I think this can only be done at the end of the contract. Say 3 years old. Hand it back pay balloon payment and walk away

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No, you can VT at the 50% mark as per my post about 3 or 4 further back up the page .......

Andyvee, is correct all PCP/HP's have it by UK law.

http://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

Edited 31 December, 201510 yr by Defenderben

I do not understand the logic of thinking the deal has gone wrong if you hand the car back and receive the guaranteed final final.

You may have taken a gamble and hoped there would be more value, and you may have been lucky in the past and done a PCP that did have more value. But that doesn't make this deal a failure, it just means the equity is nil which you accepted as a possibility when you signed up for it.

Market value is a bit vague anyway as there is usually about £1500 between the selling value and what you would need to pay to buy a similar car if you were buying. The goalposts have completely moved from 2 or 3 years ago, then you needed to have equity for a deposit, now you don't (nil deposit or a deposit contribution exists for this situation). Therefore you don't really lose, but the risk has changed to brand loyalty as you could get your next car from a number of manufacturers that are offering deposit contributions.

Longer term, if this persists then PCP will be pointless, may as well choose either HP if intend to keep, or some form of rental (personal lease) if you always want to pay monthly for next few years. Personally I would spec a car as I want then aim to keep it 5 to 7 years knowing that on average it will lose no more than about 14% each year, averaged over the term, less if I get a good discount at start.

It is probably nearer to £2k than £1500, but you are in the right ball park.

 

The concern I have is if the market values are less than the GFVs and a significant proportion hand back, VWFS have a lot of tin on their hands that they will want a quick return on. They were probably expecting these cars to end up as trade ins and the dealers paying the GFVs off as part of the trade in, what they won't have been expecting is a number of cars that they now own, and the dealers will not pay more than market value for them. VWFS will need the cash in the bank as soon as possible, so will offload these on to the market at fairly attractive prices, especially as they are devalueing for every day they stay unsold. The only problem with this is that the market values will take a hit ....... Catch22.

 

Anyway, it isn't our problem, it is VWFS's!

Andyvee, is correct all PCP's I have it by UK law.

http://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

All personal car finance does, be it HP or PCP.

Thanks for the info

Also you can pay off lump sums at any time and VWFS will either adjust your monthly payments to suit or alter the length of the PCP.

I only found this out the other day, I though I had to get a final settlement figure and pay the lot but was advised if I had a spare few ££k lying around I could have paid it as and when.

You can, but we wary of reducing the GFV ............

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I wish I got a company car, as long as you stick with a sensible car, the monthly tax is a lot less than the cost of the same car privately, and no maintenance or deposit costs.

Has anyone else noticed loads of nearly new Skodas on G prefix regs around?

Are they ex rentals or Skoda UK cars?

Seems a lot of VWFS cars are registered in Kent now, G prefix.

They will be ex-rentals. I remember the dealer telling me this when I bought mine. Most are from Avis or Budget IIRC.

I was talking to a trade plate driver the other day.

He is picking up loads of cars at 5k miles from various car rental companies around the country, seems they do not even keep them a year or 12k miles these days.

So keep an eye on any low mileage second hand cars for the previous owner details, especially if you want to avoid ex-rentals, most use holding company names that if you Google takes a little while to find the parent company.

These flooding the market every few months cannot help with residuals.

The other ones to watch for are press cars, keep an eye on the car reviews check the number plates and then see them pop up as very low mileage second hand...noticed this a lot with the new Seat Cupra 280 came out all the dealers had press cars for sale, thrashed to within an inch

Best bet is buying cars that are not big fleet or rental favourites.

Edited 1 January, 201610 yr by Defenderben

The trouble is if you want a car around 12 months old, then the vast majority will be ex-lease. Ex-demos tend to be newer and more expensive, while ex-privately owned will be older.

If I came across a 12 month old ex-privately owned car in a dealer forecourt, I'd be terrified that it had been rejected for some reason. Ex-lease cars can be terrific value if you do your homework and buy a decent one, and you still get the benefit of two years (or so) warranty.

Short term hire cars that only stay with a driver for a week or so will probably have had a hard start in life. This is not necessarily the case with ex-lease cars though. My current Octy is on personal lease and has been respected and treated every bit as well as previous cars I owned outright. If I were to have a change in circumstances and had to hand the car back to VWFS in unforeseen circumstances it would probably be a good buy for someone, if it made it to the forecourt.

I think the comment regarding ex-lease is aimed more at business leases - you don't know what they have been used for or how many drivers, they could have been courtesy cars, rental cars, driving school cars or you could get lucky and get one that has had one careful lady driver from new 

The trouble is if you want a car around 12 months old, then the vast majority will be ex-lease. Ex-demos tend to be newer and more expensive, while ex-privately owned will be older.

If I came across a 12 month old ex-privately owned car in a dealer forecourt, I'd be terrified that it had been rejected for some reason. Ex-lease cars can be terrific value if you do your homework and buy a decent one, and you still get the benefit of two years (or so) warranty.

True, ex-demos tend to be 3-6 months old. They too can have had a hard life, lots of short test drives etc.

I think the comment regarding ex-lease is aimed more at business leases - you don't know what they have been used for or how many drivers, they could have been courtesy cars, rental cars, driving school cars or you could get lucky and get one that has had one careful lady driver from new 

Yes I agree. The point I was making is that many people assume that all ex-lease cars are treated badly, but that's not always the case. It may be true for the majority, but as personal leases become more popular this perception may change.

The What Car? depreciation calculator is instructive (if it is to be believed).  This indicates that a VRS estate with an initial price of £25,295 (OTR price?) might be worth £11,096 after 3 years at 10K miles per annum (ie; 44% of original value). So presumably a GFV of £9,596 would be needed to provide £1,500 of positive “equity”? From what I have gleaned from this thread is that it would appear that the real life GFV’s are significantly in excess of that figure.

 

I recently received a quote for a Mercedes C Class Estate. The OTR price is £33,230 and the GFV is £15,575 after 3 years (ie; 47% of original value).  The What Car? depreciation calculator suggests that it might be worth approximately 51% of original cost after 3 years (there is not an exactly comparable Mercedes model on their calculator), which equates to £16,947. That would provide £1,372 of positive “equity” on the GFV I was quoted.

 

But the situation is clouded by the fact that significant discounts/deposit contributions are available for both the VRS and the C Class, and that the financing costs are appreciably more expensive for the Mercedes. So I believe you need to look at any deal from a “cost of ownership” or cash flow perspective rather than solely looking at the GFV – especially if you intend handing the car back at the end of 3 years anyway.

However I would be very upset if I was promised positive “equity” in a PCP deal, relied on it to obtain the vehicle, and the equity failed to materialise. That is miss-selling.

 

I note that there have been comments that VWFS are on the hook if the GFV’s prove to be inflated. That is only true to a certain extent. VWFS have been clever and have been parcelling the potential debt obligation as a securitised asset and selling the instruments to other financial institutions. Up until recently the ECB have been purchasing some of this very debt alongside the normal VAG bonds within their quantative easing program. (Sub prime mortgage anybody?).  So we could all end up paying in one way or another if the assets that back these instruments prove to be worth a lot less than they were actually sold for.

It is the chance they take.

I was sold an endowment policy in 1985 at xx amount a month for 25years and have the written examples of what is was predicted to be worth at 25years on based on 1985 figures!!

I had a £15k guaranteed endowment but with profits was told it would be worth £27k which in 1985 seemed like a lot of money. As we all know 2008 saw the collapse of the banks I got £9k back didn't even make the £15k, good job I had paid off my mortgage and not relied on it but that was in a previous life.

There is no guarantee of equity just the GFV of the PCP which protects the consumer, pity something like that wasn't around to help me in 2009 :(

Edited 2 January, 201610 yr by Defenderben

The What Car? depreciation calculator is instructive (if it is to be believed).  This indicates that a VRS estate with an initial price of £25,295 (OTR price?) might be worth £11,096 after 3 years at 10K miles per annum (ie; 44% of original value). So presumably a GFV of £9,596 would be needed to provide £1,500 of positive “equity”? From what I have gleaned from this thread is that it would appear that the real life GFV’s are significantly in excess of that figure.

 

I recently received a quote for a Mercedes C Class Estate. The OTR price is £33,230 and the GFV is £15,575 after 3 years (ie; 47% of original value).  The What Car? depreciation calculator suggests that it might be worth approximately 51% of original cost after 3 years (there is not an exactly comparable Mercedes model on their calculator), which equates to £16,947. That would provide £1,372 of positive “equity” on the GFV I was quoted.

 

But the situation is clouded by the fact that significant discounts/deposit contributions are available for both the VRS and the C Class, and that the financing costs are appreciably more expensive for the Mercedes. So I believe you need to look at any deal from a “cost of ownership” or cash flow perspective rather than solely looking at the GFV – especially if you intend handing the car back at the end of 3 years anyway.

However I would be very upset if I was promised positive “equity” in a PCP deal, relied on it to obtain the vehicle, and the equity failed to materialise. That is miss-selling.

 

I note that there have been comments that VWFS are on the hook if the GFV’s prove to be inflated. That is only true to a certain extent. VWFS have been clever and have been parcelling the potential debt obligation as a securitised asset and selling the instruments to other financial institutions. Up until recently the ECB have been purchasing some of this very debt alongside the normal VAG bonds within their quantative easing program. (Sub prime mortgage anybody?).  So we could all end up paying in one way or another if the assets that back these instruments prove to be worth a lot less than they were actually sold for.

And funnily enough the GFVs on that vRS estate are about £11k BUT you will only get £11k for it trading it in against a new car at full list - to the dealer it is worth about £9-9.5k, £11k is what they would sell it for. They won't 'buy' it from you for £11k.

 

It isn't that VWFS 'are on the hook' - we all have the right to hand back as per the agreement, if it proves financially advantageous to do so. How they have underwritten it will be a complicated matter - for all we know they might be expecting to lose a grand or so per car and have already written it off as part of a marketing campaign to secure market share ........

 

I used to work with someone who VT'd every 2 years - he bought a car on 4 year HP finance and just handed it back every 2 years (with his deposit it worked out to be about 24 months each time) and got another car. It doesn't affect your credit rating, so why not! For him, it was just a monthly payment for a car .......

 

You never know, VWFS might get the dealer network to stick these cars on the forecourt with artificially high screen prices and actually drive the price up!

Edited 2 January, 201610 yr by andyvee

I'll just leave this here ... http://www.briskoda.net/forums/topic/282426-a-dealer-promising-to-beat-drive-the-deal-discounts/#entry3347694

Its not about depreciation really its more about responsible financing.

I dont think the current VWFS 0% packages for the O3 at least are sensibly put together.....high GFVs set to reduce monthly payments to make the cars more attractive to the masses...after all many people do go for Skodas as no other manufacturer can really get near their monthly costs.

Problem is its then wrong IMHO for someone to find themselves 2 years into a 3.5 year PCP circa £3.5k in VWFS's pocket...basically theyve financed the car on the basis it would be worth considerably more than it actually is just to shift some metal.

Its kind of happened to me in the past with a VW Polo but nothing like to the same extent...reason being is we bought late in a vehicles model life...the new Polo came out and was alot better all round than the model we had...residuals got hit accordingly.....but thats of course not the case with the O3.

Im ultimately not that bothered as Ill just keep the car until I can trade/VT it but its still a VWFS problem and something they should look to address even if it does cost them some finance sales.