Renault PCP. Does this sound right?

Sheep

Hello,

Thanks for your time. In 2014 I took out a PCP contract for a new Renault Clio. My balloon payment is due in September 2018 and I want to start overpaying ready for this payment.

I called Renault and said I have a balloon payment of 5k due out next year. I have 2k sat in savings and would like to pay this off now and then id like to over pay every month thereafter do when September 2018 arrive i owe nothing.

"Sorry we cant do that". Thats all im hearing. They are saying if I paid 2k off now it will just reduce my monthly payments until September 2018 and then any overpayment will keep reducing it further.

Basically unless I am in a position to pay the full lot off in full I cannot overpay and save on interest. I dont want this money sat in a savings account earning little interest. I want it off my PCP!

jonesMUFCforever

Yes they are correct - this sounds exactly like the terms of my last car purchase (with Ford finance).
On the balloon payment it is all or nothing.

Why you may ask is this? - Simple really the PCP is priced at a level meaning you cannot pay more than 50% of the total price ie you can't hand the car back by VT after you have paid half.

You signed up for this I guarantee you!

motorguy

Sheep wrote: »

Hello,

Thanks for your time. In 2014 I took out a PCP contract for a new Renault Clio. My balloon payment is due in September 2018 and I want to start overpaying ready for this payment.

I called Renault and said I have a balloon payment of 5k due out next year. I have 2k sat in savings and would like to pay this off now and then id like to over pay every month thereafter do when September 2018 arrive i owe nothing.

"Sorry we cant do that". Thats all im hearing. They are saying if I paid 2k off now it will just reduce my monthly payments until September 2018 and then any overpayment will keep reducing it further.

Basically unless I am in a position to pay the full lot off in full I cannot overpay and save on interest. I dont want this money sat in a savings account earning little interest. I want it off my PCP!

Yup. They're right. A car finance deal is not designed to normally allow over payments.

motorguy

jonesMUFCforever wrote: »

Yes they are correct - this sounds exactly like the terms of my last car purchase (with Ford finance).
On the balloon payment it is all or nothing.

Why you may ask is this? - Simple really the PCP is priced at a level meaning you cannot pay more than 50% of the total price ie you can't hand the car back by VT after you have paid half.

You signed up for this I guarantee you!

No.

Usually you reach the half way point of a 36 month PCP arrangment between months 30 and 33.

takman

Sheep wrote: »

Hello,

Thanks for your time. In 2014 I took out a PCP contract for a new Renault Clio. My balloon payment is due in September 2018 and I want to start overpaying ready for this payment.

I called Renault and said I have a balloon payment of 5k due out next year. I have 2k sat in savings and would like to pay this off now and then id like to over pay every month thereafter do when September 2018 arrive i owe nothing.

"Sorry we cant do that". Thats all im hearing. They are saying if I paid 2k off now it will just reduce my monthly payments until September 2018 and then any overpayment will keep reducing it further.

Basically unless I am in a position to pay the full lot off in full I cannot overpay and save on interest. I dont want this money sat in a savings account earning little interest. I want it off my PCP!

Well if you can't overpay and save interest then your first step should be to open a Nationwide account to get 5% interest on your £2000. Keep paying as much as you can into this account until it gets to £2500.
Then open up the regular savings account which pays 5% interest and pay into that every month. Then when your PCP ends you will have enough money to pay the baloon payment.

bearcat16

No disprespect, but I think you are misunderstanding what they are saying.

You CAN overpay, and it WILL save you interest.

Interest is calculated daily on the total amount outstanding. If you reduce the total amount outstanding by £2,000 then you will save the interest on that every day remaining of the agreement.

Your original agreement is calculated to last a fixed term, say 3 years. If you overpay, it still must last 3 years because they've given you a "guaranteed future value" at a certain date (the 3 year point), so they simply reduce the monthly payment so the end date is still the same.

The point is that you only pay interest on the total balance outstanding, so if you make an overpayment it WILL reduce the interest you pay. All consumer finance agreements work this way.

In my experience, RCI bank are very good at helping you to make overpayments and manage your agreement. You have just misunderstood what they were saying.

jonesMUFCforever

bearcat16 wrote: »

No disprespect, but I think you are misunderstanding what they are saying.

You CAN overpay, and it WILL save you interest.

Interest is calculated daily on the total amount outstanding. If you reduce the total amount outstanding by £2,000 then you will save the interest on that every day remaining of the agreement.

Your original agreement is calculated to last a fixed term, say 3 years. If you overpay, it still must last 3 years because they've given you a "guaranteed future value" at a certain date (the 3 year point), so they simply reduce the monthly payment so the end date is still the same.

The point is that you only pay interest on the total balance outstanding, so if you make an overpayment it WILL reduce the interest you pay. All consumer finance agreements work this way.

In my experience, RCI bank are very good at helping you to make overpayments and manage your agreement. You have just misunderstood what they were saying.

I can only give advice based on my own PCP (but with Ford finance). I could have overpaid any amount on the loan part but if you wanted to repay early the balloon part it had to be all or nothing.
It was in my terms and conditions.
He could see if taking a personal loan to pay the balloon then overpaying on the loan would be worthwhile.