Skoda Ditch Zero VAT Offer

Written by Karen Bryan

skoda zero vat offerSkoda were running a Zero VAT offer on their cars for years. The offer seemed to be renewed every few months. However recently the finish date of the offer, 30 June 2013, had been much more prominently displayed. Sure enough on 1 July 2013, the Zero VAT offer had disappeared.

Now we’d been toying with the idea of replacing our current 9 year old Skoda Fabia 1.4TDI with a new Fabia. We swithered over whether to buy another diesel model or switch to petrol. We were saving a lot of money on depreciation by keeping our old car.  We were aware that the current car was going to need a good few hundred pounds spent on it before its next MOT in September 2013. So we finally took the plunge and ordered a Skoda Fabia 1.6 TDI  CR SE 75PS on the 21 June 2013.  We paid £10,977 ( minus a £1000 trade-in for our current car) The OTR price on the Skoda website was £12,965. That was a saving of £2,000.

It would appear that we grabbed the best deal for our new car. Skoda’s offers are now 0% finance over three years, with between 0-30% deposit, and free servicing for 3 years, or 30,000 miles.

I compared the savings made under the Zero VAT offer and the new Skoda offers.  I estimated that we’d pay £800 for three services, although the garage gave a figure of £600. Assuming that we could get the 0% finance on the whole £10,000, I estimated that over three years we’d earn £384 gross interest (£308 after deduction of 20% income tax). I used a rate of interest of 2.5% on the median balance of £5,000. We wouldn’t earn interest on the whole £10,000 for three years, as we’d need to fund the monthly repayments. I believe that there’s a £125 acceptance fee on finance agreements. So £308 net interest earned minus the £125 fee,  would leave us £183 in profit. Adding that £183 to the £800 for three services, gives us a total saving of £983 under the current Skoda offer.

As we saved £2,000 under the Skoda Zero VAT offer, we were more than £1,000 better off with the Zero VAT offer than with the latest Skoda offers.