VW PCP - a good deal?
Discussion
Afternoon all.
I'm planning to take the plunge on a 2017 Mk7.5 Golf GTi from a main dealer. I've been in a company car for 8 years - and have always bought the wife's cars cash or with a personal loan, yes how old fashioned - and I've never financed a car. I've managed to agree a deal on a low mileage 5 door manual (which is what I'm after) from a main dealer for £19k (£500 discounted). It's a decent price as there are many at small garages for the same, if not more. Crucially, where car supermarkets etc. will bang on the cheapest ditch finders, VW have put a couple of new Bridgestones on this one (financially small things, but important).
To the key bit, the finance rate. It's a PCP at 8.9% (non-negotiable, I called a few dealers and they said the same, so I'm comfortable it's legitimate) but with 2 years warranty, breakdown, MOT cover and 2 services. I know it's not the cheapest rate - been offer 5.8% elsewhere - but it seems like a decent overall deal with a high level of security/reassurance for the (admittedly, still) pessimistic. This puts it at £500 dep. £365x35 and £9600 to pay. I'd like to keep hold of the car, I'm not particularly bothered about having a 'new' car so despite the salesmen trying to tell me the GFV doesn't matter - it does.
Sorry for the waffle, but I'm just looking for people's thoughts on the deal and whether I'm better off considering something else.
Thanks
I'm planning to take the plunge on a 2017 Mk7.5 Golf GTi from a main dealer. I've been in a company car for 8 years - and have always bought the wife's cars cash or with a personal loan, yes how old fashioned - and I've never financed a car. I've managed to agree a deal on a low mileage 5 door manual (which is what I'm after) from a main dealer for £19k (£500 discounted). It's a decent price as there are many at small garages for the same, if not more. Crucially, where car supermarkets etc. will bang on the cheapest ditch finders, VW have put a couple of new Bridgestones on this one (financially small things, but important).
To the key bit, the finance rate. It's a PCP at 8.9% (non-negotiable, I called a few dealers and they said the same, so I'm comfortable it's legitimate) but with 2 years warranty, breakdown, MOT cover and 2 services. I know it's not the cheapest rate - been offer 5.8% elsewhere - but it seems like a decent overall deal with a high level of security/reassurance for the (admittedly, still) pessimistic. This puts it at £500 dep. £365x35 and £9600 to pay. I'd like to keep hold of the car, I'm not particularly bothered about having a 'new' car so despite the salesmen trying to tell me the GFV doesn't matter - it does.
Sorry for the waffle, but I'm just looking for people's thoughts on the deal and whether I'm better off considering something else.
Thanks
Yeah, I did consider the loan option but as the car is still a 'work car' I didn't really want that much money secured against me personally, plus we already have a bit of a personal loan outstanding so I questioned the likelihood of getting the advertised rate anyway - though I'm not sure how much that really affects things, my credit score is really good so that might make more of a difference(?).
The total cost of the PCP over the loan would be a couple of grand, but I thought the warranty and services would offset a reasonable amount of that given they are things I'd want (having been used to it in a company car).
For reference also, I'd asked about HP but the 2 year warranty etc. are on PCP only.
Thanks for the replies.
The total cost of the PCP over the loan would be a couple of grand, but I thought the warranty and services would offset a reasonable amount of that given they are things I'd want (having been used to it in a company car).
For reference also, I'd asked about HP but the 2 year warranty etc. are on PCP only.
Thanks for the replies.
Whatsinausername said:
For reference also, I'd asked about HP but the 2 year warranty etc. are on PCP only.
It's a bit of a grey area, but it's standard practice (I've done it) with new VWs to take all the incentives (especially deposit contribution) then Withdraw from the PCP within 14 days. Withdrawing means there's nothing extra to pay bar a few days interest - maybe £30 or so.Anytime past 14 days you can Settle. You definitely keep everything then. However Settling will cost you a couple of months interest payments - couple of hundred quid ish.
If you are looking to purchase the car and own it for an indefinite period, then there's no question that the best thing to do is find the most cost-effective way to pay the sticker price of the car. A deferred payment plan - let alone at 8.9% APR - won't be the lowest cost option except in marginal scenarios.
PCP is at its best when you are viewing your financial affairs in terms of a monthly budgets. If you prefer things this way, then it's probable that a lease or PCP on a brand new car is likely to be better value than a PCP on a used car.
PCP is at its best when you are viewing your financial affairs in terms of a monthly budgets. If you prefer things this way, then it's probable that a lease or PCP on a brand new car is likely to be better value than a PCP on a used car.
Whatsinausername said:
Yeah, I did consider the loan option but as the car is still a 'work car' I didn't really want that much money secured against me personally, plus we already have a bit of a personal loan outstanding so I questioned the likelihood of getting the advertised rate anyway - though I'm not sure how much that really affects things, my credit score is really good so that might make more of a difference(?).
The total cost of the PCP over the loan would be a couple of grand, but I thought the warranty and services would offset a reasonable amount of that given they are things I'd want (having been used to it in a company car).
For reference also, I'd asked about HP but the 2 year warranty etc. are on PCP only.
Thanks for the replies.
How many miles are you doing?The total cost of the PCP over the loan would be a couple of grand, but I thought the warranty and services would offset a reasonable amount of that given they are things I'd want (having been used to it in a company car).
For reference also, I'd asked about HP but the 2 year warranty etc. are on PCP only.
Thanks for the replies.
If it's high, I'd question whether a 3 year old Golf is the right move.
If it's low, you shouldn't worry about a warranty and servicing too much. Just put the money away each month to cover it.
Do you have more cash to put in? If so, I'd do that with a personal loan if you're worried about securing it against you personally.
Muzzer79 said:
How many miles are you doing?
If it's high, I'd question whether a 3 year old Golf is the right move.
If it's low, you shouldn't worry about a warranty and servicing too much. Just put the money away each month to cover it.
Do you have more cash to put in? If so, I'd do that with a personal loan if you're worried about securing it against you personally.
10-12k I'd say, though it's hard to know what'll be happening post-CV....I'm hoping Microsoft Teams will help reduce the motorway mileage tbh.If it's high, I'd question whether a 3 year old Golf is the right move.
If it's low, you shouldn't worry about a warranty and servicing too much. Just put the money away each month to cover it.
Do you have more cash to put in? If so, I'd do that with a personal loan if you're worried about securing it against you personally.
I could put cash in but I don't really want to. My net position through my company car/BIK saving plus the (after tax.) monthly allowance will be £550 so I just want the cost of the car and running costs to be covered by that and any left over is a bonus. Once it's paid off I've got an asset that I wouldn't have at all if I still had a company car.
To the guys suggesting paying it off after scoring the benefits - thanks, that's a good option. With being closed off to financing I always thought paying it off early would leave you with horrendous fees or negative equity, a couple of months interest is no big issue.
Sheepshanks said:
It's a bit of a grey area, but it's standard practice (I've done it) with new VWs to take all the incentives (especially deposit contribution) then Withdraw from the PCP within 14 days. Withdrawing means there's nothing extra to pay bar a few days interest - maybe £30 or so.
Anytime past 14 days you can Settle. You definitely keep everything then. However Settling will cost you a couple of months interest payments - couple of hundred quid ish.
I presume it's fine if people have done it, but I'd be surprised there's no get out clause for VW saying 'we're not honoring your free services now you've cancelled the finance' etc.(?).Anytime past 14 days you can Settle. You definitely keep everything then. However Settling will cost you a couple of months interest payments - couple of hundred quid ish.
Again, this is probably a daft, novice question, but I presume the settlement is simply £18,500 (£19k sticker price less £500 deposit), less any equity paid off via monthly payments, plus a couple of months interest as 'the charge', rendering any GFV etc. numbers as irrelevant?
Whatsinausername said:
I presume it's fine if people have done it, but I'd be surprised there's no get out clause for VW saying 'we're not honoring your free services now you've cancelled the finance' etc.(?).
Again, this is probably a daft, novice question, but I presume the settlement is simply £18,500 (£19k sticker price less £500 deposit), less any equity paid off via monthly payments, plus a couple of months interest as 'the charge', rendering any GFV etc. numbers as irrelevant?
I'm not aware of any such clauses and thought it was common practice to get the expensive PCP and then settle the finance with a loan 24 hours later. Again, this is probably a daft, novice question, but I presume the settlement is simply £18,500 (£19k sticker price less £500 deposit), less any equity paid off via monthly payments, plus a couple of months interest as 'the charge', rendering any GFV etc. numbers as irrelevant?
Best checking with the dealer.
Jasey_ said:
With PCP it's all secured against you personally.
If you are going to be keeping the car get them to run the numbers giving you the lowest possible GFV as you pay interest on this for the whole of the term.
Of course your monthly payments will go up - but your overall costs will come down.
On PCP the finance is secured against the car though is it not? If you don't pay they take the car back. A personal loan from the bank will be unsecured.If you are going to be keeping the car get them to run the numbers giving you the lowest possible GFV as you pay interest on this for the whole of the term.
Of course your monthly payments will go up - but your overall costs will come down.
Someone with average credit can get PCP because of this, they will unlikely get a bank loan for £20k.
With PCP, your liability is the total of the monthly repayments plus the balloon figure.
In Example 1, you enter a 36-month PCP agreement at 8.9% APR:
Price: £19,000
Deposit: £500
Balloon / GFV: £8,000
Monthly payments: £392.74
Total amount payable: £22,638.64 *this is the amount show on your credit file*
Interest paid: £3,638.64
N.B. This also assumes that you can find the £8,000 balloon without further financing costs, which is being very generous.
For comparison, in Example 2 you take out a widely available loan at the best available rate of 2.9% APR over 48 months:
Price: £19,000
Deposit: £500
Balloon / GFV: £0
Monthly payments: £408.67
Total amount payable: £20,116.16 *this is the amount show on your credit file*
Interest paid: £1,116.16
In Example 2, you pay approximately one third of the interest... saving at least £2,500 for exactly the same car as in Example 1. Although you commit for a further 12 months, you will be in a more advantageous position to pay off the debt at any point in time than in Example 1.
I repeat that I have ignored the costs of financing the balloon payment of £8,000 in Example 1, which you would need to do to fully compare the costs. This would make Example 1 even less competitive.
In Example 1, you enter a 36-month PCP agreement at 8.9% APR:
Price: £19,000
Deposit: £500
Balloon / GFV: £8,000
Monthly payments: £392.74
Total amount payable: £22,638.64 *this is the amount show on your credit file*
Interest paid: £3,638.64
N.B. This also assumes that you can find the £8,000 balloon without further financing costs, which is being very generous.
For comparison, in Example 2 you take out a widely available loan at the best available rate of 2.9% APR over 48 months:
Price: £19,000
Deposit: £500
Balloon / GFV: £0
Monthly payments: £408.67
Total amount payable: £20,116.16 *this is the amount show on your credit file*
Interest paid: £1,116.16
In Example 2, you pay approximately one third of the interest... saving at least £2,500 for exactly the same car as in Example 1. Although you commit for a further 12 months, you will be in a more advantageous position to pay off the debt at any point in time than in Example 1.
I repeat that I have ignored the costs of financing the balloon payment of £8,000 in Example 1, which you would need to do to fully compare the costs. This would make Example 1 even less competitive.
Edited by The Cardinal on Tuesday 7th July 13:20
If you intend to keep the car then :-
Buy the car on the VW dealers PCP product.
Borrow the money to pay it off elsewhere at a cheaper % rate.
Call VW finance and withdraw from the dealers PCP agreement within 14 days.
Pay a nominal amount of interest for the few day days the agreement is in place.
Keep the discount and service pack etc
Its been done many times with VW Finance.
Buy the car on the VW dealers PCP product.
Borrow the money to pay it off elsewhere at a cheaper % rate.
Call VW finance and withdraw from the dealers PCP agreement within 14 days.
Pay a nominal amount of interest for the few day days the agreement is in place.
Keep the discount and service pack etc
Its been done many times with VW Finance.
The Cardinal said:
With PCP, your liability is the total of the monthly repayments plus the balloon figure.
In Example 1, you enter a 36-month PCP agreement at 8.9% APR:
Price: £19,000
Deposit: £500
Balloon / GFV: £8,000
Monthly payments: £392.74
Total amount payable: £22,638.64 *this is the amount show on your credit file*
Interest paid: £3,638.64
N.B. This also assumes that you can find the £8,000 balloon without further financing costs, which is being very generous.
For comparison, in Example 2 you take out a widely available loan at the best available rate of 2.9% APR over 48 months:
Price: £19,000
Deposit: £500
Balloon / GFV: £0
Monthly payments: £408.67
Total amount payable: £20,116.16 *this is the amount show on your credit file*
Interest paid: £1,116.16
In Example 2, you pay approximately one third of the interest... saving at least £2,500 for exactly the same car as in Example 1. Although you commit for a further 12 months, you will be in a more advantageous position to pay off the debt at any point in time than in Example 1.
I repeat that I have ignored the costs of financing the balloon payment of £8,000 in Example 1, which you would need to do to fully compare the costs. This would make Example 1 even less competitive.
Thanks, it's always easier with an example!In Example 1, you enter a 36-month PCP agreement at 8.9% APR:
Price: £19,000
Deposit: £500
Balloon / GFV: £8,000
Monthly payments: £392.74
Total amount payable: £22,638.64 *this is the amount show on your credit file*
Interest paid: £3,638.64
N.B. This also assumes that you can find the £8,000 balloon without further financing costs, which is being very generous.
For comparison, in Example 2 you take out a widely available loan at the best available rate of 2.9% APR over 48 months:
Price: £19,000
Deposit: £500
Balloon / GFV: £0
Monthly payments: £408.67
Total amount payable: £20,116.16 *this is the amount show on your credit file*
Interest paid: £1,116.16
In Example 2, you pay approximately one third of the interest... saving at least £2,500 for exactly the same car as in Example 1. Although you commit for a further 12 months, you will be in a more advantageous position to pay off the debt at any point in time than in Example 1.
I repeat that I have ignored the costs of financing the balloon payment of £8,000 in Example 1, which you would need to do to fully compare the costs. This would make Example 1 even less competitive.
Edited by The Cardinal on Tuesday 7th July 13:20
So, if I were to settle the PCP early (even after 1 or 2 months) would the cost be the total (£22,638 in this example) less the interest not required over the remaining term or would this pretty much just be the sticker price given the interest not paid (after 1 or 2 months) would be the vast majority??
I'm slightly concerned about applying for a loan with having applied for the finance recently. The last time I got a loan I didn't take it up in time - after being messed about by the plumber - so had to reapply, and given I'd had a recent application on my credit file, the interest rate went up!!
Seems a bit of a catch 22....
Also, what is the benefit of a secured loan over unsecured? I understand the 'secured' bit, but does that increase your chances of getting a preferential rate? The rates themselves don't seem to differ much.
Edited by Whatsinausername on Tuesday 7th July 13:44
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