Been to local dealer who quoted on me on a new Yeti SE 4x4 with o% finance on a PCP inc free servicing for three years. Not in the position to purchase outright and wasn't initially looking to purchase a new model but with the o% it kept the payments right down. My concerns are after the agreement term there was a balloon payment of about £10,000. Obviously I could then part exchange on a new deal, pay off the balloon and own the car or return the car and walk away. My question is will the vehicle be worth considerably more than the final balloon payment, so that I get any residual profit to put towards a new deal. Always bought 3 yr old car before with relatively low mileage and changed regularly. This deal seemed to give me this option but with a new car every 3 years. If you just hand the car back do you get any money from the sale of the car back to the dealer? Has any body experience of these PCP and are they really a good deal?

Thanks

The final payment is always pitched lower than the trade/resale value so that there is equity for deposit on another car. So as long as you look after it and keep to the agreed mileage, PCP's are an excellent way to own a new car....and the 0% offer/free servicing just sweetens the deal.

 

Not sure if you hand back that any equity is handed to you ( I would think not), as I always pay the final payment and sell the car at a profit (well not really a profit, just getting my hands on the equity).

ThanksTruthseeker, would this equity be enough normally for the deposit on a new deal?

On my last Yeti purchased on a PCP (not at 0%), although I did not keep it for the 3 years, the final payment after 3 years was quoted at around the £7500 mark on a £18500 purchase price. The resale value on that model/mileage after 3 years was around the £12k mark so yes, plenty of equity for another deposit.

 

I assume that in that scenario if you choose the minimum deposit on another purchase then the balance would be paid to you.

Being a bit nosey, you say you didn't keep it for three years, what happened?

Nothing wrong with car, but I get bored very easy and usually change cars every year - very costly but it is my only vice!

 

Anyway, I have another Yeti (FL) on order, as I liked it so much, and think the FL is an improvement on the style front, although other won't agree.

Have to say pre FL is a bit like marmite, bit that is the appeal for me. Thanks for replys and enjoy the new motor when it arrives.

One thing to consider is that with 0% deals, the dealer will normally have much less negotiating room, so you'll pay closer to list price.

 

That said, I'm happy with my deal.

One thing to consider is that with 0% deals, the dealer will normally have much less negotiating room, so you'll pay closer to list price.

 

That said, I'm happy with my deal.

 

Also, when you take into consideration any interest you will get by not paying cash (typical 3% pa over 3 years), and the value of the free servicing (£500?), there really is not that much in it.

Thanks all. Been on Carwow, half a dozen replies with one dealer beating all. Spoken to them to adjust quote slightly but it seem that with a few extras added saving well over a thousand, and with the 0% and 3yrs free servicing seems a no brainier. They adjusted the quote to suit my needs regarding deposit, monthly payments and final payments. Just waiting if local dealer will match this as I would prefer to buy it locally but will not pay over the odds for this. Never had a brand new car before so getting a bit excited about placing the order when all decisions made.

And with 0%, there is a 21 day 'window of adjustment' so you change your direct debit day by up to 21 days - just wait till u get the paperwork thru then phone Skoda finance. Get sick of being on hold, hang up and phone Skoda customer services (having used saynoto0870), explain your trying to get to Skoda finance and they very kindly get Skoda finance to phone you back :-))

The only downside to the 0% deal is, as has been mentioned, the reduction in the dealer's margin.  The two discounted quotes I had (one with the free finance, and one without) were poles apart - it made no sense at all to go for the 'free' finance!

The only downside to the 0% deal is, as has been mentioned, the reduction in the dealer's margin.  The two discounted quotes I had (one with the free finance, and one without) were poles apart - it made no sense at all to go for the 'free' finance!

Sorry but I disagree. There is only a couple of hundred pounds difference between using your own (invested) cash for an outright purchase, and taking the 0%/free servicing offer. Not going to repeat the calculations I have already posted elsewhere, but keeping your own money invested at 3% pa, paying the minimum deposit on a 0% PCP, add in the £500 free service package and.........well, you do the maths.

 

Also, I suspect that some buyers probably borrow the money elsewhere to get a new car, and if they are fortunate not to have a p/ex, then yes, they can shop around for a good Yeti deal (typically 15% discount). However, if you are borrowing elsewhere (at a typical 7% APR), then you are much better off with Skoda's 0% offer, as 7% interest on a £20k loan over 3 years is £4200, therefore over riding the 15%/ £3k discount.

Sorry but I disagree. There is only a couple of hundred pounds difference between using your own (invested) cash for an outright purchase, and taking the 0%/free servicing offer. Not going to repeat the calculations I have already posted elsewhere, but keeping your own money invested at 3% pa, paying the minimum deposit on a 0% PCP, add in the £500 free service package and.........well, you do the maths.

 

Also, I suspect that some buyers probably borrow the money elsewhere to get a new car, and if they are fortunate not to have a p/ex, then yes, they can shop around for a good Yeti deal (typically 15% discount). However, if you are borrowing elsewhere (at a typical 7% APR), then you are much better off with Skoda's 0% offer, as 7% interest on a £20k loan over 3 years is £4200, therefore over riding the 15%/ £3k discount.

 

The dealer does have a reduced margin on the 0% deal.

So you do have less negotiating room.

If your dealer is giving you the best deal they can, a Yeti on the 0% deal will be more expensive than a cash purchase, by around 4-6% if I remember correctly.

 

There is not a 15% discount available on a Yeti, unless they need to sell one at a loss to make up their sales figures.

 

Financing anywhere else is not sensible.

Paying a bit more for the car, but getting the 0% makes the most sense as it's cheaper overall.

Carfile (broker) will give 15% discount on the FL (5% if taking the 0% offer). No p/ex though, and deal via main dealer. I know that is correct as I have a quote from them and did follow it up with the Skoda dealer concerned to confirm.

 

However, after following my own advise I took the 0% offer from local dealer, got the best p/ex I could negotiate and a a few quid off some extras.

 

I agree with Richard that financing elsewhere is a bad idea, and suspect that many "cash" buyers who a can get a good discount are not using their own money.

I am slightly confused by this statement  'If your dealer is giving you the best deal they can, a Yeti on the 0% deal will be more expensive than a cash purchase, by around 4-6% if I remember correctly.'

 

I cant see how the 0% deal is 4-6% more expensive, as 0% is 0%, & if you pay cash your not taking finance, so this is 0%

I am slightly confused by this statement  'If your dealer is giving you the best deal they can, a Yeti on the 0% deal will be more expensive than a cash purchase, by around 4-6% if I remember correctly.'

 

I cant see how the 0% deal is 4-6% more expensive, as 0% is 0%, & if you pay cash your not taking finance, so this is 0%

 

It's because the Skoda 0% offer involves them reducing the margin the dealer earns.

 

So if you pay cash you can get a cheaper ticket price (with haggling) than if you finance under the 0% offer.

It may be 0% interest, but the car costs more as Skoda claw some of the lost interest from the dealer margin.

 

It's been discussed quite a lot on the Octavia 3 board.

On my purchase for my FL, I managed to get an extra £500 more on my p/ex than offered elsewhere, and £500 of extras FOC, so that £1000 is the same as the 5% discount (on £20k Yeti) offered by the brokers when taking the 0% PCP deal.

 

So in my case, and especially as I had a p/ex, it was no more beneficial using a broker than my local dealer.

We found that with the 0% deal we had to pay close to the list price but the dealer sweetened it with £500 extra on the p/x than other dealerships and around £750 of extras thrown in, also I believe the Yeti is priced a bit more competitively, for example we went to Vaulxhall and they instantly knocked over £2000 off the list price on a new Mokka, on a 5 year 0% deal, however it was still more expensive than the Yeti and it was a terrible car. 

Sorry but I disagree. There is only a couple of hundred pounds difference between using your own (invested) cash for an outright purchase, and taking the 0%/free servicing offer. Not going to repeat the calculations I have already posted elsewhere, but keeping your own money invested at 3% pa, paying the minimum deposit on a 0% PCP, add in the £500 free service package and.........well, you do the maths.

 

Also, I suspect that some buyers probably borrow the money elsewhere to get a new car, and if they are fortunate not to have a p/ex, then yes, they can shop around for a good Yeti deal (typically 15% discount). However, if you are borrowing elsewhere (at a typical 7% APR), then you are much better off with Skoda's 0% offer, as 7% interest on a £20k loan over 3 years is £4200, therefore over riding the 15%/ £3k discount.

I suppose it depends on the discounts being offered (with or without the 0% finance), whether you're having to borrow the money, and whether you're trading in.  If you're not borrowing the money, and not trading in, the much better discount you can negotiate (and Carfile is pretty typical, I think) will be worth much more than the free services and the interest that could have been earned by investing the cash - at least at today's low interest rates.

I suppose it depends on the discounts being offered (with or without the 0% finance), whether you're having to borrow the money, and whether you're trading in.  If you're not borrowing the money, and not trading in, the much better discount you can negotiate (and Carfile is pretty typical, I think) will be worth much more than the free services and the interest that could have been earned by investing the cash - at least at today's low interest rates.

On a £20k Yeti, and if have a spare 20 grand:

 

Using 0% PCP

Invested £18k @ 3% pa over 3 years = £1620 (assuming min £2k/10% min deposit)

Value of 3 years servicing  = £500

5% dealer discount if no p/ex  = £1000

Total  = £3120

 

Paying cash

15% discount = £3000

 

There are some minor anomalies in the above for example, the £3k cash discount could earn £270 over 3 years. However, the point I was trying to make is there really is nothing between the 2 options, and certainly not enough to claim "worth much more". And, if interest rate do rise next year as has been mooted, then the balance tips in favour of the 0% option.

Ta Rich - that sort of makes more sense.

 

So from what i can see here when it comes down to it with the 0% pcp.

 

Do you want the discount on the car for a cash deal, or pay virtually full price for the car - Assuming that you are going to pay the final 'balloon' at the end of it.

Otherwise you have literally just 'rented' a car for the period of the PCP if you walk away, or use it as trade for another, being very lucky if you get another 0% again.

On a £20k Yeti, and if have a spare 20 grand:

 

Using 0% PCP

Invested £18k @ 3% pa over 3 years = £1620 (assuming min £2k/10% min deposit)

Value of 3 years servicing  = £500

5% dealer discount if no p/ex  = £1000

Total  = £3120

 

Paying cash

15% discount = £3000

 

There are some minor anomalies in the above for example, the £3k cash discount could earn £270 over 3 years. However, the point I was trying to make is there really is nothing between the 2 options, and certainly not enough to claim "worth much more". And, if interest rate do rise next year as has been mooted, then the balance tips in favour of the 0% option.

I calculated the figures slightly differently because, perhaps incorrectly, I assumed that some repayments would be required over the 3 years - which would reduce the notional £1620 interest somewhat.  Having also taken up all the better interest rate options (Santander 123, for example) I think I'd struggle to get anywhere near the 3% interest quoted, after tax.

 

It didn't make sense for me, but it certainly will for many people, depending on circumstances.

Agree docc, and yes, you are correct about the payments reducing (slightly) the interest - one of the anomalies I mentioned.

 

It is a very emotive subject and you can argue for and against. There are deals around that pay you 3%. For example some banks will pay you more than that on money in their current account (some pay 5% but only up to a limit)  Also, by splitting into 2 current accounts, my bank pays interest up to 3% on the first £5k in each account......so two bites of the cherry.

 

I have all of our savings in the wife's name who is a non tax payer and she can therefore earn £9440 pa tax free - and that's a lot of tax free interest.

 

Anyway, I think we will call this a score draw!

I think you have to be very, very, very stupid to hand a car back at the end of a PCP deal. Does anyone EVER do that?! Makes no sense since, as was said above, the balloon is always a lot less than what the car is worth, so it is always geared to allow you to have money as a deposit on the next car. My car turned three yesterday and I paid the balloon today which was the princely sum of £8,200 or so. You can put my car into any webuyanycar type website to see its worth. It is not worth £8,200.   So the difference is my deposit (were I to buy something else, which I'm not - I'm keeping the Monster).