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.

You're assuming everyone is paying RRP.  Most people will change every 3-4 years, so why pay the whole cost?

Got to be one of the best threads I've read on here for ages!..better than reading Harry Pothead or 50 Shades of ****e...

For me, effectively I was a cash buyer, no trade in due to opting out of company car scheme, pre 0% offer, I took finance through my mortgage at 3% fixed over 5 years for 100% of discounted purchase price as didn't want to find a deposit, but at that time, launch weekend, dealers had about 13% to play with, so I got 12% straight discount off including options by quoting carfile.net, plus still got the £500 deposit contribution and free servicing deal plus tank of fuel, free front flaps so all in about 16% of discount/freebies, getting near to the VAT free deal I thought at the time, not bad for a launch weekend deal? I then paid off the SUK 6.9% finance within a few days of taking delivery using funds from my 3% mortgage deal and only paid about £9 of cancellation charges. With the 0% deals I understand dealers only have about 5% to play with so if you get 4% discount your doing well assuming no trade-in to cloud the deal, the 0% finance would only save me 3% APR which over a 3 year PCP would equate to about 4.5% of list price in interest savings, so just over half of the discount I achieved currently up for grabs, and I assume I would have had to put some deposit down with the PCP. Even, theoretically, if I could have a 5 yr PCP, my 3% APR loan only costs me 7.5% of list price in interest so comparing like with like, max 11.5% discount equivalent, so Mr P Ceepy doesn't do as well imo. I do accept that I am paying a higher monthly sum, but after 4 years, I'll have a car worth about £8k or more if you believe the PCP residuals, but only owe £4.5k to clear the loan so I should have a nice deposit to put towards a high spec vRS on a 3 yr 0% APR PCP which will save me about £100 a month but swallow up my hard earned equity, then I'll be forced to run SWMBO's then 11 yr old Octy II into the ground cos I won't have a deposit for a new OctyIV

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

The difference between OTR RRP of O2FL TDI vRS excluding 0 VAT deal at the point of launch and OTR RRP of O3 TDI vRS was about £1600. What you call "run out" discount was like DFS sofa sales - you had to be extremely unlucky to pay full price since there were only two weeks without 0% VAT across last three or four years of O2 and all O2FL years. It was virtually impossible to order one at RRP. During four years of O2FL production, quarter of the time was spent manufacturing special editions vRS with further discount attached. In addition to the 0% VAT most of the time you still had 0% finance or free servicing. Plus dealers, especially fleet dealers, would often quietly offer discount on top of discount through brokers.

 

Most people will change every 3-4 years, so why pay the whole cost?

Well, I did mention distinct possibility of "people who for one reason or another do not want to own a car and treat 0% PCP as alternative to leasing" right in the post you were quoting. But I find the "most" part very dubious. Are there really that many people chasing specific monthly repayment figures while burning through 12 grand every three years across mere 30,000 miles? Plus even they would be better off (even @ much higher APRs) with previous discount deals.

Anyway. We are running in circles now.

Edited 4 October, 201312 yr by v0n

Got to be one of the best threads I've read on here for ages!..better than reading Harry Pothead or 50 Shades of ****e...

For me, effectively I was a cash buyer, no trade in due to opting out of company car scheme, pre 0% offer, I took finance through my mortgage at 3% fixed over 5 years for 100% of discounted purchase price as didn't want to find a deposit, but at that time, launch weekend, dealers had about 13% to play with, so I got 12% straight discount off including options by quoting carfile.net, plus still got the £500 deposit contribution and free servicing deal plus tank of fuel, free front flaps so all in about 16% of discount/freebies, getting near to the VAT free deal I thought at the time, not bad for a launch weekend deal? I then paid off the SUK 6.9% finance within a few days of taking delivery using funds from my 3% mortgage deal and only paid about £9 of cancellation charges. With the 0% deals I understand dealers only have about 5% to play with so if you get 4% discount your doing well assuming no trade-in to cloud the deal, the 0% finance would only save me 3% APR which over a 3 year PCP would equate to about 4.5% of list price in interest savings, so just over half of the discount I achieved currently up for grabs, and I assume I would have had to put some deposit down with the PCP. Even, theoretically, if I could have a 5 yr PCP, my 3% APR loan only costs me 7.5% of list price in interest so comparing like with like, max 11.5% discount equivalent, so Mr P Ceepy doesn't do as well imo. I do accept that I am paying a higher monthly sum, but after 4 years, I'll have a car worth about £8k or more if you believe the PCP residuals, but only owe £4.5k to clear the loan so I should have a nice deposit to put towards a high spec vRS on a 3 yr 0% APR PCP which will save me about £100 a month but swallow up my hard earned equity, then I'll be forced to run SWMBO's then 11 yr old Octy II into the ground cos I won't have a deposit for a new OctyIV

So, using a £25k spec'd car for both, you theoretically got 12% disc and a 16% total including deal & freebies = £4000 total disc.

PCP gets 5% disc and same deal & freebies so 9% = £2250 total disc.

So far £1750 in your favour.

Assume a zero deposit for the sake of it.

Your payments £509/month x36 to pay off £17500 (£18324). NOT a GFV £8000 - £3500 = £4500 in pocket

Using your 3% (repayment) mort rate you'll lose £824 on the £17500 (£21000 - £3500 (that you admit won't be paid until trade in)) and £324 on the constant £3500 that you haven't settled yet, so = £1148 total interest paid.

PCP payments £395/month x36 to pay off £14750 (£22750 - £8000 GFV) saving £509 - £395 = £114 x 36 = £4104 + £180 offset interest @3% = £4284

You make £1750 + £4500 - £1148 = £5102

(Edit: I'm not sure I should subtract the £1148 but I'm too tired to check at this hour)

PCP makes £4284

Over x36 months you are better off by £818 = £22.72/m

You have no Guaranteed Future Value if you buy outright.

PCP has had x3 years of not struggling with huge payments and easy access to any extra funds if needed.

Plus, if the PCP had the ability to pay in full, but didn't...then the offset mortgage money would get the £818 back in interest and more.

In this instance the PCP also has the deposit for a small buy-to-let and can pay off his car with rentals!!!

Horses for courses and all that.

Edit: Not aimed at you Matt, just that it's early and I'm between watching F1 and moaning lol

Edited 4 October, 201312 yr by dc5r666

No offence taken here, maybe I'd have been tempted if the 0% PCP had been available in early June with a zero deposit when I took delivery, but it wasn't and I had to find a way around the 6.9% deal and still get the deposit contribution and servicing, but I do like the feeling of building equity so that there is a realistic chance of a deposit next time round, rather than taking the lowest possible monthly payment, I suppose you can ask the dealer to set the GFV lower?

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.

 

Interesting points, thanks for your input / advice.

 

Supplementary question......

 

What discounts from RRP should I expect from a reasonable dealer for :-

 

A Straight cash purchase.

B. As above but with a traded in car. (Realizing that a discount can be given by over-valuing said trade-in.)

C. The current 0% PCP.

The current 2-year, 50% down & the remaining 50% over two years @ 0% normal finance deal.

 

I guess what I need to know is just what dealer retail margins are at this time, given that the 0% PCP is partly funded by the dealers & there gives them less money to "give away".

(I'd really like to know if the dealers have to make the same %age contribution to the two-year finance, but I've not yet been given a definitive answer by any of them!)

 

Thanks again to anyone who can unravel this mystery for me.

 

Cheers, DC.

 

PS

As for PCP's, at my great age & financial situation they don't make sense for me, but if was a lot younger & still earning, then they are an interesting alternative to outright purchasing, especially if you have a decent income but don't want to touch any capital that you've managed to save.

PPS. 

Perhaps I should abandon any ideas of acquiring a brand new car & wait for someone in Skoda management to hand back their 6/9 month old lease car & wait for it to surface in the used car world. At least it's a way of avoiding the initial depreciation, but I don't get to choose my preferred specification! 

 

 

 

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.

 

Interesting points, thanks for your input / advice.

 

Supplementary question......

 

What discounts from RRP should I expect from a reasonable dealer for :-

 

A Straight cash purchase.

B. As above but with a traded in car. (Realizing that a discount can be given by over-valuing said trade-in.)

C. The current 0% PCP.

The current 2-year, 50% down & the remaining 50% over two years @ 0% normal finance deal.

 

I guess what I need to know is just what dealer retail margins are at this time, given that the 0% PCP is partly funded by the dealers & there gives them less money to "give away".

(I'd really like to know if the dealers have to make the same %age contribution to the two-year finance, but I've not yet been given a definitive answer by any of them!)

 

Thanks again to anyone who can unravel this mystery for me.

 

Cheers, DC.

 

PS

As for PCP's, at my great age & financial situation they don't make sense for me, but if was a lot younger & still earning, then they are an interesting alternative to outright purchasing, especially if you have a decent income but don't want to touch any capital that you've managed to save.

PPS. 

Perhaps I should abandon any ideas of acquiring a brand new car & wait for someone in Skoda management to hand back their 6/9 month old lease car & wait for it to surface in the used car world. At least it's a way of avoiding the initial depreciation, but I don't get to choose my preferred specification! 

 

 

 

 

When I was talking to my dealer he said that on any deal other than the 0% PCP they can acheieve a 14% margin on RRP if they hit various targets etc so they have that to play with, he would of given me 10% instantly if I had been looking at anything other than the 0% PCP, the 0% PCP they have taken away from there margin, I believe they get either 8% or 6% margin on a 0% PCP, so thats what is to play wth on them, all other deals I presume are still at 14% margin.

 

It does seem strange that some dealers are stating 0% PCP = no discount at all, and some seem to still be happy to give away 6% and live on presume volume selling as opposed to profit?

Yup it's about 8% with the current offer

Dealers and Sales staff have different targets to hit, and targets vary from month to month. Generally targets are assessed by revenues, margin, numbers of units sold and add-ons (Gap Insurance, Bodywork Protection Products etc). If delears have met some targets (but not al)l they will be more willing to discount or perhaps even sell at loss. Sometimes selling several cars at a loss can lead to much larger overall bonuses for both the Dealership and Sales Person. You just need to catch them at the correct moment.

 

The widely held belief is that Dealers are working with 6% margin on Octavia III's when combined with the 0% APR and Free 3-Year Servicing offers. You will be extremely lucky to get 5-6%, but it is possible, and if dealers are desperate you may even achieve more. The 0% and Free Servicing is prabaly worth £2K to £3K for most people, so that is already an effective ~10% discount over bank loan rates for the same 36-42month periods.

 

My opninion is that 3-4% when combined with the above offers is a decent deal. Well done to those who can achieve more.

Edited 10 October, 201312 yr by Orville

The 0% and Free Servicing is prabaly worth £2K to £3K for most people, so that is already an effective ~10% discount over bank loan rates for the same 36-42month periods.

It's worth £129 on 10k a year 36 month PCP with QG1 and £378 with QG2. One minor service at approx 18,000 miles on variable schedule and one minor and major service on regular schedule. Skoda service prices are fixed nationally at the moment.

Edited 10 October, 201312 yr by v0n

It's worth £129 on 10k a year 36 month PCP with QG1 and £378 with QG2. One minor service at approx 18,000 miles on variable schedule and one minor and major service on regular schedule. Skoda service prices are fixed nationally at the moment.

I base my costs/savings upon the following:-

 

PCP on 0%

List Price £23,500

Deposit £2,000

GFV £9,000

41x £305

Total payable £23,500

 

PCP on 5.7% (typical)

List Price £23.500

Deposit £2,000

GFV £9,000

41x £379

Total payable £26,539

 

Difference £3,039

3 Years Servicing £499 (Skoda List Price - may vary from dealer to dealer)

Total Saving £3,538 or 15% of list price

 

The thing about PCP is that you pay interest for the full outstanding sum (incl GFV) up until the very last month. This makes 0% PCP deals much more costly to Skoda Finance vs straight 0% repayment loans over the same period. 0% PCP is a stonkinglinly good deal from Skoda. If you can achieve an additional 3-5% discount this deal is almost on-par with VAT-Free offers.

Edited 10 October, 201312 yr by Orville

I was talking about servicing. We've done the numbers earlier in this thread, 0% always comes out worse than proper discount or the previous 0% VAT offer.

Plus, any saving on PCP deal is "virtual" since PCP is not "buying", it's renting. Most buyers have no intention of buying the car out at the end of finance deal, so for most it is inevitably just burning money at fast pace at the point of the highest depreciation.

I was talking about servicing. We've done the numbers earlier in this thread, 0% always comes out worse than proper discount or the previous 0% VAT offer.

Plus, any saving on PCP deal is "virtual" since PCP is not "buying", it's renting. Most buyers have no intention of buying the car out at the end of finance deal, so for most it is inevitably just burning money at fast pace at the point of the highest depreciation.

 

I think that is the assumption that is the flaw in your argument.

Such assumption can't be that far off, since most of the PCP "buyers" discussing deals on this forum mainly stress about monthly repayment figures, which would be relatively useless for anyone who has enough money to buy the car outright but is using 0% PCP deal for stoozing/investments and completely irrelevant for anyone who wants to buy a car through PCP, since they still have to save monthly sum towards GFV figure in addition to the finance and the sum will always be the same, whether they pay smaller finance figure and bigger monthly saving or vice versa. From car finance perspective PCP will always be the most bizarre and acrobatic method of arranging future or long term car ownership.

Edited 10 October, 201312 yr by v0n

Just give it a rest, please.

By now we all know you don't like the 0% finance deal or PCPs, but that's what Skoda are currently offering. If it doesn't suit your needs then go elsewhere, but I'm losing the will to live seeing you post the same stuff over and over and over and over.......

Such assumption can't be that far off...

 

It may be as far off as your other assumption that there's a VAT free offer around the corner.

I'm sorry to say this forum is really going down hill at the moment. It used to be really good with everyone giving advice, help and generally discussing issues and problems in a constructive manner. Recently it just seems to be people whinging, complaining and just generally being rude about other people.

At the end of the day everyone's opinions, needs and personal circumstances are different. Who am I to judge what is right or wrong, I'm happy to give my opinion but would never dream to criticise somebody else's choices or opinions as everybody is different and what may suit me might not suit you.

Just give it a rest, please. I'm losing the will to live seeing you post the same stuff over and over and over and over.......

I'll absolutely stop, but I want you to know I do it only because it is your forum and I recognise fully that I am way off line of what a random Fiat Bravo driver from Midlands wants to read on his internet today.

It may be as far off as your other assumption that there's a VAT free offer around the corner.

Nice one.

I'll absolutely stop, but I want you to know I do it only because it is your forum and I recognise fully that I am way off line of what a random Fiat Bravo driver from Midlands wants to read on his internet today.

 

Congratulations, you've proved that you can read.

Avoiding the current 0% PCP and Free servicing offer only really makes sense if you intend to pay cash. Even if a VAT-Free offer materialises next year it will only make a difference to cash buyers because mauch of the savings will be paid back in PCP interest.

 

Cash

Discounted Cash Price £21,000 (assuming 14% discount on £24,500 car)

Cost of not collecting £21,000 worth of low rate interest from your bank over 42 months = ~£900

Cost of Servicing £400

Total Cost £22,400

 

Cash via Bank/Repayment Loan @ 5.7% over 5 years

Discounted Cash Price £21,000 (assuming 14% discount on £24,500 car)

60x repayments at £403

Cost of Servicing £400 (first 3 years only for parity)

Total Cost £24,583

 

0% PCP Finance + Free Servicing

Discounted Cash Price £23,500 (assuming 4% discount on £24,500 car)

Hand the car back or pay ~£9,000 for it after 42 months.

Total Cost £23,500

 

Cash price for hyperthetical VAT-Free Offer

Discounted Cash Price £20,400 (£24,500 minus VAT)

Cost of not collecting £20,000 worth of low rate interest from your bank over 42 months = ~£900

Cost of Servicing £400

Total Cost £21,700

 

Cost of hyperthetical VAT-Free Offer with Loan Repayment @ 5.7% over 5 years

Discounted Cash Price £20,400 (£24,500 minus VAT)

60x repayments at £391.55

Cost of Servicing £400 (first 3 years only for parity)

Total Cost £23,892

 

Cost of hyperthetical VAT-Free Offer with PCP Repayment @ 5.7% over 3 years

Discounted Cash Price £20,400 (£24,500 minus VAT), £2000 Deposit

41x Monthly Payments £295.61

Hand the car back or pay £9,000 for it after 42 months.

Cost of Servicing £400 (first 3 years only for parity)

Total Cost £23,520

 

In order of Total Cost:-

1). Cash - VAT Free = £21,700

2). Cash - Now = £22,400

3). PCP - O% Now = £23,500 (if you keep car)

4). PCP - VAT Free = £23,520 (if you keep car)

5). 5yr Loan - VAT Free  = 23,892

6). 5yr Loan - Now  = 24,583

 

I maintain that if you cannot afford to pay cash, the current offer works out almost identical to VAT-Free. As Skoda will no doubt increase Octavia prices before handing back a VAT-Free promo, you are probably better off ordeing now vs waiting for the hyperthetical VAT-Free deal.

 

Note: These are quick calculations so please don't pick over minor discrepancies. I am sure hundreds of holes can be picked in them, but I have tried not to over complicate things.

Edited 10 October, 201312 yr by Orville

Dr Zoidberg, please kindly turn around for a second or check your mail, as to avoid "losing the will to live" while reading "the same stuff over and over again". Now, I'm replying because conversation on the topic continued:

 

In order of Total Cost:-

1). Cash - VAT Free = £21,700

2). Cash - Now = £22,400

3). PCP - O% Now = £23,500 (if you keep car)

4). PCP - VAT Free = £23,520 (if you keep car)

5). 5yr Loan - VAT Free  = 23,892

6). 5yr Loan - Now  = 24,583

First of all, excellent effort, this is way beyond anything that any of the "numbers are booooring" complainers have done in this thread, but please notice that you had to give yourself a discount on 0% PCP (and take it away on 0% VAT deal) and extend payments to 5 years for the numbers to play out. I had no chance to go run all of your numbers through calculator but I think you also made few tiny mistakes in calculations, for example:

 

Cost of hyperthetical VAT-Free Offer with PCP Repayment @ 5.7% over 3 years

Discounted Cash Price £20,400 (£24,500 minus VAT), £2000 Deposit

41x Monthly Payments £295.61

Hand the car back or pay £9,000 for it after 42 months.

Cost of Servicing £400 (first 3 years only for parity)

Total Cost £23,520

£20,400 with £9000 GFV minus £2000 deposit leaves us with £9400 to finance. That's 41 x monthly payments at £252.86, total interest across 41 months is £967.25, leaving us with total bill of £21,767 incl servicing, placing it second after cash payment with VAT free.

If it was 3 years as you said in header, £9400 to finance, 36 payments of £284.69, total interest across 36 months equals £848.85, grand total of £21649, still placing it as second best method, even at relatively high APR.

Similarly in case of full finance:

 

Cost of hyperthetical VAT-Free Offer with Loan Repayment @ 5.7% over 5 years

Discounted Cash Price £20,400 (£24,500 minus VAT)

60x repayments at £391.55

Cost of Servicing £400 (first 3 years only for parity)

Total Cost £23,892

£20,400 across 36 months finance without any deposit, as per your example, total interest of £1,842.18, grand total of £22,642 with servicing.

£20,400 across 42 months finance without any deposit, as per your example, total interest of £2,150.77, grand total of £22,951 with servicing.

£20,400 across 42 months finance without any deposit, as per your example, total interest of £2,462.10, grand total of £23,262 with servicing.

etc, etc. Put larger deposit or negotiate the same 4% discount (they were actually much larger back then, but 4% will do) and 0% VAT is always unbeatable and everyone, the cash, the finance and the PCP buyer would better off with it. That's before we even get to the topic of what kind of cars similar monthly payment would secure if someone actually wanted to do pure PCP burn-and-rent etc.

But as the apologists said - it's all a moot point, 0% VAT is not coming this Christmas, there are enough people interested in monthly figure rather than total to entertain current SUK prices, there is no reason for them to discount anything as there is enough business as it is. It is what it is. Current deal works for small group, and they will hate me with passion if I try to prove otherwise and suggest for them not to rush to tills with their wallets, as the regular deal we had for better part of last 10 years would benefit everyone, not just small percentage of PCP buyers, if not for monetary value then at least because current models have severe spec issues and irregularities.

Edited 10 October, 201312 yr by v0n

The sums are above, as this is now simply an argument over pcp v cash v hp I'm locking this.

Jus a reminded the servicing deal is only for FIXED interval services.