PCP or cash

[pmuir]

Hi,

I've always bought cars outright before, so not very familiar with PCP. I'm thinking about getting an Enyaq, and did a test drive today (liked it a lot). I was talking to the sales person afterwards, and he mentioned that with the PCP there was a £750 deposit contribution. This is (obviously) appealing, but it's not enough to cover the ~5% interest on the PCP over the 24 month minimum term, or even really reduce the interest to below what I can safely achieve in a savings account.

Clearly the answer is to settle the PCP in (much) less than 24 months. I can't find the Skoda PCP terms anywhere on the internet, so wondering if anyone knows if it is possible to settle the PCP within a few weeks/couple of months, and whether there is a penalty to do this (similar to a fixed term in a mortgage)? (I'll clearly read the small print and can hopefully work it out myself, but as they say - forewarned is forearmed!).

Thanks!

Pete

[MikeJL]

Yes, you can repay the loan at any time. They can’t charge more than two months interest (possibly less). They are also obliged to tell you this when taking the loan.

I did this 3 years ago & asked to repay the loan the day after the car was delivered. It’s important that you ask to repay, not cancel. If you cancel they can ask for their contribution back.

I’m not aware that the rules have changed in the last 3 years, but it’s worth double-checking before you commit.

Can’t see the offer on the Skoda website. Is it something your dealer is offering?

[pmuir]

Thanks @MikeJL - thats very useful to know. I'll definitely double check.

My local dealer is Lookers Guildford - and this was what the sales person I spoke to told me. I don't have anything written down - I guess I'll find out more in about a week once I make a decision whether to go ahead or not. I'll post back with any info.

[scratch113]

There is normally a minimum term applied to gain the benefit of the contribution (£750 in this case), but it's normally something like 3 months - your dealer ought to be able to get this information for you if you ask the right question. Otherwise ask for a contact number for VWUK Finance and call them - they will definitely be able to tell you. If you try to pay it off before the minimum term then they will add the contribution back on to the amount you have to pay to clear the finance.

I had a previous Boss who bought a 5 series estate a few years back and was going to pay in cash until he realised that there was a £3000 contribution with a minimum term of just 3 months on the finance - sign up to the PCP and then pay it off at the earliest opportunity if you can afford it. Definitely works out cheapest!

[Chris__M]

My dealer also offered the £750 towards PCP.

Although I could have gone for a cash sale, it would have made a large dent in my savings. As I am retiring soon, I decided on a PCP with a large initial deposit. This meant the interest wasn't terrible, the monthly payments will be small but - significantly - it moved the final £14k until after my retirement. As I can take up to 25% of my fund in cash, tax free, on retirement, that will make it a minor payout from the new increased savings.

As it happens, the car is slightly later than planned, and my retirement looks to be happening earlier, so the gap between the two may now be only a matter of months, not years. So I may find myself paying off the PCP early; but only if it actually saves me money - I'm ok with the costs as they are.


Of course, the PCP also gives me the option of letting it run, and then changing my car when it runs out. Although I do plan on the Enyaq being a long-term car, having that option on new technology is attractive in itself.

[RichR]

Us too. We have enough money in savings to buy outright as we have done with every car we've owned in the last 25 years (all second hand), but preferred the option after 4 years to have a known resale value if we chose not to keep the car longer. Overall it doesn't work out much more expensive, and means we're only drawing a small amount out of savings should we need them in an emergency for something else.

The £750 contribution and 4.9%APR for the Enyaq are a bit hidden on the Skoda website as they'd prefer more people to take up a lease agreement at the moment. But you can find it on most dealer websites, for example: https://www.dmkeith.com/skoda/offers/enyaq-iv-suv

[Goaty]

Slight side issue but possibly relevant; none of us know how well the battery will still perform after 4 years of use, so might be worth bearing this in mind if part of the financial calculation includes wanting to keep the car at the end of the term.

[Deleted User 368]

Hi, same here; retired and did not want to use money from hard earned savings and in the fast moving EV world I wanted the comfort of a known value in 3 years time. Paid £500 deposit and told it was refundable up to point of build and if I want to pay it off the finance company can only charge 30 days interest. PCP deal not obvious at Skoda, but easily found with a google search. Told dealer I want it on a 22 plate anyway, he estimated a 30 week build, so I am set for a long wait, but have time to save a few months payments!!

R

[Chris__M]

None of us know, with certainty. But it is probable that the battery will last as long as the car.

[RichR]

I'm pretty sure degradation isn't as much of an issue now, and the battery is guaranteed for 8 years, which is probably about what most people will keep the car for. The pack also has a good margin above and below the usable section, and both the cells themselves and the battery management units are so much more advanced than they were even 5 years ago. My 2015 Outlander is still showing 97% SOH at almost 100,000 miles, and regularly gets me the 20-25 miles of EV range it had when it was new.

But yes, in 4-5 years time who knows what range similar sized EVs will have? There's every chance VAG will release a revised MEB platform with higher capacity batteries and even faster charging. So we may well see an Enyaq 120 and 150, with over 600 miles of range