PCP Advice

[p3asa]

I'm just about to pull the trigger and order a Mk7 GTD. Once I can decide on colour 

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?

[JBirchy]

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.

[Mk1Macca]

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.

[Beddie]

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..

[Mark V GTD]

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

[psimmoaz]

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.

[Jimmy Filth]

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.

[monkeyhanger]

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.

[monkeyhanger]

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.

[p3asa]

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.