Is this a fair deal?

igrieveuk

Hi,

About to purchase a new car but the various options is proper hurting my head now, I am so stuck on the fence its quite ridiculous.

I have been offered a skoda fabia 1.2 tsi SEL on pcp for the following amount

Cash Price 13989 Part exchange/deposit contribution 2650 (£500 from Skoda) Balance 11339 Balloon 6121.80 36 months @ £195.64 Total payable 15814.84

I was torn between this and a polo but getting far more car with the skoda, I guess I'm looking for the reassurance its a fair deal.

Thanks.

scotsbob

If I am reading your figures correctly, you are borrowing £5218 for 3 years and repaying £7020 = £1802 in interest. Can you borrow that amount from a bank/building society/credit union etc at a lower rate of interest?
Many banks will lend that amount with for only £155 per month for 36 months, check out Moneysupermarket.

igrieveuk

Just checked my bank its coming up with £164 pm

But is that the correct way of looking at it, I would of thought you would deduct the balloon from the cash price to see how much your actually spending over the term?

Might be wrong I am very green to all this way of buying a car.

AdrianC

The car is £13,989.
You're paying £2,650 up front - leaving £11,339.
£6,121.80 of that is effectively deferred until three years time, at zero interest - leaving £5,217.20 to be financed now.

Of course, it's not quite as simple as "Well, I could borrow that cheaper elsewhere", because there's various other incentives (£500 deposit contrib, balloon) tied in to the finance deal you're looking at. But it's as good a basis as any to try to beat the dealer down on the finance.

verityboo

AdrianC wrote: »

The car is £13,989.
You're paying £2,650 up front - leaving £11,339.
£6,121.80 of that is effectively deferred until three years time, at zero interest - leaving £5,217.20 to be financed now.

Of course, it's not quite as simple as "Well, I could borrow that cheaper elsewhere", because there's various other incentives (£500 deposit contrib, balloon) tied in to the finance deal you're looking at. But it's as good a basis as any to try to beat the dealer down on the finance.

The PCP deal would mean borrowing 11339 and paying interest on the whole amount. Nothing is deferred at zero interest and the paperwork clearly shows what interest is paid etc. They would repay 6121 + interest over the 3 years leaving the balloon payment outstanding

To buy the car by other means the OP would need to find or borrow 11339

As has been mentioned there are other benefits to a PCP with the deposite contribution and you are protected to some extent if the car depreciates more than expected as the car can be handed back if it is worth less than the balloon payment

igrieveuk

verityboo wrote: »

The PCP deal would mean borrowing 11339 and paying interest on the whole amount. Nothing is deferred at zero interest and the paperwork clearly shows what interest is paid etc. They would repay 6121 + interest over the 3 years leaving the balloon payment outstanding

To buy the car by other means the OP would need to find or borrow 11339

As has been mentioned there are other benefits to a PCP with the deposite contribution and you are protected to some extent if the car depreciates more than expected as the car can be handed back if it is worth less than the balloon payment

That is how I see it the math in my head, I would probably trade in for a new car in 3 years but I do like having the option to purchase if I do want to keep the car.

OddballJamie

£9k over three years is a lot for a Fabia. There's a lease deal on the Octavia vRS TDi that works out £6k over two years.

Surely leasing would be cheaper.

BTW £12,700 cash price through a broker.

igrieveuk

I know I could get a more car for similar monthly payments but I really do not need a diesel i do about 8000 miles a year and 95% of that is city driving in traffic. I'm happy with small cars for my current situation.

Now the £12700 price you got through a broker, is that for the 1.2 tsi 90 bhp SEL spec? I ve also got just shy of a grands worth of options added including paint so £13989 - £1000 isn't too bad and dealing with a local franchise is a bonus.

OddballJamie

Is this it?
http://www.parkers.co.uk/cars/for-sale/search/new/skoda/fabia/hatchback-2015/12-tsi-se-l-5d/66821/_/sort/lowest/rpp/10/page/1/

For all we know the broker could be using your local dealer or one 100 miles away.

Worth using as a negotiation tool at the least.

I get one you're saying about petrol, can't stand diesel myself as I'm a city driver. Just seems a lot for the car, I've seen bog standard Ibizas for £8.5k.

Whats the price difference with the Polo? As the depreciation should be lower, it might work out better on PCP.

GJ_WRX

For what it's worth I know a lot about Skodas and the Fabia is an excellent car and as mentioned above you get a lot more for your money when compared to other VW group cars. I've driven one and it feels very similar to my Octavia on the road and in terms of build quality.

Also I agree with the above when it comes to the PCP, if you went elsewhere to finance you would need to finance the full amount including the balloon and would not get the manufacture deposit. You could look at financing it via a standard loan over 5 years and after 3 trade it in and use the trade in value to cover the outstanding value of the loan. This would keep you payments down and in effect work in a similar way to a PCP.

If it was me I'd go for the PCP for ease and security of guaranteed future value.