Voluntary Termination - Audi Finance PCP

StuMcBill

Ive got an Audi Q5 on a 3 year PCP plan, which runs out in June. So I've been looking at new cars over the past few weeks, and have been getting shocking deals from car dealerships. I found out today its because at the moment, and even at the end of my term, I'm going to be in negative equity - and I've been recommended to do a voluntary termination and hand the car back and get a new deal.

My yearly mileage limit was 10,000 and I've done 27,000 so I'm under the limit, however, is this pro-rata'd? Ie could I possibly be due them some cash when I hand it back?

I'm presuming that doing this will not affect my credit score in anyway?

Also, I've got a private number plate, presumably I just need to put that on retention before speaking with Audi Finance?

I realise that there are quite a few posts here about VT already, but I couldn't see any asking my specific questions?

Thanks,
Stewart

neilmcl

Why are your looking for cars now, just wait until nearer the time your PCP ends.

motorguy

StuMcBill wrote: »

and I've been recommended to do a voluntary termination and hand the car back and get a new deal.

And that wouldnt have been by a car salesman looking to sell you a car right now would it?

Cornucopia

StuMcBill wrote: »

... and even at the end of my term, I'm going to be in negative equity...

At the end of the term, you have the option to give the car back and owe nothing, irrespective of its then market price. So, if the negative equity is significant, you would be best advised, as above, to wait for term completion.

...and I've been recommended to do a voluntary termination and hand the car back and get a new deal.

Depending on the detailed figures, that could be extremely bad advice.

StuMcBill

Thanks for the replies, but what difference does it make if I hand it back now or at the end of the term?

Erm, it was by a salesman actually, although I can't see the issue with it, unless I'm being really stupid?

The outstanding finance is £23000, but I'm only looking at getting £19000 or so for the car, and even when its up in June, the negative equity will still be in the same ballpark?

Looking just now just in case I needed to order something which took a few months to come.

Cornucopia

StuMcBill wrote: »

Thanks for the replies, but what difference does it make if I hand it back now or at the end of the term?

1. The terms of handing the car back are different depending on whether you do it now (under VT/50%), or at the end of the term(under contract/£0). This may or may not make any financial difference, but it is worth cranking the figures to make sure. With PCPs, the 50% point can occur quite late in the term, so it's worth checking that you qualify.

2. You will have paid a sizeable deposit at the start of your agreement, and this is in effect dispersed across your entire period of ownership. If you cut your ownership short, you will lose some of the benefit of that.

bazzyb

StuMcBill wrote: »

I'm presuming that doing this will not affect my credit score in anyway?

Your credit score is pretty irrelevant as it is only seen by you.

If you do go down the VT route, then the agreement will be marked as voluntary terminated on your credit file. The impact this will make to you will depend on a number of factors - essentially some lenders don't like to see VT but other lenders won't care at all.

As others have suggested though it seems odd to VT now when you can hand the car back at the end of term in June.

Svein_Forkbeard

Just wait until the PCP contract ends hand the car back without taking up the option to but it pay any excess mileage (minimal by looks) and any dings.

Job done, then buy car you can afford the next time.

StuMcBill

bazzyb wrote: »

Your credit score is pretty irrelevant as it is only seen by you.

If you do go down the VT route, then the agreement will be marked as voluntary terminated on your credit file. The impact this will make to you will depend on a number of factors - essentially some lenders don't like to see VT but other lenders won't care at all.

As others have suggested though it seems odd to VT now when you can hand the car back at the end of term in June.

Thanks for the replies, all makes sense now!

If I hand it back at the end of the term, does that still count as a VT?

Cornucopia

StuMcBill wrote: »

If I hand it back at the end of the term, does that still count as a VT?

No, they are two different things.

Not sure if the official guide covers VT, but it's an easy read, anyway...

https://www.moneysavingexpert.com/car-finance/personal-contract-purchase

motorguy

StuMcBill wrote: »

Thanks for the replies, but what difference does it make if I hand it back now or at the end of the term?

Because you can simply continue make the payments until the end of term and take the time to sort out a new car on your own terms not be knee jerked in to it by a salesman.

StuMcBill wrote: »

Erm, it was by a salesman actually, although I can't see the issue with it, unless I'm being really stupid?

Because its not impartial advice. Hes giving you advice that benefits him, not you

StuMcBill wrote: »

The outstanding finance is £23000, but I'm only looking at getting £19000 or so for the car, and even when its up in June, the negative equity will still be in the same ballpark?

The negative equity wont be your problem. Currently - you're winning. You've a situation whereby they got it wrong. Relax and enjoy it, it doesnt happen often.

StuMcBill wrote: »

Looking just now just in case I needed to order something which took a few months to come.

Thats fine, do that, just dont VT now.