Exiting a PCP agreement

mikepoole

Myself and my wife are thinking about buying a new Nissan through there PCP agreement.

My question is (and I appreciate it may be different for each manufacturer/dealer and to read the fine print of the contract) - what happens if we do not like the car after a period of months or our situation changes to the point where we cannot afford to make the payments each month - what are the options usually available for terminating the agreement?

Hintza

Have you read their PCO agreement, it will all be in there.

mikepoole

Thanks Hintza

It was more a general enquiry. Obviously I won't get to see the PCP agreement until it is time to sign it and although we have the car on order (due mid April), I'd just like to get my head around my options in general

alleycat`

I suspect "at best" after you've made 50% of the payments you can hand the keys back and walk away.

You might find there are different break clauses at other points (like 33%)

The reality is it depends on what it says in the paperwork.

If you "don't like" the car it's pretty much tough.

If there is something physically wrong with it that's different but just because you've fallen out of lust/love with the new toy doesn't mean you can just give it back when you like.

New cars lose a lot of money going off the forecourt and that's what you are paying for on a PCP deal.

If you are worried this might be the case ask for an extended test drive or get your own finance, buy and when you don't like it anymore sell and settle up as best you can?

Edit: Out of curiosity how do you order a car and not know what it is you've signed up for?
Surely you get some sort of pre-contract finance bumf before you sign on the dotted line?

mikepoole

Thanks alleycat

We secured the delivery of the car with a £100 deposit and have passed all the finance checks. As far as I'm concerned, we've not signed up to any agreement yet (or even been shown an agreement)

We test drove the car a couple of times (all in nice weather!) - not liking the car is really not something that worries me, more our circumstances changing and suddenly having a monthly outlay we may not find achievable.

motorguy

mikepoole wrote: »

Thanks alleycat

We secured the delivery of the car with a £100 deposit and have passed all the finance checks. As far as I'm concerned, we've not signed up to any agreement yet (or even been shown an agreement)

We test drove the car a couple of times (all in nice weather!) - not liking the car is really not something that worries me, more our circumstances changing and suddenly having a monthly outlay we may not find achievable.

If your situation were to change enough - presumably through redundancy or similar - then if you otherwise dont have enough savings or confidence that you can get another job quickly - then i guess you would be as well to be thinking of some sort of insurance policy which pays out a monthly sum if you lose you job.

If you really think that your circumstances may change permanently then i'd consider not taking out finance at this stage.

oscarward

Not sure if your agreement is the same as the one I had.

Mine was a PCP for 2 years with a balloon payment at the end or just hand the car back and walk away.

As it transpired I was made redundant 8 months in to the agreement so used the redundancy pay off to settle the finance.

I think PCP are just a scheme to keep repayments down by shifting half the purchase price to the balloon payment but interest is still reckoned on the total value.

Does the finance agreement have things like limited mileage, guaranteed minimum value and excess mileage charges built in ?

RumRat

If your circumstances change and you struggle with the repayments, you can opt to sell the car and pay off the remainder of the agreement. Obviously ensuring that the sale price also realises enough to cover the final balloon payment.

Hintza

mikepoole wrote: »

that worries me, more our circumstances changing and suddenly having a monthly outlay we may not find achievable.

If this is a genuine worry and you don't have enough savings to cover all eventualities then you really need to think twice about this.

A friend of mine went to ask his boss if his job was secure before he bought a Porsche (impetuousness of youth) and he was all was fine. He was out of a job within a month, his boss who had hired him was the main target but the acolytes went too.

If I were you I would be asking to see and digest any agreement well before you sign it anyway.