Residual values?

[skodarog]

as these cars are starting to come up to 2.5-3 years old, and no doubt started to get traded in, has anyone with PCP's found they're getting offers higher than the final payment on their PCP deal?

 

i took mine out over 42 months, and is due to expire May 2019.  My Voluntary Terminiation point is May/June 2018 and i am seriously considering getting rid now as i don't think the additional 12 months payments until May 2019 will put more equity in the car. if there is a chance that i could have a sizeable amount of equity in the car, i might be tempted to keep for another 12 months, but it would cost me £4200 for the next 12 months which i doubt is unlikely to turn into equity. then i have a final payment of £12k.

 

thanks in advance.

[eurotraveller]

Sorry, I don't have any knowledge to impart, but, oh boy, I bet this will be one big thread!

 

For what it's worth, my bet on residual values: disappointing to say the least, like pretty much everywhere else in this flooded market.

[skodarog]

3 minutes ago, eurotraveller said:

For what it's worth, my bet on residual values: disappointing to say the least, like pretty much everywhere else in this flooded market.

thats what i thought...

i got a quote on a new Kodiaq and Sportline 4 months back and was unpleasantly surprised trade in price was already £1000 under the finance at that time. hence why i'm thinking its daft to stick another £4000 into the car when i am unlikely to get any of it back. 

 

(i initially thought that 2nd car prices would rally a bit after the £ dropped against the Euro as i thought new car prices would increase a bit - but that does appear to have happened).

[SurreyJohn]

My hunch is residual value is going to depend heavily on mileage done, and which fuel type

 

Will be interesting thread

 

https://usedcars.skoda.co.uk/en/used-cars/skoda/model-search?country=gb&lat=51.291179656982&lon=-0.35475999116898&unitSystem=imperial&currency=GBP&customer=&mcategory=all&zip=KT22&radius=8047&preis_ab=&preis_bis=&gears=&km_ab=&km_bis=&gas=&manufacturer=54&reg_date_from=2014&reg_date_to=2015&doors_grouped=&consCombined_from=&emission_to=&cylinderCapacity_to=&kw_from=&trim=1204%3ABlack+Edition%3BElegance%3BGreenline%3BLaurin+%26+Klement%3BOther%3BOutdoor%3BS%3BSE%3BSE+Drive%3BSE+L%3BSE+L+Executive%3BSE+Tech%3BSE+Technology%3BSport%3BSportLine%3B!||2217%3AElegance%3BLaurin+%26+Klement%3BOther%3BOutdoor%3BS%3BSE%3BSE+L%3BSE+L+Executive%3BSE+Technology%3BSportLine%3B!

 

2014 Superbs (mark 3) range from £10k upwards, assuming a trade in margin, residual value could be only £8k

Appears anything over about 30k miles is worth lot less than lower mileage ones

 

 

 

Edited 9 April, 2018 by SurreyJohn
tried to fix link

[PSM]

A lot will depend on the down payment and monthly cost of the new car. If you keep your current car then you pay £4.2k for the year. If the new car costs you £4.2k in payments and a few k in down payment then more expensive to change. 

[skodarog]

5 minutes ago, PSM said:

A lot will depend on the down payment and monthly cost of the new car. If you keep your current car then you pay £4.2k for the year. If the new car costs you £4.2k in payments and a few k in down payment then more expensive to change. 

 

i'm not factoring in the cost of the new car. i'm just referring to the likely equity if i keep it for the term and sticking another £4.2k into this car in the hope there is a chance of equity at the end (v's cancelling now and walking away with nothing).

 

if anyone who is at the trading in stage now - are they getting more or less than the original guaranteed future minimum value?

[Sagalout]

2 hours ago, SurreyJohn said:

2014 Superbs (mark 3)

Umm.The S3 didnt start until 3Q2015.

 

I just had a quick look and found late 15/early 16 SEL estates at between £14.5 and £16.5 retail. 

 

I think it also depends on what you are buying next and what deal you can put together with the dealer. e.g how close to the resell  price they will allow on your next deal. 

Edited 9 April, 2018 by Sagalout
added sentence

[skidpan]

To be honest if residuals really worry people they should buy a worthless banger. Having a nice car costs money, simple fact.

 

Another alternative is public transport or taxis.

[Ootohere]

 

I am on a phone, i know it is the Superb Mk3 Section and so about them.

 

?

But what cars are being talked about the residuals of, Petrol or diesel engine, and what trim levels?

[skodarog]

3 minutes ago, skidpan said:

To be honest if residuals really worry people they should buy a worthless banger. Having a nice car costs money, simple fact.

 

Another alternative is public transport or taxis.

all i want to know is if people are getting higher prices than their guaranteed future minimum payment - which skoda finance estimated when they launched the model c.2.5 years back. 

if they are getting more than the GFMV i'm likely to have more from the car at the back end when i trade in so it could be worth keeping a bit longer - if they are only getting the GMFV or offered less, it makes sense to walk now rather than paying the next 12 months which is dead cash into this current car. i'll then go stick my cash into another new vehicle.

 

(and before anyone says that by VT'ing i'm may not get another VW/Skoda/Audi finance - i know that is a risk which i am happy to take)
 

[SurreyJohn]

As well as working out if it’s worth doing early, probably worth turning this around and considering keeping extra year or two.

 

Many people can get loans from their own banks at 3-4%, so if you keep it extra 2 years, and price only falls another £4K, could be much better off (even allowing for extra maintenance).    If you assume the residual value will fall to £1500 by 7th or 8th birthday, won’t be too far off.

 

Remember a new car will attract higher road tax, higher depreciation, but lower repair cost so sums will depend on your circumstances, and mileage.

[PSM]

2 hours ago, skodarog said:

 

i'm not factoring in the cost of the new car. i'm just referring to the likely equity if i keep it for the term and sticking another £4.2k into this car in the hope there is a chance of equity at the end (v's cancelling now and walking away with nothing).

 

if anyone who is at the trading in stage now - are they getting more or less than the original guaranteed future minimum value?

The thing is you have to take all the elements into account otherwise you could make a choice which is not the best.

 

For example it is unlikely the car is going to depreciate more than £4.2k over the next year. So what ever they value the car at now it will not be £4.2k cheaper or less next year. So any equity you get back will just be money you will have paid over the last year. This means they are just giving you your own money back several months after you paid for it. You then have to factor in the additional cost of the next car if going for another PCP deal.

With PCP I always think you win the most if the value of the car at the end of the term is less than the GFV and would always see equity in the car as a sign I have overpaid. The best PCP I ever had was a Nissan Leaf which had a crazy high GFV on it compared to the residuals. This meant I did not even pay enough money to cover the depreciation let alone any interest. Hence the PCP option was better than any other way of driving that car. If you have equity left in the car then it means you have overpaid what the depreciation is and the garage is only giving you back your own money which they have kept for however long.

Equity in PCP is a good thing for the salesman and not really a good thing for the consumer although it has been sold that way. The only way it is good for the consumer is if the dealer over values your car above the market price in order to tempt you into a new deal. But if they do this then they must be making some money out of you on the new deal to offset the loss.

[dunc69]

42 minutes ago, PSM said:

The thing is you have to take all the elements into account otherwise you could make a choice which is not the best.

 

For example it is unlikely the car is going to depreciate more than £4.2k over the next year. So what ever they value the car at now it will not be £4.2k cheaper or less next year. So any equity you get back will just be money you will have paid over the last year. This means they are just giving you your own money back several months after you paid for it. You then have to factor in the additional cost of the next car if going for another PCP deal.

With PCP I always think you win the most if the value of the car at the end of the term is less than the GFV and would always see equity in the car as a sign I have overpaid. The best PCP I ever had was a Nissan Leaf which had a crazy high GFV on it compared to the residuals. This meant I did not even pay enough money to cover the depreciation let alone any interest. Hence the PCP option was better than any other way of driving that car. If you have equity left in the car then it means you have overpaid what the depreciation is and the garage is only giving you back your own money which they have kept for however long.

Equity in PCP is a good thing for the salesman and not really a good thing for the consumer although it has been sold that way. The only way it is good for the consumer is if the dealer over values your car above the market price in order to tempt you into a new deal. But if they do this then they must be making some money out of you on the new deal to offset the loss.

That’s a very interesting way of looking at it! 

I like your thinking. 

[Speedman]

Very interesting topic as many of us on here will have a decision to make on this in the future but I suspect there will be too many variables to each deal to make a meaningful comparison. For example, when I traded in a previous car when purchasing a civic, the dealer couldn't offer any money off the new car but offered me £8k trade-in price on my previous car that only had a value of £5k. Really depends what deals are about at the time but I will be interested to see what happens.

 

For my part I am on a 42 month PCP but have a 5 year guarantee on the car so will probably change at 5 years old - I think that 18 months without monthly payments will more than make up for the depreciation between month 42 and the 5 year date although I will see what the dealer has to offer at 42 months, just in case...

 

What I would also be interested in is when the S4 comes out, that is more likely to make we want to change, assuming they don't ruin it!

[hwr1983]

1 hour ago, Speedman said:

For my part I am on a 42 month PCP but have a 5 year guarantee on the car so will probably change at 5 years old - I think that 18 months without monthly payments will more than make up for the depreciation between month 42 and the 5 year date although I will see what the dealer has to offer at 42 months, just in case...

 

 

How does that work? - PCP usually means you won't own the car after the term (unless you pay the balloon at the end).  So to keep the car after month 42 you would need to either pay up the Balloon Payment or give the car back (and/or take a new deal) you don't keep the car and pay nothing...

 

Usually HP (Hire Purchase) you keep the car once the term ends (subject usually to an acceptance fee on some HP Contracts)

 

Or have I misread your statement?

[SC03OTT]

You could always try selling privately. There are people out there willing to buy. You get more that the dealers trade in, they pay less than forecourt prices. Everyone is a winner. The spec of your car will likely play a big part in how easily it will sell of course. 

[casati]

Im Ireland so it a very different market, but ended a 3 year PCP on a Superb II and had 8k equity to use against a new Sportline. The new car was 7k more expensive than my old one, but the PCP payments only rose by 40 euro per month as Skoda were offering 0% cpp

 

Sounds like a great deal, but in reality the new car will probably drop 8k in value this year, so the smarter version of me would have bought my old Superb II outright by paying the 13k owing, and then keep it another year at which stage it would have been worth at least 13k. The only issue I had was that Skoda were charing 5.9% apr to refinance the old car - which was the lowest finance around and it didn't suit me to dip into savings. 

 

If I was in the U.K., I think buying a pre-reg or 6 month old car with less than 10k miles, and then keeping till its 4 years old, makes the best overall sense- you get an almost new car plus its still in demand when you go to trade it in again

 

 

[Speedman]

5 hours ago, hwr1983 said:

 

How does that work? - PCP usually means you won't own the car after the term (unless you pay the balloon at the end).  So to keep the car after month 42 you would need to either pay up the Balloon Payment or give the car back (and/or take a new deal) you don't keep the car and pay nothing...

 

Usually HP (Hire Purchase) you keep the car once the term ends (subject usually to an acceptance fee on some HP Contracts)

 

Or have I misread your statement?

Hi, my plan is to buy the car at the end of the 42 months and I have set aside the money for this, probably to then keep the car for another 18 months until the extended guarantee runs out as a minimum.  Doing it that way the amount I am saving by not having any monthly payments  for the final 18 months (about £5,750) would be more than the depreciation over that 18 month period particularly as the depreciation curve is less steep the longer I own the car. The alternative would be to hand the car back at 42 months and use the money I have for the balloon payment as the deposit for the new car but I would probably only do this if they make me an amazing offer and the Superb S4 is out. Hope this makes sense!

[Ootohere]

So that is where the value of the car at 5 year old is likely to matter to you.

The desirability might be pretty much zero by then, but maybe you are happy to keep it longer or get what you get for it.

 

Work out how much it will have cost you from collecting until 5 years after that.

If you like the car maybe the cost is not important, and then as it is next years new cars and the new cars in the years after are an unknown quantity at present.

Even Skoda seem to have little idea or are not prepared to share what is coming other than the will be a bit green / hybrid or electric, 

and petrol with GPF's.

[Speedman]

Hi, thanks for the comments. My balloon payment is just over £10,500 so if I am not making any monthly payments from month 42 to month 60 I m effectively saving £5,750 over that period so by my maths I should be better off waiting until the guarantee runs out at month 60 as I can;t see the car losing £5,750 over that 18 month period as that would mean that the cars value would reduce by 50% - which i can;t see that happening between months 42 & 60. Think this makes sense but as I said what I do will depend on what I am offered at month 42.

 

Are most people on PCP planning to give their car back at the end of the PCP period?

[walrus]

2 hours ago, casati said:

 

If I was in the U.K., I think buying a pre-reg or 6 month old car with less than 10k miles, and then keeping till its 4 years old, makes the best overall sense- you get an almost new car plus its still in demand when you go to trade it in again

 

 

 

That was more or less my initial thought when I started looking. But then I saw the discount offered by the online brokers. For a very similar car, the new version was £200 more - and for that I got to pick the exact spec I wanted, as well as being six months newer with delivery miles.

 

No brainier for me.

 

I took out a personal loan to buy it outright. I’ll be paid up after 2.5 years and then it’s all mine. (Technically it’s already all mine as it’s an unsecured 2.8% loan, but I’ll be clear of the liability!)

 

I plan to keep it for 6+ years, but I can be flexible should the need arise.

[walrus]

2 hours ago, casati said:

 

If I was in the U.K., I think buying a pre-reg or 6 month old car with less than 10k miles, and then keeping till its 4 years old, makes the best overall sense- you get an almost new car plus its still in demand when you go to trade it in again

 

 

 

That was more or less my initial thought when I started looking. But then I saw the discount offered by the online brokers. For a very similar car, the new version was £200 more - and for that I got to pick the exact spec I wanted, as well as being six months newer with delivery miles.

 

No brainier for me.

 

I took out a personal loan to buy it outright. I’ll be paid up after 2.5 years and then it’s all mine. (Technically it’s already all mine as it’s an unsecured 2.8% loan, but I’ll be clear of the liability!)

 

I plan to keep it for 6+ years, but I can be flexible should the need arise.