Giving back a car on PCP after 4 months

NicoleAnjous

Hi,

My boyfriend got his car on PCP but his circumstances have changed now and cannot afford the repayments on the car for much longer.

Any ideas of how he can give the car back without having to pay the 50% payments owed? Are there any exclusions that could occur where the finance company would just take the car back?

I've read around the subject and the only way out is to pay 50% of the agreement or whatever....but what if you can't afford that or the repayments?

[Deleted User]

You will need to pay the 50%, or default on the agreement, which will tend to be more expensive.

NicoleAnjous

thanks, I thought as much

Dobbibill

This thread is worth a read with some very knowledgeable responses.

https://forums.moneysavingexpert.com/discussion/5560732

bearcat16

Personally, I would never pay 50% of payments for a car I don't own, neither would I default.

You can simply pay off the balance owing on the PCP (get a settlement figure from the finance company) so that you will own the car. You can then sell it and repay the loan, and then get a cheaper car with more affordable repayments.

The problem, of course, is that you need access to the cash to pay the balance before you can sell it. Could you get a loan? Perhaps from a family member? You only need it until you can sell the car, then use the proceeds to repay it.

Assuming you can borrow the money, it's possible (or even likely!) that the balance outstanding will be higher than the sale value of the car, meaning there'll be a shortfall for you to pay. But this will probably be less than paying 50% of the remaining payments.

foxy-stoat

bearcat16 wrote: »

Personally, I would never pay 50% of payments for a car I don't own, neither would I default.

You can simply pay off the balance owing on the PCP (get a settlement figure from the finance company) so that you will own the car. You can then sell it and repay the loan, and then get a cheaper car with more affordable repayments.

The problem, of course, is that you need access to the cash to pay the balance before you can sell it. Could you get a loan? Perhaps from a family member? You only need it until you can sell the car, then use the proceeds to repay it.

Assuming you can borrow the money, it's possible (or even likely!) that the balance outstanding will be higher than the sale value of the car, meaning there'll be a shortfall for you to pay. But this will probably be less than paying 50% of the remaining payments.

They need to crunch the numbers.

Remaining monthly payments on the agreement......

Against....

Settlement figure to own the car less the actual value on the open market, either private sale (unlikely) or trading it in or dealer purchase plus the cost of replacing it with a car they can afford (assuming they can afford the monthly repayments and can actually get a loan).

They may find that it will be cheaper and easier to continue until the end of the agreement and save for a cheaper car they can buy outright.

This will be one of the few times where the massive depreciation for new vehicles will actually matter, as no one drives a brand new car out of the showroom to sell it and lose 25-30%.

Good lucks

Mobeer

bearcat16 wrote: »

...
The problem, of course, is that you need access to the cash to pay the balance before you can sell it...

You might be able to arrange with a dealer for them to buy the car and you pay the shortfall, which would avoid the need for a loan. Of course that doesn't necessarily give the best sale price.

Bonfire_Bride

Mobeer wrote: »

You might be able to arrange with a dealer for them to buy the car and you pay the shortfall, which would avoid the need for a loan. Of course that doesn't necessarily give the best sale price.

Most finance companies do not care who pays the settlement figure.

It is not unheard of for a private buyer to pay the finance company directly on the same day the vehicle changes hands. Get the bank details from the finance company, buyer can transfer funds as faster payment...clearance can usually be given 1 hour later as long as the funds are visible in the account.

You can arrange a voluntary termination but check your contract as the terms for PCP can vary depending on finance provider.

I would not default at all if you can help it...recovery costs, external agencies, default fees and auction fees are very expensive. Whatever the vehicles sells for at auction will be taken from the outstanding settlement figure and you will still be liable for the remaining balance.

Call the finance company and discuss options. You wont be the first and you most definitely wont be the last...so don't worry too much, but just don't dig your head in the sand as it will end up costing far more.

Herzlos

The difficult part is finding a private buyer willing to buy a 4-month old car on finance from a private seller.