Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • domgreenslade
    • By domgreenslade 22nd Apr 17, 1:29 PM
    • 10Posts
    • 0Thanks
    domgreenslade
    Advice on my PCP and negative equity
    • #1
    • 22nd Apr 17, 1:29 PM
    Advice on my PCP and negative equity 22nd Apr 17 at 1:29 PM
    Hi there, first time poster so I apologise if this has kind of been answered before.

    I am 2.5 years into my 4 year PCP deal with Renault. Through the fault of no one but my own really, my PCP allows for only 6000 a year, however, I have drastically gone over this. My mileage is currently at 55000 miles. The car has general wear and tear, but no major damage. I pay 8p for every mile over the 6000 a year allowance.

    Basically, I had a call from my local Renault to discuss upgrading my current Clio to the new facelift model. Amongst this conversation, several things were discussed, mainly that the car is currently only worth £4000 with the finance left at about £7500 on it to pay. So the salesman advised that there would be £3500 of negative equity to roll over onto the next car, basically telling me that my car is almost worthless to continue driving.

    I roughly do 16-18k miles a year, so with the increase in miles in the new PCP, with the roll over of negative equity, and the new car, my monthly payments on my PCP shoot up £100 a month, alongside fronting a £1700 deposit on top.

    My question is, what are my options, from an unbiased point of view. The salesman explained that I can either:
    • Front a deposit and roll the negative equity onto a new car, thus meaning that I pay a LOT more than i could afford for the new car. Apparently this is only available on a new car, with Renault as they understand my predicament??
    • Terminate the finance with the finance company as i have paid over half, which would apparently mean I would get charged for the mileage and any damage to the vehicle, which would (according to the salesman) be more hassle to return the car, along with would end up paying more money for the miles and damage than the negative equity currently is.
    • Pay the balloon payment after the 4 years and keep the car to sell privately (which is more than the negative equity)

    I just don't know what my actual options are at this time. With 18 months remaining on my PCP, I was under no illusion that the mileage wouldn't catch up with me. But the idea of finding nearly £2k for a deposit and paying £100 a month extra (for the same car, just the facelift model) is really quite depressing and not to mention, something I couldn't afford. So am I stuck and is what the salesman saying correct, or is there a salesman bias here?

    Any help would really be appreciated.
Page 2
    • neilmcl
    • By neilmcl 24th Apr 17, 1:15 PM
    • 10,229 Posts
    • 7,152 Thanks
    neilmcl
    Are you sure this is PCP and not PCH? PCP agreeements dont normally let you add miles on but not sure about RCI.
    Originally posted by purpleparrotuk
    Most main dealer/manufacturer finance companies will allow you to increase/alter your annual mileage allowance on a PCP deal, most at a cost, sometimes for no extra charge at all.
    • domgreenslade
    • By domgreenslade 11th Jul 17, 9:19 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    I've had a long think, and i believe the best option is to VT when i can, and deal with the consequences of not being able to get another car after. I dont think i'll go down the PCP route again, unless it is explained in greater detail to me. Unfortunately, the salesman was rather good at saying 'you can hand it back at the end' but never mentioned anything about negative equity until calling me.

    I understand that i need to have paid 50% of the finance off to do this.
    I managed to get access to my finance agreement online, and its all a bit confusing

    £10,984.00 was the amount financed
    But they're stating that the outstanding amount is £7,594.76, which is not right at all. in 33 months i've paid way more than £3500 on that car....Anyone know where this figure is drawn from?

    So to get this right, if £10984 is the financed amount, i would have needed to have paid around £5500 to be able to VT?
    • Cornucopia
    • By Cornucopia 11th Jul 17, 9:33 PM
    • 9,417 Posts
    • 8,976 Thanks
    Cornucopia
    I would contact them again and ask for clarification.

    The £7500 sounds like the total outstanding amount (which would include the balloon payment). As such, it doesn't sound too far off.

    The VT clause should be specified in your finance agreement paperwork. The question of payments for damage and excess mileage on a VT are something of a grey area.

    I would also be tempted to check the car's value with a car buying service before making a decision.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • motorguy
    • By motorguy 11th Jul 17, 9:56 PM
    • 15,662 Posts
    • 8,973 Thanks
    motorguy
    I've had a long think, and i believe the best option is to VT when i can, and deal with the consequences of not being able to get another car after. I dont think i'll go down the PCP route again, unless it is explained in greater detail to me. Unfortunately, the salesman was rather good at saying 'you can hand it back at the end' but never mentioned anything about negative equity until calling me.

    I understand that i need to have paid 50% of the finance off to do this.
    I managed to get access to my finance agreement online, and its all a bit confusing

    £10,984.00 was the amount financed
    But they're stating that the outstanding amount is £7,594.76, which is not right at all. in 33 months i've paid way more than £3500 on that car....Anyone know where this figure is drawn from?

    So to get this right, if £10984 is the financed amount, i would have needed to have paid around £5500 to be able to VT?
    Originally posted by domgreenslade
    Total amount financed does not equal total amount payable.

    Total amount payable = total amount financed + deposit + interest + fees

    You need to look for the total amount payable figure
    You are not special. You are not a beautiful and unique snowflake.
    • motorguy
    • By motorguy 11th Jul 17, 9:59 PM
    • 15,662 Posts
    • 8,973 Thanks
    motorguy

    and deal with the consequences of not being able to get another car after.
    Originally posted by domgreenslade
    Is that the very best of an idea, given you do 18,000 miles a year?

    How are you going to pay for the cars replacement?

    If its doing your job, why not drive on at it, set aside whatever you can afford per month to help cover the shortfall and see where the land lies at the end of the term. It could be just a matter of taking a loan out to buy the car - better the devil you know....
    You are not special. You are not a beautiful and unique snowflake.
    • motorguy
    • By motorguy 11th Jul 17, 10:03 PM
    • 15,662 Posts
    • 8,973 Thanks
    motorguy

    I dont think i'll go down the PCP route again, unless it is explained in greater detail to me. Unfortunately, the salesman was rather good at saying 'you can hand it back at the end' but never mentioned anything about negative equity until calling me.
    Originally posted by domgreenslade
    He wasnt lying there when he said all of that - keep the car to the end of term and hand it back with nothing further to pay. This was subject of course to you sticking to the 6,000 miles a year limit you set yourself, which you havent.

    Bumping 18,000 miles PA on to a car thats inside an agreement to do 6,000 miles PA was always going to create a rather large hole somewhere along the line...
    You are not special. You are not a beautiful and unique snowflake.
    • AdrianC
    • By AdrianC 11th Jul 17, 10:10 PM
    • 15,445 Posts
    • 13,771 Thanks
    AdrianC
    I understand that i need to have paid 50% of the finance off to do this.
    I managed to get access to my finance agreement online, and its all a bit confusing

    £10,984.00 was the amount financed
    But they're stating that the outstanding amount is £7,594.76, which is not right at all. in 33 months i've paid way more than £3500 on that car....Anyone know where this figure is drawn from?

    So to get this right, if £10984 is the financed amount, i would have needed to have paid around £5500 to be able to VT?
    Originally posted by domgreenslade
    Can you post the figures from that agreement?

    How much deposit did you pay?
    What is the monthly payment?
    What is the APR?
    What is the final payment, the balloon?
    Are there other fees broken down on there?
    • neilmcl
    • By neilmcl 12th Jul 17, 9:44 AM
    • 10,229 Posts
    • 7,152 Thanks
    neilmcl
    I've had a long think, and i believe the best option is to VT when i can, and deal with the consequences of not being able to get another car after. I dont think i'll go down the PCP route again, unless it is explained in greater detail to me. Unfortunately, the salesman was rather good at saying 'you can hand it back at the end' but never mentioned anything about negative equity until calling me.

    I understand that i need to have paid 50% of the finance off to do this.
    I managed to get access to my finance agreement online, and its all a bit confusing

    £10,984.00 was the amount financed
    But they're stating that the outstanding amount is £7,594.76, which is not right at all. in 33 months i've paid way more than £3500 on that car....Anyone know where this figure is drawn from?

    So to get this right, if £10984 is the financed amount, i would have needed to have paid around £5500 to be able to VT?
    Originally posted by domgreenslade
    Read your agreement and statements from the finance co., all the information is there to see.
    • rtho782
    • By rtho782 12th Jul 17, 12:16 PM
    • 1,014 Posts
    • 726 Thanks
    rtho782
    Are you sure this is PCP and not PCH? PCP agreeements dont normally let you add miles on but not sure about RCI.
    Originally posted by purpleparrotuk
    Yes I am sure
    Deposit Saved since 01/12/15: £13,000 / £15,000 House Bought!

    Debt Cleared since 01/12/15: £6,000 / £7,500
    • domgreenslade
    • By domgreenslade 18th Jul 17, 8:48 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    The advice, whether bad or good, is to look at a bank loan, rather than PCP in the future.
    Handing the car back when possible, is going to affect getting another PCP deal, and may potentially affect getting a bank loan too, so either way, i am stuck.

    The alternative, is to get a bank loan to pay for the balloon payment. Or to go for a cheaper car, and roll over the negative equity.
    • domgreenslade
    • By domgreenslade 18th Jul 17, 8:50 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    He wasnt lying there when he said all of that - keep the car to the end of term and hand it back with nothing further to pay. This was subject of course to you sticking to the 6,000 miles a year limit you set yourself, which you havent.

    Bumping 18,000 miles PA on to a car thats inside an agreement to do 6,000 miles PA was always going to create a rather large hole somewhere along the line...
    Originally posted by motorguy
    The quote from the salesman, at the time was 'If you go over your miles, you'll never pay the 8p per mile, so long as you hand the car back and get a new one at the end of the term'. I have, in an email, something to similar effect which does state 'unless there is negative equity, which we can roll over'. I have witnesses to both of these incidents, and neither time was 'negative equity' even spoken about.
    • domgreenslade
    • By domgreenslade 18th Jul 17, 9:00 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    Can you post the figures from that agreement?

    How much deposit did you pay?
    What is the monthly payment?
    What is the APR?
    What is the final payment, the balloon?
    Are there other fees broken down on there?
    Originally posted by AdrianC

    This is everything from Renault Finance Online:
    My Deposit: £1500
    Renault Contribution: £500
    Financed Amount: £10,984.00
    Outstanding Amount: £7,432.17
    APR Rate: 6.82%
    True Rate: 6.13%
    Payment 1: £261.59
    Payment 2-48: £162.59
    Payment 49: £5,318.50
    Balloon Payment: £5,169.50
    • Money saving maniac
    • By Money saving maniac 18th Jul 17, 11:45 PM
    • 366 Posts
    • 674 Thanks
    Money saving maniac
    The advice, whether bad or good, is to look at a bank loan, rather than PCP in the future.
    Handing the car back when possible, is going to affect getting another PCP deal, and may potentially affect getting a bank loan too, so either way, i am stuck.

    The alternative, is to get a bank loan to pay for the balloon payment. Or to go for a cheaper car, and roll over the negative equity.
    Originally posted by domgreenslade
    You clearly need a car as you are doing a lot of miles. Surely the most sensible thing to do is to get a loan for the balloon payment.
    • domgreenslade
    • By domgreenslade 24th Jul 17, 4:42 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    Well I am hoping that towards the end of the year or at the very start of next year, I will be in a company car which I have been promised, and there's not really much use for the car anyway after that, so I don't really know what to do. I don't have the space to keep 2 cars at my house as it is, and wouldn't be used at all, as I can use the company car for pleasure as well as business and commuting.
    • domgreenslade
    • By domgreenslade 31st Jul 17, 3:45 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    Sorry to resurrect this but does anyone know how to work or whether I am over halfway through the agreement, given the numbers I posted above?
    • Cornucopia
    • By Cornucopia 31st Jul 17, 4:35 PM
    • 9,417 Posts
    • 8,976 Thanks
    Cornucopia
    I know that it's 50% of the total amount payable, but I don't know how you account for the deposit & dealer contribution (if at all).

    Including the Deposit, the total amount payable is £15222, half of which is £7611. Taking the deposit back off, gives £5611, and that takes you up to payment 34.

    Excluding the Deposit, the total amount payable is £13222, half of which is £6611. This takes you up to payment 39.
    Last edited by Cornucopia; 31-07-2017 at 4:42 PM.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • k3lvc
    • By k3lvc 31st Jul 17, 5:33 PM
    • 1,911 Posts
    • 3,001 Thanks
    k3lvc
    Sorry to resurrect this but does anyone know how to work or whether I am over halfway through the agreement, given the numbers I posted above?
    Originally posted by domgreenslade
    How about reading your agreement ? It'll tell you the exact answer rather than relying on us making assumptions
    • domgreenslade
    • By domgreenslade 1st Aug 17, 3:18 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    Ok so the value in the agreement is £8360 which is apparently half the amount payable

    Now my issue is that I would never have paid half until after the PCP ends????
    • domgreenslade
    • By domgreenslade 1st Aug 17, 3:18 PM
    • 10 Posts
    • 0 Thanks
    domgreenslade
    Or is that £8360 minus monthly payments, minus the deposits?
    • neilmcl
    • By neilmcl 1st Aug 17, 3:57 PM
    • 10,229 Posts
    • 7,152 Thanks
    neilmcl
    Or is that £8360 minus monthly payments, minus the deposits?
    Originally posted by domgreenslade
    It really is simple. Take the Total Amount Payable (consisting of deposit, all monthly payments and optional final payment plus fee), this should be clearly outlined in your agreement. Then you divide this by 2 then minus your deposit and this will give your 50% VT figure.

    In fact I'd be surprised if there wasn't a section in the agreement entitled "Termination: Your Rights" or similar which should state what the 50% repayment figure should be.
    Last edited by neilmcl; 01-08-2017 at 4:01 PM.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,753Posts Today

9,528Users online

Martin's Twitter
  • Sneaky NAKED photo... ...of the room where many political and regional TV interviews are done. This is before the? https://t.co/fDdeKQOQuU

  • The Premium Bond rate is being boosted from 1.15% to 1.4% should you pile in? My analysis... https://t.co/3Q7tjphAFO

  • RT @colinjdunn: First #Plevin cheque received this morning - £548.66 from Nationwide & with other claims still outstanding - so thanks @Mar?

  • Follow Martin