Audi Choice… Skoda Choice… Volkswagen Choice… Do you notice anything similar about these recently launched motor finance guarantees? It’s an easy answer: Audi and Skoda are part of the Volkswagen group, and all three have just launched 'Choice', a new financial program for car buyers in Australia.
“The unique thing with Skoda Choice is that, as Skoda Financial Services, we are the only provider of such a product simply because we are Skoda, we know exactly what the car is, we know the value, and we are absolutely convinced of the future value of the car.” Frank Czarnetzki of Skoda Financial Services Australia told caradvice.com.au just last month, presumably forgetting about Skoda’s German stable mates in the excitement.
The Choice scheme is designed to give Australian customers an assurance about the future price of their new car. Under the banner ‘Forward Thinking Finance’, the scheme provides the private buyer a guaranteed buy-back price for new and demo vehicles.
How does it work?
At the time of purchase, you can either pay the full on-road cost of the new vehicle, or place a deposit and embark on a car finance contract. You can enter the program under 12-month to 48-month terms. As well as selecting the term, you also need to pinpoint the maximum distance you expect to drive each year, from 10,000 to 25,000 kms.To benefit from the guarantee, you will need to remain within that distance. If you go over, it’s not the end of the deal, but it will bring down the value of the vehicle.
The future value will determine how much the monthly repayments are. At the end of the contract, you can decide whether to trade the vehicle in, keep it, or return it to the dealer. Each option is based on the Guaranteed Future Value price that was established at the contract’s start.
With the trade-in, the fixed amount goes towards the purchase of the new car, and you pay the difference – or take out new car finance. If you decide to keep the car, you can buy it outright for the GFV – or take out new car finance (see how this works?). If you return it, you receive the GFV – provided you’ve kept to the maintenance side of the contract.
Yes, there are terms and conditions with this arrangement. Your Guaranteed Future Value must be preserved, and to do that, you need to keep the vehicle in acceptable condition. Everyday wear and tear is fine, but Volkswagen provide a 20-page document detailing what is and isn’t acceptable. Areas covered include everything from window and lamp glass, to rubber seals, bumpers and wheel trim. There are also sections on mechanical condition, body damage, engine, exhaust system and oil leaks.
If you feel a little hesitant after reading that, then that is a good thing, as few attractive deals are quite as good as they look. Volkswagen is offering a further $1000 bonus for its finance customers until the end of June, but you should still compare the total cost, including the hidden costs of getting the car on the road, against other options available from motor finance companies.