So I’ve ordered a kodiaq on PCP arriving (alledgedly) in September. I’ve heard about the bank loan swap cancelling the pcp after 24 hours, but considering that I’ll probably only keep the car for 4 years, is that a sensible thing to do. The loan can be paid off early without penalty, but if I want to part exchange the car at 4 years would the dealer settle the loan and give me any difference? Is that how it works?? 

 

Ive run a few numbers and i can save about £20 a month and I should have about £11k left after 4 years, vs the £13400 GTMFV on the finance quote, which should give me some equity if I do that. I’m not really sure if it’s that easy though! Any experience or advice much appreciated. 

 

 

Have you gone for a 4 year PCP?

 

If so what is the total amount payable compared to the regular bank loan? This is the important comparison to make.

 

Whichever finance option you choose, this won't affect the cars market value after 4 years.

 

Skoda Finance are renowned for over-egging their balloon payments, resulting in their not being much, if any, any equity in the car to use as a deposit on the next car.

 

Skoda Finance have also reduced the APR this quarter, 6.2% > 4.9% APR versus the best bank loans at around 3% so the incentive to clear the PCP with a bank loan has reduced.

 

Comparing the total amount payable is the best comparison to make. If there is equity in the car at the end on the PCP, all this means is you've overpaid via the deposit / monthlies.

 

Edited 19 July, 20187 yr by silver1011

4 minutes ago, silver1011 said:

Have you gone for a 4 year PCP?

 

If so what is the total amount payable compared to the regular bank loan? This is the important comparison to make.

 

Whichever finance option you choose, this won't affect the cars value after 4 years.

 

Thanks Silver. Yes opted for a 4yr PCP. I realise that the value will be the same at any given time, but with the loan I worked out that I’d have less outstanding at 48 months (so more ‘equity’).  If I then trade in on a new vehicle and let’s say they offer me £13k and I have £11k outstanding - does that mean I get that £13k to pay the balance on the loan and use the £2k extra as deposit on the new one? 

Yes, some dealers will even clear the loan for you directly with the bank.

 

The remaining £2,000 is then put into the next deal as the deposit.

 

As the bank loan is cheaper then that would be the obvious choice for me (and is exactly what I've done).

Typically any PCP deal leaves you breaking even in reality the dealer can make it look they are giving you value on the car or as discount on the new car.

 

As a Jewish friend said to me “car dealers and accountants have one thing in common, both of them believe one plus one is a variable and it isn’t two and the number they come up will always benefit them, rather than you”

Excellent - thanks mate.

On 19/07/2018 at 21:56, silver1011 said:

As the bank loan is cheaper then that would be the obvious choice for me (and is exactly what I've done).

 

Quick question - did you pay the first payment or withdraw within the 14 days. There seems to be a lot of conflicting info about losing incentives if you withdraw within 14 days.

The joys of the internet, lots of duff advice.

 

I can categorically guarantee that if you exercise your right of withdrawal within the first 14 days you won't lose any of the discounts or incentives.

 

I've done it.

 

Anyone who tells you to pay the first monthly payment, or wait a few months is wrong.

 

@silver1011 thanks.

On ‎19‎/‎07‎/‎2018 at 21:27, MattEds said:

So I’ve ordered a kodiaq on PCP arriving (alledgedly) in September. I’ve heard about the bank loan swap cancelling the pcp after 24 hours, but considering that I’ll probably only keep the car for 4 years, is that a sensible thing to do. The loan can be paid off early without penalty, but if I want to part exchange the car at 4 years would the dealer settle the loan and give me any difference? Is that how it works?? 

 

 

If you take out a bank loan, and pay off the Skoda finance you disconnect the two transactions

 

The car is then fully paid for and you are free to keep it as many years as you choose, and sell it or part exchange when you want.  As there is no (car) loan remaining on the car, the dealer can't settle it

 

The new bank loan is completely separate, its entirely up to you when to settle it early, or run it to term (when its fully repaid)

 

What you have to carefully consider, is if you change the term (the end date), you may end up paying more because although the annual interest is lower (and the monthly repayments therefore lower), if the loan is longer period, the interest on the extra months/years may be more than the saving each month.    About 15 years ago some people took out consolidation loans, or moved loans to mortgages, cut their repayments short term, but ended up paying loads more, as still paying interest 15-20 years later, whereas originally loan would have been cleared 10 years ago.    The only way to compare is to look at total amount repayable, don't try and minimise monthlies by backloading without understanding the consequences of how much you will still owe in 3-4 years time.   Not a lot of advantage in saving £20 per month, only to discover you still owe £2000 extra in year 4

 

 

15 minutes ago, SurreyJohn said:

the dealer can't settle it

 

This isn't actually true - the dealer can repay a bank loan on your behalf if/when you trade the car in. Whether or not any particular dealer is willing to do so is another matter entirely.

 

The other thing to mention is the GMFV - if, as suggested by @silver1011, it has been over-inflated and the car is going to be worth less than the GMFV after 4 years, then with PCP the risk of that is purely with VWFS... you get to simply hand the car back and walk away (mileage/condition dependent, of course). If you move to a bank loan, you assume the risk and you have to clear the loan no matter what the car is worth. Personally, I like the risk being with someone else, so I'm more than happy to stick with PCP.

 

Edit: And it's the same with GAP insurance - I'd rather someone else takes the risk, so I'll pay the £100 it cost me (not from the dealer, obviously!).

Edited 26 July, 20187 yr by WiggosSideburns

@WiggosSideburns do you have any recommendations for gap insurance? £100 sounds reasonable...

19 minutes ago, MattEds said:

£100 sounds reasonable...

 

It was more like £154... sorry! But that was from gapinsurance.co.uk - don't forget to use the BRISKODA10 for 10% off the premium.

2 minutes ago, WiggosSideburns said:

 

It was more like £154... sorry! But that was from gapinsurance.co.uk - don't forget to use the BRISKODA10 for 10% off the premium.

Still not bad - thanks