When will I be offered a new car on PCP?
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It is but bear in mind if you VT you could find it hard to get another finance package as you will have a history of cancelling contracts before their normal end date.
Used finance is advertised at a high rate. If you negotiate, there are normally lower rates available to the dealer via Audi Finance. They don’t want to give you these as it reduces their commission and profit - but if they need to get a lower rate to close a deal, they can and will if there are any available to them...
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Before I took out my latest contract, I asked about this very question as I was looking to see what other finance options might be available. I was told that a franchised Audi dealer can only offer Audi finance for a new car, and the rates are set nationally. However, if others have been offered finance from a different company whilst sitting in a franchised dealer, then clearly it is going on.
Quite, but have heard or seen no evidence that Audi Finance can offer different apr's, but, as you state, if a non franchiased dealer can use different finance companies then it is obvious there could be flexibility...
On new cars, a franchised Audi dealer will 90% of the time use Audi Finance (VWFS), simply because of any finance incentives/deposit contributions/subsidised rates offered for the various models as part of each quarterly sales campaign by the manufacturer - these are then used alongside any dealer discounting of the car price to get you the deals you all want on new cars.
There may also be some reactive/impulse deals available from time to time for dealers to use to help sales (eg, 0% interest on a particular model for a limited time, etc)
It would make no sense to go to the likes of Blackhorse or other funders for new cars as Audi Finance will be offering the 'best deals' in general - the dealer in return receives a flat documentation fee/commission for each finance deal struck, which may differ from model to model - it may be something like £400 commission per car sold on finance, so not a huge earner for the dealership (many new cars are sold at a loss/minor profit in order to sell the unit - the biggest earner for a dealership is a volume bonus paid by the manufacturer for hitting set sales targets on overall units sold per quarter/year, etc)
However, let's say a customer is declined by VWFS for perhaps a poor credit record, affordability reasons, or VWFS simply deem that customer to be too high risk...a dealer is free to seek out any other finance provider (but who will not provide the large customer incentives/contributions offered by VWFS) - but their franchise agreement with Audi will have a clause to say that VWFS are to be offered each finance case first.
Used cars is a different ball game, as in general, the interest rates offered by VWFS (or any other lender used) will be unsubsidised so tend to be anywhere from 7% to 12% (but may offer 2 years servicing, extended warranty, etc) as part of those rates. The dealer is not lending the money - they are simply acting as a credit broker.
A franchised dealer will generally have some flexibility to reduce used car rates from the structure set out to them by VWFS (if they want to - depending on the economics of the whole transaction, they may have more profit in the actual car itself so can sacrifice a little commission, or the car may be losing them money, so will be seeking to recoup as much as they can from finance commission ), as VWFS will be paying them a commission based on the overall finance profit - if the dealer sells a car at a higher rate (hence more profit for VWFS), they will receive a higher commission
Some finance companies will have restrictions of the type of used cars they finance, depending on age, mileage, condition, etc - some may have a maximum age of car for PCP, or mileage, or anything that perhaps restricts finance availability
For this reason, franchised dealers will generally have 2-3 main prime lenders they use for used cars (VWFS, Blackhorse, plus several other large finance providers) and will also likely have a source of funding available for "sub-prime" borrowers for poorer credit records that can still buy a car, but have some type of blemished credit record - APR of 18% plus would not be uncommon for these type of borrowers as they are higher risk
For the record, dealers do not set the guaranteed future value of a new or used car on PCP - that is set by each finance company depending on age, mileage, usage, spec, etc as it is the finance company that is underwriting what they believe the future value to be - two different finance companies could offer the same APR on the same car, with the same mileage and up front deposit, but depending on what they estimate the future value to be, it could have significantly different monthly repayments
There may also be some reactive/impulse deals available from time to time for dealers to use to help sales (eg, 0% interest on a particular model for a limited time, etc)
It would make no sense to go to the likes of Blackhorse or other funders for new cars as Audi Finance will be offering the 'best deals' in general - the dealer in return receives a flat documentation fee/commission for each finance deal struck, which may differ from model to model - it may be something like £400 commission per car sold on finance, so not a huge earner for the dealership (many new cars are sold at a loss/minor profit in order to sell the unit - the biggest earner for a dealership is a volume bonus paid by the manufacturer for hitting set sales targets on overall units sold per quarter/year, etc)
However, let's say a customer is declined by VWFS for perhaps a poor credit record, affordability reasons, or VWFS simply deem that customer to be too high risk...a dealer is free to seek out any other finance provider (but who will not provide the large customer incentives/contributions offered by VWFS) - but their franchise agreement with Audi will have a clause to say that VWFS are to be offered each finance case first.
Used cars is a different ball game, as in general, the interest rates offered by VWFS (or any other lender used) will be unsubsidised so tend to be anywhere from 7% to 12% (but may offer 2 years servicing, extended warranty, etc) as part of those rates. The dealer is not lending the money - they are simply acting as a credit broker.
A franchised dealer will generally have some flexibility to reduce used car rates from the structure set out to them by VWFS (if they want to - depending on the economics of the whole transaction, they may have more profit in the actual car itself so can sacrifice a little commission, or the car may be losing them money, so will be seeking to recoup as much as they can from finance commission ), as VWFS will be paying them a commission based on the overall finance profit - if the dealer sells a car at a higher rate (hence more profit for VWFS), they will receive a higher commission
Some finance companies will have restrictions of the type of used cars they finance, depending on age, mileage, condition, etc - some may have a maximum age of car for PCP, or mileage, or anything that perhaps restricts finance availability
For this reason, franchised dealers will generally have 2-3 main prime lenders they use for used cars (VWFS, Blackhorse, plus several other large finance providers) and will also likely have a source of funding available for "sub-prime" borrowers for poorer credit records that can still buy a car, but have some type of blemished credit record - APR of 18% plus would not be uncommon for these type of borrowers as they are higher risk
For the record, dealers do not set the guaranteed future value of a new or used car on PCP - that is set by each finance company depending on age, mileage, usage, spec, etc as it is the finance company that is underwriting what they believe the future value to be - two different finance companies could offer the same APR on the same car, with the same mileage and up front deposit, but depending on what they estimate the future value to be, it could have significantly different monthly repayments
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I have definitely got reduced APR on cars, especially when I have pressed saying I am prepared to may x deposit and x p/m. One example was in 2013 and when I got a Q5 sline plus. Was looking at X3 at the time, but they wanted £11k deposit and £400+ p/m. Went to Audi and said may be interested in Q5, but deposit £3.5k and under £400 p/m. After a few rounds with business manager reducing interest rate, got that deposit and £397 p/m.
Maybe, but my wife and I have seen no impact after doing VT on her last two cars. Mainly down to the dealerships and experiences with them rather than the actual cars to be honest. No issues getting finance after either of them.
The guidelines state that there should be no negative impact to credit history as a result of exercising your rights to terminate early so I think you'd be able to go the legal route if they used that as an excuse for not providing finance.
There’s never any impact to credit. It would seriously impact on the dealers that are getting their customers to VT to put them in another deal. VWFS and their like would simply see customer numbers reduce. If they knocked back customer who VT then those customers would just go elsewhere. As there’s no record of a VT on a credit file. It’s invisible to everyone else.
Also take into account that under GDPR rules you have the right to be forgotten. Once your account is closed use your rights to ask VWFS to delete your record. Then even they won’t know you’ve VTd your last one!
Also take into account that under GDPR rules you have the right to be forgotten. Once your account is closed use your rights to ask VWFS to delete your record. Then even they won’t know you’ve VTd your last one!
I wish that Audi would, my previous car on their PCP is still showing up under 'view all agreements'...
If you want a new car at any stage in the PCP you'll pretty much always be offered one - however the negative equity will be baked into the cost of the new car. So if you owe say 2k more than what the car is worth, and you get a new 4 year deal, that 2k will be an extra 42 quid or so a month, with the finance interest rate added to that. Of course they won't want to do it too early on because the negative equity will make the monthly payments far too high, however unless you owe less than or equal to what the car is worth, you'll never get a "better" deal by swapping it.
Wife had a car on 3 years which had a load of excess miles due to a change of job mid-way through the deal. She was offered a new car but trading in the old one added about £2.3k over the term of the deal. Instead she VT'ed it at the first opportunity, paid the £1700 excess mileage and saved £500.
Obviously remember that as said above, the VT 50% point is on the total value of the car, so you won't hit it until probably a few months before the end of your term. Some people with a sufficiently high GFV never hit it before the end of the deal!
Wife had a car on 3 years which had a load of excess miles due to a change of job mid-way through the deal. She was offered a new car but trading in the old one added about £2.3k over the term of the deal. Instead she VT'ed it at the first opportunity, paid the £1700 excess mileage and saved £500.
Obviously remember that as said above, the VT 50% point is on the total value of the car, so you won't hit it until probably a few months before the end of your term. Some people with a sufficiently high GFV never hit it before the end of the deal!
The sale of cars on PCP where sales staff almost guarantee positive equity at the end of the term, is prolific. The amount of people I speak to who have bought cars recently from various manufacturers and been incorrectly told this is shocking.
People genuinely believe that PCP deals are some kind of investment and their deposit is safe and transferable to the next vehicle.
I suspect a looming investigation by the FCA judging by the percentage of vehicle sales purchased through PCP variants over the last couple of years that will be due to complete soon.
A shake up similar to that of the oversold mortgage endowment policies of a few years back which resulted in millions being paid out by financial institutions.
People genuinely believe that PCP deals are some kind of investment and their deposit is safe and transferable to the next vehicle.
I suspect a looming investigation by the FCA judging by the percentage of vehicle sales purchased through PCP variants over the last couple of years that will be due to complete soon.
A shake up similar to that of the oversold mortgage endowment policies of a few years back which resulted in millions being paid out by financial institutions.
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You didn't need to pay the excess miles, see link above.
TX.
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I can't believe that anyone would think a pcp on a car will result in any 'investment'. Having said that I have just had my car valued at a £1000 more than the current settlement figure with mine. It is well documented what and who PCP's are for and how the finance works so I doubt if any mis-selling could be proven. After all these deals get people into cars they could other wise not afford...
I *believe* there have been a couple of cases recently where finance companies have challenged that going loads over the mileage constitutes not having taken appropriate due care, and have won. So the "without financial penalty" clause doesn't apply. Otherwise everyone would just get a cheap 5k p/a allowance, hammer it with 20k, and VT it?
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Links to that? Most people unaware that you can do what you have stated and not pay the excess mileage so imho most people simply pay up.
TX.
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I don't think anything is set in stone, however I think it's a great area with no guarantee of winning. Unfortunately I had no inclination to go through a court case for it. 
See post #26 here: https://legalbeagles.info/forums/fo...es-voluntary-termination-excess-mileage/page2 which describes a non-win.
There are cases here (https://legalbeagles.info/forums/fo...ty-court-claim-mortimer-clarke-pls-help/page4) where people have won in court, but also people who have won then have a marker on their credit record as owing the amount.
This one went through the ombudsman (not legal, I know) and lost:
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=65660
I think it's "risky" to say the least. But good luck to anyone trying it
See post #26 here: https://legalbeagles.info/forums/fo...es-voluntary-termination-excess-mileage/page2 which describes a non-win.
There are cases here (https://legalbeagles.info/forums/fo...ty-court-claim-mortimer-clarke-pls-help/page4) where people have won in court, but also people who have won then have a marker on their credit record as owing the amount.
This one went through the ombudsman (not legal, I know) and lost:
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=65660
I think it's "risky" to say the least. But good luck to anyone trying it
