PCP (balloon payment) question

Katem

I have tried to find the answer to this online but not coming up with anything conclusive (or maybe I just need someone to talk in layman's terms!)

I have a car on a PCP/balloon payment plan (4 years, of which there's three left). I have access to nearly the same amount of funds as the 36 remaining months would cost me (£2880).

Is it possible to pay the remaining months (36) upfront and then only owe the balloon payment at the end of three years? Is this something that the finance provider would do?

Or is it worth just keeping the nearly £3k and bunging it in the bank to pay this off monthly? I would prefer to pay it off as a lump tbh, as I would rather be without the monthly payment - not because I can't afford it but just that I don't particularly like to have monthly payments, but at the time I got the car, I couldn't afford to pay it outright.

thank you

Cornucopia

No, it's not usually possible to do what you want.

Depending on the figures & interest rates, you may want to consider settling the finance entirely - if necessary borrowing from elsewhere to make up any shortfall.

PCP schemes are all very well, in terms of allowing access to newer, more expensive cars than would otherwise be possible. But they do tend to bump up the amount of interest to be paid, because interest is due on the entire balloon figure for the entire period of the scheme.

Katem

Hmmm I had a suspicion that I couldn't do it!

I don't really went to borrow from elsewhere tbh as the monthly payment is quite low and would be immediately bumped up if I borrowed elsewhere.

Thank you anyway, I will just have to win the lottery and pay for the car outright!

InsideInsurance

Ultimately speak to the finance company and see what they are willing to do.

It certainly isnt the norm to allow early payment of the installments and then nothing until the balloon but theoretically nothing to stop it happening.

Of cause unless they waive the interest/ depending on any penalties for early settlement it may be better for you to put the money into savings and just pay on the drip

Katem

Thanks II, I hadn't even thought about early settlement penalties.
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I might give them a call and see what they say. Need to dig out the paperwork, which is buried in my spare room under a heap of things "to sort"