Can someone please explain a PCP deal, is this good or bad?

[EdHru]

Hi all,

 

Can any member who is well financially familiar with these offers/deals please glance with their expert eye over this deal that it has been offered to me by a car dealer via carwow.

 

its in respect of Fabia 1.0 110bhp SE L with 3 extras (hill assit, electric windows rear, spare tyre). Mrs. would like to buy the car at the end, the deal is based on 41 months, 10k p.a (but we would buy it at the end anyway). Our contribution would be £2k, with addition of £2k from Skoda.

 

Can someone please decode  the figures for us please, I understand that £155 is per moth, but all this APR stuff is a big puzzle for me, so if we were to purchase the car at the end, what would be the final figure of the car that it would cost us over the agreement period (would it be a simply as i think, £155 x 41 + £2k our deposit + optional final payment). would this calculation be correct.

 

FABIA HAT 1.0TSI 110 SE L Solutions (Personal Contract Plan) representative example based on 10,000 miles per annum

 

Duration 42 months

41 payments of £155.30

Deposit £4000 (£2k from us+ 2k from skoda)

Retail cash price £15,244.55

Optional final payment £5,707.80

Total amount payable £16,085.10

Representative APR Rate of Interest 2.9%

APR 2.82% fixed

 

would anything prevent us making a larger contributions per month to reduce the interest?

 

any advice would be greatly appreciated.

 

[SoupDragon]

Hi EdHru, these are very similar figures to figures I agreed to in a PCP deal for my 110 TSi DSG Estate in April 2015. My deal costs £166 p.m. and includes servicing for three years. The attraction of the PCP arrangement for me was that, for whatever reasons, after 3 years I would know very well if I wanted to buy the car outright or return it to the dealers. After 2 1/2 years of trouble-free driving, I will be pleased to buy the car at the end of the PCP term, touch wood.

    I think the terms offered, at 2.9% APR are as good as you will get, apart from special deals from time to time. I asked to pay more per month to reduce the interest but the dealer said I was paying back the monthly maximum allowed. I don't think I am paying an extra cost for PCP, please, other readers, tell me if I am wrong, and that the advantage of "test driving" the car for three years is worth any extra cost. I usually buy a car new on a 2 or 3 year term and keep it for 7 or 8 years but recent relatives' experiences with new cars have made me wary.

 

[Kobayashi]

We finally got out of PCP this year, and decided to buy a 16 plate MK3 Monte for £12K  but use a bank loan over 5 years and keep the car.

Payments £236 @3% APR

If you can afford £60 -£70 per month more take over 5 years & keep it (or at least do the calculation)  - also depends on personal circumstances as well etc...

 

Also with 17 plate you will be paying £140-155 tax per year, The 16 plates are the last ones at £20 tax per year, £200 over 10 years something else to put in your sums...

Approx £1200 to £1550 over 10 years in tax just for a 17 plate for effectively same car what a joke!

[punyXpress]

If you can afford ( & want ) to pay outright, sign up for PCP, accept the 2 grand from Skoda, and pay it off the next working day?

 

[EdHru]

6 minutes ago, punyXpress said:

If you can afford ( & want ) to pay outright, sign up for PCP, accept the 2 grand from Skoda, and pay it off the next working day?

 

 

i have heard of that as well, but some forums say its not possible, or wait for 6 months etc. that would be a good option, but can they ask for 2k back?

[punyXpress]

2 minutes ago, EdHru said:

 

i have heard of that as well, but some forums say its not possible, or wait for 6 months etc. that would be a good option, but can they ask for 2k back?

Was kicking tyres a couple of weeks ago at a local Skoda dealer and the nice young man in the shiny suit told me.

Had known about it for years, but never from ' the horse's ' mouth before!

[roo]

Also there is nothing stopping you overpaying and reducing the monthly amount.  I believe the minimum per month they can go to it £50, but you can also shorten the term with the overpayments as well to reduce the interest.

[chieflordy]

4 hours ago, EdHru said:

 

i have heard of that as well, but some forums say its not possible, or wait for 6 months etc. that would be a good option, but can they ask for 2k back?

No, you can pay it off and they don't get the £2k back. That is exactly what I did. Don't just rely on my word though, give Skoda (VW) finance a call, or better still send them an email and get it in writing. 

 

[bloodycat]

On 9/24/2017 at 22:00, chieflordy said:

No, you can pay it off and they don't get the £2k back. That is exactly what I did. Don't just rely on my word though, give Skoda (VW) finance a call, or better still send them an email and get it in writing. 

 

Indeed you can. When I bought mine in March the dealer confirmed that it  was possible to pay it off early but weren't sure what if anything the minimum term was, there isn't a minimum term, but effectively it is about 1 month just due to the time it takes for them to process your payment after requesting a redemption statement and paying it.

I only took it out for the £2000 manufacturer contribution  as the dealer weren't prepared to offer any incentive for cash, and went for the maximum permissible deposit. I actually only paid it off recently as I was earning more on my cash elsewhere than the PCP interest rate so waited until I had accumulated sufficient cash not earning anything to clear it . 

On the finance website there is also the option to pay an additional lump sum, or alternatively you could change your mileage to something much higher which would increase your monthly payments but reduce your balloon payment.

[threadbear]

When I had my PCP on my lousy Polo, I was told I could settle the Finance after the first month. I ended up doing a voluntary termination on my PCP after two years, settling up with VAGFS for the fee of £9.07p. I now have my Octavia on a personal loan from NatWest for £324 a month paid off in 3 years @ 3.9%. Some lenders advertise lower rates but the agreements come at a higher rate. So were declined.