OK.. PCP people, let's do some rough and rushed maths here.Let's say we are going to buy new vRS estate, without any options. Let's say we are going to use RRP price of £23,970 as base. Let's say free servicing incentive is present across all options (as it normally was with 0 VAT deals for the past couple of years as well)Mr. P. Ceepy takes advantage of the PCP at 0%. He has one grand in his pocket for deposit, with 10k per annum GFV figure of £12,050, leaving him with £10,920 to settle across 36 months of £303 payments. At the end of the deal Mr. P. Ceepy will leave £11,920 in Skoda UK pocket, and not pay the balloon sum as he still has no 12 grand handy. After soft cushioning VAG finance against inevitable depreciation to the tune of £4k a year the only option left is to embark on another PCP journey at RRP or write off nearly 12 grand and move on to bangernomic sector.Mr. Savvy waits for 0% VAT deal. It finally arrives in January, discounting the £23,970 car by VAT amount to the sum of £19,975. He settles quarter of it as deposit, leaving him with even £15k to borrow in finance, which Skoda UK is happy to arrange at highest VAG finance rate of 7.9 APR. He's relatively good at googling so he knows the interest will be about £1,900, which means total cost of ownership will be about £22k. At the end of year three he trades the car in with Skoda, gets their own GFV value of £12,050 back and starts the whole journey again. By his calculations the car left him £9,825 out of pocket across 36 months. Or £273 a month.Mr. Stingy holds fire and waits for the dust to settle. Once his favourite vRS arrive on 0 VAT deal he goes through broker. Broker offers him rather moderate discount of 8% lowering down the price to £18,395 and arrange the same 7.9 APR from the fleet dealer behind the broker. Similar to Mr. P. Ceepy he also has only one grand to his name, so he borrows £17,400 from VAG finance at cost of £2,200 in interest. Total cost of ownership is now roughly £20,600, which after he trades the car back to Skoda for the same £12050 means he forked out approx £8550 or £237 a month for 36 months.What have we learned?- With 0% VAT even if Mr.Savvy decided not to get any finance at all and paid the whole sum with credit card at 12% APR he would still be better off than Mr. P. Ceepy- If Mr. Stingy managed to get a 14% broker discount (current carfile discount) while 0% VAT is preset he could pay the whole sum (£17,195) with the most terrible credit card at 23% APR and still be better off than Mr. P. Ceepy.Questions or comments?

Mr P Ceepy is first in the queue for the latest thing and is also keen to get a discount too so, he manages a paltry £1000 knocked off and maybe a sweetener in the form of a freebie. His discount alone makes him just as savvy as Mr Savvy. He's also stingy enough to know that the GFV of £12050, that he never intends to pay, is tucked away and it's offsetting his mortgage at about £30 a month!

Mr P Ceepy ends up laughing at Mr Stingy who had to wait soooo long for his bargain only to tie up his hard earned cash in a depreciating car.A situation that doesnt leave him free to dip into any stash for that weeks holiday he promised Mrs Stingy, back when she started the sex ban cos of his misuse of funds! :-P

v0n,

I admire your perseverance but regardless if your figures are right or wrong your never going to change the masses.

In this day of age if joe I don't care average public wants something they will get it regardless of cost and financial product used.

Richard Turpin dealer will always try and sell a product with finance that maximizes the profit.

Only the savvy people will hunt a deal and thumb screw until they get the deal they like (like many of this forums users).

Alas a majority wouldn't think of using a forum like this or to ask for some discount, they just walk in and pay the RRP and feel happy.

(I know this to be sadly true as when I tried my local dealer the rather honest salesman spilled the beans on how many Octavia's he had sold and the discount given-nothing-and I can confirm that as true as I worked for them for 13 years as well and was well addressed with their sales tactics)

So sit back, smile ever so slightly smugly and let the masses continue on their merry financial product dependent ways :-)

Edited 3 October, 201312 yr by Pumatron

I specifically omitted discounts to even the playing field. They all start at the same value, they all have the same service package etc. Otherwise the example wouldn't make sense and we would loose everyone in page long explanation of maths behind completely different values. It's also quite obvious that Mr Savvy and Stingy could sell their cars privately at the end, and that the more deposit equity they introduce into the game, the bigger their discount negotiating powers and wider the gap between them and Mr. P Ceepy payment schedule becomes.

When the current Skoda pricing model was first announced and everyone jumped to ordering pages I incorrectly presumed the initial queue consisted almost entirely of people with subprime personal situation and nouveau riche taste, but I soon realised this might have more to do with the way these deals are presented to general public. "Set your monthly budget and we will make it happen" without showing the whole picture". Personally I cannot think of a scenario in which PCP deal based solely on inflated RRP would be beneficial to anyone, rich or poor, over any deal secured at realistic initial prices (otherwise known as never ending, almost decade long 0 VAT "offer") unless the force driving the purchase forward is either "I must have the latest and that's that" or it's a result of self induced dyscalculia paired with chronic aversion to spreadsheet and calculator. Add the fact most of the 0 VAT deals were also paired with 0 finance and that before that the standard finance APR from VAG dealers was closer to 2.9 than 7.9 and all of the above becomes even more obvious.

 

v0n, I admire your perseverance but regardless if your figures are right or wrong your never going to change the masses.

Very true.

Edited 3 October, 201312 yr by v0n

OK.. PCP people, let's do some rough and rushed maths here.

Let's say we are going to buy new vRS estate, without any options. Let's say we are going to use RRP price of £23,970 as base. Let's say free servicing incentive is present across all options (as it normally was with 0 VAT deals for the past couple of years as well)

Mr. P. Ceepy takes advantage of the PCP at 0%. He has one grand in his pocket for deposit, with 10k per annum GFV figure of £12,050, leaving him with £10,920 to settle across 36 months of £303 payments. At the end of the deal Mr. P. Ceepy will leave £11,920 in Skoda UK pocket, and not pay the balloon sum as he still has no 12 grand handy. After soft cushioning VAG finance against inevitable depreciation to the tune of £4k a year the only option left is to embark on another PCP journey at RRP or write off nearly 12 grand and move on to bangernomic sector.

Mr. Savvy waits for 0% VAT deal. It finally arrives in January, discounting the £23,970 car by VAT amount to the sum of £19,975. He settles quarter of it as deposit, leaving him with even £15k to borrow in finance, which Skoda UK is happy to arrange at highest VAG finance rate of 7.9 APR. He's relatively good at googling so he knows the interest will be about £1,900, which means total cost of ownership will be about £22k. At the end of year three he trades the car in with Skoda, gets their own GFV value of £12,050 back and starts the whole journey again. By his calculations the car left him £9,825 out of pocket across 36 months. Or £273 a month.

Mr. Stingy holds fire and waits for the dust to settle. Once his favourite vRS arrive on 0 VAT deal he goes through broker. Broker offers him rather moderate discount of 8% lowering down the price to £18,395 and arrange the same 7.9 APR from the fleet dealer behind the broker. Similar to Mr. P. Ceepy he also has only one grand to his name, so he borrows £17,400 from VAG finance at cost of £2,200 in interest. Total cost of ownership is now roughly £20,600, which after he trades the car back to Skoda for the same £12050 means he forked out approx £8550 or £237 a month for 36 months.

What have we learned?

- With 0% VAT even if Mr.Savvy decided not to get any finance at all and paid the whole sum with credit card at 12% APR he would still be better off than Mr. P. Ceepy

- If Mr. Stingy managed to get a 14% broker discount (current carfile discount) while 0% VAT is preset he could pay the whole sum (£17,195) with the most terrible credit card at 23% APR and still be better off than Mr. P. Ceepy.

Questions or comments?

That is all assuming that VAGs predictions about future value of the vehicles are correct.

Should the new Octy depreciate more heavily for some unforeseen reason or the bottom fall out of the second hand market, the PCP customer could be better off in that scenario.

Say the car turns out to be worth £8000 and not the predicted £12,050 you have used at the end of the three years? The Savvy person ends up being £13,825 out if pocket.

Thanks to the GFV of the PCP, Ceepy walks away and is £11,920 out of pocket.

You're also assuming that Ceepy has accepted a repayment that means they are at the limits of their budget and has been unable to save for a potential deposit if they have to hand the car back at the end. As a result of no deposit, having to join the "bangernomic" sector.

I'd argue that anyone who does take PCP at the max of their budget and doesn't have the capacity to save for a deposit at the same time has over stretched themselves and should reevaluate their finances. PCP is brilliant if you recognise what it is and plan your finances accordingly.

Yes it may cost more than direct finance in the long run (although for the initial period is significantly cheaper with a 0% deal as I personally found out) but in return it does provide that safety net if the value of the car plummets unexpectedly.

Andy

Edited 3 October, 201312 yr by boff180

Or we could all wait for Santa to bring us one free!

Great story when two thirds of it might not even happen.

If your that bothered financially don't buy a £20k car.

..and why is there an assumption that the 20% vat reduction offer will be reintroduced? 

It's also not 20% off with a VAT free car, and you won't then get an extra 12% dealer discount on top.

I specifically omitted discounts to even the playing field.

 

No you didn't...

 

 He settles quarter of it as deposit, leaving him with even £15k to borrow in finance

 

He should only pay a deposit of £1000 not £4975 in your example!

 

Stop trying to imply PCP purchasers are thick and don't know how to work out how to pay for their car.

 

Circumstances will dictate to individuals the best way to pay for theirs, just because it's not your way doesn't mean they are wrong!

Jebus v0n, talk about agendas!

That is all assuming that VAGs predictions about future value of the vehicles are correct.

They are not. Their predictions were off for all of the previous Octavias and GFV on this model is even more optimistic. That's why certainty that none of the PCP will be buying out their car at the end and not offloading negative equity back to Skoda. But we are also presuming that Mr Savvy and Mr Stingy won't sell their cars on private market or simply keep the car longer, while Ceepy keeps sponsoring depreciation loss year after year.

I'd argue that anyone who does take PCP at the max of their budget and doesn't have the capacity to save for a deposit at the same time has over stretched themselves and should reevaluate their finances. PCP is brilliant if you recognise what it is and plan your finances accordingly.

Oh there is more, if you were cash buyer, taking PCP at 0% on realistically valued car would actually make the best stoozing scheme we've seen for years. But unfortunately, the numbers I used were from our "what deal did you get" type of thread, it seems the deal is mostly targeting buyers with limited deposit and a monthly figure in mind.

 

..and why is there an assumption that the 20% vat reduction offer will be reintroduced?

 

It's not "will", it was "if" scenario. It was a flow of conversation, someone said "0% finance stays" I said "They should have reintroduced 0% VAT by now it would benefit everyone more" and everyone started schooling me on why 0% finance is better than 0% VAT so I decided to provide some numbers to illustrate that it's not. It's worse for just about any buyer and worse for the Skoda (as they never receive full price and are tasked with shifting second hand "rental" metal after deal is over instead). Now, it's quite certain that if O3 didn't shift in numbers 0% VAT would be reintroduced, as it was for the past 8 or 9 years across two models.

 

It's also not 20% off with a VAT free car, and you won't then get an extra 12% dealer discount on top.

The numbers I used are correct - discount price + 20% = RRP, not RRP - 20% = discount. Also, broker discounts used were actually quite pessimistic. Using easily googlable offers - in 2012 vRS TDI from DTD/Skoda Marlborough would cost you £16,995 after discount of £5,244 on "0 VAT" OTR price. In 2011 it was £16,860 after discount £4,236 and in 2010 it was £16,192 with discount of £3,947. All figures verifiable via honestjohn's "deal of the week" archives.

No you didn't... He should only pay a deposit of £1000 not £4975 in your example!

You do realise it makes very little difference, right? 7.9 APR on extra £3975 across 36 months would only be about £500. It wouldn't change the outcome. I used larger deposit as an example of mid range buyer perhaps with previous Octy trade in as deposit.

 

Stop trying to imply PCP purchasers are thick and don't know how to work out how to pay for their car.

Although you are not helping to prove otherwise (just kidding, just kidding, please put down pitchfork honourable sir), the point was - that even current PCP buyer would be better off with 0 VAT deal because APR on that deal would have to be extraordinarily extortionate not to beat regular price/discount we enjoyed for the last decade or so.

 

 

Jebus v0n, talk about agendas!

What agenda would that be? 0 VAT agenda? Well, it would be better for all, wouldn't it just?

Edited 3 October, 201312 yr by v0n

v0n, you really are a ****! (just kidding!)

At the end of the day the 0% deal really is just a variation of the VAT deal.

with the 0% deal you save little or no money on the list price of the car but you make a vast saving on the interest payments you'd have had to pay on the VAT free scheme.

The VAT scheme was all front end loaded, money off sticker price but then VWFS make money back on the loan interest, 0% all back end, no money off but VWFS make no money on the loan.

I dont have all the relevent figures to hand but i suspect had i bought a MK3 now instead of my MK2, I reckon I could have probably got quite close to my current monthly payments with the same deposit.

very much 6 of one half a dozen of the other but its to be expected that you'll never do quite so well on a new model as a runout special.

for me leasing is all about an agreeable monthly payment with as little capital down up front as possible; something Skoda are quite good at accomodating.

something ive never really understood to be honest is people who put several thousand down on a PCP (likely all equity fron their trade in) just to get a cheap monthly cost on a car; i put a bit down but id rather have several k sat in my bank accumulating a small amount of interest than sat in sonething that depreciates.

Edited 3 October, 201312 yr by pipsyp

At the end of the day the 0% deal really is just a variation of the VAT deal.

I kind of spent an evening proving that it is not by any stretch of imagination (with numbers, made up names and everything), but I understand that I cannot expect people to read two pages of dry material with little entertainment value and at some point all threads inevitably lead to resets and repeats.

ok we have discovered what v0n thinks. good, can we move on?

 

some of us will be using whatever method suits us best. living my life by someone else, no i will pass.

 

there is currently no reason for skoda to bring out VAT free, even if they did it would be very similar to the PCP buyers as the 0% assuming same discounts etc

 

so fine it may not suit you but it clearly is suiting the majority of the buyers.

Re servicing. Do you have to use the same dealer from who you bought the car?

Re servicing. Do you have to use the same dealer from who you bought the car?

No.

ok we have discovered what v0n thinks. good, can we move on?

 

some of us will be using whatever method suits us best. living my life by someone else, no i will pass.

 

there is currently no reason for skoda to bring out VAT free

There is a good reason for Skoda to bring back VAT free, as I highlighted earlier on, simply because subprime rental target does not benefit them (or the customer) as much as full ownership deal at lower price would, so there is element of shortsighted number driven targets in play there (we sold all the cars at RRP, score, let's get bonuses! Did you really. Well, no, vast majority of them will be coming back to us in few years time with negative equity and budget spec). Pair that with reduced service income and very strong alienation of the high mileage/fleet user (which was always core customer of what at the end of the day was budget mile muncher stretched golf/"mini cab" VAG brand) and you can see why retargeting the Octavia brand might seem like questionable idea.

However, there is no reason to get knickers in the twist and aggressive about what I post. You are second or third forumite to do so in this thread and I'm both surprised and concerned by this outcome. It's an internet forum, with whole purpose of discussing and sharing things, if there is a constructive critique of I posted I would like to believe it would be voiced in equally fact checked and reality based manner rather than what appears to be "na-na-na, talk to the hand, now can you go away" routine. My posts were supposed to be helpful and informative, and by no means have I tried to imply that I want you to "live your life by someone else". If that's how my posts come across I can but apologise. I wouldn't allow myself to judge your lifestyle and purchase choices or discuss depths of anyone's wallet. Everything I post is just my opinion and it's open to discussion.

Edited 3 October, 201312 yr by v0n

There is a good reason for Skoda to bring back VAT free, as I highlighted earlier on, simply because subprime rental target does not benefit them (or the customer) as much as full ownership deal at lower price would, so there is element of shortsighted number driven targets in play there (we sold all the cars at RRP, score, let's get bonuses! Did you really. Well, no, vast majority of them will be coming back to us in few years time with negative equity and budget spec). Pair that with reduced service income and very strong alienation of the high mileage/fleet user (which was always core customer of what at the end of the day was budget mile muncher stretched golf/"mini cab" VAG brand) and you can see why retargeting the Octavia brand might seem like questionable idea.

However, there is no reason to get knickers in the twist and aggressive about what I post. You are second or third forumite to do so in this thread and I'm both surprised and concerned by this outcome. It's an internet forum, with whole purpose of discussing and sharing things, if there is a constructive critique of I posted I would like to believe it would be voiced in equally fact checked and reality based manner rather than what appears to be "na-na-na, talk to the hand, now can you go away" routine. My posts were supposed to be helpful and informative, and by no means have I tried to imply that I want you to "live your life by someone else". If that's how my posts come across I can but apologise. I wouldn't allow myself to judge your lifestyle and purchase choices or discuss depths of anyone's wallet. Everything I post is just my opinion and it's open to discussion.

aggressive? ha no certainly not meant that way

He who cast the first stone...

This has been an interesting read so far, perhaps I can ask a question or two?

 

I quite fancy n new Octy vRS  (petrol & DSG) hatch, preferably on a '14 plate.

 

If I wanted this car for early March delivery, I'd order it sometime in this quarter using one of the current "offers".

 

Q? is, which one.....

 

Normally I'd trade in my current Superb, (owned my myself, no finance) worth perhaps £13K & go to the piggy bank & pay the difference in cash.

(After screwing some discount from dealer, assume  I'd need £12 to £13K.)

i'm a pensioner, with a moderate income but with a small pile of spending cash, & no need to provide for any family, etc. so I can spend it all on myself if I so desire!

 

Do I just buy the new car with my own funds, as I've done for the last few years, should I use a Skoda PCP @ 0% or can I still borrow 50% of the price of the new car @0% from Skoda finance & expect a smallish cash rebate from the dealer?

(The free 3-year servicing package with the PCP should be taken into account, but I don't now how much that is worth, & as for annual mileage, maybe 8-10K would be a good estimate.)

 

I'm unfamiliar with car financing, 'cos hen my late wife was still alive we had motability contract hire cars, always better value IOVHO than purchasing.

 

Any help &/or advice would be very much appreciated.

 

 

TIA, DC.

I kind of spent an evening proving that it is not by any stretch of imagination (with numbers, made up names and everything), but I understand that I cannot expect people to read two pages of dry material with little entertainment value and at some point all threads inevitably lead to resets and repeats.

If everyone had the same deposit the pcp wouldn't be a bum deal with the 0% offer.

You can't compare an apple with a grapefruit and a bottle of wine.

If everyone starts with the same deposit and the 0% pcp deal would be hard to beat.

If everyone had the same deposit the pcp wouldn't be a bum deal with the 0% offer.

You can't compare an apple with a grapefruit and a bottle of wine.

If everyone starts with the same deposit and the 0% pcp deal would be hard to beat.

How? Compared to what? 0% VAT deal?

PCP on RRP, on any terms, will always be a rouge deal to someone who wants to own the car and at the point of sale has no money or idea how to get the money to buy the car outright at the end. Not only will the PCP "buyer" pay more for their O3 vRS than any vRS owner before them over the last few years but they will also have to accumulate £12,050 (or £335 a month) while paying finance of £303 (on top of 1k deposit) to pay the balloon sum at the end if they want to actually own it. If they don't then they just wee away nearly 12 grand on pure rental and the only option would be to embark on another three years of, pardon the expression, weeing contest.

The only people that will truly benefit from 0% PCP are:

- preset mileage users who had the full sum and were willing to pay RRP, with flexible enough wallet to freeze large portion of that sum as annual savings or investment that would earn them money while paying 0% finance instalments.

- people who for one reason or another do not want to own a car and treat 0% PCP as alternative to leasing.

Edited 3 October, 201312 yr by v0n

This has been an interesting read so far, perhaps I can ask a question or two?

 

I quite fancy n new Octy vRS  (petrol & DSG) hatch, preferably on a '14 plate.

 

If I wanted this car for early March delivery, I'd order it sometime in this quarter using one of the current "offers".

 

Q? is, which one.....

 

Normally I'd trade in my current Superb, (owned my myself, no finance) worth perhaps £13K & go to the piggy bank & pay the difference in cash.

(After screwing some discount from dealer, assume  I'd need £12 to £13K.)

i'm a pensioner, with a moderate income but with a small pile of spending cash, & no need to provide for any family, etc. so I can spend it all on myself if I so desire!

 

Do I just buy the new car with my own funds, as I've done for the last few years, should I use a Skoda PCP @ 0% or can I still borrow 50% of the price of the new car @0% from Skoda finance & expect a smallish cash rebate from the dealer?

(The free 3-year servicing package with the PCP should be taken into account, but I don't now how much that is worth, & as for annual mileage, maybe 8-10K would be a good estimate.)

 

I'm unfamiliar with car financing, 'cos hen my late wife was still alive we had motability contract hire cars, always better value IOVHO than purchasing.

 

Any help &/or advice would be very much appreciated.

 

 

TIA, DC.

 

 

DC, if you took a 50% down 0% HP deal then your Superb would be the 50% and the balance would be split over the 24 months I think it is for that deal, thats it, simple as, what discounts would be applicable, I dont know as I have never looked into that finance deal, the only plus side as opposed to paying direct in cash would be you would earn a modest amount of interest on the money in your bank as opposed to Mr Skoda.

 

As for taking the PCP, max deposit is 30% so if you put your Superb in valued at £12K for example on a 25K car would be they would give you 'cashback' on teh difference between 30% and the PX price of your car, then pay yoru instalments and pay of or trade your car in at the end of the term, simple.

 

Personally, for me, if I had the ability to put a car in on PX and pay the balance in cash then I would do that, especially as at the moment that is liklely to attract the biggest discount from a dealer.

 

As for us PCP buyers, well what suits one doesnt suit another, for me, I budget X amount per month for a car, if I can get a car on a PCP within that budget, then great, I do, I will never keep the car beyond the end of the contract, I will always trade it in, if the car makes me a deposit, great, if it doesn't tough luck, simple as, for me the cost of ownership is about the monthly payment, not the GFV, not whether its 7.9% or 0%, VAT free, VAT charged etc etc however you want to call, the differences between all the offers is quite small in the big scheme of things, what you gain with one offer you lose on another and vice versa.

 

You pay yoru money you take your choice, simple as.

Not only will the PCP "buyer" pay more for their O3 vRS than any vRS owner before them over the last few years....

Of course they will. The list price went up a fair amount, and the old model was on a heavy run-out discount.