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PCP Deal coming to and end!


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Hi all,

 

Needs some help/advice on what to do. My 42month PCP deal is up in January, and I recent spoke with my dealer about what my options were. my initial thoughts were to keep the car as I like it, but potentially get another if the cost wasn't much different. I thought I'd enquire now, as I wasn't sure of delivery times on a new car. Anyway I was shocked at the options.

 

So, I have a 2014, VRS DSG diesel estate, with some options. I paid around £28k and a £7400 deposit. I'm being told I'm in negative equity, and the projected value is around £10k in January and I will owe £11.5k So my best option is to walk away. Pretty surprised the value is so low, considering its in as new condition. Apparently its because of diesel emissions and it made price crash.

 

Anyway, just want some recommendations of what I should do. I'm starting to look around a mercs and bmw's etc, but I'm not keen on putting such a large deposit down. I think I'd rather up my monthly payments.

 

thanks

 

Alastair

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I was always under the impression that the dealer would try their hardest to get you into a new car at the end of the agreement, negative equity or not.

 

shop about for a better trade in price for your car, you can negotiate on the trade in value with your dealer. Try: We buy any car, evanshawshaw and other Skoda dealers.

 

You'll also get a bit more for a private sale if you're willing to put in the effort.

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2 hours ago, allyst170 said:

Hi all,

 

Needs some help/advice on what to do. My 42month PCP deal is up in January, and I recent spoke with my dealer about what my options were. my initial thoughts were to keep the car as I like it, but potentially get another if the cost wasn't much different. I thought I'd enquire now, as I wasn't sure of delivery times on a new car. Anyway I was shocked at the options.

 

So, I have a 2014, VRS DSG diesel estate, with some options. I paid around £28k and a £7400 deposit. I'm being told I'm in negative equity, and the projected value is around £10k in January and I will owe £11.5k So my best option is to walk away. Pretty surprised the value is so low, considering its in as new condition. Apparently its because of diesel emissions and it made price crash.

 

Anyway, just want some recommendations of what I should do. I'm starting to look around a mercs and bmw's etc, but I'm not keen on putting such a large deposit down. I think I'd rather up my monthly payments.

 

thanks

 

Alastair

 

If you're definitely wanting to change then maybe look at selling privately. If your car is clean it'll practically sell itself. I went down this route. Was getting nothing for trade in and didn't really want to hand it back. Sold it and after paying off the finance had a few grand in my hand. Then I went a leased another vRS which I will pick up next week. 

 

It took me two days to sell my old vRS. Like I said. If it's clean, like mine, has a good advert and is priced reasonably (unlike some of the jokers I saw on Autotrader) it'll go no problem. 

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I don't understand this obsession with "negative equity" in PCP deals.

 

At the start of the deal, you were given a price for the car, the monthly payments based on that and your deposit, and the balloon payment to keep the car. You were happy to pay this then - why not now? As far as i can see, it only matters what the value of the car is on the day the agreement ends. Then you:

 

1) pay the balloon figure that you seem to indicate you were happy to pay anyway ("my initial thoughts were to keep the car as I like it")

2) give back the car and try to buy a different car with the same spec for under the balloon payment (and you can win this way, but of course you don't know the history of the "new" car in the same way as you do your current one")

3) hand the car back and take another from the dealer using the value in it (which surely is the same as the balloon payment) as you're deposit.

 

Am i missing something?

 

And regarding your comment on size of deposit, does that matter (apart from the interest you pay)? If the car cost £28k, and the GFV is £10k, then the car is costing you £14k over the PCP period. It doesn't really matter if you pay £13k deposit and £1k over the period or the other way round except for the interest you pay (although you may prefer to have the money in your bank) 

 

 

 

 

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1 hour ago, sdenny said:

I don't understand this obsession with "negative equity" in PCP deals.

 

At the start of the deal, you were given a price for the car, the monthly payments based on that and your deposit, and the balloon payment to keep the car. You were happy to pay this then - why not now? As far as i can see, it only matters what the value of the car is on the day the agreement ends. Then you:

 

1) pay the balloon figure that you seem to indicate you were happy to pay anyway ("my initial thoughts were to keep the car as I like it")

2) give back the car and try to buy a different car with the same spec for under the balloon payment (and you can win this way, but of course you don't know the history of the "new" car in the same way as you do your current one")

3) hand the car back and take another from the dealer using the value in it (which surely is the same as the balloon payment) as you're deposit.

 

Am i missing something?

 

And regarding your comment on size of deposit, does that matter (apart from the interest you pay)? If the car cost £28k, and the GFV is £10k, then the car is costing you £14k over the PCP period. It doesn't really matter if you pay £13k deposit and £1k over the period or the other way round except for the interest you pay (although you may prefer to have the money in your bank) 

 

 

 

 

I see where your coming from, my issue with the negative equity is, I would like to keep the car. Now to do that I need to pay the GFV value, which doesn't make financial sense. I'd be paying £1.5k over the market value for the car.

 

When I bought the car I was pretty much told, the car would be worth more than the GFV, so you can use difference to add to your deposit. At the time looking around at older VRS, it seamed reasonable to expect that this would be the case.

 

 

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34 minutes ago, allyst170 said:

I see where your coming from, my issue with the negative equity is, I would like to keep the car. Now to do that I need to pay the GFV value, which doesn't make financial sense. I'd be paying £1.5k over the market value for the car.

 

When I bought the car I was pretty much told, the car would be worth more than the GFV, so you can use difference to add to your deposit. At the time looking around at older VRS, it seamed reasonable to expect that this would be the case.

 

 

 

OK -  it's bad form for a salesman to imply that you "will" rather than "could" get more. However, you're still only paying what you originally thought you would for the car in total. You're not paying £1.5k over the market value, you've just paid £1.5k too little up to now for the car you have.

 

Forget cars for the moment - assume you buy an item for £100 in 2 installments of £50. If you pay one, and the (second hand) item could now be bought for £40 would it worry you? If you thought it was worth £100 in the first place? (I realise the numbers are bigger!)

 

However, it's never a nice feeling to feel as if you didn't actually get quite as good a deal as you thought you were getting, so for that you have my sympathy.

 

And I've just realised that i messed up point 3, since the car is worth X and you owe X so you have 0 value in the car

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End of the day, its as you say, only numbers. And i would have always paid the same at the end of the day. 

 

Think my biggest annoyance is the residual value. I thought the car would do better, but there you go.

 

Anyway, i guess what i trying to do with this thread, is not complain but basically work out my next step.

 

keeping car? is worth it, due to market value and gfv. However is it all black and white or can a deal be stuck? Would skoda offer a better purchase price rather than have me hand it back??? 

 

If i go for a pcp again, whats the best advice? Low deposit over short term or something else? 

 

Has anyone changed to another manufacturer and got a good deal???

 

 

Edited by allyst170
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Hmmm. my pcp ends at the end of August & my new one starts the beginning of September, I didn't enter a pcp thinking I'd make money.

 

I don't know what my GFV is as I never intended to buy the car, I took out a pcp to fix my outgoings while having the flexibility to VT should I need to.

 

Under those conditions, the pcp has worked out just as I would have expected. I'll be slightly over mileage with some paintwork issues so, I'll be charged a few quid but, I've ragged the absolute **** outta that car so, I know that car will have been great value for me.

 

What I'm saying is, if you're gonna look after the car & keep to mileage a pcp isn't the right way to go about financing, a pch may very well be better for you but, you'll need to like a base cars as options do get expensive.

 

Good luck whatever you do but, don't expert a person whom is paid on commision tell you what is financially best for you.

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11 minutes ago, themanwithnoaim said:

Hmmm. my pcp ends at the end of August & my new one starts the beginning of September, I didn't enter a pcp thinking I'd make money.

 

I don't know what my GFV is as I never intended to buy the car, I took out a pcp to fix my outgoings while having the flexibility to VT should I need to.

 

Under those conditions, the pcp has worked out just as I would have expected. I'll be slightly over mileage with some paintwork issues so, I'll be charged a few quid but, I've ragged the absolute **** outta that car so, I know that car will have been great value for me.

 

What I'm saying is, if you're gonna look after the car & keep to mileage a pcp isn't the right way to go about financing, a pch may very well be better for you but, you'll need to like a base cars as options do get expensive.

 

Good luck whatever you do but, don't expert a person whom is paid on commision tell you what is financially best for you.

Think this is where i went wrong. Cars low mileage, been exceedingly well looked after, getting fully detailed every 6 months. Took a lot of pride in the car! When really i should have enjoyed more and drove it like it was stolen as it would have made little difference to value

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I don't see what the issue is here unless I am missing the point. £10k in my view is below the open market value for the car which is unsuprising as the dealer wants to sell on for a profit.

 

If you want to keep the car pay the £11.5k unless you think you can find a similarly low milage well kept example for less money.

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All depends whether you want to keep the car, or have a new one.

 

£11.5k over the next 3 years is about £330 a month, at the end of those 3 years if you keep maintaining it like you do now you will get top whack for it, probably around £5-6k.

 

I would have thought your car is worth £12k ish now, ignore the dealer. If you put your details in to We buy any car what do they say it is worth? They aren't far off what you should get as a trade-in.

 

At a guess you are also probably around the 50% mark on the PCP as well, so you could probably VT and hand back now and walk away, exactly the same as at the end of the agreement, why keep paying monthlies on a car you are just going to hand back if you can do that now?

 

Be wary of trading in at the end of a PCP - unless your car is worth more to the dealer than your GFV then they are using margin out of the new car to inflate the value, clear the finance, give you a deposit and make you feel all warm and snuggly. Or rip you off, depending on how you look at it.

 

Let's say your car is worth (all completely made up numbers) £10k to the dealer at the end of your agreement, and the dealer is thinking of sticking it on the forecourt at £11,995 for a month, then if it doesn't sell reduce to £11,495. If you trade in for a new car that is £25k with £3k of margin in it for the dealer, they offer you £12k for your car - it clears your finance and gives you £500 deposit. They make £1k margin on the new car sale and have your car on the forecourt with a potential £1.5-2K margin - £2.5-3k in the dealers pocket. This is what they want you to do.

 

Or - you just hand the car back - it clears the finance as it is a GFV. You walk in to the dealers and say you want the £25k car but you want maximum discount as you have no trade in. You can buy the new car for £23k if they drop the same £2k margin off of the price. You don't have the £500 deposit, but you got the new car for £2k less, so you are £1.5k better off. The dealer now only makes their £1k margin. In reality, you can use comparison sites and probably get even more discount.

 

All food for thought, only you can make the decision by looking at the numbers carefully and deciding if you want a new car, or keep this one a bit longer.

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Octavias have sold well on the 0% PCP, so there are too many around = negative equity. Dealers don't want them unless they are cheap.

That dealer obviously doesn't want your car, so he bid low, and also it's a 16+ week wait for a new one, so the trade in has to be cheap.

Get another opinion, and check values with WBAC and Evans Halshaw, they gave us a very good price for our Ibiza last week.

Also look at the discounted prices on broadspeed carwow etc and see if you can put together a cheaper deal.

Also consider keeping it, finance the balloon with a cheap loan. You know the car is clean and you would have to pay at least £12k to get one as good of that age.

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5 hours ago, allyst170 said:

I see where your coming from, my issue with the negative equity is, I would like to keep the car. Now to do that I need to pay the GFV value, which doesn't make financial sense. I'd be paying £1.5k over the market value for the car.

 

When I bought the car I was pretty much told, the car would be worth more than the GFV, so you can use difference to add to your deposit. At the time looking around at older VRS, it seamed reasonable to expect that this would be the case.

 

 

 

Market value according to who? A franchised Skoda main dealer who is in the business of making money on the buying and selling of cars?

 

Don't trust their view on your cars value as far as you could throw it.

 

If they wanted your car they'd offer you more, as it happens they want their cake and to eat it (getting your car for with a £1.5K discount and still signing you up for a new motor).

 

I guarantee if you pay the GFV and then sell the car privately you won't end up £1.5K down.

 

The vRS remains highly desirable, especially so with a diesel engine. Tell the dealer (especially if it's DM Keith to go and do one).

 

Take a look on Autotrader, used values remain high.

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1 hour ago, silver1011 said:

 

Market value according to who? A franchised Skoda main dealer who is in the business of making money on the buying and selling of cars?

 

Don't trust their view on your cars value as far as you could throw it.

 

If they wanted your car they'd offer you more, as it happens they want their cake and to eat it (getting your car for with a £1.5K discount and still signing you up for a new motor).

 

I guarantee if you pay the GFV and then sell the car privately you won't end up £1.5K down.

 

The vRS remains highly desirable, especially so with a diesel engine. Tell the dealer (especially if it's DM Keith to go and do one).

 

Take a look on Autotrader, used values remain high.

It is indeed a DM Keith dealer

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Thanks for all your replies. Gives me something to think about. 

 

I think paying the gfv is probably

my best option. Yeah its over the alleged market value, but i also have confidence its a good car. After another 3yrs of owner ship the extra paid wont make a lot of difference. 

 

However i will shop about for other opinions on its value. 

 

Slight change if topic! Anyone any thiughts or experience on leasing/cintracr hire? Was looking at contract cars.com and a merc c class amg line estate, worth about £32k (carwow price not rrp) can be had for less thsn i pay for my octavia. Just an example, not saying i want a merc. Seems good value, thoughts?

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Yes there are some cheap personal leasing deals around. Just use a reputable broker that is a member of the BVRLA.

 

https://www.nationwidevehiclecontracts.co.uk/

 

https://www.selectcarleasing.co.uk/

 

The only issues are:

 

If your circumstances change and you need to terminate the lease, you basically have to pay the remaining cost and admin charges. 

The car is inspected at the end for damage, and non wear and tear damage charged for. But this wont be a problem for you as you say you keep your cars immaculate.

If you want a new car every 2 or 3 years, it is cheaper than a PCP, but keep an eye on how much you spend, say over 10 years, and you'll see its quite a lot more than, say buying a car like a Merc and keeping it for 10 years.

 

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