PCP Voluntary Termination

Weiss86

Hi,

I'm looking for some advice on the voluntary termination of my agreement with my cars finance company (I'm not going to name companies, cars or personal details).

The agreement runs for 42 months with an end date of August 2018, however our circumstances have changed and we need to change to a bigger more practical car. Unfortunately there is a massive negative equity with the car and the only sensible options are to settle or terminate.

The settlement figure given to us yesterday is £7424 and the halfway mark of the agreement is £6039 so we figured, pay off the £1385 and terminate the agreement. This is much less than the amount we will lose by trading in (£4500 Value) or selling the car privately (£5500 value).

This all seemed fairly easy but the finance company told us today that we owe £7956 if we choose to terminate meaning we need to pay £1916 to get to the halfway mark. Their reasoning is that, when settling a, £500ish rebate is due for the amount of interest that we won't be paying for the rest of the term but if we terminate we still have to pay this.

My main query is, is this correct? Surely the interest rebate is due either way because we wont be paying over the last 18 months.

If this is correct, I'm now left wondering if it is better to settle on the car and use it as a trade in to save myself £500 or carry on as i intended.

motorguy

Weiss86 wrote: »

Hi,

I'm looking for some advice on the voluntary termination of my agreement with my cars finance company (I'm not going to name companies, cars or personal details).

The agreement runs for 42 months with an end date of August 2018, however our circumstances have changed and we need to change to a bigger more practical car. Unfortunately there is a massive negative equity with the car and the only sensible options are to settle or terminate.

The settlement figure given to us yesterday is £7424 and the halfway mark of the agreement is £6039 so we figured, pay off the £1385 and terminate the agreement. This is much less than the amount we will lose by trading in (£4500 Value) or selling the car privately (£5500 value).

This all seemed fairly easy but the finance company told us today that we owe £7956 if we choose to terminate meaning we need to pay £1916 to get to the halfway mark. Their reasoning is that, when settling a, £500ish rebate is due for the amount of interest that we won't be paying for the rest of the term but if we terminate we still have to pay this.

My main query is, is this correct? Surely the interest rebate is due either way because we wont be paying over the last 18 months.

If this is correct, I'm now left wondering if it is better to settle on the car and use it as a trade in to save myself £500 or carry on as i intended.

They are correct. A VT is different than an early settlement.

Its 50% of the total overall transaction cost. Thems the rules.

boliston

I'm sure that as long as the vehicle is in good condition regardless of mileage that the '50% rule" MUST be applied and they cannot go a penny over it. Also you don't need to pay the balance prior to termination - you can terminate and wait for the final bill before settling.

neilmcl

boliston wrote: »

I'm sure that as long as the vehicle is in good condition regardless of mileage that the '50% rule" MUST be applied and they cannot go a penny over it. Also you don't need to pay the balance prior to termination - you can terminate and wait for the final bill before settling.

But it[s 50% of the total finance, incl ALL interest and fees.

boliston

neilmcl wrote: »

But it[s 50% of the total finance, incl ALL interest and fees.

Did I say it was anything other than 50%?