Part settlement of PCP finance

[Nick3000]

 

Does anybody have any experience or understanding of part settling a PCP finance agreement, rather than withdrawing or settling in full?

 

I placed the order for my Karoq in November and agreed the PCP deal with the Skoda contribution and two free services, with the intention of withdrawing from the agreement within the 14 day cooling off period.

 

Due to a change of plans now with a new mortgage application I'm not going to have as much spare cash as I thought, so am considering paying off part of the balance. I assume this can be done, like any finance agreement, but am unsure how this affects the monthly payments on a PCP deal.

 

In round numbers the amount being financed is £21,000 and the minimum guaranteed future value is £11,000 after 4 years, with monthly payments of £307.

 

If if was to pay off say £10,000, would that mean I wouldn’t have to make any monthly payments (or very small payments) and then after 4 years pay the balance of £11,000 / hand the car back, or would Skoda halve the monthly payments to around £150 per month?

[33q]

Could you pay it off in full and recover the cash you need on a cheap balance transfer credit card

 

6.9% is easily bettered with a loan and even a low rate credit card loan. 

 

I keep getting plenty of offers for 3% for a year and 4.9% guaranteed for 3 years

 

making advance payments without any reductions is wasting money 

 

I paid mine off within a few days at cost of about £15.....it is the cheapest way if you can find a good way of doing this. 

 

Radical thought but do you need the car. Could you delay or cancel?

 

And I recall the max deposit on mine was 30%. If that’s still the same it it stop you pre-loading which may have been an option. 

[SurreyJohn]

Are you proposing this because you have surplus cash, or because you want lower outstanding commitments showing on your mortgage application 

 

You then refer to having ordered a Karoq, do you actually have it yet.  There is a big difference between an order and a live financing agreement.

 

As stated by 33q above, not sure how an advance payment will be treated on a PCP, it’s not like a loan where you can pay off some capital, as it acts like a rental until you pay the option fee.   I suspect you either need to fully settle or not pay part (but I’m not sure).

 

If you haven’t actually got the car yet, then you could still change the Finance and increase the deposit as you won’t have signed the final finance agreement (anything signed at order time was probably a credit application)

 

 

 

 

[skoda1982]

You can pay part finance but it does not reduce your payments. Just less time to pay.only if you got finance now. 

 

We’re sorry but the deposit amount must be less than or equal to 30.00 % of the total retail price of the car.  If there is a deposit contribution available on the car, then please note that this is automatically added to your deposit value.        skoda finance calculator

 

Based on £21,940.00 Your deposit 30% £5000 there about's skoda deposit £1,450 10000 miles pa  48 months  £206.83  ofp £9,053.10  6.9% apr

Edited 21 January, 2019 by skoda1982

[silver1011]

It would be cheaper to throw that £10,000 at the mortgage and leave the PCP as it is.

[Retrac]

I repaid a £2000 lump sum on my Kia PCP. I was told it would only reduce the monthly repayment and not the final 'balloon' balance. So i could pay off enough to not make any monthly repayments for 3 years, but the final amount would still be payable.

[33q]

38 minutes ago, silver1011 said:

It would be cheaper to throw that £10,000 at the mortgage and leave the PCP as it is.

 

£10,000 at 6.9% Skoda  is £699. £10,000 at 2.00% Mortgage is £200.

 

I make that £499 saving per annum. £41 per month  

 

It would be cheaper to increase the mortgage borrowing to pay for the car but I suspect the mortgage offer is limited by LTV or earnings ratio etc

 

[Nick3000]

Thanks for your replies, I am juggling loan to value and monthly commitments a bit, so weighing up a few pros and cons.

 

In addition to the financial aspect I am wondering if it is in my interest to own the car outright without finance.

 

I have ordered a 1.5 manual and have recently been keeping an eye on the 'First Gear Issue' with some trepidation. I am certainly not minded to consider cancelling the order at this stage, when I test drove the 1.5 I didn't experience any issues and it is definitely the car I want, but if the worst comes to the worst and the kangarooing is as bad as some people seem to be suffering with is there any advantage (or indeed disadvantage) of VW/Skoda finance still having some sort of interest in the vehicle? 

 

I really don't want to tempt fate at all and am hoping for the best but is rejecting a car likely to any easier or harder if it is owned outright?

[silver1011]

 

3 hours ago, 33q said:

£10,000 at 6.9% Skoda  is £699. £10,000 at 2.00% Mortgage is £200.

 

 

A mortgage can be for up to 35 years, a Skoda PCP a maximum of 5 years.

[sexdrugskaroqnroll]

On ‎22‎/‎01‎/‎2019 at 16:11, Retrac said:

I repaid a £2000 lump sum on my Kia PCP. I was told it would only reduce the monthly repayment and not the final 'balloon' balance. So i could pay off enough to not make any monthly repayments for 3 years, but the final amount would still be payable.

 

Because the balloon at the end is the expected value of the vehicle at the end of your term.  You haven't financed that, you have financed essentially the gap in-between from when you picked it up to the day you have to pay the balance/hand it back/part-ex.  It's why PCP is handy if you want to change every few years as you're not financing the full value of the car.