Getting out of PCP

cal123321

My parter got a nearly new car on PCP last June. His income has fallen since and can no longer afford the monthly payments along with other bills. He is now wondering if he can get out of this early, bearing in mind that he has no savings to buy the contract out. In total there is about 10000 left to pay on the car. He was only 18 when he took this out and felt somewhat pressured and dazzled by the car dealer. In hindsight this was obviously the wrong way to go about getting a car but at the time it seemed like a no brainier.

Thanks

motorguy

cal123321 wrote: »

My parter got a nearly new car on PCP last June. His income has fallen since and can no longer afford the monthly payments along with other bills. He is now wondering if he can get out of this early, bearing in mind that he has no savings to buy the contract out. In total there is about 10000 left to pay on the car. He was only 18 when he took this out and felt somewhat pressured and dazzled by the car dealer. In hindsight this was obviously the wrong way to go about getting a car but at the time it seemed like a no brainier.

Thanks

Unless he put down a large deposit its likely he owes considerably more than the car is worth.

Also, after a year its unlikely he could use the 50% rule to hand the car back (ie, once youve paid more than 50% of the total transaction cost you can hand the car back with nothing further to pay)

Has he got a settlement figure from the finance company? How does that look compared to what similar cars are selling for?

cal123321

At the end he's either got to £4500 and keep the car or hand it back and not pay anything. On the the account at the minute the settlement figure is about £10000. They're selling for between £7-8000 currently

motorguy

cal123321 wrote: »

At the end he's either got to £4500 and keep the car or hand it back and not pay anything. On the the account at the minute the settlement figure is about £10000. They're selling for between £7-8000 currently

Then hes fairly stuffed i'd have thought.

Sorry.

dannyrst

I'd suggest discussing selling the car with the finance company and working on paying the shortfall, before the value of the car drops more.

motorguy

dannyrst wrote: »

I'd suggest discussing selling the car with the finance company and working on paying the shortfall, before the value of the car drops more.

If they can sell it, then its just a matter of getting the buyer to pay the finance company directly, however at that point he will have to stump up the difference - which is going to be a problem as the O/Ps partner has no savings.

Plus if they only get around £7K then thats a £3K shortfall, which is £200 a month ish over 18 months to pay someone back.

motorguy

cal123321 wrote: »

My parter got a nearly new car on PCP last June. His income has fallen since and can no longer afford the monthly payments along with other bills. He is now wondering if he can get out of this early, bearing in mind that he has no savings to buy the contract out. In total there is about 10000 left to pay on the car. He was only 18 when he took this out and felt somewhat pressured and dazzled by the car dealer. In hindsight this was obviously the wrong way to go about getting a car but at the time it seemed like a no brainier.

Thanks

Can he really not afford the payments or has just got got tired making the payments on a car thats not new any more?

dannyrst

motorguy wrote: »

If they can sell it, then its just a matter of getting the buyer to pay the finance company directly, however at that point he will have to stump up the difference - which is going to be a problem as the O/Ps partner has no savings.

Plus if they only get around £7K then thats a £3K shortfall, which is £200 a month ish over 18 months to pay someone back.

Surely they would attempt to help by setting out affordable repayments? It would make more sense to them to have him owe £3k and reduce payments but increase the loan period to, say 24-36 months? (obviously with the benefit to them of making more money on the interest).

This is why people need to really think before they borrow money. "What if I lose my job?" "What if my girlfriend dumps me?" etc.

motorguy

dannyrst wrote: »

Surely they would attempt to help by setting out affordable repayments? It would make more sense to them to have him owe £3k and reduce payments but increase the loan period to, say 24-36 months? (obviously with the benefit to them of making more money on the interest).

This is why people need to really think before they borrow money. "What if I lose my job?" "What if my girlfriend dumps me?" etc.

Typically - they dont care.

Once they hear "cant afford the payments" alarm bells will be ringing

They will offer to take the car back, then they'll flog it at auction, then pursue him for the difference.

They *might* allow him to change to a different finance agreement, but thats only spreading the cost over a further time, and £10K over 5 years is £200 a month ish.

dannyrst

motorguy wrote: »

Typically - they dont care.

Once they hear "cant afford the payments" alarm bells will be ringing

They will offer to take the car back, then they'll flog it at auction, then pursue him for the difference.

They *might* allow him to change to a different finance agreement, but thats only spreading the cost over a further time, and £10K over 5 years is £200 a month ish.

Sorry, I meant still sell the car but restructure the repayments to allow a lower monthly cost over a longer period. Seems like more sense than just selling the car and then pursuing someone with no money to pay £3k which they don't have.

£3k over 3 years is about £83 a month plus interest.

motorguy

dannyrst wrote: »

Sorry, I meant still sell the car but restructure the repayments to allow a lower monthly cost over a longer period. Seems like more sense than just selling the car and then pursuing someone with no money to pay £3k which they don't have.

£3k over 3 years is about £83 a month plus interest.

You cant sell the car without clearing the finance in full.

Its the finance companies car.

The O/Ps partner could take out a personal loan for the £3K, but thats still going to be roughly £95 a month over three years inc interest.