GolfGTIforum.co.uk
Model specific boards => Golf mk7 => Topic started by: clarky92 on 27 December 2017, 18:07
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3 year pcp with vw on my 7.5 GTI
Started a new job and my mileage agreement is too high now, as in Im paying for mileage Im not going to use.
Can you amend this during a pcp contract? I would like to drop the mileage amount down a notch. Not come across this before, anyone know?
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I tried to increase my mileage on a previous PCP when my job changed and I was smashing through the allowance... VW Finance were having none of it! Still worth a call to them though as reducing may well be different.
I guess it also depends what you think you will do with the car at the end? In theory if you trade in, you will have more equity than you would have had otherwise as you will have paid down the balance quicker. If you pay the balloon, the payment should be a better deal for a car with lower mileage than expected. If you hand the keys back though, you've wasted the extra monthly payment for the higher mileage allowance.
Good luck!
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As Andy says, best way forward depends on what you were planning to do at the end of the term.
Lower monthly payments will result in a higher balloon payment at the end. If you buy the car, being above or below the contract mileage has no effect.
If you're trading in, in theory a lower mileage car should be worth more and would give you more equity than a higher mileage car, but there is no certainty your car will even be worth the GMFV regardless of its mileage.
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Forgive my ignorance on this matter but isn't the GFV is what it says, a guaranteed value. I had various PCP's some years ago, when they were in their infancy, and when it came to trade in my cars the GFV was always honoured plus a bit extra to encourage you to takeout another car.
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Thanks for the replies, called VW and the answer was no.
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Forgive my ignorance on this matter but isn't the GFV is what it says, a guaranteed value. I had various PCP's some years ago, when they were in their infancy, and when it came to trade in my cars the GFV was always honoured plus a bit extra to encourage you to takeout another car.
If the car is worth more than the GMFV at the end of the term, then in theory you have some equity in the car towards your next one. But if it's worth less than the GMFV then you get nowt. Same if you walk away at the end of the term without buying a new car, you get nowt.
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Mileage is only of relevance to VW Finance if you hand the car back at the end of the term, as they will charge you extra based on a p.p.m figure, though it doesn't work the other way round!
You should NEVER simply hand back the car at the end of a PCP, unless your personal circumstances make it unavoidable. You will always do better by paying off the balloon and then deposing of the car by your chosen method (sale or p/x).
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You should base your decision on whether to walk away or not on the actual value of the car.
If it's worth less than the balloon payment (or GMFV), then it makes little sense to purchase unless you're planning on keeping it for a while. If you're planning on moving it on quickly, why make a balloon payment of say £14k, if in reality it's only actually worth £13k...or even less?
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Mileage is only of relevance to VW Finance if you hand the car back at the end of the term, as they will charge you extra based on a p.p.m figure, though it doesn't work the other way round!
You should NEVER simply hand back the car at the end of a PCP, unless your personal circumstances make it unavoidable. You will always do better by paying off the balloon and then deposing of the car by your chosen method (sale or p/x).
Not always. My wife has a Smart ForFour and the balloon is £6500 as of December 2018, the car is just about worth that now so likely to be worth £5500 at best this time next year. It will be handed back without doubt. I agree that this may be an exception to the rule as I've never done this before, although I have heard it's quite common with Mercedes as they set the GFV high and depreciate a lot.
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Mileage is only of relevance to VW Finance if you hand the car back at the end of the term, as they will charge you extra based on a p.p.m figure, though it doesn't work the other way round!
You should NEVER simply hand back the car at the end of a PCP, unless your personal circumstances make it unavoidable. You will always do better by paying off the balloon and then deposing of the car by your chosen method (sale or p/x).
Not always. My wife has a Smart ForFour and the balloon is £6500 as of December 2018, the car is just about worth that now so likely to be worth £5500 at best this time next year. It will be handed back without doubt. I agree that this may be an exception to the rule as I've never done this before, although I have heard it's quite common with Mercedes as they set the GFV high and depreciate a lot.
That's a fair point, but most of my experience of PCP's has been with VAG cars and I think they tend to give realistic future values. I suspect Mercedes up the GFV in order to get lower monthly payments, which is often what attracts buyers more.
I have always been able to sell cars at the end of the their term for more than the balloon payment, sometimes by only about £1,000, but once by over £6,500 more (Skoda Yeti). Usually I expect to get between £2,000 and £3,000 over, but I generally treat my cars well and make sure they are well presented for sale.
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Arnold makes some interesting and relevant points. Certainly I would have agreed with him 100% before my last PCP experience:
Golf GTD (DSG) with about 3k of options on it (Pro-nav, Dynaudio, Winter pack , camera etc)
Bought through drive the deal for 26k (13% disc) and financed over three years
Sold after two years for 17,750 (the car was virtually as new apart from tire wear). At that point the finance settlement figure was 19,250 so I had to pay 1,500 to get rid.
Now had I kept the car for the full three years the final payment would have been 16,041. Would I have got that in a private sale - maybe, but not sure I would.
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I think a lot of the pcp problems I've seen described are related to the gfv figure. Sure if they make it too high you'll pay less monthly but then discover that you have no equity at the end. It all is effectively the same, there is no such thing as a free lunch but people are perhaps shocked when it "goes wrong"
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I think with the value of diesels in free fall, VAG and many others will be getting many more cars than usual handed back over the next few years.
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I sold the GTD in March of 2016 actually - still miss it.
In my view what actually sunk my PCP was the optional extras on the car which upped my initial cost by 3k but probably had negligible difference in actual value come sale time. To be fair, having those options on the car (and the late lamented Carbon Grey paint) made sure the phone kept ringing so the car shifted inside a week or so.
It would be interesting to run the figures on the same car sans options.