 Polo SEL (a light 110bhp).

Swapped Winters back to Summer Annapurnas, valeted interior and exterior - looks brand new !

 

Have you had the insurance quotes on that for your daughter?

You may [or may not] be in for a shock.

 

Colin

[Silly Old Hector]

£380 extra to cover her as Provisional (DL) named driver., after that its Telematics for us all, or a different provider, but after she has passed, I'm passed caring - she can do what she likes ;-)

Any thoughts where elso to look ?

[eribaMotters]

The £380 extra sounds fair. When we put the boys on the VW Up the insurance went from about £300 to £1300 from memory. Don't forget the increase in the x/s.

The one that came as a shock to me was that when they pass the test the premium often goes up, not down.

 

Colin

 

Where else?

Try Tesco. The paperwork, bar coloured heading at top used to be an exact match for DL. One year I was with one and my wife was with the other. We tried each others provider, but our premiums would have gone up.

I teach and have a 6th form tutor group, some learning to drive, others have passed their tests.Last time I asked I found Admiral and Elephant to be used by many.

Edited 22 January, 2017 by eribaMotters

[jonnyboy78]

PCP is a rip off stay well clear - PCH is the way to go at the moment, as the options given to you on PCP don't really stack up and quite often require a big deposit which you never get back, PCH can be found with little to no deposit, Car Tax paid for the duration and even though not widely published offer you the option at the end to buy the vehicle. 

 

I have just taken PCH on a Yeti with no deposit and less than £160 per month, its a £21k OTR vehicle and im paying less than £4k for 2 years of hire. At the end of the contract the new Yeti should of launched, with that in mind I am expecting a trade value of less than £12k as we all know a new model hits residuals of the "older" model, currently retained value on a Yeti after 3 years is around 48%.

 

So If I get the option to buy I could walk away with a £21k Yeti that I have owned from new for less than £16k all in, 30% off the new price on the road had I walked in on day 1 with cash, there have been no finance charges or interest and I can walk away at the end and go pick another deal, the equivalent PCP offering was a deposit of over £2k and monthly payments of over £250 per month with a final payment to keep the vehicle of over £10k................................

Edited 22 January, 2017 by jonnyboy78

[eribaMotters]

That does sound very attractive. The "the option at the end to buy the vehicle" seems to be a bit of a grey area. I remember reading that the person who the contract is with cannot buy the vehicle at the end, but a family member could. Can anybody clarify this?

 

Colin

[Gyp]

On 22/01/2017 at 18:44, eribaMotters said:

The £380 extra sounds fair. When we put the boys on the VW Up the insurance went from about £300 to £1300 from memory. Don't forget the increase in the x/s.

The one that came as a shock to me was that when they pass the test the premium often goes up, not down.

 

Colin

 

Where else?

Try Tesco. The paperwork, bar coloured heading at top used to be an exact match for DL. One year I was with one and my wife was with the other. We tried each others provider, but our premiums would have gone up.

I teach and have a 6th form tutor group, some learning to drive, others have passed their tests.Last time I asked I found Admiral and Elephant to be used by many.

 

Putting the lad on the missus' insurance (Mitsubishi Colt CZC) added about £200 to the cost when learning and about £2500 to the cost once he'd passed his test. I guess when they're learning they have the parent/car's owner in the passenger seat providing "advice and guidance", once they've passed they potentially have 4 of their mates providing "advice and guidance".

 

The insurance cost was the justification for buying the Citigo as that worked out at about £850 for him fully comp (admiral multicar), so the saving on insurance over 3 years pays for the car and at that point he should have some equity in it.

 

Note, this is Gloucestershire - when he did a price check to see how much it would be to take to uni in Birmingham is was back into the many thousands, so he leaves it here to use when he's home

[logiclee]

On 1/23/2017 at 06:04, eribaMotters said:

That does sound very attractive. The "the option at the end to buy the vehicle" seems to be a bit of a grey area. I remember reading that the person who the contract is with cannot buy the vehicle at the end, but a family member could. Can anybody clarify this?

 

Colin

 

There are options to extend the lease and options for a family member to purchase the vehicle but it's not guaranteed and there is no pre-agreed price. But as these cars are usually picked up by British Car Auctions and put through the sales VW/Skoda Finance prefer to sell when they can.

 

But it's a no brainer to me. The PCP GFV balloon payment usually leaves you with very little equity in the vehicle if any so you are no better off at the end of the term.

 

For a PCP you are financing the entire cost of the vehicle including balloon payment and VAT. For PCH VAT is only payable on the payments so leaves more profit for the dealers.

 

For our Yeti with £2k down the PCP payment were £239. The PCH deal was £2k down and £99 a month.

 

Lee

Edited 25 January, 2017 by logiclee

[Ryeman]

Easy to get blinded by the £99 it seems?.

[SurreyJohn]

15 hours ago, Ryeman said:

Easy to get blinded by the £99 it seems?.

 

I always translate it to an equivalent monthly cost by adding up the deposit and the monthly payments to give a total.

Then divide by the number of months covered.   You can't compare otherwise

 

If there is a £140 difference for 23 months that is £3220 difference, which basically only gives you an option to buy.

 

Doesn't make any sense to pay that much for an option.  If you are already decided its a keeper then forget PCP and just search the internet for cheapest loan to buy it.  If you have decided that it will go back then the cheaper PCH is obvious.

 

PCP like mobile phone contracts are designed to look good to those who latch onto a headline low monthly.  The issuers aren't doing it for charity, its so they can make money at your expense.  Always remember there is probably a cheaper alternative elsewhere.

 

 

 

[logiclee]

19 hours ago, Ryeman said:

Easy to get blinded by the £99 it seems?.

 

No. quite the opposite.

 

Total Cost on PCH £4277

 

Total Cost on PCP £7497

 

Buy outright on HP 0% or pay it cash (Which I could) would be around £22k. I'd loose more than £4300 in just the first year in depreciation.

 

So considering all options of having a new Yeti PCH makes the most financial sense.

 

I just sold a Passat I bought new. Paid just shy of £25k, kept it 6 years and did 60k miles in it. Got £5k for it which works out at £3333 a year in depreciation alone and doesn't cover the consumables, servicing, warranty and hassle required to keep a 6 year old car on the road.

For comparison my colleague has just had a Superb SE Business on PCH, £2500 down and £139 a month over two years. Which works out at £2850 a year with the all the benefits of a new car with warranty with Road Tax included. 

I'd have been financially better off leasing a new Superb every 2 years.

 

Of course you can always buy 2nd hand but if you are buying new then PCH has to be considered as often it's cheaper than PCP or depreciation when buying outright.

 

Lee

Edited 26 January, 2017 by logiclee

[Falmouthboy]

On 22/01/2017 at 21:55, jonnyboy78 said:

PCP is a rip off stay well clear - PCH is the way to go at the moment, as the options given to you on PCP don't really stack up and quite often require a big deposit which you never get back, PCH can be found with little to no deposit, Car Tax paid for the duration and even though not widely published offer you the option at the end to buy the vehicle. 

 

I have just taken PCH on a Yeti with no deposit and less than £160 per month, its a £21k OTR vehicle and im paying less than £4k for 2 years of hire. At the end of the contract the new Yeti should of launched, with that in mind I am expecting a trade value of less than £12k as we all know a new model hits residuals of the "older" model, currently retained value on a Yeti after 3 years is around 48%.

 

So If I get the option to buy I could walk away with a £21k Yeti that I have owned from new for less than £16k all in, 30% off the new price on the road had I walked in on day 1 with cash, there have been no finance charges or interest and I can walk away at the end and go pick another deal, the equivalent PCP offering was a deposit of over £2k and monthly payments of over £250 per month with a final payment to keep the vehicle of over £10k................................

 

A bit of a sweeping statement - I don't dispute that PCP isn't the best option for everyone and that there are some excellent PCH deals out there.  However with 0% interest and substantial dealer/Skoda deposit contributions PCP isn't a 'rip off'.  PCP provides far more flexibility as it's far easier to get out of early if fancy a change and gives you the option to keep the car at the end if you wish but with the security of a guaranteed future value.  Excess mileage charges are also less of an issue as if your circumstances change you can trade the car early and won't be hit by excess charges.  Finally, be aware that at the end of the PCH period the condition will be far more scrutinised and you may be hit with additional charges.

[logiclee]

1 hour ago, Falmouthboy said:

 

 Finally, be aware that at the end of the PCH period the condition will be far more scrutinised and you may be hit with additional charges.

 

For VW Finance and Skoda the hand back inspection and pickup is the same for PCP an PCH.

 

If you PCP or PCH from any other source then you will be subject to their own T&C's

 

Lee