PCP/PCH

[Orville]

Out of interest, as I've little knowledge of the PCP/H thing....What happens if you are in a 2 year deal and then something happened that meant you could not continue? what would the lease company do?

It depends upon the small print. Some may expect payment for the full-term of the contract, and purse payment via legal avenues. Others may take in to account the cars higher-residual value (assuming it was handed back after ~12/18 months instead of 24/36), and only charge the difference between higher-value and outstanding contract costs. As there is generally a front-ended 6/9 months deposit, Lease companies can generally obtain all or most of their money back by simply reclaiming the car and selling it at auction. My best guess is that most will charge a reduced settlement fee.

[Neily03]

You still have to make the car pristine again when you hand it back - so also budget for a couple of wheel and ding repairs and a full valet. 

 

Not true and all, I had a booklet through for mine showing what classed as 'wear and tear' which included curbed wheels and small scratches and dents as acceptable.

[silver1011]

Out of interest, as I've little knowledge of the PCP/H thing....What happens if you are in a 2 year deal and then something happened that meant you could not continue? what would the lease company do?

 

This is where PCH can fall down compared with PCP. It is far less flexible.

 

If midway through a PCH you want out then I'm afraid you have to pay the full remainder of the payments.

 

This is why loading up the first monthly payment can help. I paid £2,400 followed by 23 months at £100. If anything happens between now and the end of the lease I won't be stung as hard as if I'd paid a minimal deposit.

[silver1011]

You still have to make the car pristine again when you hand it back - so also budget for a couple of wheel and ding repairs and a full valet. 

 

Most reputable lease companies (including Skoda UK) are members of BVRLA. If they aren't then walk away.

 

By being a member they agree to adhere to the BVRLA's guide for acceptable wear and tear...

 

http://www.bvrla.co.uk/

 

As Neily mentions you are provided with a booklet describing what is acceptable and what isn't. I was pleasantly surprised by what they will accept as fair wear and tear.

 

25mm long alloy wheel scuffs, dents as big as a 5p coin, scratched and scuffed door cards. The booklet is quite comprehensive.

 

Taking an hour out to wash and hoover the car and empty it of rubbish is common sense. Those that don't are simply providing the inspector with clear evidence of their attitude towards their lease car, opening them up to a more thorough inspection.

 

Treat the car like your own, repair any significant damage (as you would your own car) and all will be fine.

Edited 6 September, 2016 by silver1011

[Osc]

Had the test drive and can get it in the drive ok.Need to decide which model now was looking at 1.4 se sport but may go for 2.0 diesel decisions decisions.

Going to get dealer to quote for both on PCP and PCH and 'cash'.

Thanks for all the comments swaying towards PCH at the minute.

[999pooch]

Had the test drive and can get it in the drive ok.Need to decide which model now was looking at 1.4 se sport but may go for 2.0 diesel decisions decisions.

Going to get dealer to quote for both on PCP and PCH and 'cash'.

Thanks for all the comments swaying towards PCH at the minute.

My preference is PCH, as the overall costs tend to be lower, just make sure you're happy to financially commit to the full term of the lease regardless of your situation changing

[ima]

My preference is PCH, as the overall costs tend to be lower, just make sure you're happy to financially commit to the full term of the lease regardless of your situation changing

That's the bit that bothers me about a PCH. I like the idea as I have no real desire to own a car each time. What happens if your circumstances change such as redundancy, and you can no longer afford the payments? Is there no way of getting out of the agreement?

[silver1011]

As mentioned above, load up the deposit / 1st monthly payment to minimise the next 23 monthly payments.

[Czechers]

As mentioned above, load up the deposit / 1st monthly payment to minimise the next 23 monthly payments.

Be careful doing this. It can help psychologically having less remaining to pay off if you find yourself in a pickle and need an early exit, but it's not foolproof. Unless front loading the agreement reduces the overall cost, then I prefer to stick with a lower deposit.

If the vehicle is written off early in the agreement, then your insurance company will generally have first dibs on any payout. This could leave you with not much to show for your large deposit, and quickly needing to find another one as you would also now be car less.

Also, why have money tied up in an asset owned by someone else? Unless paying more upfront reduces the overall amount payable, then to my thinking it would make more sense to put the difference between a large and a small deposit to one side to fund any alteration you need to make to the agreement that could be brought about by unforeseeable events, such as change in employment or medical circumstances. Handing over a large portion of the total amount due in one go on day one would put you in a weak negotiating position. Better the money be in your bank account than theirs, for as long as possible. In times past I'd also say you could be earning interest on this amount as well, but as we all now bank rates are now so low that currently this would make negligible difference.

It may feel like it's hurting less (and to some that may be enough), but the total amount payable is still the total amount payable, whether you front load it or back load it.

[GoneToBeemer]

Had the test drive and can get it in the drive ok.Need to decide which model now was looking at 1.4 se sport but may go for 2.0 diesel decisions decisions.

Going to get dealer to quote for both on PCP and PCH and 'cash'.

Thanks for all the comments swaying towards PCH at the minute.

Use a website like contracthireandleasing.com - you will get a much better deal than just getting a quote from one dealer, and you can also use it to negotiate if you wanted to.

[silver1011]

It may feel like it's hurting less (and to some that may be enough), but the total amount payable is still the total amount payable, whether you front load it or back load it.

 

And that's the point, for whatever reason you might need to exit a lease early the total amount payable is required so it really makes no difference how you load the deposit / monthly payments. Whether Skoda UK already have most of it (large deposit) or the majority of it is still in my bank account (small deposit, larger monthlies) makes no difference

 

My PCH will cost me £4,800 over the 2 year lease period. Whatever happens, if I need to exit the lease early or the car is written off I need to pay Skoda UK £4,800.

 

Unlike a PCP where you have the option of selling the car to recoup costs and clear the debt, on a PCH this isn't an option so you are always liable for the full amount.

 

If the car is written off and the insurance payout isn't enough to clear the outstanding payments a smaller or larger deposit will make no difference, you'll still need to find the money to clear the outstanding debt. This is why it is often recommended to purchase GAP insurance.

Edited 6 September, 2016 by silver1011

[GoneToBeemer]

And that's the point, for whatever reason you might need to exit a lease early the total amount payable is required so it really makes no difference how you load the deposit /monthly payments.

My PCH will cost me £4,800 over the 2 year lease period. Whatever happens, if I need to exit the lease early or the car is written off I need to pay Skoda UK £4,800.

Unlike a PCP where you have the option of selling the car to recoup costs and clear the debt on a PCH this isn't an option so you are always liable for the full amount.

If the car is written off and the insurance payout isn't enough to clear the outstanding payments a smaller or larger deposit will make no difference, you'll still need to find the money to clear the outstanding debt. This is why it is often recommended to purchase GAP insurance.

That's not strictly true - I asked the question if I want to get out of the lease early to Skoda Finance...(might be true with other companies of course).

Essentially if it's within the first 12 months then it's 90% of the total left payable, 12-24 months 70%, 24-36 months 50%.

[silver1011]

Hmm, I asked a very similar question and got a different answer.

 

They did say it was possible to buy the car, but the price would only be disclosed at the point of terminating the contract.

[glosrich]

Check out broadspeed.com for prices on discounted Octavias.

You can usually achieve 20%.

20% discount and 0% finance with Skoda can almost match the PCH price. Bonus being you can buy or refinance the car at the end if you want to.

But if you're sure you want to keep changing every 3 years then PCH is cheapest.

Depends if you want to keep paying every month for ever.

Say if you pay out £8k every 3 years, after 9 years its £24k, which buys better cars than an Octavia.

Next time I'll get a new BMW or Merc with a big discount and a low rate deal and keep it for 10 years.

Edited 6 September, 2016 by glosrich

[Czechers]

My PCH will cost me £4,800 over the 2 year lease period. Whatever happens, if I need to exit the lease early or the car is written off I need to pay Skoda UK £4,800.

 

 

That's not true. If the car is written off you are liable for the full value of the car, as it your responsibility to adequately insure it. As I understand it, your insurance company and Skoda Finance would negotiate a settlement to cover the shortfall between the value of the car and what you have already paid. If they reach an agreement then there is nothing further for you to pay, but if there is still a shortfall then this is where your GAP insurance will come into effect (if you have it). If you have no additional cover in place then you will need to dig deep.

[dsj20v]

That's not true. If the car is written off you are liable for the full value of the car, as it your responsibility to adequately insure it. As I understand it, your insurance company and Skoda Finance would negotiate a settlement to cover the shortfall between the value of the car and what you have already paid. If they reach an agreement then there is nothing further for you to pay, but if there is still a shortfall then this is where your GAP insurance will come into effect (if you have it). If you have no additional cover in place then you will need to dig deep.

^^this^^

You are liable for full amount of price of car in event of write off not your lease fee, normally if wrote off in 1st year your insurance company will cover it, it's the following year where it becomes an issue with market values etc, not a problem if you have Gap insurance which can be had for £200

[DaryllH]

I bought contract hire gap insurance with my PCH for I think £199. That covers the rest of my lease should the car be written off in an accident.

 

Additionally, I put £5k deposit down and pay £158 a month over 2 years for a DSG VRS with the black pack plus. I had the money, so why not make my monthly outlay less? Next time around though, I think I'll shop around more and am VERY tempted by silver1011's scout, that is a great deal...

[silver1011]

That's not true. If the car is written off you are liable for the full value of the car, as it your responsibility to adequately insure it. As I understand it, your insurance company and Skoda Finance would negotiate a settlement to cover the shortfall between the value of the car and what you have already paid. If they reach an agreement then there is nothing further for you to pay, but if there is still a shortfall then this is where your GAP insurance will come into effect (if you have it). If you have no additional cover in place then you will need to dig deep.

 

 

^^this^^

You are liable for full amount of price of car in event of write off not your lease fee, normally if wrote off in 1st year your insurance company will cover it, it's the following year where it becomes an issue with market values etc, not a problem if you have Gap insurance which can be had for £200

 

My point was that you can't escape the need to cover the payments.

 

Writing off the car makes it more complicated with how the costs are covered but ultimately my point was that it doesn't matter how you load the deal, the full amount is payable, if the insurance payout covers it then great, have GAP, then even better, but however you slice or dice it I'll be paying at least £4,800 over the two years. 

[BMK]

This is my first time dealing with PCP.

 

VRS230 manual, Black metallic, winter pack, rear camera.

 

£5000 deposit (£2000 from skoda +£3000 myself)

part-ex my current car and squeezed a extra £500 out of them on the value of car from £6500 to £7000

plus £500 of value of car.

my monthly is £330.

Final guarantee value of car is £9950 which I personally think will leave me with equity judging by current car values

Personally thought its a decent deal for the car.

Next time after reading the forums can be a bit more savvy for my next time I get into PCP.

[Wakey]

What duration is that over?

[SC03OTT]

It seems rather expensive given the large deposit.

[dsj20v]

So £12k down and still £330mth is that over 36mths

[davitc]

My point was that you can't escape the need to cover the payments.

 

Writing off the car makes it more complicated with how the costs are covered but ultimately my point was that it doesn't matter how you load the deal, the full amount is payable, if the insurance payout covers it then great, have GAP, then even better, but however you slice or dice it I'll be paying at least £4,800 over the two years. 

 

My GAP insurance cost £150 and that also covered the deposit upto about £2000 of which mine was £1600.

 

A no brainer for the piece of mind.

Edited 8 September, 2016 by davitc

[silver1011]

This is my first time dealing with PCP.

 

VRS230 manual, Black metallic, winter pack, rear camera.

 

£5000 deposit (£2000 from skoda +£3000 myself)

part-ex my current car and squeezed a extra £500 out of them on the value of car from £6500 to £7000

plus £500 of value of car.

my monthly is £330.

Final guarantee value of car is £9950 which I personally think will leave me with equity judging by current car values

Personally thought its a decent deal for the car.

Next time after reading the forums can be a bit more savvy for my next time I get into PCP.

 

Assuming 36 months.

 

Which bit have I got wrong?

 

£3,000 deposit

£7,500 part exchange

36 months @ £330 = £11,880

£9,950 final payment

TOTAL = £32,330.

[BMK]

This is my first time dealing with PCP.

 

VRS230 manual, Black metallic, winter pack, rear camera.

 

£5000 deposit (£2000 from skoda +£3000 myself)

part-ex my current car and squeezed a extra £500 out of them on the value of car from £6500 to £7000

plus £500 of value of car.

my monthly is £330.

Final guarantee value of car is £9950 which I personally think will leave me with equity judging by current car values

Personally thought its a decent deal for the car.

Next time after reading the forums can be a bit more savvy for my next time I get into PCP.

 

 

What duration is that over?

 

 

My GAP insurance cost £150 and that also covered the deposit upto about £2000 of which mine was £1600.

 

A no brainer for the piece of mind.

 

 

Assuming 36 months.

 

Which bit have I got wrong?

 

£3,000 deposit

£7,500 part exchange

36 months @ £330 = £11,880

£9,950 final payment

TOTAL = £32,330.

 

Apologies wrote that like a idiot

 

I am Part-exing my current car, valued at £6500 but pushed them to £7000.

 

Deposit on the car is £5000 (£2000 from skoda + £3000 from part-ex)

42months@£330

final value= £9950

+ £500 discount on car value from skoda as well.

GAP insurance for me is £399 seems steep compared to others but still considering for peace of mind. Is it worth it?

 

VRS230, black metallic, winter pack, rear camera and forgot Canton speakers.

Edited 8 September, 2016 by BMK