Hi,

I currently own a 2014 Octavia VRS Diesel with quite a lot of extras (leather interior ect) which I bought on finance almost exactly a year ago as an ex demo car with about 1k miles on it. I put down a £1k deposit plus a small amount of equity that was in my previous Octavia.

I pay £316 per month which at the time was ok as I had a long commute and needed lots of space in car too as I was often sharing car lifts with others. I have now moved into a house with my partner and child, we pay higher rent and I now work 5 miles from home and commute alone. Essentially I do not need a big, high powered diesel for my needs now. I cycle lots and really only need the car for the days I do the school run. My GF also now drives and has another small car she purchased outright worth about £800-£1k.

We can afford the monthly repayments and have paid all on time but it seems a little silly paying out for VRS that is sat at home most of the time…we could really do with saving money each month.

My plan is to downsize the VRS and cut the monthly payments down…. And put the money we have saved into a savings account. The smaller car could then be used by my partner or me when needed (shes only been driving a year so she cant drive VRS). If I then needed a bigger car in the future I could let my GF have the new, smaller, skoda… and then I could buy a second hand motorway mile muncher with the savings we have been making each month. We might even be able to get by with one car for a decent amount of time.

Here’s the issue…. I think the dealer who sold us the car originally was less than honest about how good a deal I was getting. It has since became apparent I over paid for the cost of the car by about £1.5-2k. I think this is the only time in my life where I fell for a salesman pitch but im pretty sure I got my pants pulled down (you live and learn). I looked into my settlement fee after 6 months of the agreement and I was in £2.3 negative equity. After now paying a year of repayments I am still in negative equity of £2300 when you look at what the garage will buy the car for compared to my amount left to pay on finance. I guess this is a combination of the second hand Octavia diesel market being awful (mine is not effected by the emissions scandal) and me being only a year into my agreement. I know negative equity is quite common in the first couple of years of car deals and its partly my fault as my circumstances have changed quite soon after buying the car – in hindsight I should have waited for things to settle down with regards to my work and living arrangements before deciding on the new car.

My options are

1. To keep my car – and pay more than we want each month for a car we no longer really need.

2. To pay for my car for another year and half when I can hand it back and walk away under the finance agreement terms (effectively making it a very expensive 2 years of motoring with the deposits ect taken into account). We could then start a new finance agreement for a more suitable, cheaper car.

3. To take the 2.3k negative equity and bump that into a finance agreement on a used car.

The offer they have made us (through another skoda dealership) is to take a 3000 mile, black citigo mote carlo (we like the car) at £8,100 and to add the negative equity to this (it made the total finance just over £11k). We would then be on a 5 year hire purchase scheme at £230 a month (with a £250 cash deposit). We then own the car outright after 5 years.

The big negative point is that we are essentially paying full value (with the neg equity added) for the mote carlo even though it has 3k miles on it.

The positive thing would be that the Monte Carlo fits our needs better, would half my insurance (by £25 a month) and would take £85 a month off the monthly finance cost. The depreciation is less on the monte carlo than it would be on the VRS …and negative equity shouldn’t be an issue as we would want to keep the car for the full 5 years…at which point its ours with no final payment. It also means we owe much less money in total (approx £18k down to 11k) …. I am worried that further Skoda emissions revelations could hurt the VRS price still further meaning we are never in a good position on the car.

My Octavia will soon need a service plus 4 new tyres so that’s another good reason to change soon rather than later.

My current thought is that I should go for this deal and just live with the mess we made on the Octavia…… but just hoped some of you might be able to comment on the deal or think of another option for us?

Is option 2 the voluntary termination point on your agreement, or simply when your current deal finishes and you have to find the balloon payment, or hand it back?

 

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

Edited 14 March, 201610 yr by softscoop

At what point can you initiate the voluntary termination on your agreement, or is that option 2?

 

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

 

 

Yes this is option 2 .... I was actually unaware of this option until the new dealer told us about it on Saturday.  I need to check the finance agreement later as I ran out of time yesterday but I think it will be half way through the agreement..... which should be in about a year and half (2.5 years into 5 year deal).   I will check this later.

Yep sadly residuals on the O3 are woeful....in a similar situation myself.

I bought a 2.0 TDI Elegance estate early 2014 to run for work, funded by a car allowance....I wanted a vRS but not the 30/40 quid/month extra it was gonna cost so compromised.

All was well until I relocated, my mileage went through the roof and got to a point where I was about to exceed my mileage allowance less than 2 years into a 3.5 year agreement.

I didnt want to be £££ in VWFS's pocket for excess mileage or face a big shortfall come trade in time so I went back to a company car, sold the wifes several year old Vauxhall Astra and she now runs the Octavia.

Lucky in the sense I now get to drive around in a fully funded Golf GTD but there is circa. £3.5 neg equity on the Skoda so rather forced to keep it until the situation is less severe.

My brother works in the trade so I might in time be able to get such a discount on a new car that I can absorb some of the shortfall in another deal but for now continuing to run the car but its way more 2nd car than we want or need. I can afford it but its burning money every month Id rather save or spend on other things.

Worst case the VT point comes up about month 37 so I might end up doing that save paying for it right to the very end.

One things for certain I wont be buying another...about the worst hit of depreciation Ive had on a new car and Ive bought a few!

Edited 14 March, 201610 yr by pipsypreturns

I'd be looking at option 2, and then a new 0%,free service ,etc, deal on a new Citigo to your Spec.

New Citigos (let alone secondhand ones.) depreciate a lot....

We handed back my Son's Citigo 5 door elegance last year (with good extras and very low mileage.)because it's value was well below the final payment valuation after nearly 3 years.

Yep sadly residuals on the O3 are woeful....in a similar situation myself.

I bought a 2.0 TDI Elegance estate early 2014 to run for work, funded by a car allowance....I wanted a vRS but not the 30/40 quid/month extra it was gonna cost so compromised.

All was well until I relocated, my mileage went through the roof and got to a point where I was about to exceed my mileage allowance less than 2 years into a 3.5 year agreement.

I didnt want to be £££ in VWFS's pocket for excess mileage or face a big shortfall come trade in time so I went back to a company car, sold the wifes several year old Vauxhall Astra and she now runs the Octavia.

Lucky in the sense I now get to drive around in a fully funded Golf GTD but there is circa. £3.5 neg equity on the Skoda so rather forced to keep it until the situation is less severe.

My brother works in the trade so I might in time be able to get such a discount on a new car that I can absorb some of the shortfall in another deal but for now continuing to run the car but its way more 2nd car than we want or need. I can afford it but its burning money every month Id rather save or spend on other things.

Worst case the VT point comes up about month 37 so I might end up doing that save paying for it right to the very end.

One things for certain I wont be buying another...about the worst hit of depreciation Ive had on a new car and Ive bought a few!

 

That sucks too ... and I guess the whole "I am not buying another" feeling is likely to make the second hand market even worse ...which is why I am really nervous about having an £18k debt on what is now a £15,5k car and depreciating fast...and paying £320 every month for the privilege.

 

My thought is that I would rather cut my loses and bump the negative equity onto the Citigo Monte Carlo...a car we could afford more easily, we could both drive and we would still want through the full 5 years.   I can not see a point where we would not need a small city car in the next 5 years.   It depends on my work if I need a second car and what kind of car that should be ...but I could easily buy a second hand car outright if my circumstances changed again.

 

I would feel better about having a £11k debt on a car we need rather than a £18k debt on a car we don't need...even if £2.3k of that new debt is just negative equity from the VRS.

I'd be looking at option 2, and then a new 0%,free service ,etc, deal on a new Citigo to your Spec.

New Citigos (let alone secondhand ones.) depreciate a lot....

We handed back my Son's Citigo 5 door elegance last year (with good extras and very low mileage.)because it's value was well below the final payment valuation after nearly 3 years.

 

Thanks, interesting..... this might not be such an issue for us as we will want to have the car for the full 5 years of Hire Purchase which means no final payment at the end..we would own it after 5 years at £230 per month

Have you looked into option 3 on a New citigo?

 

With the deposit contribution and 0% pcp it may well work out much less than than putting the negative equity onto a low rate finance deal.

Have you looked into option 3 on a New citigo?

 

With the deposit contribution and 0% pcp it may well work out much less than than putting the negative equity onto a low rate finance deal.

 

This is indeed was what I was hoping to do.....

 

Dealer is saying they can not bump the negative equity onto a new car (or at least they really don't want to)...as it will be rejected by the finance company.    They can not just inflate the cost of the new car to cover other debts I might have (I have done a bit of reading on this and it does seem to be a legitimate response).  On a used car they can hide the actual cost of the car better to hide the negative equity that is being added into the deal.

 

To get a new car they would settle the finance on the VRS.... I would then have to pay off the negative equity (2.3k) and then put down a deposit on a new car (£500).- total cost to me would be about £2.7k.   If Im gonna do that I might as well just pay the current deal up to the half way point and hand it back.

Edited 14 March, 201610 yr by TheRedEyeJedi

One thought I had was that of course quite a bit of the negative equity is coming from the low settlement the dealer is offering me on the car.

 

If I could sell it privately it could bring down the negative equity involved quite a bit.

 

For instance... could I pay £1k lump sum off my finance...then advertise the car privately at £17.5k (making it clear this is the amount owed on finance)

 

Buyer then pays cheque direct to skoda finance so they can see its cleared.

 

 

Does anyone know if this is even possible?  It would mean I more than half the negative equity and get rid of the car..freeing me up to buy what I want at a better rate.

 

It does of course mean I would need to find a private buyer which could be near impossible.

Edited 14 March, 201610 yr by TheRedEyeJedi

This is indeed was what I was hoping to do.....

 

Dealer is saying they can not bump the negative equity onto a new car (or at least they really don't want to)...as it will be rejected by the finance company.    They can not just inflate the cost of the new car to cover other debts I might have (I have done a bit of reading on this and it does seem to be a legitimate response).  On a used car they can hide the actual cost of the car better to hide the negative equity that is being added into the deal.

 

To get a new car they would settle the finance on the VRS.... I would then have to pay off the negative equity (2.3k) and then put down a deposit on a new car (£500).- total cost to me would be about £2.7k.   If Im gonna do that I might as well just pay the current deal up to the half way point and hand it back.

 

It may be worth trying another dealer then... I've switched from an Insignia to a new Octy VRS and had around 2k of negative equity added onto the new PCP deal.

You can do that. But finance company won't let you hand the keys over until they have there payment.

Best option is sell privately. Buyer pays you. Then you pay finance off with buyer there. They then know the finance is clear and your free to sell the car as it's legally yours

Sent from my SM-G900F using Tapatalk

It may be worth trying another dealer then... I've switched from an Insignia to a new Octy VRS and had around 2k of negative equity added onto the new PCP deal.

 

 

So you had a Vauxhall insignia with 2k of negative eq and they put that on a VRS?

 

 

Would you mind elaborating more on the numbers?  Are you not worried you are passing on neg eq to a new car which could then add even more neg equity on top?

 

Im not sure I see the advantage here?

So you had a Vauxhall insignia with 2k of negative eq and they put that on a VRS?

 

 

Would you mind elaborating more on the numbers?  Are you not worried you are passing on neg eq to a new car which could then add even more neg equity on top?

 

Im not sure I see the advantage here?

 

I've sent you a PM with more detail in.

Run a few we buy any car type quotes to see what you can get for it. Also clean it up so it looks its best, then spend a few hours going around some local dealers who buy cars, you might be able to get more for it.

 

If you sell it to a dealer they will want to send a cheque direct to the finance company for the settlement.

 

However, I'd be inclined to Voluntary terminate it, let them have the negative equity back!

 

I don't think the answer is rolling the neg equity into another loan, you're just paying for the money again.

 

Hope you sort it.

Be careful as they wont do this for love, they want to make some money out of you also.

 

£250 a month sounds a bit high to sort this out. How about:

 

1. Take a personal loan for £2k to sort the neg equity out - looks about £58 for 42 months from Sainsburys bank for example. Get a new Citigo on the current offer (basic model I'm afraid) for £149 deposit, £149 a month for 42 months. Total monthly cost £207. http://www.skoda.co.uk/finance/finance-offers/citigo/default/ 

 

If you can add some savings into that then all the better it will cost less, could get it under £200 easily.

 

2. Maybe even PCH a car for £100 a month, 3 months deposit, to get you out of this bind:  https://www.nationwidevehiclecontracts.co.uk/Volkswagen-UP-leasing.htm

As soemone who is also trying to work their way out of the negative equity trap I feel your pain about how to go about changing out of your car.  Your say that you felt you had your trousers pulled down when you were sold the VRS however it appears that you are more than willing to jump straight into the same situation but with a car with even worse residuals.

 

The big negative point is that we are essentially paying full value (with the neg equity added) for the mote carlo even though it has 3k miles on it.

 

 A quick check on Parkers for a used 2016 (65) shows a valuation of approixmately 6k, a loss of over £4000 equity over just 6 months and you are wanting to add an extra £2.3k onto the finance value of the car.

 

If you are still able to afford to run your vRS you need to ask the question of whether you want to pay for your immeadiate savings over the next 5 years when your situation is likely to change again.  You also need to look at the benefits of having a larger "family" car to use with your partner and child.  In a few years time is a Citigo going to be sufficient for your needs as a family? 

 

While you may decide that right now the car is too expensive to run, in a years time are you likely to be able to afford the cost to change for a second time should your circumstances change for a second time. 

As soemone who is also trying to work their way out of the negative equity trap I feel your pain about how to go about changing out of your car.  Your say that you felt you had your trousers pulled down when you were sold the VRS however it appears that you are more than willing to jump straight into the same situation but with a car with even worse residuals.

 

 A quick check on Parkers for a used 2016 (65) shows a valuation of approixmately 6k, a loss of over £4000 equity over just 6 months and you are wanting to add an extra £2.3k onto the finance value of the car.

 

If you are still able to afford to run your vRS you need to ask the question of whether you want to pay for your immeadiate savings over the next 5 years when your situation is likely to change again.  You also need to look at the benefits of having a larger "family" car to use with your partner and child.  In a few years time is a Citigo going to be sufficient for your needs as a family? 

 

While you may decide that right now the car is too expensive to run, in a years time are you likely to be able to afford the cost to change for a second time should your circumstances change for a second time. 

 

 

Thanks... that's really good info.   I am not rushing into anything this time....and we can indeed continue to pay for the VRS if a new 'lump and bump' deal isn't the best way to go.

 

We had this offer at the weekend which gives me an out as such but I really havnt had time to look into it yet... I thought I would run it past a few specialist forums first to help us.   It may well be better to wait until I can voluntarily cancel this current deal and start again.   I am going to dig out the finance agreement tonight and look at when that date is.

 

You say you are trying to get out of negative equity too.. what is your current approach?

As soemone who is also trying to work their way out of the negative equity trap I feel your pain about how to go about changing out of your car.  Your say that you felt you had your trousers pulled down when you were sold the VRS however it appears that you are more than willing to jump straight into the same situation but with a car with even worse residuals.

 

 A quick check on Parkers for a used 2016 (65) shows a valuation of approixmately 6k, a loss of over £4000 equity over just 6 months and you are wanting to add an extra £2.3k onto the finance value of the car.

 

If you are still able to afford to run your vRS you need to ask the question of whether you want to pay for your immeadiate savings over the next 5 years when your situation is likely to change again.  You also need to look at the benefits of having a larger "family" car to use with your partner and child.  In a few years time is a Citigo going to be sufficient for your needs as a family? 

 

While you may decide that right now the car is too expensive to run, in a years time are you likely to be able to afford the cost to change for a second time should your circumstances change for a second time. 

 

 

I have been thinking more about what you have said and what others have recommended and it does seem like the voluntary cancellation would be a good option.

 

I need to double check my agreement but I think I was on a 5 year deal and I paid £1k deposit.   So in theory the cancellation point should be after 2.5 years

 

So I would have paid approx. £2.5k deposit plus 30 x £316 = £11980.   So that means I have effectively paid £399 per month for the VRS for 2.5 years with no extra costs as its in warranty

 

I could then voluntary cancel and hand the car (and its neg equity) back..... leaving us free to go with one car for a while or to enter into a new (hopefully) much better deal

 

You are quite right about the residuals on the Citigo ...which are actually quite sickening.   I had been advised (by both dealerships) that the residuals were good on the citigo.  The last thing I want to do is take an interest free deal that has an exit clause and swap it for a new finance deal at a worse rate with no exit point.

Edited 14 March, 201610 yr by TheRedEyeJedi

You say you are trying to get out of negative equity too.. what is your current approach?

 

I'm currently trying to change out of a Land Rover Discovery 4, due to phenominal running costs.  Luckily for me I am in a position where i am able to release my car now, part ex it ahead of the delivery of its replacement (a vRS DSG estate) and in the period in which I am car less (or using SWMBO's car), the money I am saving is the same as my negative equity.

The citigo is a capable little car. I got upsold to a 75 green. I still have to lean over to open the passenger window. I would tomorrow in this situation, grab the cheapest one I could. For two people 'going away' it's ok, 3... still lots of seat space. A fabia might be a more long lived option, or a rapid as they are not selling... but then, residuals.

 

I was once in negative equity and it was the last time... we all have to learn something, somehow. The good thing is, you're in this predicament for a good reason, you have options, even if you can't quite get to them right away!

 

I'd go with comments above about avoiding a 'deal' to shunt the negative equity on... get shot at the best point and be shot of it. I just found a credit card bill from'99, a time when I was just deferring on the never never... I was quite sad at how stupid I'd been.  The rs might be worth more in bit on lower mileage.

 

If it helps, you can't take it with you. So what,  it's been expensive, the cash is gone, tomorrow hasn't. You could of spent that extra 50pm opn beer and seen nowt but a higher water bill...

 

Have a last hurrah with the car in a few months when you can exit, then exit and don't look back... sure as chips is chips, don't leave an old bill around that can resurface 16 years later to make you feel sad...

I need to double check my agreement but I think I was on a 5 year deal and I paid £1k deposit.   So in theory the cancellation point should be after 2.5 years

 

So I would have paid approx. £2.5k deposit plus 30 x £316 = £11980.   So that means I have effectively paid £399 per month for the VRS for 2.5 years with no extra costs as its in warranty

 

I could then voluntary cancel and hand the car (and its neg equity) back..... leaving us free to go with one car for a while or to enter into a new (hopefully) much better deal

 

I would contact your finance company about that. I am currently with Alphera (BMW financial services) and mt early termination point isnt 50% of the finance term, its 50% of the finance value.  And that includes the baloon payment at the end of the deal

I spoke to skoda finance and here's the long and short of it

I paid £3k deposit in total

Then 48 monthly payments of £316

Then final optional payment of £8955 to keep car

Total credit cost of £24,158

Voluntary termination target is £7062 more than I have paid up to now

So far I have made 11 payments of £316

I need to make another 23 payments of £316 before I can hand it back and walk away

I think going the distance of the credit deal is out of the question as I may go over the 6k miles per year target anyway... So I would have to pay the balloon figure at end to own the car or get charged for excess milage

If I do the voluntary termination I will have paid in total £3k deposit plus 11 monthly payments so far (£3476) plus a further 23 payments of 316 (£7268) = £13744 which means the car has cost me £404 per month and I can hand it back without any penalty for miles

If I do the lump and bump on the Citigo then I will have to pay 60 X payments of £230 = £13800 and at the end of it the car will be worth about a grand (we will own it outright, no final payment)

It seems that rather than paying the £13800 on the Citigo and end up with a car worth very little I would be better off paying another £7268 on the Octavia then handing it back. Then we can go and start a more competitive agreement elsewhere or buy second hand ect ect

Would that seem the best option to you guys too from the figures I have posted in order for us to get out of negative equity?

I know I've made a mess of this but now I want to get out of this in the most sensible way possible

Edited 14 March, 201610 yr by TheRedEyeJedi

Apologies if this sounds blunt, but take another look at the current valuation of the citigo.  You will effectively be paying almost £14,000 for a car which, when new costs c. £10,000 (list price) and at its current valuation has already depriatiated by almost 40%. When you look at the cold hard reality of your situation you are considering paying double for a car to save £3000 over the course of the next 3 years. 

I personally would hang onto the vRS, and look to get rid approximately replace it at close to the end of your finance agreement as possible when your neg eq will be at its lowest point and you shouldnt fall foul of the mileage penalties

Apologies if this sounds blunt, but take another look at the current valuation of the citigo. You will effectively be paying almost £14,000 for a car which, when new costs c. £10,000 (list price) and at its current valuation has already depriatiated by almost 40%. When you look at the cold hard reality of your situation you are considering paying double for a car to save £3000 over the course of the next 3 years.

I personally would hang onto the vRS, and look to get rid approximately replace it at close to the end of your finance agreement as possible when your neg eq will be at its lowest point and you shouldnt fall foul of the mileage penalties

.

No need to apologise - I'm looking for bluntness!

Do you not think I would be better off doing the voluntary termination half way though as described in my post before yours? That way I do not have to worry about the mileage or negative equity and I get out in 23 months from now?

Edited 14 March, 201610 yr by TheRedEyeJedi