Sorry to resurrect an old thread but it's useful for people like me researching the topic.

 

So if I've understood everything correctly, there are two ways of paying off your PCP early.

 

Option 1: Exercise your right of withdrawal within the first 14 days (asap to avoid too many daily interest charges).  This seems to be the best for saving money.  No fees/penalties apply, just interest.

 

Option 2: If 14 days have elapsed for whatever reason, ask for a Settlement quote and pay it.  VW/Skoda will base this quote on the capital you owe plus the 28 days of interest required by law plus another month as stipulated by VW.  In other words the penalty for settling early is 58 days' interest, plus any fees (£10 Option to purchase fee is the only one I'm aware of).

 

Now I've also read a nice tip to soften the blow of the 2 months interest you have to pay in Option 2.  Don't ask for a settlement quote straight away, ring up and pay off 99% of the capital owed, wait til it goes through, then do the settlement thing.  That way the 58 days interest is calculated on the 1% remaining, not the full debt.

 

My question is, does this also work for option 1, or is the amount saved not worth the bother?  Like if the finance was for £20K, would a few days of interest be hugely different than if it was on just £100?

 

 

Once you have signed on the dotted line, you have the keys in your hands, the car is yours pay off the loan straight away, why wait 14 days ?

 

No fees/penalties or interest to pay

 

 

Simples

6 minutes ago, Auric Goldfinger said:

Once you have signed on the dotted line, you have the keys in your hands, the car is yours pay off the loan straight away, why wait 14 days ?

 

No fees/penalties or interest to pay

 

 

Simples

Thanks but I was asking about option 1.  I think some people either have no choice to wait over 14 days because they haven't got their money together yet, or they believe the dealer who has told them they have to wait a month or two then pay it off (so they get their kickback).

 

Also, people on this thread are saying that there is still interest to pay even if you withdraw.  Did you manage to do it without any interest?

I did option 1 and paid no interest, not even a penny. To do this I had advised Skoda Finance of my right of withdrawal on the same day that they set up the finance agreement.

 

This was before I picked up the car. I signed the paperwork electronically online a few weeks before collecting the car. It then took a few days (after signing) for the customer services team at Skoda Finance to see my agreement on their system, I was ringing each day for a few days.

 

You can actually set-up an online account (mentioned earlier in this thread) which you can check yourself to see when the agreement appears online - and the daily interest starts.

11 hours ago, silver1011 said:

I signed the paperwork electronically online a few weeks before collecting the car

Interesting, thanks.  Was the dealer annoyed that he was no longer getting his kickback for the finance? 

I'm not convinced they do.

 

I made it clear before agreeing the price that I'd be exercising my right of withdrawal, I wouldn't be using them for servicing and that the car was a keeper so it'd be unlikely I'd be back anytime soon.

 

They still beat the next best quote by £1,000 which was already below my best carwow offer.

 

Des Winks Skoda in Scarborough.

I think you did pretty well. I am intending to exercise my right of withdrawal, but if the cooling off period starts more than 14 days before delivery I would be concerned that the dealer might decline to offer me PX and I would have to go down the less convenient private sale route. 

2 hours ago, CBM said:

I think you did pretty well. I am intending to exercise my right of withdrawal, but if the cooling off period starts more than 14 days before delivery I would be concerned that the dealer might decline to offer me PX and I would have to go down the less convenient private sale route. 

Cooling off period 14 days before delivery ? Doesn't the finance start the day you collect the car .

So is the effective date on the paperwork the delivery date, not the signature date or whenever the agreement appears on the system? The post above by silver1101 suggests that as the interest clock runs from signature, which could be more than 14 days before delivery, the cooling off period does as well.

The finance starts when you sign the paperwork.

 

You can either sign it electronically in advance of collecting the car, or on the day when you collect the car.

Thank you for the clarification. Mine is being delivered, so I'll hope that they send the paperwork no more than 14 days beforehand.

I don’t have the money to buy the car outright so was going to go for the PCP deal. Is there a better way to finance the car? 

With a PCP you're not financing the full vehicle value, so the monthly payments are relatively low, hence the popularity of PCP.

 

Another option is PCH, but you don't build up any equity, you're simply leasing the car, but another way to keep the monthly payments low.

 

You could get a regular loan, but stretch the term for as long as you can (usually around 8 years).

 

To benefit from the manufacturers incentives (deposit contributions, free servicing etc.) you usually have to sign up the their finance (PCP), hence the reason this thread discusses the right of withdrawal. The idea  being you sign up to a PCP to get the incentives, and then settle the finance immediately using a cheaper source of funding the purchase price i.e. savings, a bank loan etc.

7 minutes ago, silver1011 said:

With a PCP you're not financing the full vehicle value, so the monthly payments are relatively low, hence the popularity of PCP.

 

Another option is PCH, but you don't build up any equity, you're simply leasing the car, but another way to keep the monthly payments low.

 

You could get a regular loan, but stretch the term for as long as you can (usually around 8 years).

 

To benefit from the manufacturers incentives (deposit contributions, free servicing etc.) you usually have to sign up the their finance (PCP), hence the reason this thread discusses the right of withdrawal. The idea  being you sign up to a PCP to get the incentives, and then settle the finance immediately using a cheaper source of funding the purchase price i.e. savings, a bank loan etc.

 

Re PCP - Currently many deals coming to a close have no equity left in them, although at least with the PCP if the value has dropped below the GMFV you can walk away but you then have nothing to give towards the next deposit.  Skoda PCP interest rates are also rather high at the moment - that's OK of course if you are going to pay off straight away to just keep the incentive .

 

Re PCH - There have been some stonking deals around as of late.

 

 

11 hours ago, silver1011 said:

With a PCP you're not financing the full vehicle value, so the monthly payments are relatively low, hence the popularity of PCP.

A common misconception.

 

You ARE financing and paying interest on the full amount. You are just not making any capital repayment against a portion of it.

Mmmm.  I would take “financing” to mean “arranging the payment of” so, like silver, I’d say a PCP doesn’t finance the full purchase of the car.

 

I could have worded it better, but I think we all knew what I meant 

 

In terms of the OP's question, around affordability, a PCP is seen as more attractive way of financing a vehicle because the monthly payments are calculated from a much smaller value.

 

But in terms of being approved for the 'finance', and the interest paid, the total vehicle value is used.

1 minute ago, silver1011 said:

I could have worded it better, but I think we all knew what I meant 

 

In terms of the OP's question, around affordability, a PCP is seen as more attractive way of financing a vehicle because the monthly payments are calculated from a much smaller value.

 

But in terms of being approved for the 'finance', and the interest paid, the total vehicle value is used.

 

A PCP gets you into a car you can't really afford.

36 minutes ago, Auric Goldfinger said:

 

A PCP gets you into a car you can't really afford.

 

This is why I like PCP haha! My last car I did a PCP and then ended up keeping the car and paying it off at the end so I’ve kept the value left in the car. I’m not sure the PCP and changing cars after the 3/4 years is as good as I think you lose your deposit going forward if not much equity.  But you get a nice new car more often. I haven’t really looked into loans but I want to do the pcp to get the finance contribution but it was interesting reading this thread about paying it off straight away it gives you more options!

Edited 5 December, 20187 yr by Kingly2

3 hours ago, Kingly2 said:

I’m not sure the PCP and changing cars after the 3/4 years is as good as I think you lose your deposit going forward if not much equity

 

Alternatively, you don't put any deposit in. Yes, that means the payments are higher, but doing it this way means I don't have to find lump sums every few years for the next car... I won't claim this is cheaper or anything like that (it isn't), but I can afford the higher repayments and I'd rather keep whatever savings I have for other things.

Done it. Withdrew as soon as my car arrived. VW Financial Services could not have been more efficient. No questions asked other than ID and bank transfer details and it was all over in five minutes.

55 minutes ago, CBM said:

Done it. Withdrew as soon as my car arrived. VW Financial Services could not have been more efficient. No questions asked other than ID and bank transfer details and it was all over in five minutes.

Great feeling, enjoy the car.

 

I have done it with my last 3 or 4 cars and reaped the benefit of service plans/deposit contributions etc 

Hi Folks, just signed a pre contract pcp agreement (today) which lists the deposit contribution and 2 year service plan for a new skoda superb to be collected on Saturday.  The dealership said that if we withdrew from the agreement in the first 14 days that we would lose the deposit contribution and the free 2 years servicing.  Is the dealership right or just hoping I’ll believe them and keep the pcp going past the 14 days.   We are hoping to pay the whole lot off as soon as. Also is it usual to sign a pre contract before receiving the final pcp agreement?  And does the 14 day period start from the signing of the pre contract?

I signed up for pcp 2weeks ago. £400 deposit allowance plus 2 years servicing. I cancelled it within 14days but they have cancelled my 2 year servicing (which did state Not to cancel before 1st payment even tho sales guy said 3mths at least) and are hounding me for £400 back saying it’s in the finance t&c but the finance said that don’t apply as it’s not finance contribution and it’s dowm to the dealership. I have no idea where I stand anymore

On 03/12/2018 at 10:13, silver1011 said:

I did option 1 and paid no interest, not even a penny. To do this I had advised Skoda Finance of my right of withdrawal on the same day that they set up the finance agreement.

 

This was before I picked up the car. I signed the paperwork electronically online a few weeks before collecting the car. It then took a few days (after signing) for the customer services team at Skoda Finance to see my agreement on their system, I was ringing each day for a few days.

 

You can actually set-up an online account (mentioned earlier in this thread) which you can check yourself to see when the agreement appears online - and the daily interest starts.

I can’t see the earlier thread for how to set up an online account to check interest etc, do you have any more info on how to do this?