I've just done a deal on a new superb using both 0% VAT equivalent deal and 0% APR over 2 years from Skoda Finance.

To be honest, it took me a moment or two to get it sorted in my head (maths never my strong point). I think I have it right below but do feel free to make clearer if not!

The dealership cannot sell a vehicle without charging VAT, hence why it's a VAT equivalent deal.

In preparing the quote, the dealer will total up all the costs without VAT i.e. list price + cost of factory extras + cost of dealer fitted accessories (e.g. mudflaps).

They will then discount that total amount by 16.666666666% to give a discount equivalent to the amount of VAT you would pay on the total.

E.g. car + options would cost £15,000 without VAT.

A discount equivalent to vat is 16.67% of that, i.e. £2,500 making the actual cost of the car (before VAT) £12,500.

Then vat is added to that reduced amount, at 20% - so £12,500 + 20% VAT = £15,000 - this is the amount you are paying, the same as the price without VAT.

So normally you would have paid £15,000 + VAT = £18,000, so your actual discount is £3000.

What's worth remembering is that delivery is not subject to the discount, neither are road fund tax and first registration fees.

What you want to see is the dealer making that 16.67% discount larger, which will further discount the car over and above the VAT offer. I achieved 2% further discount. I'm sure others would do better / could do better but in my own situation this was a very good deal, so I stopped negotiating when I was happy with the result and was still being offered the better coffee in the dealership :-) Also, the final price came in below the What Car? recommended "most you should pay" amount and that was not taking into account a load of options over the base spec.

For the 0% finance, you do have to lay out 50% of the final price, which would typically be made up from deposit and maybe trade in of previous car. But you're owning the whole car after two years, so residuals much higher at that point.

I haven't posted much before so hope this was helpful.....

i'm a taxi driver so looking for the cheapest possible price i'm looking to get it in Pacific Blue as its the only solid paint for me, no optional extras or anything just looking to pay under £300 a month over a 48 month period i'l ask for a discount too what did yous guys manage to haggle down to?

This is how it was calculated for my car.

Start with the latest brochure prices:

For the car, take the On the Road price (this includes all sorts of one off costs including the tax disc and the first registration costs) and deduct the figure for the VAT.

For any options or accessories, add the basic price.....NOT the RRP

Tot up the total and that's your "VAT free price", even though they have to pay VAT... don't worry about it, just treat it as a haggle free discount. That's the figure from which to start negotiating. You might expect to a couple of hundered pounds off plus a tank of fuel.

This is how it was calculated for my car.

Start with the latest brochure prices:

For the car, take the On the Road price (this includes all sorts of one off costs including the tax disc and the first registration costs) and deduct the figure for the VAT.

For any options or accessories, add the basic price.....NOT the RRP

Tot up the total and that's your "VAT free price", even though they have to pay VAT... don't worry about it, just treat it as a haggle free discount. That's the figure from which to start negotiating. You might expect to a couple of hundered pounds off plus a tank of fuel.

is it right about if you use Skoda Finance they give you another 500 pound towards the deposit

Not had that offer either time.... but it could be a good angle to use......

how much is reasonable for a discount?

anyone know?

What Car Price Guide is a good place to start ....

http://www.whatcar.com/car-advice/glossary/W/what-car-price-guide/3160083

http://www.whatcar.com/images/subscription/haggle.pdf

This is the amount they feel you should be paying. If you're paying more than that, then it's too much.

To be honest, I stopped haggling when I had a deal I was pleased with. It helps to have a really clear view of what the impact of your negotiation will have on monthly payments if doing finance, so you can quickly work out how much it will cost each month. I'm sure others here are far far more experienced than me at this though!