Golf Mk7 GTI Help with Finance options

[MXResonance]

Hello All,

This my first post on the forum, I have been browsing threads for a while now gaining knowledge about the Mk7 GTI, but I am hoping you can help me with some more detailed questions.

I am looking to buy MK7 GTI in the next few weeks, but I am unsure how to go about it, please see my circumstances below -

Trading in an Audi A4 which is been valued at around 7000 by the dealer
I have shares coming out of my company in August which will be worth around 18k

Now my issue is that I would prefer to get the car via finance either PCP or Hire Purchase as it would help my manage my monthly outgoings due to getting a mortgage a year ago and I don't want to spend all my share money on buying the car outright.

I would ideally like my monthly cost to be around £300, but the quotes I have been getting are more than that as there is a limit to the amount of deposit I can put down (£7000 for PCP), In an ideal world I would like to put down a much higher deposit to use some of my share money up, but still leave some of it behind. Does VW offer a finance solution which would suit me?

I would rather get the a second hand car, but would go for a new car if I was given a good offer, I also live in the South East of England if that makes a difference.

Any advice you can offer me I would greatly appreciate.

Thanks

[monkeyhanger]

VWFS will not offer you terms based on less than 70% of the RRP of your car being financed. If you want a £27k GTI on VWFS PCP, you will have to have £18900 on finance.

If you get 12% discount (£3240) and the £1250 deposit contribution on a £27k GTI then you'll only be able to add in £3610 of your own money to get to your £8100 "deposit".

So you could stick just over half of your p/x money in the bank, along with all of your shares money, and be paying around £280 a month over 36 months. Your money will earning £50pm in a Santander 123 current account (3% on up to £20k balance).

Alternatively, you have the means to buy it outright - 12% discount, £1250 deposit (take up the PCP and then settle within 14 days cooling off period for financial products) and you'll have about £2500 change from your £18k + £7k p/x. As far as the mortgage company is concerned when assessing affordability, that's £280 a month NOT committed to going out of your account.

Realistically your GTI will be worth £14k in p/x at 3 years old, so it will have lost £8500 vs the £22500 that you paid after discount and deposit contribution. Over 36 months, you'd need to put in about £230 a month to cover that depreciation (£236 a month on the assumption it makes no interest). So buy outright and the car will cost you £236 a month in depreciation, buy on PCP at £280 a month and make £50 a month in interest, but you will have already lost £3610 of your own money in the initial deposit, but the car will have around £1500 p/x equity.

Taking all that into account, you will save about £2100 on a £27k GTI by buying outright vs PCP over 3 years. Cash buys are also less hassle to sell privately at any point in time if you get itchy feet.

[JonnyG]

You don't have to get your finance through VW. 

Just like with GAP insurance you can usually get better finance deals with 3rd parties.  I have always found better deals with Clydesdale Bank's low payment scheme  (lower APR %  and lower monthly payments than VW and Audi).  Having said that they (VW) have been fairly good over the last couple of years.

I would look elsewhere and keep an eye on the lowest APR %.

This site lets you work out an alternative to VW and you can choose the deposit amount to suit you (not VW Finance  )   :   

http://www.finance4cars.co.uk/PCP_Car_Finance_Calculator/Car.jsp?showOptionsTab=FALSE&selectedPeriod=36&selectedMileage=10000&enteredDeposit=10000&firstTime=FALSE&seenOptionsPage=FALSE&100188=on&64626=on&64572=on&48802=on&12003=on&87266=on&83789=on&14495=on&28883=on&67944=on&19624=on&109018=on&selectedManufacturer=VOLKSWAGEN&selectedModel=GOLF+ESTATE&selectedVariant=2.0+TSI+R+5dr+DSG

[Snooze]

I got my car through VW on leasehire, my 3rd as it happens. I put down a £3k deposit and I pay just over £300 a month.

[JonnyG]

Yes, personal leasing is becoming very popular these days !

Not too bad for a GTI :

http://www.nationalvehiclesolutions.co.uk/Volkswagen-Golf-5-Door-Hatch-2.0TSI-220-GTI-Personal-Lease/37160

[monkeyhanger]

Yes, personal leasing is becoming very popular these days !

Not too bad for a GTI :

http://www.nationalvehiclesolutions.co.uk/Volkswagen-Golf-5-Door-Hatch-2.0TSI-220-GTI-Personal-Lease/37160

Spread that deposit and arrangement fee throughout the 2 year term and it's £343 a month, and only 5k miles PA. Factor in standard VW penalty mileage terms (7.2ppm) and you can add £30pm.

Compare that with a bare bones GTI on a 3 year PCP with 12% discount. The discount as "deposit" leaves you with 35 x £394 (equivalent to £383 per month x 36 months). Factor in that you'll likely end up with £1500 equity to p/x again (£42 a month) and you're talking a true £373 a month leasing on 10k miles PA, vs a true £341 per month for PCP, albeit with a term a whole year longer.

On those terms i'd rather PCP.

[caprigreen]

VWFS will not offer you terms based on less than 70% of the RRP of your car being financed. If you want a £27k GTI on VWFS PCP, you will have to have £18900 on finance.

If you get 12% discount (£3240) and the £1250 deposit contribution on a £27k GTI then you'll only be able to add in £3610 of your own money to get to your £8100 "deposit".

So you could stick just over half of your p/x money in the bank, along with all of your shares money, and be paying around £280 a month over 36 months. Your money will earning £50pm in a Santander 123 current account (3% on up to £20k balance).

Alternatively, you have the means to buy it outright - 12% discount, £1250 deposit (take up the PCP and then settle within 14 days cooling off period for financial products) and you'll have about £2500 change from your £18k + £7k p/x. As far as the mortgage company is concerned when assessing affordability, that's £280 a month NOT committed to going out of your account.

Realistically your GTI will be worth £14k in p/x at 3 years old, so it will have lost £8500 vs the £22500 that you paid after discount and deposit contribution. Over 36 months, you'd need to put in about £230 a month to cover that depreciation (£236 a month on the assumption it makes no interest). So buy outright and the car will cost you £236 a month in depreciation, buy on PCP at £280 a month and make £50 a month in interest, but you will have already lost £3610 of your own money in the initial deposit, but the car will have around £1500 p/x equity.

Taking all that into account, you will save about £2100 on a £27k GTI by buying outright vs PCP over 3 years. Cash buys are also less hassle to sell privately at any point in time if you get itchy feet.

I purchased my Car for cash. 12% discount through the drive the deal. Missed out on the £1250 discount as not offered at the time.  If buying for cash your dead right people must take advantage of the loophole of taking PCP and the discount then cancell within the 14 day cooling off period. What a winner that is 
I was speaking to a Vw dealer the other day who insisted that buying through PCP was a the way to go. Its quite clear that its not cheaper than cash over 3 years overall but may suit personal circumstances . The dealer said if I came into to see him he would explain. If he was not 300 miles away I would have taken up the challenge .

PS the 3% on the 123 santander account is taxable

[MXResonance]

Hello All,

Thank you for all your comments and information, you have been a great help!

A few questions though, reading through the information it seems that its all geared up for a brand new GTI, lets say I wanted to buy second hand through a dealer would I still be able to get the same PCP deals, or do they sting you with higher APR as they want you to buy new?

Thanks

[monkeyhanger]

Hello All,

Thank you for all your comments and information, you have been a great help!

A few questions though, reading through the information it seems that its all geared up for a brand new GTI, lets say I wanted to buy second hand through a dealer would I still be able to get the same PCP deals, or do they sting you with higher APR as they want you to buy new?

Thanks

Higher APR. somewhere between 6 and 7% new generally and on a used one 10% is the norm. They're less flexible on discounting used ones too - there's no way you'll get 12% off the sticker price of a nearly new VW at a franchised dealership.

The waits aren't nearly as long for a GTI as they are for an R or GTD at the moment. Get a new one ordered! 

[MXResonance]

Hello All,

Thank you for all your comments and information, you have been a great help!

A few questions though, reading through the information it seems that its all geared up for a brand new GTI, lets say I wanted to buy second hand through a dealer would I still be able to get the same PCP deals, or do they sting you with higher APR as they want you to buy new?

Thanks

Higher APR. somewhere between 6 and 7% new generally and on a used one 10% is the norm. They're less flexible on discounting used ones too - there's no way you'll get 12% off the sticker price of a nearly new VW at a franchised dealership.

The waits aren't nearly as long for a GTI as they are for an R or GTD at the moment. Get a new one ordered! 

Thank you Monkeyhanger, so far most of my friends and family have said I should go new as well and the build times do seem pretty good at the moment after reading around on the forum.

You mentioned most dealerships offers a 12% discount off the sticker price, is that on top of the dealer deposit contribution of £1250 with the PCP plan? So for example if the car costs £30000 with options etc I should be able to get £3600 off the price?

I live in the South East of England and the nearest dealer to me is a Motorline VW.

Thanks