Help with my current PCP

Iyamate18

Hi there,

So in November 16, I entered into a PCP agreement after passing my test for a new car. Its a 49 month agreement at £15033.00, I have a mileage allowance of 6000 per year and 24500 at the end of the agreement.

I have a problem as my estimated mileage per year was around 4500-5000 but my circumstances have changed and my current job is a lot further to travel and I used to walk to work.

If i continue to drive to work my mileage by the end of the agreement will be around 42000, ive done the math and the bill is scary. Public transport is not an option for me unfortunately.

Do I just have to suck it up and prepare for the bill by puttiny money away each month? Should I consider early termination at half way point or is this a no go if I ever want another car on finance? Is negotiating with the finance company viable?

Thanks in advance guys.

facade

Someone asked this on here recently.

Choices are:

1) put away 1/49 of the final (balloon) payment each month and buy the car outright at the end.
2) contact the finance and renegociate based on 42,000, they charge less if you agree at the beginning.
3) VT it as soon as you can, and they can't hold you to the mileage agreement.
4) Put aside the extra to pay the mileage.

Do the maths and figure out which is best value, remember if you go for 1) that you have a car worth something rather than just a hole in your wallet.

facade

My mistake, I didn't do the maths, option 1) should be: put away 1/40 of the balloon, as you are 9 months in.

There is also option 5) ask the finance for a settlement figure, and take out a 3 year personal loan for this amount, which might work out cheaper than 1) depending on the interest rate, but you can't then VT the car as you will be stuck with paying off the loan.

bazzyb

What were you intending on doing at the end of the term? If you plan on keeping the car then the mileage doesn't matter. You can pay the balloon payment, or potentially refinance it, and there won't be any excess mileage. You could potentially also part exchange the car, depending on its value.

The excess mileage charge is only payable if you were planning on handing the car back at the end of the term and walking away.

Iyamate18 wrote: »

Should I consider early termination at half way point or is this a no go if I ever want another car on finance?

If you VT a car it can make it more difficult to get a car on finance for the next 6 years (that's how long it will show on your credit profile) but it certainly won't male it impossible. Some lenders don't like it but some are either less bothered about it or not bothered at all.

Iyamate18

Great advice thanks, gives me a bit of a choice there. I think the most cost effective way to do it is probably save up for the car balloon payment and at least then its mine at the end.

Other thing im thinking off is a VT and a possible bank loan and buy my next car outright, but again its whether or not lenders are prepared to offer me a loan after the VT.

bazzyb

I'm not aware of any lenders that would have an issue with VT for personal loan purposes. Some lenders won't do another HP or PCP to somebody with a VT, others will put restrictions on the terms of the agreement - the reason they do this is they perceive there is a risk that you would VT again. With a personal loan there would be no such risk to the lender.

System

Iyamate18 wrote: »

a possible bank loan and buy my next car outright,

That isn't buying the car outright, its putting it on credit again and kicking the can down the road. Save up money to buy a car or that car in cash outright. You'll then finally break the cycle of perpetually paying out £100s a month to rent a car you can't afford, something which you'll be grateful for if you lose your job or your circumstances change. The loans and DFW boards are littered with people who are in serious financial trouble because of a PCP/HP loan on a car they got they couldn't actually afford when things changed.

motorguy

Tarambor wrote: »

That isn't buying the car outright, its putting it on credit again and kicking the can down the road. Save up money to buy a car or that car in cash outright. You'll then finally break the cycle of perpetually paying out £100s a month to rent a car you can't afford, something which you'll be grateful for if you lose your job or your circumstances change. The loans and DFW boards are littered with people who are in serious financial trouble because of a PCP/HP loan on a car they got they couldn't actually afford when things changed.

Who said the O/P couldnt afford it? Or have you arbitrarily decided that?

motorguy

Iyamate18 wrote: »

Great advice thanks, gives me a bit of a choice there. I think the most cost effective way to do it is probably save up for the car balloon payment and at least then its mine at the end.

Other thing im thinking off is a VT and a possible bank loan and buy my next car outright, but again its whether or not lenders are prepared to offer me a loan after the VT.

Do as per your saying and either save up and pay the balloon at the end of term outright, or set aside an amount per month now extra to cover either the excess mileage payment OR towards the reduced value of the car because of the higher miles.

If you VT the finance company will pursue you for the excess mileage charges - they cant legally enforce it, but they will pursue you and try to make your life that miserable that you pay.

neilmcl

Have you considered speaking to the finance co? I've heard of a few occasions where some have allowed customers to increase their mileage allowance at no or little cost.

System

motorguy wrote: »

Who said the O/P couldnt afford it? Or have you arbitrarily decided that?

AFFORD: Verb. To have enough money to pay for.
If you can afford it you have the moneny to buy it outright in cash. If you can't afford it you get it on PCP/HP. "Affording the monthly repayments" is not the same as "being able to afford to buy a car."