Voluntary Termination on PCP contract

tomspence24

Hi all,

I am coming towards the end of a PCP contract on my car and don't really want to pay the balloon at the end as the car is worth less than the final payment (benchmark vs. other similar models on Auto Trader). I don’t really want to hand the car back at the end of the agreement either as I am well over the mileage limit and this will cost me £1200.

I've heard that I can voluntarily terminate and this have no effect on my credit rating. I think this is part of the consumer credit act and can be executed after you have paid over half of the finance agreement.

Any further information on whether this is a good idea/other options available to me would be greatly appreciated.

Thanks.

motorguy

tomspence24 wrote: »

Hi all,

I am coming towards the end of a PCP contract on my car and don't really want to pay the balloon at the end as the car is worth less than the final payment (benchmark vs. other similar models on Auto Trader). I don’t really want to hand the car back at the end of the agreement either as I am well over the mileage limit and this will cost me £1200.

I've heard that I can voluntarily terminate and this have no effect on my credit rating. I think this is part of the consumer credit act and can be executed after you have paid over half of the finance agreement.

Any further information on whether this is a good idea/other options available to me would be greatly appreciated.

Thanks.

Yes, once you've paid more than 50% of the total transaction cost, you can hand the car back.

Several things though

• This amount will be on your credit agreement
• They *might* try and stick you with the mileage access but i doubt it
• They *might* try and stick you with a charge for any marks on the bodywork / alloys that they can find, so it might be worthwhile having a SMART repair done if there are any marks.

tomspence24

Thanks Paul.

Do you know if there will be any adverse affect on my credit score/rating? I think, according to the CCA there shouldn't be, but as mine is very strong I don't want anything to affect it!

Cheers.

Cornucopia

The other option is a simple redemption figure. That'll give you the best value cost to hold on to the car for the moment. Depending on how easy it will be to sell privately, that could be the best option, financially.

I would check the figures on statutory redemption VERY carefully. They are not designed for the benefit of consumers. They also apply (if at all) under specific conditions (duration, amount repaid, condition of the vehicle).

edit: It sounds a little like you are trying to get the best of both worlds, and the car finance company will likely do whatever they can to avoid the loss to them that will result.

I'd be interested to hear how it turns out, though.

motorguy

Cornucopia wrote: »

I would check the figures on statutory redemption VERY carefully. They are not designed for the benefit of consumers. They also apply (if at all) under specific conditions (duration, amount repaid, condition of the vehicle).

If you mean the 50% 'statutory redemption', then its a legal requirement which is designed for the benefit of customers.

tomspence24

Thanks both.

I am in agreement with Paul in that I thought VT was in the interest of the customer and is part of the CCA.

Cornucopia - thanks for the information, I am just weighing up the options available to me and think VT is a good option.

tomspence24

Does anyone know if the finance company have the right to charge me for my mileage being over the contracted amount?

I've done some research into the consumer credit act and it seems that it is not the case but I've seen conflicting stories. Other than the high miles the car is in great condition.

Thanks.

forgotmyname

The contract was setup based on the mileage. There will be a charge for going over. What do the terms and conditions say?

You cant say i will only do 100 miles a year and then do 100,000 without a charge. If thats the case everyone will only say a low mileage then accidently exceed it.

arcon5

Your contract should cover costs if you go over your mileage. Of course they can charge you for this.

Worth phoning them and making a full and final offer...

tomspence24

Thanks both, I realise the high mileage charge is still applicable if I settle....but if I VT....?

motorguy

tomspence24 wrote: »

Thanks both, I realise the high mileage charge is still applicable if I settle....but if I VT....?

I personally dont think a mileage charge is applicable if you VT.