Paying off HP

[Mr Statto]

22 minutes ago, SunsetZed said:

 

This, the interest starts when the agreement starts.

 

You usually can't sign it on the day of delivery as it doesn't give the dealer time to get the deposit contribution from Skoda to release the car, this was the latest the dealer suggested I should do it to avoid any chance of compromising the delivery date.

 

We "signed" over the phone on Friday afternoon & picked up on Saturday morning, did the bank transfer for the remaining deposit on Friday too

[SunsetZed]

3 minutes ago, Mr Statto said:

 

We "signed" over the phone on Friday afternoon & picked up on Saturday morning, did the bank transfer for the remaining deposit on Friday too

 

Sounds like the dealer 'earned' Skoda about an extra £10 from me then, I won't let them get away with that next time!!

[juan27]

So just to be absolutely clear we are saying you can take out the Skoda PCP offer and receive the advertised deposit contribution, then cancel almost immediately without any further penalty except the few £s interest for the period between signing and cancellation?

 

If so that's good to know.   

 

I still think you can probably get a cash discount equivalent or near to the deposit contribution by shopping around using CarWow or whatever and just buy outright with your own finance, but the PCP cancellation route lets you use your nearest dealer. 

[Mr Statto]

2 hours ago, juan27 said:

So just to be absolutely clear we are saying you can take out the Skoda PCP offer and receive the advertised deposit contribution, then cancel almost immediately without any further penalty except the few £s interest for the period between signing and cancellation?

 

If so that's good to know.   

 

I still think you can probably get a cash discount equivalent or near to the deposit contribution by shopping around using CarWow or whatever and just buy outright with your own finance, but the PCP cancellation route lets you use your nearest dealer. 

 

Current price on CarWow for our spec is £15,959 on PCP or £18,959 cash. Annoyingly that's £700 less than we paid, even though prices have gone up in the meantime (though if we'd waited this long then we'd have got even less for our Roomster & had to insure & MOT it again)

[SunsetZed]

2 hours ago, juan27 said:

So just to be absolutely clear we are saying you can take out the Skoda PCP offer and receive the advertised deposit contribution, then cancel almost immediately without any further penalty except the few £s interest for the period between signing and cancellation?

 

If so that's good to know.   

 

I still think you can probably get a cash discount equivalent or near to the deposit contribution by shopping around using CarWow or whatever and just buy outright with your own finance, but the PCP cancellation route lets you use your nearest dealer. 

 

That's what  we're saying. This works with most car companies who offer similar incentives for Finance deals I think, definitely all VW group ones as they use the same financial services!

 

I bet you won't get close to it via Car Wow or whatever, this is definitely cheaper.

 

Plus you get two free services.

[juan27]

1 hour ago, SunsetZed said:

 

That's what  we're saying. This works with most car companies who offer similar incentives for Finance deals I think, definitely all VW group ones as they use the same financial services!

 

I bet you won't get close to it via Car Wow or whatever, this is definitely cheaper.

 

Plus you get two free services.

 

I suppose it depends on the model and the timing. Last June  when I ordered my 245 I could have got 15% off a "normal" VRS or an SE-L through CarWow.....so from any  list price over £20K I think you'd have been in the money. 

 

Also when I was looking though CarWow the credit (inc deposit contribution) and cash prices weren't greatly different.   Appreciate the deposit contribution level has increased since then. 

 

All that being said I still like the idea!

Edited 8 March, 2018 by juan27

[Jono]

Lots of you seem to think that a few hours fuss isn't worth it to save £1600. 

 

Are you mad?

 

What does strike me as odd though, if you were to be in the position to buy outright, or finance via different methods (Flexible Mortgage, directors loan etc.)  why on earth wouldn't you just negotiate a deep discount for buying "cash" outright?

[juan27]

47 minutes ago, Mr Statto said:

 

Current price on CarWow for our spec is £15,959 on PCP or £18,959 cash. Annoyingly that's £700 less than we paid, even though prices have gone up in the meantime (though if we'd waited this long then we'd have got even less for our Roomster & had to insure & MOT it again)

 

Agreed that looks fairly compelling.

[juan27]

21 minutes ago, Jono said:

What does strike me as odd though, if you were to be in the position to buy outright, or finance via different methods (Flexible Mortgage, directors loan etc.)  why on earth wouldn't you just negotiate a deep discount for buying "cash" outright?

 

 

Because the £3000 discount available for taking out a PCP almost certainly isn't negotiable on a cash deal for an Octavia S/SE with a relatively low list price (as I believe the OP bought) .     

 

And also if Skoda advertise a £3000 discount for taking out a PCP you can get that from your dealer of choice without any haggling.

 

I looked at all the options before buying my car last year. If there had been a 0% PCP available from Skoda I would have used that. 

 

 

Edited 8 March, 2018 by juan27

[SunsetZed]

33 minutes ago, juan27 said:

 

 

Because the £3000 discount available for taking out a PCP almost certainly isn't negotiable on a cash deal for an Octavia S/SE with a relatively low list price (as I believe the OP bought) .     

 

And also if Skoda advertise a £3000 discount for taking out a PCP you can get that from your dealer of choice without any haggling.

 

I looked at all the options before buying my car last year. If there had been a 0% PCP available from Skoda I would have used that. 

 

 

 

This, I couldn't get near the discount level as a cash buyer.

 

I think the days are gone where cash is king, dealers / manufacturers will give better 'up front prices' for finance customers as then they can make money on the finance aspect as well.

[Robbijay]

1 hour ago, Jono said:

Lots of you seem to think that a few hours fuss isn't worth it to save £1600. 

 

Are you mad?

 

What does strike me as odd though, if you were to be in the position to buy outright, or finance via different methods (Flexible Mortgage, directors loan etc.)  why on earth wouldn't you just negotiate a deep discount for buying "cash" outright?

Completely agree, £1600 can be put toward a lot of other thing! Marginal gains and all that (for the cyclists among us)

 

 

4 hours ago, juan27 said:

So just to be absolutely clear we are saying you can take out the Skoda PCP offer and receive the advertised deposit contribution, then cancel almost immediately without any further penalty except the few £s interest for the period between signing and cancellation?

 

If so that's good to know.   

 

I still think you can probably get a cash discount equivalent or near to the deposit contribution by shopping around using CarWow or whatever and just buy outright with your own finance, but the PCP cancellation route lets you use your nearest dealer. 

Yes, You can take out the finance and then pay settlement balance pretty much immediately. However, I believe the interest being paid is only on the repalyments, not the GFV, so if the PCP were paid off with a loan for the full amount then the amount paid overall would probaly far higher. Unfortunately I only worked his out AFTER i did exactly that to pay off my 86! Intend to leave it with the Skoda finance for longer this time and then just save up to pay it off ASAP instead. 

[penguin17]

On 05/03/2018 at 12:53, Mr Statto said:

 

This is potentially an issue - we're looking at moving house in the near future & don't want to jeopardise mortgage applications. That said, our credit score is excellent so it shouldn't make a huge impact

A credit score isn't necessarily the only thing a mortgage company will look at.  Some lenders have stricter criteria than others and some will be happy enough with a cursory check of the details held by certain credit reference agencies whereas others will look at your spending habits, lifestyle, 'appetite for finance and credit', % debt/finance vs income, etc 

 

Mortgage lenders are much more stringent and careful than they used to be.  Gone are the days when they will just offer you 5x your income with a quick Experian check.

[penguin17]

3 minutes ago, Robbijay said:

Completely agree, £1600 can be put toward a lot of other thing! Marginal gains and all that (for the cyclists among us)

 

Indeed that buys a lot of TUE's 

[juan27]

55 minutes ago, Robbijay said:

 

Yes, You can take out the finance and then pay settlement balance pretty much immediately. However, I believe the interest being paid is only on the repalyments, not the GFV, so if the PCP were paid off with a loan for the full amount then the amount paid overall would probaly far higher. Unfortunately I only worked his out AFTER i did exactly that to pay off my 86! Intend to leave it with the Skoda finance for longer this time and then just save up to pay it off ASAP instead. 

 

You certainly pay interest on the balloon payment for the whole term of the PCP.

 

If you play with the Skoda finance calculator and look at a straight loan calculator for the same APR its fairly obvious.

 

With interest rates as they are you can certainly borrow the whole amount to settle the PCP over 42 months at 2.8%APR and reduce your payments over say five years. If your intention is to buy the car at the end of the PCP, and have to borrow then to pay the balloon your total amount paid will also decrease as the OP has demonstrated .

 

Note he is saving money without even considering interest charges on refinancing the balloon payment.

 

 

Edited 8 March, 2018 by juan27

[Robbijay]

well in that case i'm relieved I saved money and now i'll switch from Skoda finance as soon as i hit £15k oweage!

[themanwithnoaim]

Hmmm. Got my 245 at 2.9% apr so, I'm kinda comfortable with my PCP but, I for one do like shopping around for bargains.

 

Not sure I'd wanna be in the same car for 6 years though, like OEM warranty too much for that.

[PSM]

53 minutes ago, themanwithnoaim said:

Hmmm. Got my 245 at 2.9% apr so, I'm kinda comfortable with my PCP but, I for one do like shopping around for bargains.

 

Not sure I'd wanna be in the same car for 6 years though, like OEM warranty too much for that.

Although you pay a lot for that warranty. Can do a lot of repairs for the money you lose over the first 3 years.

[themanwithnoaim]

1 hour ago, PSM said:

Although you pay a lot for that warranty. Can do a lot of repairs for the money you lose over the first 3 years.

As a postman with no option of using public transport for work, the warranty has a higher value than JUST the repair costs. Replacement cars are an essential item

[PSM]

1 hour ago, themanwithnoaim said:

As a postman with no option of using public transport for work, the warranty has a higher value than JUST the repair costs. Replacement cars are an essential item

Although you get a courtesy car from the dealer whether your car is in or out of warranty.

[ahenners]

52 minutes ago, PSM said:

Although you get a courtesy car from the dealer whether your car is in or out of warranty.

 

The period is usually much shorter for the loan car without warranty. Unless your dealer is making enough margin on the repair costs that they are happy to lend you one for a good while.

[amwphotos]

I wanted to buy my Octavia cash, but the dealer suggested finance for the minimum possible and pay it off after a month in order to get 2 free services. So I did and it's worked a treat.

 

The funny thing is that you did this to save £1600 but the car probably depreciated by £3000 when you drove it out of the garage.

[Robbijay]

8 hours ago, amwphotos said:

I wanted to buy my Octavia cash, but the dealer suggested finance for the minimum possible and pay it off after a month in order to get 2 free services. So I did and it's worked a treat.

 

The funny thing is that you did this to save £1600 but the car probably depreciated by £3000 when you drove it out of the garage.

But surely the £3K loss is why you need to save as much as poss to make up for it? Dealer contribution was £3k when we got ours and they gave me a total of £6.5k off. So it all depends on the deal you can get at the time. The sales manager for my last car even admitted to me they don't sell cars, they sell finance, the cars are just a tool to do so. Ideally if i had the money I'd still PCP it and pay off!

[kevberlin]

Brilliant Quote from above:

 

”The sales manager for my last car even admitted to me they don't sell cars, they sell finance, the cars are just a tool to do so”

 

Sums it up very concisely and explains why the customer experience at dealerships feels so different nowadays.

[amwphotos]

On 09/03/2018 at 07:58, Robbijay said:

But surely the £3K loss is why you need to save as much as poss to make up for it? Dealer contribution was £3k when we got ours and they gave me a total of £6.5k off. So it all depends on the deal you can get at the time. The sales manager for my last car even admitted to me they don't sell cars, they sell finance, the cars are just a tool to do so. Ideally if i had the money I'd still PCP it and pay off!

They're unlikely to sell below what it cost to build the car, dealer contributions are a sweetner, you paid 6.5k less than book price, but depreciation will still nock several thousand off that again when you drive off, although less than if you paid full whack obviously. It's the same as the scrappage scheme con, nick 3k off a cars inflated price back to what you wanted for it anyway!

[silver1011]

When your carwow quotes come in there are two tabs to select, 'cash' and 'PCP'.

 

The PCP quote already includes the manufacturers incentives so are almost always lower than the 'cash' price.

 

The manufacturers incentives are only applicable to cars bought using their finance scheme, for example PCP.

 

This is why more of us are signing up to the PCP to benefit from the discounts, only to pay the balance off in full immediately after signing the paperwork using a regular unsecured bank loan which more often than not attract a lower APR.

 

We've been able to stretch the bank loan out to 7 years too which dramatically reduces the monthly payments, with the intention of settling early and saving further interest.

 

You really have to do your sums, which when trying to calculate APR's, AER's and flat rates can be very difficult.

 

£1,600 is a lot of money, irrespective from all other elements such as depreciation which if buying new is unavoidable. The £1,600 is a reward for doing your homework and spending a few hours on an Excel spreadsheet. And coming on this forum too!