VW Solutions Finance

toblerone24

Gazamundi wrote: »

With the Solutions plan, do you go straight to the dealer for this, or is it still available to you if you go through a broker like drive the deal or broadspeed? Glad you guys posted on this thread. Very informative for me as I'm about to use it with my local dealer.

I ordered a new Polo via a broker (orangewheels) a few weeks ago and have taken the Solutions PCP with £1k deposit contribution. All the main brokers (Dt, Broadspeed etc) seem to offer a discount on certain VW models if you do take out VW Finance. At the end of the day your order is placed with a VW Main Dealer so the finance should still be available to you. Hope this helps....

El_Capitan

Hi

I'm looking to buy a new Polo and was going to pay cash until I came across this thread.

Unfortunately I know nothing about loans so don't really understand how the interest savings/penalties are calculated if you want to settle early.

I understand if you buy the car on hire purchase (i.e. a loan through VW finance) if you settle early you avoid the full term interest (as you would if you settled a mortgage early) but I don't understand how the interest is built into the "solutions" lease plan? Is it in the final balloon payment or the monthly instalments?

Basically, I don't know how you work out how much interest you would be charged paying off the solutions plan after one or two payments and if this is less than the £1000 deposit contribution and £100 off a servicing plan.

Also, by paying it off early do you pay off all the monthly payments and the balloon payment? Or the amount you borrow on lease hire in the beginning? As you can see I'm very confused and don't understand lease hire at all!

Can anyone explain it to me? Thanks

trickytree1984

anotherbaldrick wrote: »

Withdraw or settle , you just pay the outstanding finance and you are not penalised for terminating the agreement , compre ? They also make it very easy, one quick phone call, they advise you the amount and confirm it, you send them the cheque and they send you a letter stating they have no further interest over the car and have notified the agencies accordingly . Could not believe they did it so swiftly.
You can do this at any time during the life of the agreement.

Nearly but not quite.

If you withdraw (within the 14 days) then you will only have to pay the balance to buy the vehicle (amount financed). This means you will not pay the acceptance fees or option to purchase fee. It will be as if the agreement never existed. You may also be liable to pay the interest accrued daily since the day after the 1st day of the agreement. Your SECCI will lay out the daily interest charge that you would be liable for to withdraw (or you can get a rough figure by doing Total amt payable - amt to finance / term / 30 * number of day into the 14 days)

If you settle early, you would have already paid the acceptance fee and you will have to pay the option to purchase fee to take ownership of the vehicle. Also, under the CCD (consumer credit directive) the date used to calculate a settlement figure is 28 days into the future, meaning you will not get and interest rebate on that 28 days. The finance company also has the right to add a further months worth of penalty interest to that, so the settlement date could be 28 days + 1 month in the future. That could be nearly £200 of interest depending on the interest rate and amount financed (it is in my case). The quote assumes that you pay any scheduled payment due before the calculated "reference date". Any of those due will of course be clearing capital and interest, further increasing your costs.

All in all, if you settle, you will still pay some interest and fees. If you withdraw, you will pay a very negligible amount of daily accrued interest within the 14 days.

One last point, you should also consider the impact of your credit file. Withdrawing with in 14 days will likely mean you never show as having taken a loan. Settling will show on your file. This could impact your eligibility elsewhere (but not likely)

trickytree1984

El_Capitan wrote: »

Hi

I'm looking to buy a new Polo and was going to pay cash until I came across this thread.

Unfortunately I know nothing about loans so don't really understand how the interest savings/penalties are calculated if you want to settle early.

I understand if you buy the car on hire purchase (i.e. a loan through VW finance) if you settle early you avoid the full term interest (as you would if you settled a mortgage early) but I don't understand how the interest is built into the "solutions" lease plan? Is it in the final balloon payment or the monthly instalments?

Basically, I don't know how you work out how much interest you would be charged paying off the solutions plan after one or two payments and if this is less than the £1000 deposit contribution and £100 off a servicing plan.

Also, by paying it off early do you pay off all the monthly payments and the balloon payment? Or the amount you borrow on lease hire in the beginning? As you can see I'm very confused and don't understand lease hire at all!

Can anyone explain it to me? Thanks

Its complex and simple at the same time

You would have been quoted a flat rate interest rate. That doesn't include fees and tells you the cost of borrowing the balance remaining each year. It doesn't include fees.

Interest is payable on the balloon just as it is the rest of the balance and as that balance is due for the whole term, it never reduces and you always pay interest on it right up until the last day.


To work out how much it is costing you, when you get a quote, you should always get a TAP figure (total amount payable). If you take away the amount to finance (which is the car price less any deposits, part ex and contributions) then that is the amount of interest you will pay. Now you know that figure, divide it by the term (e.g 35 months) and you will know the monthly interest amount.

Settlements are quite complex, but if you just multiple the monthly amount of interest by the remaining term, you will get to a rough estimate of the interest rebate due. Take that off the original TAP and the amount you have paid already, and that's your rough settlement figure.

papacino

Trebor16 wrote: »

Don't pay off the loan in one go as they can hit you with the rule of 78. But if you pay off the bulk of the loan and then pay off the final amount then the rule of 78 is based on the outstanding balance at the time of the settlement request. In other words, the amount of penalty interest will be much lower on a balance of £500 than it would if you asked for a settlement on the whole loan amount.

Just like to confirm that Trebor16's advice is still correct. I recently called VW Finance for a settlement quotation a couple of weeks before my first payment was due and was given a settlement figure nearly £170 more than the original amount of credit.

So I called them again and asked to make a lump sum payment instead, leaving just over £200 outstanding. They accepted this and adjusted my first monthly payment to become the final payment. This saved me nearly £130. The finance cost me just under £40.

thewombler

Sorry to necromance this thread, but I'm about to buy a VW and I'm struggling to understand how the early repayment works on the VW Solutions finance. I need to decide whether to take up their offer in order to get the dealer contribution and the 2 free services or just to finance it myself.

Below are the figures I've been quoted:

Balance of cash (vehicle cost - part ex and deposit and VW contribution) = £9,880
Add charges = £3,012
Balance = £12,892
Balance payable by 47 monthly rentals = £173.90
Final rental (balloon payment) = £4,718.70
Total amount payable = £15,402

So if I pay off a chunk early and then ask for a settlement figure, am I paying off the 'Balance of cash' (i.e. £9,880) or the 'Total Amount Payable' (i.e. £15,402)??

Thanks,
thewombler