I purchased my 2018 Karoq Edition brand new in Aug of that year and used the Skoda (VW) Finance package that gave me £700 of the screen price and included two free services.

I did the routine method at the time which was to pay off the Finance within a few days and was only charged about £4 in interest but kept the perks.

I'm potentially looking at my next new Skoda and wondered if this loophole was still in place or have Skoda/VW stopped this practice?

Still in place, just doing the same thing on a used Superb, took the pcp to get 2 years warranty, 2 x services, 2 x mot and 2 years European breakdown cover.

Did it on a Kamiq a couple of months ago.  The VWFS lady even waived the interest charge - it's the third time I've done it, and that's never happened before.

 

I've always been slightly puzzled by the interest charge, because Withdrawing is supposed to be like there was never any finance in place, so I don't know on what basis they can charge interest.  However when it was waived, it made me slighly nervous that, if the finance had really never existed, they could try to reclaim the deposit contribution.    In practice that hasn't happened.

2 hours ago, ronniebarker said:

I purchased my 2018 Karoq Edition brand new in Aug of that year and used the Skoda (VW) Finance package that gave me £700 of the screen price and included two free services.

I did the routine method at the time which was to pay off the Finance within a few days and was only charged about £4 in interest but kept the perks.

I'm potentially looking at my next new Skoda and wondered if this loophole was still in place or have Skoda/VW stopped this practice?

 

Sorry to be a tad pedantic, but for others reading this who're not familiar with this way to purchase a car, it's not a loophole.

 

The question you should be:  Does VWFS still allow financing a car through PCP to be settled at anytime during the agreement without additional penalty? And the answer is yes ( well it was up to last month. can't comment on Feb 2024  ).

 

But you're absolutley right to question it because not all manufacturers work in the same way and VWFS may change. I've come across one who hide their fees behind government guidelines which I believe goes against financial rules. The finance company should set out what that fee is and give you a breakdown of how it's calculated rather than effectively say, " we've pushed buttons and twirled knobs and come up with £626 to settle your agreement. "  It's something they add on to the settlement figure without even telling you what it's for. 

 

I've spent more hours than I should have trying to investigate this and still cannot come up with an answer to how these finance companies calculate that figure. I'm currently awaiting a decision from the financial ombusman.

 

But as far as VWFS is concerned, up until last month anyway, they we're still just charging minimal interest but not in the way you describe above. They have a min fee which is nominal ( depending on your finance package ) then what they  do is charge the greater of the two - the daily interest  or nominal fee. If you settle within a few days, the nominal fee will kick in rather than the daily interest, but it's only around the £30 mark.

 

Hope that helps.

Edited 20 February, 20242 yr by kodiaqsportline

14 minutes ago, kodiaqsportline said:

 

Sorry to be a tad pedantic, but for others reading this who're not familiar with this way to purchase a car, it's not a loophole.

 

The question you should be:  Does VWFS still allow financing a car through PCP to be settled at anytime during the agreement without additional penalty? And the answer is yes ( well it was up to last month. can't comment on Feb 2024  ).

 

 

Well, to be a bit more pedantic - it's really nothing to do with VWFS, it's the law, largely the Consumer Credit Act 1974.

 

This allows you to Withdraw completely within 14 days, and like I said earlier, it's supposed to be like the finance never existed.  Because of this, the situation with incentives is a bit of a grey area,  some manufacturer finance arms have it in their T's & C's that they can be taken away, but in practice I've seen in discussed in forums populated by car sales people and they say it never happens, and we know VWFS doesn't do it (and they surely would if they could).

 

After 14 days you're Settling.  You have to give 28 days notice to the finance company and they are entitled (and always do) charge another 30 days interest as a penalty.    On a typical new car deal this is going to cost a few hundred pounds in interest.   However the situation with incentives is clearer cut - they can't be withdrawn.

Edited 20 February, 20242 yr by Rory

7 hours ago, Rory said:

I've always been slightly puzzled by the interest charge, because Withdrawing is supposed to be like...

 

6 hours ago, Rory said:

 

Well, to be a bit more pedantic - it's really nothing to do with VWFS, it's the law, largely the Consumer Credit Act 1974.

 

This allows you to Withdraw completely within 14 days, and like I said earlier, it's supposed to be like the finance never existed.  Because of this, the situation with incentives is a bit of a grey area,  some manufacturer finance arms have it in their T's & C's that they can be taken away, but in practice I've seen in discussed in forums populated by car sales people and they say it never happens, and we know VWFS doesn't do it (and they surely would if they could).

 

After 14 days you're Settling.  You have to give 28 days notice to the finance company and they are entitled (and always do) charge another 30 days interest as a penalty.    On a typical new car deal this is going to cost a few hundred pounds in interest.   However the situation with incentives is clearer cut - they can't be withdrawn.

 

Look, this has been discussed before. You've went thru the process but obviously you have no idea how it works.

 

1: You are NOT withdrawing  from the PCP, you are settling the PCP.

 

2: The 14day period has nothing whatsoever to do with settling a PCP. 

 

People get confused between cancelling a PCP and settling a PCP and no wonder, because what you've just written is complete garbage. You did NOT cancel your PCP, you settled it.

 

After 14 days you're Settling.   WTF ?   You can settle after 14hrs, 14 days, 14 weeks, 14 months etc.  You can settle a PCP at anytime, however you only have a limited period before you can cancel the agreement without penalty, as set out in the various credit acts.

 

If you look at my past history, I've explained step-by-step how it works for those who don't understand it.

 

Ordered a new Karoq recently and the dealer asked me outright, do I really want the finance or am I intending to pay it off within a couple of days?

Gave him the honest answer. He was fine with it, though my projected delivery keeps getting put back!

Seduced by two free services, I went for two years hire purchase, totally forgetting I have to pay half the loan before I can pay off the outstanding. Always had pcp finance, and paid off early, so a bit annoyed with myself. Still, roll on September.

15 hours ago, kodiaqsportline said:

 

 

Look, this has been discussed before. You've went thru the process but obviously you have no idea how it works.

 

1: You are NOT withdrawing  from the PCP, you are settling the PCP.

 

2: The 14day period has nothing whatsoever to do with settling a PCP. 

 

People get confused between cancelling a PCP and settling a PCP and no wonder, because what you've just written is complete garbage. You did NOT cancel your PCP, you settled it.

 

After 14 days you're Settling.   WTF ?   You can settle after 14hrs, 14 days, 14 weeks, 14 months etc.  You can settle a PCP at anytime, however you only have a limited period before you can cancel the agreement without penalty, as set out in the various credit acts.

 

If you look at my past history, I've explained step-by-step how it works for those who don't understand it.

 

 

I'm sorry, but that's mostly the same as I wrote, except that you're wrong about Settling.  If people Settled with 14 days they'd have hundreds of pounds of interest to pay, not the few pounds usually charged on Withdrawing.

 

 

5 hours ago, Rory said:

 

I'm sorry, but that's mostly the same as I wrote, except that you're wrong about Settling.  If people Settled with 14 days they'd have hundreds of pounds of interest to pay, not the few pounds usually charged on Withdrawing.

You are getting confused, withdrawing is another term for changing your mind in first few days, that is terminating through cancelling (ie where everything goes back as if deal hadn't happened, no car sale and no loan)

 

Settling is paying off the remaining outstanding.  In first 14 days there is just token bit of daily interest or small flat fee.  After 14 days usually got to pay another months interest.   Not hundreds of pounds extra interest (although on big loans a months interest could be couple of hundred pounds)

 

Nowadays the loans are online, and printed after electronic signature in the dealers, so go live within seconds.   But at one time it would take couple of days for loan paperwork to be mailed to finance Co and in turn entered on their system, so had to give them few days before you could call to settle.

 

I am not sure if you are (incorrectly) using term withdrawing to mean a voluntary early handback and sale of the car, where it's value part settles the loan and there is a shortfall which requires hundreds of pounds of cash to cover the shortfall.

 

 

Edited 21 February, 20242 yr by SurreyJohn

2 hours ago, SurreyJohn said:

You are getting confused, withdrawing is another term for changing your mind in first few days, that is terminating through cancelling (ie where everything goes back as if deal hadn't happened, no car sale and no loan)

 

 

No - specifically if you Withdraw from the finance you are still required to pay for the car.    Withdrawal is a specific term in the CCA:  https://www.legislation.gov.uk/ukpga/1974/39/section/66A

 

2 hours ago, SurreyJohn said:

Settling is paying off the remaining outstanding.  In first 14 days there is just token bit of daily interest or small flat fee.  After 14 days usually got to pay another months interest.   Not hundreds of pounds extra interest (although on big loans a months interest could be couple of hundred pounds)

 

 

No - Settling (the Act calls it" Right to complete payments ahead of time" requires 28 days notice to be given.  So you simply can't "Settle" in 14 days - well, in theory you could, but you get charged for the 28 days anyway, plus 30 days interest early settlement penalty.

 

 

I've done this multiple times for myself and family members and I'm completely confident I understand how it works, so I'll leave it there.

 

Edited 21 February, 20242 yr by Rory

Hi all,

 

Thanks for the great information. 

 

I'm about to sign the PCP paperwork for a used Octavia this morning and picking it up this afternoon. 

 

It's my understanding that I can still pay off the PCP payment within 14 days and not lose my incentives. Is that others experience?

 

Thanks. 

13 hours ago, Rory said:

 

No - specifically if you Withdraw from the finance you are still required to pay for the car.    Withdrawal is a specific term in the CCA:  https://www.legislation.gov.uk/ukpga/1974/39/section/66A

 

 

No - Settling (the Act calls it" Right to complete payments ahead of time" requires 28 days notice to be given.  So you simply can't "Settle" in 14 days - well, in theory you could, but you get charged for the 28 days anyway, plus 30 days interest early settlement penalty.

 

 

I've done this multiple times for myself and family members and I'm completely confident I understand how it works, so I'll leave it there.

 

 

You can leave it there but for those who're unfamiliar with the process and want to find out more...

 

Under PCP, it's the finance company who own the car. If you withdraw / cancel the agreement, the finance company take the car back. If you Settle the agreement, you own the car. It's as simple as that.

 

You can settle an agreement within 24hr if you so want. The general advice is to give it a few days for the process to be setup.

 

When you take out PCP, VWFS will set up the agreement on their website. You can access it without having to speak to anyone - the process is now fully automatic. You register your name, you log in and you'll see a list of options, one of which is to settle the agreement. You request a settlement figure.  VWFS will then give you a figure and you have 28days to settle ( from memory that is...  it might be a full month, I can't remember the exact figure ) without further interest, otherwise the PCP agreement continues as normal.

 

You say you've done this multiple times?  Next time you do it, pay attention to the wording.

 

Here's the link...   Settlement request

 

There is no such option to withdraw. You're using the wrong terminology.

 

I 100% agree with @SurreyJohn, withdrawing implies you no longer wish to continue with the agrement whereas settlement implies fulfilling the agreement.

 

Well, to be a bit more pedantic - it's really nothing to do with VWFS, it's the law, largely the Consumer Credit Act 1974. This allows you to Withdraw completely within 14 days,

 

No, that's for people canceling a credit agreement. It's designed as a 'cooling off period'.  There was a time when as soon as you put pen to paper, a credit company could hold a gun to your head, the 14 day cooling off was introduced to stop that practice. You can cancel a credit agreement within 14days without penalty. 

 

 

Edited 22 February, 20242 yr by kodiaqsportline

Just a heads up to anyone one thinking of doing this today.

I've recently swapped my Karoq for a Superb.

Finance offer was £250 towards deposit and two free services.

On the 15th Day I've asked for a settlement figure and it's £354 more than the financed amount.

I've asked for a breakdown of the costs but they have changed several things recently including showing a fixed price for dealership commission.

It was still worth doing as I've got two services for £104 but quite a bit of hassle.

Oh dear - if you'd called a few days earlier and asked to Withdraw and it would have cost you just a few pounds.

Edited 14 April, 20251 yr by Rory

I have to agree with @Rory here, the terms Withdraw and Settle are clearly defined in the CCA. When you Withdraw within the 14 day period you have to repay the amount of credit and any interest accrued and the vehicle becomes yours. As to Settling, it is not possible to generate a Settlement figure online in the first 14 days! I know I tried! but you can call VWFS and request withdrawing.

I recently bought a new Karoq on PCP to get the £3000 finance deposit contribution with the intention of clearing the finance ASAP. Whilst I appreciate the anecdotal evidence that withdrawing doesnt lose any incentives TBH I wasnt willing to risk losing £3000! . In the end I got a settlement figure on day 15 and paid it off at the end of the 28 day notice period. Taking everything into account including interest earned on the money in my account for 28 days, I estimate it cost me around £130 more than withdrawing but there was no risk of losing the £3k!

Edited 15 April, 20251 yr by NottsIan

Great info I’m going in tomorrow to see what deals are on offer.

Thanks everyone.

5 hours ago, daroya said:

Yes, the practice still works. Many recent Skoda buyers have confirmed that you can still take out the finance, claim the perks like the dealer contribution and free services, then pay it off within the 14-day cooling-off period with little or no interest. Just make sure to double-check the current terms and confirm with the dealer or VW Finance before doing it again.

The 14 day cooling off period is consumer finance law, they can't change that, but they could change a contract term with any early repayment charge after that date.

Personally I wouldn't check it with the dealer, they get commission on arranging finance, and possibly they lose the commission if you cancel within cooling off period. There is a chance they have vested interest in it not getting cancelled, so might not give unbiased advice.

Ultimately if you pay it off, somebody else (a poorer person, who can't afford to pay it off) subsidises any arrangement fees and incentives, because it is funded from the interest. But would be insensitive to actually advertise it like that, even though that's how it works.

Edited 7 July, 20257 Jul by SurreyJohn

When I bought my Karoq in January 2024, I took out HP but only to get 2 free services. The dealer told me I had to take out a minimum of £2k and not pay it off for at least 6 months. I knew this wasn't correct so contacted Skoda Financial Services. They confirmed I could withdraw from the HP agreement within the first 14 days and keep the 2 free services. This is what I did and have used up 1 of the free services so far without any problem. I paid a few pounds in interest.

Don't believe what dealers tell you where money is concerned. Always speak to the people who have no vested interest in your financial arrangements and who should give you correct and proper advice.

1 hour ago, nbramwel said:

When I bought my Karoq in January 2024, I took out HP but only to get 2 free services. The dealer told me I had to take out a minimum of £2k and not pay it off for at least 6 months. I knew this wasn't correct so contacted Skoda Financial Services. They confirmed I could withdraw from the HP agreement within the first 14 days and keep the 2 free services. This is what I did and have used up 1 of the free services so far without any problem. I paid a few pounds in interest.

Don't believe what dealers tell you where money is concerned. Always speak to the people who have no vested interest in your financial arrangements and who should give you correct and proper advice.

Totally agree, that's what the salesman said to me when I bought mine a couple of weeks ago. I also geta free MOT - as it still within the first three years (It is three years isn't it?)

Yes can confirm still works. Took out HP on £5k of the payment, got £250 discount, and 2 free services. Salesman told me to do it and I could cancel within 14 days. Phoned up Skoda finance last week to withdraw from the agreement. I cancelled after 7 days - there was a daily interest charge of around £1.50 per day, so need to pay back £5010ish, within the next 30 days.

They confirmed that the service agreement would not be affected even without me asking.

It worked for me two years ago, I bought my used karoq from Peter vardy carz. I got a £1000 deposit incentive from the dealer and put down £4000 the day I picked the car up. It was a hire purchase agreement, not a pcp. After 2 days I requested a settlement from the finance company and only paid a very small amount, I seem to remember £14 on what I borrowed from them. This was arranged directly with the finance company. I effectively got a £986 further discount on the car that I had already got £500 off. I do not know who lost out on the £986, nor do I care. The dealership in Aberdeen then closed down 6 months later and is only now getting done up again.

Edited 12 July, 202512 Jul by daviemck2006