[5erge]

Appreciate many of you decided to pay off the PCP early to save on the interest but I have gone down a slightly different route. You can overpay your PCP to either reduce your monthly payments or reduce the term, this in effect reduces the amount of interest payable on the loan.

However, I am keen to retain the price VW guarantee my car will be worth in four years time, as long I stick to my mileage quota of 10k a year that shouldn't be a problem. Locked in with this is the support I would get from VWFS should software issues with the car persist or VW fail to crack OTA updates. So, with this in mind I am going to overpay by a £1000 at first to see how much interest this will save, then when I've sold my Type 2 pay a much larger chunk off of the car. With further updates and innovations in EV technology I want to lock in the security VWFS provide. Who knows if solid state batteries take off or 300kwh charging is the baseline four years down the line I would not want this to adversely affect my cars residual value.

 

[njm106]

I get the logic but I went the opposite way, I looked at the value of 3-4 year old eGolfs and compared the difference between them and the ID3 and thought it's going to be worth at least as much as the balloon payment.

My decision is a bit easier though as we're planning to keep the car for at least 8 years hopefully more so the depreciation doesn't really concern me too much. The only thing that worries me now is the charging infrastructure think that goes for any EV though!!

 

[HandyAndy]

Yup, that's the gamble I'm taking, by having paid it off early. I didn't like the 10k miles p.a. limit, and generally don't like paying middlemen's salaries (VW financiers) when I don't need them. But do think hard about early repayments, and whether you could be better off saving that money regularly somewhere else. As the PCP is about 5.5%, it looks v tempting to pay back early, but you'll have to crunch he figures carefully! Here's the Early Repayment item I've seen, that's relevant to you I think:

"7.1 You have the right at any time to make early repayment. ... <stuff about dates etc> ...
7.2 Any such repayment will be applied first to discharge sums which have already fallen due under this Agreement. The balance will be applied to discharge your indebtedness under this Agreement by the amount paid and any statutory rebate. If the effect of the early repayment is to discharge only part of your indebtedness, we will, at our discretion (subject to any agreement between you and us) elect to apply that sum to reduce either the amount of each future monthly payment, or the number of such payments to be made by you in succesive months, and we will notify you of our decision."

So it's a toss-up whether they reduce the monthlies, or how many of them are left. I rather suspect the entire sum of (monthly amount) * (number of monthlies remaining) will simply get reduced by the cash sum you pay them, so in other words you may end up not saving any interest at all. There's no mention of the precise way they calculate this! Do they reduce the outstanding capital amount immediately, then do a future repayments calculation from scratch? They should, and this would reduce the total amount of interest paid over the 3 years. I think this is what they do, but I've only ever made the one repayment, which was the outstanding capital + a few days interest. You'll need to make absolutely sure your early payments really do reduce the total interest payable.

 

[TJEV]

Settlement figures do not include future interest. They include any unpaid interest between the last payment and the settlement date given.

So if you pay off after 6 months, the settlement will be the remaining value of the original loan amount after subtracting your 6 payments (a reduced value of - as some of the value of the payments will have been interest).

 

[Woodulike]

The automated settlement figure I had was quite a bit more than just interest. When I called to ask why it was £200+ more than just t interest I was given a much lower figure because I had cancelled within the 14 day cooling off period. After the 14 days there must be a premium added to pay off early, is it a months interest?

I slightly follow the logic of paying interest just to have the gfv as a safety net but you must be paying £3-4k for that insurance. The paperwork I have says I'm saving £2k on a 2 year agreement paying it off now.
If your ID3 is valued at 12000k in 4 years time, I'm guessing at the value, will it only be worth £9k, £12k minus £3k interest.

I'm assuming you have the money to pay it off. If you're leaving out with VWFS instead of borrowing it from elsewhere there not so much difference and it might be worth the extra 2-3% interest.