Can i change my finance from HP to PCP?

MarkVw2017 · Jul 7, 2018

Dear All,

Ordered my beach two weeks ago and got approved on a HP 10 year finance deal and paid £1k

I have just seen on their website and been told by a member, that the new deal VW are doing on a California via pcp over 4 years is a £2,000 deposit contribution, 2 free services and an interest rate of 5.3% interst.

Thats a huge difference over my 10 year HP deal with no deposit contribution, no free servies and an interest rate of 7.4%

Ive only been approved on the HP deal and not signed any finance package yet, so can i ask to change it to PCP or have i missed thr boat because i have signed the order form?

Any advice would be gratefully received as it could save me, and others who are considering vw finance literally thousands of pounds!?

Bellcrew · Jul 7, 2018

MarkVw2017 said:
Dear All,

Ordered my beach two weeks ago and got approved on a HP 10 year finance deal and paid £1k

I have just seen on their website and been told by a member, that the new deal VW are doing on a California via pcp over 4 years is a £2,000 deposit contribution, 2 free services and an interest rate of 5.3% interst.

Thats a huge difference over my 10 year HP deal with no deposit contribution, no free servies and an interest rate of 7.4%

Ive only been approved on the HP deal and not signed any finance package yet, so can i ask to change it to PCP or have i missed thr boat because i have signed the order form?

Any advice would be gratefully received as it could save me, and others who are considering vw finance literally thousands of pounds!?

I would have thought the signature is a significant requirement of a contract, if the HP was arranged through the dealer there would be a lot of commission involved which could affect any discount that was offered to you. The PCP deal would also give him some commission, don't ask don't get.

MarkVw2017 · Jul 7, 2018

Bellcrew said:
I would have thought the signature is a significant requirement of a contract, if the HP was arranged through the dealer there would be a lot of commission involved which could affect any discount that was offered to you. The PCP deal would also give him some commission, don't ask don't get.

Hello,

Thank you, but only signed the order form, not signed any finance agreement yet, only been provissionally approved, the finace documents dont get signed until a month before it starts to get built?

Borris · Jul 7, 2018

If you haven't signed the contract then you are free to choose.

MarkVw2017 · Jul 7, 2018

But @Bellcrew has got me thinking? will i lose the 8% discount i have squeezed out of the dealer if moving from finace packages from hp to pcp (as assuming finance is where they actually get most of their profit from). I dont want it all to fall through by messing the dealer about?

Borris · Jul 7, 2018

MarkVw2017 said:
But @Bellcrew has got me thinking? will i lose the 8% discount i have squeezed out of the dealer if moving from finace packages from hp to pcp (as assuming finance is where they actually get most of their profit from). I dont want it all to fall through by messing the dealer about?

I really don't know which system they make more profit from but I suspect that they do quite nicely out of PCPs. I wouldn't worry about messing the dealer about as you are the customer and therefore always right. You are buying the product and service so it has to be right for you. I doubt if they will be bothered as this is a decision that many purchasers have to make and anyway if they are there are plenty of other dealers that will take your order.
Insist on keeping the 8% and see what happens. What's the worst that could happen?

MarkVw2017 · Jul 7, 2018

Thanks, will send them an email now to see what they say,

ArunAlec · Jul 7, 2018

Most finance deals have a cooing off period, so the borrower can pull out if they change their mind.

Stoneybroke · Jul 8, 2018

You haven't started the finance deal yet as you don't have the vehicle. There will be a raft of other papers to sign before you take possession, all that's happened is pre-approval (credit checks, etc.)
The dealer gets the profit on the vehicle whatever, and may also get commission on the finance package. They want the sale, so negotiate.

Elmo3 · Jul 8, 2018

If VW have launched a program with a £2K deposit contribution and 5.3% rate (it says 5.9% on the VW website), the dealer finance commission will be much lower than your deal. The economics of the deal will therefore change and 8% discount may not be available (I’m not up to speed on current discount levels). Stick to your guns on the discount and ask for the latest finance promotion to be applied if that’s what you want. If they won’t play ball you may be better off walking and ordering from another dealer who will.

7.4% is expensive for presumably a good credit on a secured asset. First Direct will lend £30K over 7 years at 3.3% unsecured! This would save you thousands. The optimum deal would be to get the 8% discount, the additIonal £2K finance support and the free services, then immediately settle the expensive VWFS debt (should be no penalty but check) with a cheaper facility (such as personal loans).

Borris · Jul 8, 2018

Just a thought. Have you tried a Building Society. If you have a mortgage some members have financed their vans at a much better interest rate by extending thier mortgages. I don't know any more than that about this method and it might be a daft idea but might also be worth a look.

Elmo3 · Jul 8, 2018

Borris said:
Just a thought. Have you tried a Building Society. If you have a mortgage some members have financed their vans at a much better interest rate by extending thier mortgages. I don't know any more than that about this method and it might be a daft idea but might also be worth a look.

It’s not daft at all, as long as you are financially disciplined. An offset mortgage is the perfect facility for this.

Borris · Jul 8, 2018

Elmo the Ocean said:
It’s not daft at all, as long as you are financially disciplined. An offset mortgage is the perfect facility for this.

Well if it is possible, I can certainly see that method being much more affordable for some buyers and you'd effectively own the van from day one. I certainly wouldn't have suggested this method to buy an ordinary car, unless it was a classic but a California holds its value so well that it starts to make good sense.
Spread over the remaining term of the mortgage could make the repayments much much cheaper than straight finance, a bank loan or PCP.
However as this would enable the buyer to pay with cash, I'm not sure that the dealers would be so keen to offer big discounts. Still if they want the sale they should.

Elmo3 · Jul 8, 2018

Borris said:
Well if it is possible, I can certainly see that method being much more affordable for some buyers and you'd effectively own the van from day one. I certainly wouldn't have suggested this method to buy an ordinary car, unless it was a classic but a California holds its value so well that it starts to make good sense.
Spread over the remaining term of the mortgage could make the repayments much much cheaper than straight finance, bank loan or PCP.
However as this would enable the buyer to pay with cash, I'm not sure that the dealers would be so keen to offer big discounts. Still if they want the sale they should.

The trick is to utilise the cheapest debt facility you can but religiously pay it down every month at the level of a ‘normal’ deal. You will then be rid of the debt much quicker at a much lower overall cost. As I said in my earlier post, take the VWFS incentives then settle it immediately from a cheaper debt facility. An offset mortgage is ideal.