Poor market valuation on the vRS

[NikEd]

How are people getting on that are coming to the end of the PCP? What sort of value are they giving you at trade in etc?

 

My car is only 18 months old and they value it at 14.5k leaving me with over 3k of negative equity is this likely to improve any in the next 18 months? Mine was on 0% finance so I kinda hoped it wouldn't be so far out 

[stepdavi]

I thought on pcp you had a guaranteed future value gfv which avoids the neg equity trap? Might be wrong. 

[NikEd]

You do for handing back to Skoda etc. Doesn't apply if you want to trade early or at a different dealer unfortunately 

[stepdavi]

Oh right sorry. I bought 4 new Vauxhalls on 0% over 7 years. Negative equity every time. Got fed up of it. Cleared negative equity and got my vrs on lease. If your like me and change car every 2 years the lease deal suited me.

[SurreyJohn]

1 hour ago, NikEd said:

You do for handing back to Skoda etc. Doesn't apply if you want to trade early or at a different dealer unfortunately 

 

But surely on a PCP you have a guaranteed value at a fixed point in time (e.g. 3 years), and you can choose the time period.  

 

If if you wanted to change after 18 months, why pick a 36 month PCP, and why a PCP not a PCH or lease.  Sorry but it seems to me you got yourself into this situation.  

 

If you want to end early have to take what you can get, and pay any costs so provider doesn't lose out, always been that way with everything.   If you had bought a fortnights package holiday and want to come home early, you would expect to pay cost of return flight, and not get refund for empty accommodation, what is different here, they might not want that type of car at current time.  You seem to be forgetting it's your request to buy yourself out of a deal, and not wait until guaranteed value date.

Edited 25 November, 2017 by SurreyJohn

[ahenners]

4 minutes ago, SurreyJohn said:

 

But surely on a PCP you have a guaranteed value at a fixed point in time (e.g. 3 years), and you can choose the time period.  

 

If if you wanted to change after 18 months, why pick a 36 month PCP, and why a PCP not a PCH or lease.  Sorry but it seems to me you got yourself into this situation.  

 

If you want to end early have to take what you can get, and pay any costs so provider doesn't lose out, always been that way with everything.   If you had bought a fortnights package holiday and want to come home early, you would expect to pay cost of return flight, and not get refund for empty accommodation, what is different here, they might not want that type of car at current time.  You seem to be forgetting it's your request to buy yourself out of a deal, and not wait until guaranteed value date.

 

Can't speak for OP but people's circumstances do change which may not have been accounted for when taking out the PCP or even Lease. Outright ownership is the best option here, as it's the most flexible.

 

OP - I think you will be very lucky even at the end of the PCP to have much (if any) equity. Plenty on here have ended up with negative equity on their PCP.

[Redboy]

I think if you keep it for 3 years that the value will settle. I was quoted a trade-in of £16K within 12 months of purchase on a notional list price of £27K with 10000 miles on the clock and it would lowered to £14K upon receipt of the new car 5  months later. When I queried the 50% notional loss, the reply was that depreciation rate levels out over 3 years. The car is now 34 months old and an insurance agent  has just quoted me a Glasses Guide valuation of £15K without asking about the fitted extras. Even though this is a dealer valuation vice trade-in, it's better than I thought.  I realise that fitted extras don't add an awful lot in resale but they can make it more attractive to some buyers. 

[loveman]

I would guess your GFV at 3 years is around £10300. I traded my vrs in for a Nissan at 1 month prior to the end of my PCP deal and got £12000 in a trade in , my car was in very good condition with very low miles and some goodies as extra on it. Sold for £15000 in the garage. I did try a wbac valuation a few months ago for my Nissan and was shoked to see its value had dropped by £10k. The only winners in this game are the car dealers I'm afraid. You could hand your car back at the 50% paid stage which would probably be around 2.5 years into you PCP.

[Falmouthboy]

PCP mis-selling is the next  financial services scandal as so many people went into deals without understanding the consequences of leaving the deal early.  Some don’t even realise that to own the car at the end there is a large balloon payment.  Early PCP deals were very cautious with the GFV so there was usually an equity deposit for the next car.  More recently you are likely to find the car is worth less than the GFV.  But on the bright side, this difference at the end of the deal is effectively an additional discount on the original purchase price, particularly if you have 0% deal with a £2k deposit contribution.  Also, it’s worth noting that dealers are becoming far stricter on hand back condition, so apart from the excess mileage charge, every scuffed alloy, missed service or mark may result in an attempt to recoup more cash.

 

So many people are now in new cars that they would never have been able to afford before PCP was an option but they fail to understand the depreciation curve on a brand new car and how it will impact a decision to make an early exit from the deal.  If by choice, fine, if due to change of circumstances, potentially serious.

 

Others have pointed out PCH as a better solution.  It may be right for some as it will probably be cheaper on monthly payments and deals are normally shorter, but it gives even less flexibility in terms of an early exit.  

 

The right to exit a PCP deal once 50% paid also exists, (they never tell you that), but I believe this can affect your credit rating, particularly with the same or a linked finance company.

Edited 25 November, 2017 by Falmouthboy

[SC03OTT]

Try selling it. I sold mine when it came to changing.  I got more than trade in/handing back and the buyer paid less than dealer prices. Both parties were winners. 

[NikEd]

4 hours ago, SurreyJohn said:

 

But surely on a PCP you have a guaranteed value at a fixed point in time (e.g. 3 years), and you can choose the time period.  

 

If if you wanted to change after 18 months, why pick a 36 month PCP, and why a PCP not a PCH or lease.  Sorry but it seems to me you got yourself into this situation.  

 

If you want to end early have to take what you can get, and pay any costs so provider doesn't lose out, always been that way with everything.   If you had bought a fortnights package holiday and want to come home early, you would expect to pay cost of return flight, and not get refund for empty accommodation, what is different here, they might not want that type of car at current time.  You seem to be forgetting it's your request to buy yourself out of a deal, and not wait until guaranteed value date.

 

not sure the tone here is quite necessary?

 

I think you may have misunderstood the intention of my post? I'm well aware that the earlier you look to change the more likely you are to be in negative equity at that point.

What I asked was, what position people were finding themselves in at the end of their current PCP terms (i.e still in negative equity). I was also pointing out that it has depreciated faster than I would have expected at this stage of ownership.

 

I'm not desperate to get out of my deal, indeed I'm more than happy to stay with the current car... however I've seen a couple of great deals recently and had the car not been so far in negative equity I may well have taken a small(ish) hit and jumped into something else.

 

Not sure how any of your comments are relevant tbh?

 

[Orville]

The heaviest depreciation occurs within the first few years. Unless a large deposit is put down, most people on PCP will face negative equity until near the end of their contract terms. Typical first year depreciation is 30% of new car value. That would make a ~£25K car worth £17.5K after 12 months

 

Each subsequent year removes ~20% of it's existing value, so £25K to £17.5K to £14K to £11.2K to £9K to £7.2K etc...

Edited 25 November, 2017 by Orville

[NikEd]

cheers for the info... much appreciated

[Dinesy]

11 hours ago, Falmouthboy said:

PCP mis-selling is the next  financial services scandal as so many people went into deals without understanding the consequences of leaving the deal early.  Some don’t even realise that to own the car at the end there is a large balloon payment.  Early PCP deals were very cautious with the GFV so there was usually an equity deposit for the next car.  More recently you are likely to find the car is worth less than the GFV.  But on the bright side, this difference at the end of the deal is effectively an additional discount on the original purchase price, particularly if you have 0% deal with a £2k deposit contribution.  Also, it’s worth noting that dealers are becoming far stricter on hand back condition, so apart from the excess mileage charge, every scuffed alloy, missed service or mark may result in an attempt to recoup more cash.

 

So many people are now in new cars that they would never have been able to afford before PCP was an option but they fail to understand the depreciation curve on a brand new car and how it will impact a decision to make an early exit from the deal.  If by choice, fine, if due to change of circumstances, potentially serious.

 

Others have pointed out PCH as a better solution.  It may be right for some as it will probably be cheaper on monthly payments and deals are normally shorter, but it gives even less flexibility in terms of an early exit.  

 

The right to exit a PCP deal once 50% paid also exists, (they never tell you that), but I believe this can affect your credit rating, particularly with the same or a linked finance company.

Ending a PCP early is called Voluntary Termination, it is a term of the deal and it does not affect your credit rating in any way.

I’ve done it twice, as I was half way through a deal with a pile of neg equity and wanted to change early. 

Dealers/finance co’s don’t shout about it but it’s legal and it’s in the terms. Always worth considering. 

[themanwithnoaim]

I handed back my Mk3 1.4TSI ELEGANCE at the end of its 42 month pcp (1-9-17), it wasn't it great condition & it was over its mileage allowance.

 

Twice VWFS have sent me letters to state I've made all my payments but, not confirmed there will be no further charges. I think in that vehicle's case, the second hand values were strong & they got their money back but, probably feel they should have charged me something for the extra miles & poorer condition.

 

Does anybody know if you can find out the amount a car sold for at auction ?

[stever750]

9 hours ago, themanwithnoaim said:

I handed back my Mk3 1.4TSI ELEGANCE at the end of its 42 month pcp (1-9-17), it wasn't it great condition & it was over its mileage allowance.

 

Twice VWFS have sent me letters to state I've made all my payments but, not confirmed there will be no further charges. I think in that vehicle's case, the second hand values were strong & they got their money back but, probably feel they should have charged me something for the extra miles & poorer condition.

 

Does anybody know if you can find out the amount a car sold for at auction ?

Excess mileage charge is usually in the contract, so I'd be surprised if they didn't come after you for that, or at least deduct some value as a trade in to compensate for it. 

[tasmanuk]

My PCP lease on my VRS expires in June/July however while car was in for a service yesterday I got a quote on a new one. Payout today was just over £11k and they said that left me £650 equity based on what they were going to offer as a trade in which would be just under £12k. My payout at the end of my lease is £9.4k so I'm hoping it doesn't drop any further in value as at least then I shoudl have £2500 in equity. Thsi is on a 2014 VRS with 25,000 miles on the clock. I'm probably better off paying the residual and then trying to sell it privately but I really wanted to avoid all of that hassle.

 

This is why I want to move into a PCH deal and not ever worry about this sort of thing again. Unfortunately Skoda is no longer doing PCH on the VRS 245 so I may have to look at an alternative vehicle. 

[Famous_Afro_Jay]

You are only 18 months in. Get to the end and if you are in neg egg then hand it back and start again. These are just Skodas at the end of the day regardless of trim level.