Settling PCP early / Negative equity

Matt.r

Hey guys.

I have a car on PCP finance with PSA, i have paid over 50% and have requested to VT the contract. I have got all the paperwork, i just need to sign it and send it off. My question is about negative equity. My car is about £2,000 negative. Nowhere in my contract does it even mention negative equity, it says i'll be charged for excess mileage, and/or damage, but after that there will be nothing more to pay. It doesn't mention it in 7 page settlement document either, not even in the small print. I've tried phoning them for the past 2 days but they seem to have limited opening and closing times, and i never catch them. So do you guys think i will need to pay it? or do you think it will just be written off as there is no mention of it?

Thanks :beer:

chanz4

50% of the total agreement you pay

bazzyb

As above, the 50% figure is of the total, including the balloon payment, not just 50% of the monthly repayments.
How far in to the agreement are you? If you have genuinely paid 50% of the total repayable then you are likely to be coming towards the end of the PCP agreement anyway (generally speaking).

bris

You don't pay negative equity on a VT as long as the 50% is reached.


As already mentioned it's not just half the monthly payments, remember to factor in half the balloon payment too.

Nebulous2

You need to take advice before signing an agreement. If you genuinely qualify to VT it then you shouldn't need a settlement agreement. I've never done it but there have been posts here before about companies trying to make people sign up to something which restricts their rights.

It may well be that what you are being offered is not a VT. Most PCP type plans are structured so that the 50% point arrives very late in the agreement period.

Borders2017

Possibly someone with more knowledge will correct me but as I understand....

VT will allow you to hand the car back (no matter what mileage) but within fair wear and tear (ie you have not crashed it!) as long as 50% of the whole balance has been repaid. As mentioned above this is not 50% of the repayment part of the loan, but the whole amount including the balloon payment and interest.
This means you will have lost any initial deposit you have put into the car, but means you can end the agreement early.

If you are not in the position to end asVT (as I found myself, and needing a quick sale) I sold the car to a motor trader (as hard to sell privately if has finance, from what i understand.. I could be wrong). Then I ask for a settlement fee from the fiance company and paid the shortfall (about £750 in my case).

If indeed you are at true VT point, then i would think you dont have to pay anything additional. And you should contest with the fiance company if they ask you to.

Please let us know how you get on :-)

Borders2017

I believe most cars that get handed back on VT from large dealers just go to Auction. As the dealer will still get back most of the value as you have overpaid/covered the depreciation for them.

foxy-stoat

If there was a minimal deposit and low monthly payments then the VT point will probably be somewhere near the end of the agreement.

Nasqueron

I did the maths on this a while back and pretty much into the third year before you get 50% of the total amount depending on deposit and balloon size on a 0% deal

molerat

If you VT there is no paperwork to sign. Any paperwork will undoubtedly mean you will be agreeing to pay for something. DO NOT SIGN ANYTHING.

Early termination is a whole different ballgame and you can be held responsible for large costs.

You need to weigh up the costs of ET against making up the payments to 50% to VT.

As for excess mileage charges on VT, the FOS has rejected several consumer complaints on them being unfair upholding the lenders right to charge them.

motorguy

Matt.r wrote: »

Hey guys.

I have a car on PCP finance with PSA, i have paid over 50% and have requested to VT the contract. I have got all the paperwork, i just need to sign it and send it off. My question is about negative equity. My car is about £2,000 negative. Nowhere in my contract does it even mention negative equity, it says i'll be charged for excess mileage, and/or damage, but after that there will be nothing more to pay. It doesn't mention it in 7 page settlement document either, not even in the small print. I've tried phoning them for the past 2 days but they seem to have limited opening and closing times, and i never catch them. So do you guys think i will need to pay it? or do you think it will just be written off as there is no mention of it?

Thanks :beer:

DO NOT sign any paperwork when doing a VT. You are not obliged to and they could use it to remove your rights under a VT