I guess in some way you're trading interest rate for possible loss at trade-in, but I think the overall cost-of-ownership over the whole finance period is the thing to consider. The Citigo is one of the less-expensive cars to run and if you get things like servicing thrown in with the finance, all the better. But at the end of the day, 0% PCP is just interest-free money that you've got to pay back one way or another (modulo handing the thing back).

 

The joy of the guaranteed value at the end though is that if the car is worth less then you have saved money in depreciation compared with having financed it a different way.

Our last pcp we'd planned to keep it, but in the end px'ed and bought something new, the Skoda  I'm not planning on keeping.  As it turns out I'm doing more miles than planned (with fuel economy being so good we're using the Citigo more than we used my last car. So my plan was to buy it and then sell it/px it straight away, but if the actual value is lower than the MGFV and it is only 4.4p a mile I may just pay the bill!!

There is a loop hole in the pcp agreement that when you get to 50% u can hand back no mater the mileage

I think you need to read your PCP agreements very carefully, yes its regulated and you are entitled to 'half's' & 'thirds'.... these are clearly documented prior to your original signature.

 

What people need to understand is that Skoda have set many of the 0% PCP with the end payment being 50% .... based on 36month & 10kpa, so the majority of owners will have to go full terms if they want to return the Citigo.

 

Going back to trade prices, I agree with the tread that the Citigo would seem to be valued (by the trade) below Skoda expectation...... but a lot of this isn't helped that they made fleet deals (especially) with Security companies who no doubt abuse them and by the quantities sold give the car abundance of stock and an image that many are abused in life.

 

Skoda have also tried to improve the residuals with recent price rises on the Citigo.

 

What it all comes down to is that nearly all new cars are massively over priced at new sale, there is a drive that  the monthly payment  is paramount and get the wheels on the road, welcome to the world of pcp!

 

Car makers are seeking to repeat the sale on the same car with a view of maximum of 2 - 3 times, dependant on mileage and age.
After this they are very happy for the product to go into the deep used car arena.

Many people do not know the best way to handle the PCP at the end of the agreement, but here is my top tips:

• 1 month before the end of the agreement send you vehicle to BVRLA bodyshop (3) to get a quotation for any repairs inline with BVRLA guidelines of condition.
• Find out from the car maker finance what lead time they have on car collections under PCP arrangments
• Accept the bodyshop quotation you are happy with on scope and price and they will have the works completed by collection date
• Usually its a 1-2  week turn around and you may get given a courtesy car - in this time look for your new car if you don't want factory wait.
• Have the PCP finance collet the car from the bodyshop with you in attendance and wave it good bye, knowing you hae the clear inspection records and that you wont be re-billed on poor condition.

The above will avoid any re-charge form the PCP finance, avoids you being stiffed by the dealer in a part exchange position (where they use you neg equity in their favour) and finally the bodyshop quotation you paid was the fair amount to make the car to a regulated standard of acceptance

 

Sorry for the lots of words, hope its helpful

 

Surely if you go down the route of any kind of deferred payment system you are going be paying for the privilege. To expect to come out at the end with any advantage is wishful thinking. If it was otherwise the dealers would not be so keen to press customers to have it.

i dont know a lot about PCP. 

 

if you agreed a 5,000 mile PCP deal for 3 years. if you over mileage by 15,000 miles (total 30,000 miles) and you want to buy the car at the end. do you have to pay 4.4p x 15000 on top of the purchase price (balloon payment) ???

You only pay the excess mileage charge if you hand the car back. If you trade it in or buy it then it doesn't matter.

Surely if you go down the route of any kind of deferred payment system you are going be paying for the privilege. To expect to come out at the end with any advantage is wishful thinking. If it was otherwise the dealers would not be so keen to press customers to have it.

 

 

The thing is with a low deposit and a relatively low monthly payment you're more likely to buy (well some are) so the dealers sell more cars, if they can add some extras, magic shine or whatever skoda use, gap insurance, optional extras (which don't add to the mgfv, so you're paying 100% of the cost)

i dont know a lot about PCP. 

 

if you agreed a 5,000 mile PCP deal for 3 years. if you over mileage by 15,000 miles (total 30,000 miles) and you want to buy the car at the end. do you have to pay 4.4p x 15000 on top of the purchase price (balloon payment) ???

 

 

As Mark says only if you hand it back, but its only £660, so if the cars mgfv is £660 higher than the actual value you may as well hand it back and take the hit.

 

The 50% rule just doesn't sit right with me, I know a lot are starting to do it and its over a lot of different forums, I cant help but think the finance companies will do something to stop it, of hinder those that do use if to get finance on a car again.

Another reason dealers like pcps as you don't hit the 50% mark until you are normally 3/4 of the way through the agreement or longer. As it's 50% of the total cost of the car not 50% of the length of the agreement.

Oh and the 50% rule is consumer law so there's nowt the finance companies can do other than decline to do business with you.

Another reason dealers like pcps as you don't hit the 50% mark until you are normally 3/4 of the way through the agreement or longer. As it's 50% of the total cost of the car not 50% of the length of the agreement.

 

This. 

Agreements are tending to be 42 months now, with the magic 50% repayment mark being at 36months. (which is what mine works out to exactly)

 

Come 3 years, dealer calls, sells you some spiel about being a good time to change, and then has the option of VT in the toolbag if needed.. 

Oh and the 50% rule is consumer law so there's nowt the finance companies can do other than decline to do business with you.

 

 

That's one option, or if a lot of people start to say they'll do 5k miles a year and then a month before the end of their contract hand back a car with 40k miles they'll either get a clause in there as I'm sure there must be for damage**, or say the minimum annual millage is 15k (lowest I could say on a Toyota was 10k, we actually did ~7k), and then everyone who does  lower mile sage will suffer, or add a % or two to cover the excessive millage.

 

** I'm guessing you cant hand a damaged car in under a VT and walk away without paying any extra.

Just had my car valued its 27months old and they reckon its worth 4K! The MGFV after 42 months is 3.8K!!

 

If you have a citigo or a Mii we will all be in this boat, if you have an Up VW will more than likely take the hit and give you some money to put into another VW.

 

Whats more annoying is that since I got mine Skoda have pushed the MGFV values up by about £500 leaving everyone with even more negative equity. Im off now to look at when I can VT my car..... It looks like 4-5 months

some of this could be the emmissions scandel tainting that is affecting every VAG brand,

 

no VAG brand has escaped, I suspect if you look in parkers over the last few months even the citigo (with no currently affected engines) will have taken a hit

 

from what I have seen in the press VW and Audi resale values have dropped about 10% on their cars, if skoda have taken a similar hit that may explain the drop you have seen

Edited 5 December, 201510 yr by bluecar1

is it possible to have the car valued LESS than GMFV at the end of PCP deal? 

No. If the car is worth less you hand it back and vwfs take the hit. However it can still make sense to buy the car as say mine is valued at 3.5k at the end. Although it may cost 3.8k to buy the retail price for the car will probably be 4.5k to 5k so you are still getting a car you know the history on for a good price.

What it is worth after three years is not important to me as I intend to keep it ( love it !) - I only do about 3-4 k a year so not trading in for a new car. 

If I did get another in 3 years time I would be hit with the £140 road tax. If I keep mine, it stays at £0 

I got mine for 0% interest, 3 years servicing for £99 . free 3 year AA cover ! And they gave me £200 for my 20 year old rusty micra .

Cant see any reason to buy a new car for cash !

I have three years to save for the final cash payment ( gaining interest in my bank)

To be fair I love mine And am tempted to buy it at the end. I was fancying getting a monte Carlo but for a few reasons I prefer my sport.

I guess I'll have to see whats going on in a years time....

if there are some very slight scratches on wheels, few stone chips on bonnet. will they use them to devalue the trade in price? thats what lease car companies do when you hand the car back in.  

 

i am trying to understand how they make profit! where does the profit come from?!!?

Edited 8 December, 201510 yr by wesleyuk

if there are some very slight scratches on wheels, few stone chips on bonnet. will they use them to devalue the trade in price? thats what lease car companies do when you hand the car back in.  

 

i am trying to understand how they make profit! where does the profit come from?!!?

the GMFV is "guaranteed" so if VW Finance got their calculations wrong it is their problem not yours, the clue is in the first word of GMFV

 

what it means is if you go right to the end of the contract you will owe nothing , BUT you will have no equity to use as a deposit on your next car

if there are some very slight scratches on wheels, few stone chips on bonnet. will they use them to devalue the trade in price? thats what lease car companies do when you hand the car back in.  

 

My understanding is they might charge to rectify damage that exceeds some level of "fair wear and tear" when you hand it back. There's a VWFS guide book somewhere that describes this in more detail (I think it was on the VW Solutions web-site the last time I saw it).

Edited 9 December, 201510 yr by ettlz

Just picked upnthe Mrs new car today and spoke to the vw sales manager. He's confirmed that even the ups are still well into negative equity at the end of pcps and people are handing them back.

So anyone who got a citigo and put a deposit down is going to lose it unless they buy the car.

My understanding is they might charge to rectify damage that exceeds some level of "fair wear and tear" when you hand it back. There's a VWFS guide book somewhere that describes this in more detail (I think it was on the VW Solutions web-site the last time I saw it).

Actually there is a loop hole here on quality of return.

 

Simply if you signed an agreement, the provider is duty bound to provide you with a copy of what is acceptable and what isn't in written and picture format at that time.

 

All parties can only refer back to that original document issued in the event of mitigation, the provider is unable to perfect their position with betterment of expectation 2 or 3 years later.

 

Merc & BMW are very good with issuing the returns guide document at inception of the agreement, same document issued 1 week later. Thats the standard expected.

 

Reference to web link isn't acceptable. But the fall back would be the BVRLA guidelines