All the answers you need to the key questions
We know the world of finance can be intimidating and full of regulation and jargon which can make it off putting. So we have pulled togther some of the key information below to help you understand vehicle finance.
What are option-to-purchase fees?
Option-to-purchase fees are charged on most agreements and contribute towards our administration costs.
What is the Consumer Credit Directive (CCD) ?
It is an EU wide directive which aims to establish common rules on consumer credit across Europe. In the UK it came into effect on 1st February 2011.
What type of finance agreement is covered by the Consumer Credit Directive (CCD)?
Any regulated purchase product(s) sold after the 27th November 2010, with a balance financed up to and including £60,260 are covered by the CCD. Agreements where the balance financed is in excess of £60,260, are with businesses that have exempted themselves, or are for hire products, remain unaffected.
What to do in the regrettable event that a customer passes away?
Firstly, we offer our sincere condolences at this difficult time. Please call us where you will be able to speak to a dedicated specialist who will provide information and support to guide you through the process of bringing the matter to an efficient and satisfactory conclusion, as compassionately as possible. Please visit our contact us page.
Should you prefer to notify us in writing please send us a letter, including your contact details, along with a copy of the death certificate to:
Volkswagen Finance, Brunswick Court, Yeomans Drive, Blakelands, Milton Keynes, MK14 5LR
What is a credit check?
A credit check, or credit search, is an integral part of applying for finance. It allows us to use your credit history to make sure the financial commitment you are signing up for is right for you. We work with Credit Reference Agency (CRAs) who hold information on your financial history. This information is obtained from creditors you have used in the past such as a Banks and public records.
How does taking out a finance offer affect my credit score?
The majority of credit including finance you take out will be visible on your credit file. Creditors will be able to see your repayment history and your credit score may be impacted if you do not make repayments in time.
What does Guaranteed Future Value mean?
Guaranteed Future Value (aka Guaranteed Minimum Future Value) is a guarantee of what the value of your car will be at the end of your agreement. This protects you from any unforeseen depreciation.
This is used in our Solutions PCP & Lease Purchase products to set the value of your ‘Balloon Payment’ at the end of your agreement. This means we bare the risk of unforeseen depreciation, not you. However, you must make sure not to go over your agreed annual mileage or damage the vehicle as this may result in charges at the end of the agreement.
What is an Option to Purchase Fee (OTP)?
With Solutions PCP, Lease Purchase, and Hire Purchase you have what is called an option to purchase fee at the end of the agreement. This fee legally transfers ownership from VWFS to you, the customer. This is usually paid with the final instalment together with any other charges payable under the terms of your agreement.
What is equity in Car Finance?
Equity is the difference between what your car is worth and how much you have left to pay on your agreement. You’re in positive equity when the car’s value is more than what you have left to repay. Therefore, negative equity is when the car’s value is less than what you have left to repay. Negative equity is most common at the beginning of an agreement, but as the car begins to depreciate in value and you pay off your finance, it’s possible that you will reach positive equity.
What is residual value?
Residual value is the estimated value of your car at the end of the agreement. This impacts all of our products as it helps us to determine what your monthly payment is, as we use the residual value to understand the difference between the price at the start of the agreement and the price at the end.
What is a balloon payment?
A balloon payment is a deferred lump sum payment due at the end of a car finance agreement. This is found in Finance Lease, Lease Purchase and Solutions PCP. The balloon payment amount is agreed up front and deferring this payment until the end of the agreement can significantly reduce your monthly payments. For a Solutions PCP and Lease Purchase agreement this is linked to your Guaranteed Minimum Future Value.
What are approved authorised repairers?
All Volkswagen Group brands have approved repairers. These repairers have comprehensive access to training programmes, use genuine Volkswagen Group parts and are fully qualified to work on all Volkswagen Group models.
· Helps maintain your warranty
· Receive an official stamp in your service log, helping you retain a high service value
· Ensures you aren’t charged twice for damage at the end of your agreement if work doesn’t meet our standards
What does default mean?
You are in default when you do not meet the terms and conditions of a Credit Agreement. An example of this would be not making your scheduled repayments on time.
If you are worried about default, please visit our Contact-Us page to find out how we are here to support you.
What is depreciation?
Depreciation is the reduction of the value of your car as it gets older. In other words, it’s the difference between the price you initially paid for the vehicle and its current sale value. Things such as mileage and wear and tear reduce the value of your car.
The level of depreciation expected in a vehicle is used to set your residual value for the agreement. Vehicles with low depreciation inherently have higher residual values which often means lower monthly repayments.
What is early settlement?
An early settlement (aka early termination) is the termination of your agreement by paying all outstanding debts before the end of your agreement. It should be noted that you could be liable for additional interest charges.
To find out more about early settlement for your product please visit our ‘ending your agreement early’ page.
What is a mileage allowance?
Your mileage allowance is the maximum number of miles you have committed to driving throughout your agreement. It is important as it helps to determine the residual value of your vehicle at the end of the agreement, which helps to set your monthly payments and any balloon payments. It is important to consider how many miles you drive each year at the start of your agreement, as if you exceed your agreed mileage, there are excess mileage charges payable at the end of your agreement.
What is a secured loan?
A secured loan is a financial agreement that is tied to a physical asset such as a car. Meaning that an unsecured loan is a loan where money is lent without being secured against an asset. All VWFS financial agreements are secured loans, which gives you a higher amount of consumer protection than that of an unsecured loan. For example, if you were to default on the loan, the car can be handed back and sold and you will only be liable for the remaining balance.
What is APR ?
APR, or Annual percentage rate, integrates the interest rate and any administration costs associated with your financial agreement into one simple figure that is easily comparable. For instance, if one finance provider offers a low interest rate and high costs, but another offers a high interest rate and low fees the APR is a good indication of which one is the best deal.
That said, APR should not be the only factor you consider when choosing your finance provider. Benefits such as deposit contributions and discounts will reduce the total cost of finance, meaning that even with a higher APR your monthly payments could still be lower. Other factors such as convenience and financial security should also be taken into account.
Representative vs personal APR
All car finance lenders are required to show a representative APR in their advertising. This is the APR that they expect more than half of all applicants to get if they took up the offer.
Bear in mind that your personal APR may differ from the representative APR depending on your credit score. If you have a low credit score you may have to pay a higher APR.
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