Hello everyone,

 

we bought our Kodiaq (basic model) 3.5 years ago on 4-years PCP. It ends soon. Of course we would like to keep the car 😊  but don't have enough money.

What options do we have now ? Is there any credit card we could use to pay for it ?

Do you have any recommendations ?

Without knowing your financial situation it's possibly difficult to offer any real advice. If I were making a decision though it would likely factor in

 

1. Size of balloon payment

2. Estimated value of the vehicle

3. Amount of cash available to put down as a deposit

4. Affordable monthly payment

5. Condition and reliability of current vehicle

6. Projected ownership costs, especially servicing and warranty

7. Depreciation

 

Historically CCs are an expensive way to borrow money. I don't know at the moment though, it's not something I've needed to know and thus research. I suspect that there are other better loan options available to you, such as a general bank loan so probably worth looking in to.

 

General advice for PCP seems to be if the car is worth less than the balloon payment then walk away. However that decision would need to be balanced against what car you can replace it with, and whether it's better value for money to do so. If the car had been ultra reliable and the difference between value and balance was small then I might consider buying it, If not then if the car is exactly what you need and like then look at cheaper second hand models that are affordable based upon #3 and #4.

 

Alternatively if there is likely equity in the car then talk to the dealer about a new deal for a replacement car, perhaps a lower spec to bring the price down. It might work out better value than a loan to pay off the existing car, again presumably dependent on #3 to #7.

 

You need to do the sums and see what suits you best.

We checked the value of the car online and it looks like it didn't lose its value. I mean used Kodiaqs from 2019 have more or less the sam price as we purchased it with.

It is very reliable and we definitely would like to keep the car.

I would check, you could find by taking out a bank loan to pay the ballon payment, you might end up paying more monthly than a new one on pcp especially if there is  decent equity to pay a deposit.

Edited 18 January, 20233 yr by Kenny R

15 hours ago, New11 said:

we bought our Kodiaq (basic model) 3.5 years ago on 4-years PCP. It ends soon. Of course we would like to keep the car 😊  but don't have enough money.

 

2 hours ago, New11 said:

I mean used Kodiaqs from 2019 have more or less the sam price as we purchased it with.

we definitely would like to keep the car.

 

Apologies if you think I'm being pedantic but you didn't buy the car, to date all you've done is rented it from the owner ( i.e. the finance company ). What price you think you purchased it for it is irrelevant. 

 

As others have said you need to know how much your car is actually worth and what the GFV Guaranteed future value or 'balloon payment' is. Doesn't sound like you've done that.

 

A:  How much will you have to pay the finance company for you to own the car at the end of the agreement? ( or you can call them up or login to VWFS website and find out how much it will cost to end or rather 'settle'  the agreement this month ).

 

B: How much is your car worth. Go to somewhere like WeBuyAnyCar.com, enter the details ( accurarely ). Now bear in mind your PCP ends in 6 moths time, not today. The figure you receive today will only be accurate if you're going to be buying your car in the next few weeks.

 

The equity you have in your car will be the difference between B and A

 

For example if your baloon payment is £15000 and Drive the deal are offering you £20000 then you have £5000 equity.

 

I've used a credit card ( at the dealers request, not mine ) to buy a car but paid off the amount when my bill arrived. But if you're not going to pay it off a.s.a.p then I'd never recommend a car be purchased on a credit card. 

 

If I were in your position I'd be looking at a bank loan. Check out sites like MoneySavingExpert. To use just one example, you can borrow £15,000 from Sainsburys Bank at 4.8% APR fixed if you're a Nectar card holder.  Don't know what Barclaycard charge but it's be something like 22% variable - i.e. it'll increase if BofE increase interest rates.  

Edited 18 January, 20233 yr by kodiaqsportline

2 hours ago, Kenny R said:

I would check, you could find by taking out a bank loan to pay the ballon payment, you might end up paying more monthly than a new one on pcp especially if there is  decent equity to pay a deposit.

@New11 be careful, this may only be true short term.   It is often plugged by salesman.   However new PCPs are currently at high interest rates, and if inflation falls in few months could be paying well over inflation in 2 years time.

 

If you are going to keep the car another few years, then rolling it with another PCP will just put you in same dilemma at end of that one.  It is very easy to get on a merry-go-round with PCP extensions that you cannot afford to get out of (except by having no car).

 

Work backwards, how many years will you keep car, (eg another 5, or perhaps to 10th birthday etc).  Feel free to take out a bank loan (and use a comparison site for rates), but don't make the repayment period longer than your minimum keep car to date (you don't want to be still paying the loan when sold the car).   Because the loan and car are not formally linked it would be easy to sell the car and forget to pay off any outstanding loan balance.  

 

For obvious reasons also a bad idea to consolidate a loan into extra mortgage (you might then be still making repayments in 15-25 years time, however long your mortgage has to go).

 

Without knowing your financial circumstances, assume cheapest loan will be your bank or another lender.  You might be able to take out a balance transfer onto a new credit card for about 3% for part of the amount (but make sure it is paid off before special period expires, otherwise likely to be paying 30+%).  You really don't want to be paying anything with high interest.

 

Use the internet and multiple financial comparisons sites, might not be a bank, and the interest rate will depend on circumstances.  Sometimes rate is lower for bigger amounts over £5000 or £7000.  Generally if there are rate tiers (lower interest for bigger amounts) then will be less interest to borrow the £7000 than just under a threshold eg £6900 at a higher rate.  There are loans being advertised under 5% (but there are qualifying requirements)

 

There is a chance interest rates will fall, they have already started to ease, so might be better waiting until nearer when balloon payment is due (but of course no one has a crystal ball so can't predict what rate you might get in a few months), there is a risk rate will go higher

Here's a wildcard option.

 

PCH

 

Not PCP.

 

PCH gets you a new car - any car - for xxx pounds per month with a first payment of 3x or 6x or 9x monthly payment.   Much less than a several thousand pound PCP deposit.

 

How about an ID4 for £10,000 deposit plus £500+ per month - recently spotted in my local dealer.

 

I call it rent-a-car - because that's what many of us are doing under both the PCP and PCH banners.

 

The above suggestions are perfectly OK,

 

I've considered a bank loan to buy a PCP car, i.e. pay the balloon payment, but decided against it as I'd end up with a 5, 6, 7 year old car and quite frankly I don't think any cars are built to last anymore.  Bills get hefty then.

 

I've also paid a balloon payment then sold the car at a decent profit (changed days now)

 

ps - I'm a double PCH fan

 

 

PCH has advantages and disadvantages, yes you can regularly have a new car, but not everyone wants to be paying £4000, £5000, £6000, £7000 per year to rent a car (or can afford that much).

For some people, it is nice to have finished financing, having bought it outright, then  you can have have couple of years off paying for car whilst buy something else (new furniture, bathroom refit or whatever), before considering another car.    Of course might incur £1000 in the year for parts that are due replacement and service, but that is still lot less than £6000 per year which @BoxerBoy suggested (described as £500 per month).

 

Actually @BoxerBoy is partly correct when saying think of it over 6 or 7 years.  What you should do is add up all the estimated costs for next say 7 years and decide which is best.  
 

For the Op @New11 who likes current car vary the calculation to what you would spend if keeping it another 5 or 6 years vs changing it and incurring 5 or 6 years new PCH or PCP costs.

 

What worries me is that by only thinking of it monthly, (or in 2 or 3 year timeframes), means might not have realised you have committed to spent £50,000+ over 7 years.  Which is a lot for a car unless you are not short of money.

 

 

 

It’s sure a mad world out there and we’re all different with different priorities and/or preferences.

 

We’re just home from visiting a friend who I’d been told was considering changing her car. For no good reason other than it’s about 5 years old. Bought and paid for. Low miles. Mint condition. Right size.  Suits her needs nicely.  I left her with the suggestion to keep it and not be afraid of an MOT test and any routine maintenance work. 

21 hours ago, BoxerBoy said:

PCH gets you a new car - any car - for xxx pounds per month with a first payment of 3x or 6x or 9x monthly payment.   Much less than a several thousand pound PCP deposit.

 

How about an ID4 for £10,000 deposit plus £500+ per month - recently spotted in my local dealer.

 

You seem to be giving an example that doesn't fit with your first statement. I for one have never put anything like £10k into a PCP deal up-front - it's always been approx. £1k plus whatever equity (if any) from the last car (which was admittedly a huge chunk last time around, but that was more down to good timing than anything else!).

4 hours ago, Yogi-Bear said:

 

You seem to be giving an example that doesn't fit with your first statement. I for one have never put anything like £10k into a PCP deal up-front - it's always been approx. £1k plus whatever equity (if any) from the last car (which was admittedly a huge chunk last time around, but that was more down to good timing than anything else!).

I was simply quoting a real example of a 2022 example in a VW showroom.

 

Not a recommendation.

Appears that new orders might not arrive until Feb-April 2024, so likely to be many paying balloon payment, or being without a car

 

https://www.marnet-mobility.de/aktuelle-lieferzeiten.html

1 hour ago, SurreyJohn said:

Appears that new orders might not arrive until Feb-April 2024

 

As per the other thread - https://www.carwow.co.uk/new-car-delivery-times might be more accurate for the UK market. They're quoting ~9 months.

20 hours ago, Yogi-Bear said:

 

You seem to be giving an example that doesn't fit with your first statement. I for one have never put anything like £10k into a PCP deal up-front - it's always been approx. £1k plus whatever equity (if any) from the last car (which was admittedly a huge chunk last time around, but that was more down to good timing than anything else!).

 

I appreciate we all find ourselves in different financial situations but when PCP was first being promoted, the idea was you'd be left with equity in the car which you could use as a deposit on the next. I NEVER understood that logic.

 

I only use PCP these days to secure an extra discount and or benefits, paying the balance off in the days after taking delivery, but when setting up the PCP nearly every salespeople I've spoken to questions putting down the max. deposit. " That's not how PCP is designed to work " comes the reply. Too bloody right it isn't, it's designed to benefit the creditor, not the debtor. Those who take out credit seem to think it's the otherway round. The power of advertising eh?

 

Unless you don't have the money to hand, I've never understood that logic. I hear lots of people like Yogi-Bear say things like the equity was greater than expected as if it's a good thing. It makes me question if these people actually know how PCP works?

 

If someone finds that their car has more equity than they thought it would, that means they've just paid more finance than was necessary. I find that very confusing. Why would anyone see paying more interest than was necessary as a good thing? 

Edited 22 January, 20233 yr by kodiaqsportline
wording

39 minutes ago, kodiaqsportline said:

If someone finds that their car has more equity than they thought it would, that means they've just paid more finance than was necessary. I find that very confusing. Why would anyone see paying more interest than was necessary as a good thing?

OK, I see your point, but, if the NFV seemed reasonable when you took out the finance, and when the contract ends the NFV proves higher than expected, it's easy to believe this means that the depreciation was lower than expected rather than that you have paid more interest than was necessary.

Personally, I see a PCP as "how to spend say 60% of the value of a car over a term and never actually own the car".

22 minutes ago, kodiaqsportline said:

I hear lots of people like Yogi-Bear say things like the equity was greater than expected as if it's a good thing. It makes me question if these people actually know how PCP works?

 

I know exactly how PCP works, tyvm.

 

Given that the usual deposit required to order a car is £1k these days (used to be less!), that's how much I've put in as my deposit on the last couple of deals. I then pay £x/month until I get rid of the car. That works for me, and total amount paid is roughly equivalent to or less than leasing examples I've looked at for the same car / colour / spec (yes, you can get some very good lease deals if you're willing to be flexible on make / model / colour / spec, but that's the same with buying). It might have helped that I've always got a good deal that includes a low interest rate, making switching away from the PCP a bit pointless.

 

Out of the 2 PCP deals I've completed with VWFS so far, I've handed the car back once (Octavia vRS) because it was worth less than the MGFV and the dealer through which I ordered my first Kodiaq didn't want to do trade-in (fair enough, really), and the second deal (my first Kodiaq) ended with a huge lump of equity thanks to the anomaly of used car prices rocketing skywards through the second half of 2021. So yes, the equity being greater than expected was a good thing - but it had absolutely nothing to do with the PCP deal. I even said in the post you quoted that it was down to good timing rather than anything else.

 

PCP deals were originally designed so you would end up with equity - but because people concentrate on the headline £x/month figure, they soon changed so that the MGFV is as high as can possibly be so the £x/month is lower. I'd argue that this is a gamble on the part of the finance company, as if the car is worth less at the end, they're the ones that lose out, not the customer (well, assuming the customer hands the car back and doesn't trade it in with negative equity... but I guess some people probably end up doing that out of ignorance of the way it works). Also, I'd argue that PCP does benefit the customer - or, at least, a certain profile of customer. If you're wanting to buy a car outright and keep it for many years, then a PCP probably isn't the cheapest way of doing it (certainly not as interest rates get higher and higher) as you're probably paying more interest on the balloon amount than you would otherwise. However, if like me you enjoy (and are able to) a change of car every few years, then it's a simple way of doing that without having to worry about what the car is going to be worth - again, you have to understand how PCP works and use the correct option at the end of the deal, otherwise you can lose out big time. I'd argue that I've benefitted in different ways from the two deals I mention above, VWFS took the hit on the first car and I took the rewards on the second.

 

3 minutes ago, KenONeill said:

I see a PCP as "how to spend say 60% of the value of a car over a term and never actually own the car".

 

This. I'd lease a car if I found exactly what I wanted for less money, but I never have. I don't intend on hanging onto cars for more than a few years, so PCP is just renting to me. If I end up with equity by any miracle (or anomaly!) then it's just a bonus that makes the payments on the next one a little bit less.

 

On 18/01/2023 at 12:31, New11 said:

We checked the value of the car online and it looks like it didn't lose its value. I mean used Kodiaqs from 2019 have more or less the sam price as we purchased it with.

It is very reliable and we definitely would like to keep the car.

You've done well! A personal loan is a good option. If the balloon payment is 11k, looking at about 5% interest rate  which will be around £200 a month over 5 years ( via someone like Tesco).

Edited 23 January, 20233 yr by Theo5

2 hours ago, Theo5 said:

 

You've done well! A personal loan is a good option. If the balloon payment is 11k, looking at about 5% interest rate  which will be around £200 a month over 5 years ( via someone like Tesco).

Yes much better to pay a balloon payment of say £11k if car is worth more.  Can always sell car later.

 

Now is a poor time to start a new PCP with small deposit contributions and hefty interest rates of 7.9% or more.  If don't believe me just use the finance calculator. Will get something like on the road price £30k, total amount payable over 3 or 4 years £33k.   So basically being asked to pay thousands to do a PCP

1 hour ago, SurreyJohn said:

So basically being asked to pay thousands to do a PCP

 

I don't get this comment... you'll pay interest on any loan, not just a PCP. So unless you can afford to pay outright for a car, you're always "being asked to pay thousands" on top of the OTR price. It's just a matter of how many thousands.

 

Yes, interest rates on PCP deals are not very inviting at the moment, and you can get cheaper rates elsewhere - but PCP, being a secured loan on the car, is often more easily attainable than a low rate unsecured personal loan, although it obviously all depends on your individual credit worthiness and affordability. And to be fair, that's where a PCP comes in - because the £x/month is usually less than a personal loan for the whole purchase amount over 5 years, it's actually more affordable (although this difference in monthly payments narrows as interest rates rise). But it does mean that if you want to keep the car long-term, you will be paying for it for longer (and it's probably not the cheapest way of buying it overall).

The real benefit of a PCP as I see it, is that it gives you the option of handing the car back after 3 years, with no hassle of selling it, or paying the balloon payment and keeping a car that you know the history of.

 

The loan interest is the price of this flexibility.

 

I normally pay for cars in cash.  I have had 2 PCP's.  The first one I paid off within a week, (old habits), the second I continue to pay the monthly charges on the basis of the above.

 

I fully intend to pay off the car, but the PCP gives me flexibility.

Today I received the standard VWFS letter pointing out my PCH deal ends in March.

 

(as if I’d forget)

 

What would I like to do?
 

 (A) extend contract?
 

(B) buy the car? (no price mentioned - you have to ask)

 

(C) return the car? (suffer the BCA inspection for Fair Wear And Tear and hope for a clean sheet without penalties)

 

I shall ask the buying price out of interest, but based on previous experience it will be top dollar in line with anything showing online with Auto Trader and/or dealers. So I’m unlikely to go chasing a £10 profit.

 

One of tomorrow’s jobs is to phone dealer and ask for build week, hence an estimate of delivery, for new car ordered in December.

 

The probable outcome will be an extension of 3 to 6 months.

 

I do like this car, which is why the next one will be exactly the same in a different colour.

@BoxerBoy Option A extend contract is new, I bet it isn't in the finance agreement you signed when you took it out (dig out your copy and look).  This seems to be a recognition that VW group dealers haven't bought enough stock to sell you a car that isn't yet made.

 

Option B pay balance should also be there, it was fixed amount at start.  It will only be more if you terminate it early as you are effectively combining some of the monthly payments not yet made.  But of course it's easy to add up the remaining payments and balloon to give a max outstanding.

 

Option C is effectively optional, nothing to stop you settling the balance, and selling it yourself (or part exchanging it) without having a BCA inspection.

Of course if someone like webuyanycar.com offers you more than you owe, would be daft to hand it back, as could simply sell to them and keep cash difference (it's not a windfall, just some of the monthly you paid, being given back to you)

 

My Kodiaq is on PCH not PCP so there is no up front “final payment” or “balloon” like the PCP GFV.

 

But in reality they do offer it to you at top dollar to save them - BCA actually - from collecting it.

 

I’ve already gone through this process with my wife’s Polo that expired in December so we’re into a 3 month extension on that one.

 

BTW - today I called both my VW and Skoda dealers to ask about Build Week situations and neither phoned back when “my man” was unavailable when I called. Useless Shiites.

 

 

Edited 26 January, 20233 yr by BoxerBoy

The routine BCA letter dropped through the door this morning.

 

”We have some great news: you do not have to part with your vehicle”

 

Always makes me smile. They mean “please pay us lots of money and keep your car and save us the bother of collecting it and re-selling it.”

 

Anyway, a few keystrokes got me a preliminary price to buy. Top retail price as expected - £26,500.

 

Compares with online adverts. My car is in A1 condition with lots of desirable extras.

 

I’ll hand it back, but only after several months extending the contract to await the on order car.

 

(Sorry for the delay - I was off for a while)

 

I checked what @kodiaqsportline asked and:

- the final payment (according to a printed document):  £11k

- the value of similar cars:  > £20k (https://www.autotrader.co.uk/car-search?postcode=co29bt&radius=80&make=SKODA&model=Kodiaq&include-delivery-option=on&year-from=2019&year-to=2019&transmission=Automatic&fuel-type=Diesel)