Negative Equity PCP Trade-in

doomfreak777

Hi everyone,

Looking for some help and advice about the following:

I have a vehicle on 3 year PCP, due to end later this year.
Balloon Payment / Final value is around £7k
Current value of the vehicle is about £5k and it seems the final value has been somewhat over-estimated.
Financed for 10k miles a year, so 30k total and I am expecting to bust this, there is also some small scuffs to the alloys.

What happens if I try to trade this in for another PCP vehicle?

By the time the deal is up I will still be in negative equity by a fair amount. Will I just be able to trade it in and take a new deal but without any deposit contribution from the value of this vehicle?

Will they still want me to pay excess mileage charges because it is in negative equity?

Thanks!

jimjames

I don't think value has any bearing on whether you pay excess mileage charges. If you agree 30k miles and do 40k then you have 10k to pay at whatever rate you signed in the contract

motorguy

doomfreak777 wrote: »

Hi everyone,

Looking for some help and advice about the following:

I have a vehicle on 3 year PCP, due to end later this year.
Balloon Payment / Final value is around £7k
Current value of the vehicle is about £5k and it seems the final value has been somewhat over-estimated.
Financed for 10k miles a year, so 30k total and I am expecting to bust this, there is also some small scuffs to the alloys.

What happens if I try to trade this in for another PCP vehicle?

By the time the deal is up I will still be in negative equity by a fair amount. Will I just be able to trade it in and take a new deal but without any deposit contribution from the value of this vehicle?

Will they still want me to pay excess mileage charges because it is in negative equity?

Thanks!

If you attempt to trade it in, and its worth less than the balloon payment, then you'll have to fund the difference (either with refinancing into the next deal (not a good idea) or with your own hard earned).

If you hand the car back at the end of term, they will bill you for the excess miles, and for any wear and tear not deemed to be fair - eg, scuffs on alloys, etc.

Have you considered a voluntary termination ahead of the contract end date?

motorguy

jimjames wrote: »

I don't think value has any bearing on whether you pay excess mileage charges. If you agree 30k miles and do 40k then you have 10k to pay at whatever rate you signed in the contract

Only if you hand it back to the finance company at the end of the term - the O/P is proposing trading it in.

neilmcl

doomfreak777 wrote: »

Hi everyone,

Looking for some help and advice about the following:

I have a vehicle on 3 year PCP, due to end later this year.
Balloon Payment / Final value is around £7k
Current value of the vehicle is about £5k and it seems the final value has been somewhat over-estimated.
Financed for 10k miles a year, so 30k total and I am expecting to bust this, there is also some small scuffs to the alloys.

What happens if I try to trade this in for another PCP vehicle?

By the time the deal is up I will still be in negative equity by a fair amount. Will I just be able to trade it in and take a new deal but without any deposit contribution from the value of this vehicle?

Will they still want me to pay excess mileage charges because it is in negative equity?

Thanks!

I'd consider VTing the car if you are in a position to and walk away, no point keep paying out on something that has neg equity.

foxy-stoat

neilmcl wrote: »

I'd consider VTing the car if you are in a position to and walk away, no point keep paying out on something that has neg equity.

Do this and buy a cheaper car you can afford - stay away from similar PCP deals for a while.

motorguy

foxy-stoat wrote: »

Do this and buy a cheaper car you can afford - stay away from similar PCP deals for a while.

Where did the op say they couldn't afford it??

rhysadams

VT the car, I had an Audi A6 and that was the best way. I didn't pay any excess mileage charges or damage bills

almillar

Don't worry about the value of the car. If you really are £2k short (where did you get the valuation from?) then the dealer/manufacturer has overestimated, and they've been caught out. They'll hope for you to come back and start again, and get some money out of you, but the guaranteed final value is exactly that - if you make all your payments, you don't owe them a penny (but see next sentence). You're over your mileage by 10,000 miles - what do they charge per mile? You owe them that, and any wear and tear costs - that's the same for any PCP though, and nothing to do with your car being short of its value.
You should hand this car back, go to another dealership and start again, IF there really is a £2k hole. What is the advantage of VT-ing over this approach guys?

motorguy

almillar wrote: »

You should hand this car back, go to another dealership and start again, IF there really is a £2k hole. What is the advantage of VT-ing over this approach guys?

Because if you VT you wouldnt be subject to the mileage charges.

At say, 7p per mile x 10,000 miles, thats £700 saved.

doomfreak777

Thanks all for your replies.

I got the valuation using auto trader and inputting my REG and current mileage (I don't know how accurate this is, whether it takes into account the trim levels etc).

EDIT: I have found my actual documents and discovered the final value payment to be just under £5k which makes more sense. Sorry for the false alarm.

My question now is, does Mileage still matter if I trade it in against a new PCP? I have heard from a couple of sources that it doesn't matter if you go over the mileage if you plan to trade in, however I'm not sure how that makes sense??

Just to clarify I'm not over the mileage limit just yet, but it means I only have about 2k miles left to last until October if I plan not to go over the limit.