Questions about what happens at the end of a PCP

splinternet

The MSE article "What is Personal Contract Purchase" is quite helpful, but in the section explaining what happens at the end of the deal, the article seems only to be catering for a situation where the finance was agreed with the dealer. (In my case, I arranged the PCP with my bank). So for example, option 2 says "Hand the car back and walk away. This means you have nothing more to pay (subject to damage, and over-mileage charges, see below for more info)". Who would I hand the car back to - the bank? Are they geared up for this? Then there's option 3: "Get a new car. This is the most common option for people taking a PCP deal. Usually at the end of a PCP deal, the car will be worth slightly more than the balloon payment. And if this is the case, your dealer will usually ask if you want to use that 'equity' as a deposit on a new PCP deal on a brand new car. For example, if the car’s actual value at the end of the deal in the example above was £9,000 and the balloon payment is £8,000, you’d have the difference of £1,000 that you could use as a deposit to roll into another deal." Again, as I financed the PCP with my bank, how would this option work for me?

Maybe I'm wrong but it seems to me that perhaps the only viable option with a bank PCP is option 1, where I pay them the pre-agreed balloon payment. So with this option in mind, there are two things I'm not clear on.

Firstly, I'm probably going to cover appreciably less mileage than I'd based the PCP on (7k p.a. as opposed to 10k), so how would this benefit me? I've read that there are penalty charges if I were to exceed 10k p.a. but I don't see anything that addresses the reverse situation.

Secondly, if I'm going to pay the balloon payment, then would it matter to the bank if I were hypothetically to have exceeded the 10k p.a. (and/or if the car was not in good condition) provided they get their balloon payment?

missile

Your options should be clearly stated in your PCP agreement. If after reading this you are still in doubt, ask your PCP provider to confirm in writing.

loskie

I am sure you can hand it back, they will just send a car auction rep to come and appraise and collect it.
You don't say who the lender is but Halifax says:

https://www.halifax.co.uk/car-finance/help/faqs/#ending

splinternet

It's Lloyds.

neilmcl

splinternet wrote: »

It's Lloyds.

Then ask them.

TBH, I'd imagine you get the same options as you would if arranging the finance at dealership and you finance pack should explain all the relevant options that are open to you. As mentioned you should read your documents.

At the end of the day, you'll be dealing with the Bank's car finance dept who will be "geared up" to arranging to take your car back.

As far as you other questions are concerned, if you're keeping the car the condition and mileage allowance doesn't come into it. Doing less mileage than agreed wont have any benefit, other than the car maybe being a bit more valuable at the end of the agreement.

splinternet

Many thanks Loksie. If you paid for lessons in people management and friendly disposition, I suggest you get your money back. I may be a tw*t in your eyes but a response like that has no place in this forum.

If the moderator is reading this, please comment.

Mercdriver

splinternet wrote: »

Many thanks Loksie. If you paid for lessons in people management and friendly disposition, I suggest you get your money back. I may be a tw*t in your eyes but a response like that has no place in this forum.

If the moderator is reading this, please comment.

Good luck with that. Especially as many (me included) won't see his response as being abusive in any way.

It's not out of order for people to expect you to do a little homework yourself. People here are generally willing to help, but you do have to do some work yourself

splinternet

The homework I did for myself was to read the MSE guide on car finance before buying my car, and again when I had these questions. On the basis of the article, I chose a PCP and saw that my bank had a good deal. I asked my questions above as I thought others probably might have the same questions and it would be useful for them too as it wasn't crystal clear in the article. I'm not a financial expert (hence I turn to MSE) and I certainly hadn't bargained for a response containing mockery which was borderline abuse. Perhaps the responder got out of bed the wrong side?

neilmcl

splinternet wrote: »

The homework I did for myself was to read the MSE guide on car finance before buying my car, and again when I had these questions. On the basis of the article, I chose a PCP and saw that my bank had a good deal. I asked my questions above as I thought others probably might have the same questions and it would be useful for them too as it wasn't crystal clear in the article. I'm not a financial expert (hence I turn to MSE) and I certainly hadn't bargained for a response containing mockery which was borderline abuse. Perhaps the responder got out of bed the wrong side?

You don't need to be a financial expert to simply read the documentation and agreement you no doubt got from the bank when you took out your finance and it doesn't take a whole lot of homework to google the product in question, as loskie was able to do, to be able to answer your basic questions.

Mercdriver

splinternet wrote: »

The homework I did for myself was to read the MSE guide on car finance before buying my car, and again when I had these questions. On the basis of the article, I chose a PCP and saw that my bank had a good deal. I asked my questions above as I thought others probably might have the same questions and it would be useful for them too as it wasn't crystal clear in the article. I'm not a financial expert (hence I turn to MSE) and I certainly hadn't bargained for a response containing mockery which was borderline abuse. Perhaps the responder got out of bed the wrong side?

The thing is if there was a particular part of the Ts and Cs you were unsure of and posted a question about that part, you would likely have had a response you would have found more helpful.

Nasqueron

splinternet wrote: »

Firstly, I'm probably going to cover appreciably less mileage than I'd based the PCP on (7k p.a. as opposed to 10k), so how would this benefit me? I've read that there are penalty charges if I were to exceed 10k p.a. but I don't see anything that addresses the reverse situation.

Secondly, if I'm going to pay the balloon payment, then would it matter to the bank if I were hypothetically to have exceeded the 10k p.a. (and/or if the car was not in good condition) provided they get their balloon payment?

If you are intending on buying at the end, as I am with mine, mileage is irrelevant (ditto any bumps or scrapes etc) - the mileage only effects the guaranteed value (which is based on your predicted mileage), if you are just paying back the final cost then the value can be ignored, just treat it as a normal loan. Mine was on 0% so financially made more sense to PCP and earn money on the money in the bank