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Model specific boards => Golf mk7 => Topic started by: p3asa on 11 February 2014, 02:05
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I'm just about to pull the trigger and order a Mk7 GTD. Once I can decide on colour :angry:
As I understand it, the more miles you put down for the PCP the lower the GFV is?
I'm possibly looking to keep the car after the PCP is finished so would the mileage I put down have any bearing on the overall price of the car or is it just a sliding scale
i.e.
high miles (higher payment) + low GFV = X
low miles (lower payment) + high GFV = X
Would they both work out exactly the same?
Also what I couldn't get my head around was, my monthly payments for 36 & 48 months were exactly the same!
Would there be any advantage on me going with either if I was going to keep the car after its term?
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Hi buddy. The only time when the mileage comes into play is if you are handing the car back at the end of the term.
If you're planning to keep the car (i.e. Pay the GFV payment) then put the lowest possible mileage down to reduce your payments. Not sure on the effect it has on the GFV to be honest so worth checking that out before you make your final decision.
I'm planning on trading mine in after 2.5/3 yrs so I've put down 5k miles p.a to reduce the payments.
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That only works if you are actually only going to do that amount.
If you do more you'll be charged 7p or so a mile for every mile over that amount at trade in time.
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That only works if you are actually only going to do that amount.
If you do more you'll be charged 7p or so a mile for every mile over that amount at trade in time.
Not true, you will only be charged excess mileage fees if you hand back the car at the end of the term, if you px against another car then the only effect the mileage will have is to that of the px value of the car, meaning you could be in negative equity compared to the amount outstanding on the PCP should you have done a relatively high mileage, excess mileage penalty will NOT apply in this case..
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Advice from Beddie is correct....
Also if you massage the deal by opting for low mileage allowance so that the monthly payments are low (in other words have a larger outstanding balance than if they were higher due to higher GFV - which you are paying intrest on) then this will slightly increase the overall cost. Its always going to be cheaper to pay off the outstanding balance quicker. or have a lower outstanding balance at any one time
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If you exceed the annual mileage in your PCP agreement, you would only have to pay the 7.2p per mile excess if you gave the car back and walked away, you are far more likely to trade it in. In which case you'll probably have some equity in the car which will more than offset your excess mileage (within reason). (Generally the GFV will leave you some equity in the car). The GFV's for PCPs tend to be quite cautious these days.
The only example I can give is. My wife has a Seat Exeo which we set the mileage at 10000 mpa, we are 2 .5 years in and have already done 44000. The Glasses guide black book still values the car at £300 more than the settlement figure for the PCP. We have ordered new Octavia vrs and have guaranteed the £300 equity in our car. Obviously other cars will be different.
PCP rates at VW are very low at the moment so you should take advantage while you can, but I wouldn't pay more that 10% deposit, paying more deposit just lowers your monthly payment but has no effect on the GFV. You will find there is a sweet spot where you get the most value (highest GFV vs monthly payments). again it depends on the car but I found 42 months (on a GTI) is a good term and you also benefit from the final service.
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What you say about maximum of 10% deposit I don't agree with. Technically you'll pay the same for the car whether you put £1000 down and higher payments or £10000 down and lower payments.
Except, if on a £30,000 car the GFV is £15,000 and you put £1000 down you're paying interest on £14,000, whereas if on the same car you put £10,000 down you're only paying interest on £5000 so you pay a fair amount less over the period.
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If you were always buying the car at the end of the term, then paying more per month up front would save you a bit of interest (it soon racks up), but basically you’d end up in roughly the same situation by paying less per month and clearing a higher GFV/balloon payment vs paying more per month and a lower GFV/balloon payment. The VW business model of high GFV means that they make more interest out of you on solutions because you always owe a large proportion of the car over the term and hence more interest as a result.
Same monthly payment either over 3 or 4 years is explained by year 4’s payment being a mixture of covering 4th year’s additional depreciation and more interest to be paid by spreading the interest related costs of the car over 4 years instead of 3. In that situation and assuming you change cars regularly, there is no advantage to keeping the same car 4 years instead of 3, especially as your warranty coverage runs out in year 3 and assuming the cost of the next car hasn’t increased appreciably 3 years after you’ve bought the original one.
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What you say about maximum of 10% deposit I don't agree with. Technically you'll pay the same for the car whether you put £1000 down and higher payments or £10000 down and lower payments.
Except, if on a £30,000 car the GFV is £15,000 and you put £1000 down you're paying interest on £14,000, whereas if on the same car you put £10,000 down you're only paying interest on £5000 so you pay a fair amount less over the period.
A) On a £30k car with £15k GFV, put £1k down and you’re paying interest on £29k initially, dropping to interest on £15k at the end, and also covering £14k depreciation (between the financed amount and GFV over the term.
B) On a £30k car with £15k GFV, put £10k down and you’re paying interest on £20k initially, dropping to interest on £15k at the end, and also covering £5k depreciation (between the financed amount and GFV) over the term.
Scenario B will have you paying a lot less interest as there is less lent money to be paying interest against.
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I've just played around with the configurator to see how various figures work out.
The car with extras cost £29,695 retail. I'm getting it cheaper through DTD but the deposit and their discount is too much for the VW configurator to use so I'll stick with the above figure.
£6k down....36 months....10k miles....£359.12 month.....GFV £14,580.90....paid over 3yrs....£12,928.32...plus GFV = £27,509.22
£6k down....36 months.....5K miles.....£324.62 month.....GFV £15,898.50....paid over 3 yrs....£11,686.32...plus GFV = £27,584.82
£6k down....48 months.....10k miles....£329.83 month.....GFV £12,532.50...paid over 4 yrs....£15,831.84....plus GFV = £28,364.34
£6k dpwn....48 months......5k miles.....£299.65 month.....GFV £14,126.40...paid over 4 yrs....£14,383.20...plus GFV = £28,509.60
So buying it outright makes no real difference at all as there is only £75 in it between the two figures over 36months although a bit more over 48months
What would bother me only putting down 5k of miles a year to keep the payments lower is come trade in time the car doesn't actually make the GFV as you have excess miles on it, as VW gave you a figure for 15k miles whereas you have done 30k miles.
Although in saying that, with my last 2 PCP deals, every salesman has always looked at my GFV and just given me slightly over it.
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I also found the 3 and 4 year figures were similar. I went for the 4 years to give me more options, didn't want to get to the end of year 3 and have to find the money to buy the car if I wanted to keep it longer. This way I can go in to year 4 if I want and just keep paying the monthly sum.
Don't agree about low deposit, this leaves you more vulnerable to negative equity and you pay more interest. Deposit of about 20% I reckon is the sweet spot.
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I've just played around with the configurator to see how various figures work out.
The car with extras cost £29,695 retail. I'm getting it cheaper through DTD but the deposit and their discount is too much for the VW configurator to use so I'll stick with the above figure.
£6k down....36 months....10k miles....£359.12 month.....GFV £14,580.90....paid over 3yrs....£12,928.32...plus GFV = £27,509.22
£6k down....36 months.....5K miles.....£324.62 month.....GFV £15,898.50....paid over 3 yrs....£11,686.32...plus GFV = £27,584.82
£6k down....48 months.....10k miles....£329.83 month.....GFV £12,532.50...paid over 4 yrs....£15,831.84....plus GFV = £28,364.34
£6k dpwn....48 months......5k miles.....£299.65 month.....GFV £14,126.40...paid over 4 yrs....£14,383.20...plus GFV = £28,509.60
So buying it outright makes no real difference at all as there is only £75 in it between the two figures over 36months although a bit more over 48months
What would bother me only putting down 5k of miles a year to keep the payments lower is come trade in time the car doesn't actually make the GFV as you have excess miles on it, as VW gave you a figure for 15k miles whereas you have done 30k miles.
Although in saying that, with my last 2 PCP deals, every salesman has always looked at my GFV and just given me slightly over it.
Just remember the GFV on these cars are very high and certainly more chance than ever that you may hand it back. The volume of GTD's being sold is astronomical so there will be hundreds of these cars on the market in 2-4 years time as they come back on contract hire/PCP deals.
Unlike Mk6 which was much more exclusive due to limit on allocation...................
At the end of the day if you plan to pay it off it doesn't matter what you set the mileage at. However I know there will be something else available in a few years time you will want to change it for : )
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That's true Lee.
Certainly putting a low mileage if your not keeping it is a false economy
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I decided to put 12,000 miles on it because it gives me options at the end. If you put a low mileage you are limiting yourself. At least, that is how I feel.
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I was looking to pay £15k cash £10k on a credit card (balance transfer). Reading on the forums that the credit card companies now only allow balance transfers to other credit card accounts ! (Many years ago, you could just get the transfer paid into a normal current account). I ran through the VW finance tool and was amazed at the rate of interest. I was advised a few months ago that the VW dealers only allowed a small amount via a credit card purchase. I have a few cards with 12 months interest free on purchases. I rang my VW dealer today just to check on the progress of my order and asked what would be the maximum that I could pay via credit card and to my surprise he said you can pay all via a credit or number of credit cards but they charge a 1.5% surcharge fee.
Now I am thinking a different strategy. Car cost £29,629 minus discount £26k already paid £1k deposit £25k outstanding have 3 credit cards that will allow 12 months interest free on purchases combined total of £25k+. 1.5% surcharge on £25k is £375.00 (12 months interest free). Open a Santander 123 account and deposit my £15k get 3% interest on balances upto £20k. I get back £450 interest over 12 months (paid monthly). Am I missing something ? Seems too good to be true.
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Won't the interest be astronomical after the 12 months? Or do you plan to fully pay it off? I looked at putting some of it on credit card, but it worked out cheaper to finance it.
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Easier to do a balance transfer some credit cards are doing 30 months 0%, 3% fee effectively just over 1% per year !. Have never paid credit card full rates only the promotional rates. Personal circumstances at mo buying a buy to let property and need the spare cash to do the property up and for unforeseen expenditure (as it seems to cost more than you originally planned) once it is done and rented out will be able to remortgage and pay off the credit cards.
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my dealer let me pay in full via CC with no fees. Got a shedload of cashback doing it that way.
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You will have to find a very flexible dealership to allow full payment or even significant payment on a credit card (or a series of credit cards). Most have a limit of less than £1000, enough to cover a small deposit or a largeish privately paid service repair bill. My local dealership had a strict policy of £800 max payment by credit card.
The credit card companies want a 3 to 5% chunk of every purchase you make on it. You bought something from Argos for £100 on your Mastercard? Argos saw about £96.50 of it. That’s £780 (3%) to £1300 (5%) margin lost on a £26k car that may have already been generously discounted.
With £26k loaded onto credit card debt, you might find your credit rating takes a bit of a hiding if you then plan to take out other loans to pay off the credit cards once the 0% period runs out, or they strictly stick to babalnce transfers rather than 0% purchases.
Noexcuses: Seems a lot of pissing about for £75 gain. Why not chuck your £15k cash at the car, owe £10k and put that £10k on the cards to enjoy 0%/1.5% paid over the year. If you’ve got £417 spare a month for payments then you could be in a position to only owe £5k after 12 months when the CC 0% deal on purchases is likely to have run out. You’re also far more likely to be able to get £10k on CC debt than £26k, and it will look better for you on your credit rating. If you start applying for umpteen cards all at once, your credit rating will go down for a month or 2 after every application.
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I think it depends on the dealer regarding credit cards. I've just financed my daughters first car a VW Polo from a VW dealership and they were happy to take the £7000 on credit card.
At the end of the day it was me paying the fee to do it at £104 so its no loss to them.
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I think I just have a dislike of CC's. My dad is an accountant and has always beat two things into me:
Mortgage > renting
Credit cards are the most expensive way to borrow. :)
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I agree with Monkeyhanger re the savings and hassle, The reason for the post was to let the forum know my experience and maybe of use to another member. The dealership I have ordered through is a large one and hence get a 1.5% credit card surcharge.
My personal circumstance's are that I may need the spare cash in the next couple of months as contingency in the purchase and renovation of the property. I was thinking of cancelling and reordering for September, The credit card option allows me flexibility and less stress. Car goes into build next week fingers crossed will get it towards the end of March.
Already have a 12% discount off list price do not have the cheek to ask for another 1.5% (I know the answer would be no !).
I signed up to the Experian credit report (30 day free trial and Just being nosey) and found to my surprise I have a credit rating of 999. It shows just about every bit of loan history and also shows that I have £32k of credit available (on credit cards) I have just been recently approved for a £70k buy to let mortgage as well. I spoke to Barclaycard yesterday to cancel my card as they had only given me a £2k limit several months ago. Ended up staying as thy offered to increase my limit to £4k and 12 month's interest free on purchases. I have never paid the full interest rate (bar a couple of weeks) on any credit card and would never take money out that I could not pay back within the interest free period. Otherwise it would be like borrowing from Wonga you would get stuck into debt for the rest of your life !
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My personal circumstance's are that I may need the spare cash in the next couple of months as contingency in the purchase and renovation of the property. I was thinking of cancelling and reordering for September, The credit card option allows me flexibility and less stress. Car goes into build next week fingers crossed will get it towards the end of March.
If things are that complicated, I would be questioning is it really the right time to be getting a new car as well?
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After some negotiation I was able to persuade my dealer to let me pay the deposits for both my car (£5k) and my wife's (£3k) on our Amex card.
He agreed to process £1k of each deposit without fee and charged me only 1.5% on the remainder.
We had the cash to pay for it, but by putting it on the Amex first (then paying it off immediately) we got a boat load of Avios as an added bonus :) The total fee really wasn't much, especially as we did it purely for the Avios.
I wouldn't advocate buying the car on a credit card though. Seems like really bad ju ju.
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There will never be the "right time", I have though long and hard and my finger has been on the cancel button a few times ! My options are the GTD as a company car, actual cost over 3 years is £18k (difference in salary). So really is a no brainer as a personal purchase, My insurance is approx. £340 per year and I am currently doing 8,000 miles per year.
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I agree with Monkeyhanger re the savings and hassle, The reason for the post was to let the forum know my experience and maybe of use to another member. The dealership I have ordered through is a large one and hence get a 1.5% credit card surcharge.
My personal circumstance's are that I may need the spare cash in the next couple of months as contingency in the purchase and renovation of the property. I was thinking of cancelling and reordering for September, The credit card option allows me flexibility and less stress. Car goes into build next week fingers crossed will get it towards the end of March.
Already have a 12% discount off list price do not have the cheek to ask for another 1.5% (I know the answer would be no !).
I signed up to the Experian credit report (30 day free trial and Just being nosey) and found to my surprise I have a credit rating of 999. It shows just about every bit of loan history and also shows that I have £32k of credit available (on credit cards) I have just been recently approved for a £70k buy to let mortgage as well.
Thats funny because I signed up to Experians 30 day free trial but only because I was refused for credit through Zopa and I couldn't understand why. Experian gave us a credit rating of 999 as well which is a bit coincidental I think! Anyway, you'd be better signing up to https://www.checkmyfile.com/ as they have 3 credit houses under their wing with Experian being one of them. Plus they are more detailed.
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Guys thank you, don't get me wrong I would not buy anything on the "never never". If I can't afford to buy it for cash then I can do without it. The last item I bought was a large screen TV cash price £1500 or £150 deposit and £75 per month over 18 months interest free. I now only have 5 payments remaining (£450) to pay off, and still have the original £1500 saved in my deposit account. That is interesting p3asa Will look into the www.checkmyfile.com once my 30 days trial is over thank you.
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Would there be any advantage on me going with either if I was going to keep the car after its term?
If you are seriously thinking about keeping the car after its term, then you may be best to consider other finance options as well that may (in fact are likely to :smiley:) offer a lower interest rate than PCP. The interest rate (APR) is the most important thing to consider IMHO.
One of the options is (a) a straight forward HP deal over five years and another is (b) a low finance scheme which is like PCP but you don't have the option of giving the car back to the finance company ... you either pay the balloon payment yourself or trade the car into a dealer and they pay it off.
My last two cars have been financed on (b) above and VW / Audi couldn't match the third party's APR or even get close. This may be different now though.
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If I was looking to keep the car 5 or 6 years, I would be paying off as much as I can afford now. If you can only just afford PCP rates as they stand, it'll be worse when you are driving in a 3 year old car that has no warranty coverage (unless you bought the warranty extension) and still owe more than half RRP on it.
Keeping the car for just 3 years, then PCP isn't a bad way to go if you can't buy it outright.
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This is one of the problems with longer term car finance of any type - you are paying the same amount after four years as you were after four months! At the start, you have a brand new car so all is well but spool ahead a few years and you are paying the same sum per month for a car that is decidedly less than new!
Never heard of a scheme where the repayments stepped down a bit as the car aged (say by £50 after 12 months and so on) and I guess they may not be workable - but this aspect of the schemes makes me want to change when the car is two years old...