Anyone help with car PCP finance issue?

Dalglish

Hi
I have question on a car financed over 3 years on a Personal Contract Purchase (PCP) basis which I am now approaching the halfway point at 17 months.

Due to a job change, I no longer can afford the luxury of a car and was advised by a friend that a brake clause could be exercised by myself at the halfway (18 month) point and settle the agreement with a reasonable sum.
The finance company want me to pay approx £5,000 above the open market value of the car which I would have to dispose of myself. This if course will be financially difficult.
The finance agreement is regulated under the Consumer Credit Act 1974 and early termination is referred to as possible at any time, subject to payment of the outstanding finance.

To end, my question is can I terminate this agreement as my friend believes at the midway point for substantially less than the £5000 the company expect?
Trading standards do not take personal calls and return questions raised by the Consumer Direct helpline people.
Thanks to all in anticipation.
Steve

chilli_dog

Try and get your post moved over to pure money/ loans.
If a moderator cant do it you might have to repeat post.

Im sure you will get better feedback on this problem.

Martin

piggeh

Would have to read the Ts and Cs, but as the rate is based on the car's end residual value, finishing the contract early should mean paying a lot less than what the outstanding rentals add up to. Finance on PCP is done on the depereciation of the car, so outstanding finance would be readjusted for the reduced depreciation imo.

I guess this means about the same thing:

"You always have the option to hand back your car at the end of the term, and avoid all the hassle of reselling. It’s worth noting too, that if you are handing your car back to the provider, and it is valued at more than the agreed GFV, then you will get the extra back, which you can then use as either a deposit on another car. However, should the car be valued at LESS than the GFV then you wil not have to make up the shortfall. Of course, if you have paid upfront for a car, then you have to take the hit and move on."

IE handing it back now, the value of the car will be way more than the GFV of the value agreed at the contract start, so you would get a sizeable(?) chunk back of that £5k.

Dalglish

thanks Martin, have posted under loans/ money.

Thanks also Piggeh...
the finance company wants £23k and BMW are prepared to pay only £19k meaning I need to pay the difference.
The GFV is £16k but I'm confused how I could use this to finance a new car..
are you saying if I approach the lease company and take out a new lease for a new car, the £23-£16k could be used as deposit or am I way off the mark?
Thanks for the trouble.
Steve

piggeh

what's the car worth with the mileage and depreciation it has accrued so far? What I mean is that as you're handing it back, the car will be worth more than the GFV, so this sounds like it would be credited back to you?

You may get some more knowledgeable people on companycardriver or parkers as I don't know much about PCP (I only deal with my work's business contract hire vehicles - though for businesses you can change your contract duration and mileage so maybe there's an option there to change it with a PCP?).

Dalglish

The car is a BMW 3 series, 15 months old on 21,500 miles. It has a value of £23k for the finance company to settle but BMW have offered only £19 as they want to get profit on the transaction if I was to sell it to them as a BMW used car.
Does that help you?
Thanks about the idea of changing eith a PCP -I havent asked the question of the lease company, jst how much it would be to terminate.
Would it be in their interest to re-finance to keep me or do you think they would say, over to you!?
Cheers