Trying to figure out my PCP options

stadler123

I've got Nissan Qashqai on a 36-month PCP contract financed by RCI. By the end of this month, I will have made 26 payments. Last weekend I had a conversation with the car dealer I bought the car from. They estimated the value of the car and told me that it has negative equity and my best option would be VT in 6 months. It's a bit of a disappointment as I hoped that I would have at least something by the end of the term to roll over to the new contract given that I put down a 6.5K deposit. I guess it's a combination of me being a bit too optimistic and the higher depreciation of diesel vehicles over the last couple of years. In any case, I am trying to figure out what to do. I was trying to determine when I am going to be 50% through my payments and I am not sure if I will by the end of my contract. Probably I calculate it wrong.

I am looking at the Agreement Details online, and currently, it shows the following:

Outstanding amount £15,820.21
Financed Amount £20,704.00

I have to pay back £10,352 to reach the 50% point. Therefore, I’m still short £5,468.21 of this amount. I pay £276.57 a month, meaning I will pay by the end of the agreement only £3,042.27 of which some amount is the interest. So I don’t see how I can do VT and walk away in six months as the dealer advised. Do I miscalculate something?

Ganga

If you pay £276.57 a month and have paid 26 payments plus you put £6500 down you have paid them £13,690.80,how much was the car to start with.
You would only of paid £9956.52 in three years ( 36 x £276.57 )
Something does not seem right unless there is a big baloon payment due at the end of the 36 months.

BoGoF

I assume you meant to say best option for the dealer?

stadler123

I think the car was around 26K+. So it was a 6.5K deposit and 20K financing.

stadler123

I guess that for the dealer the best option would be me trading in the car and rolling the negative equity into the new one. But I don't know.

Herzlos

I'd assume the dealer is giving you advice that suits the dealer rather than yourself, until you can verify independently.



I'm not sure why you'd want to VT 4 months before the PCP ends unless you're worried about excess mileage charges?


Your PCP will have set a final value (balloon payment), so what you need to figure out is what the car will be worth at the 36 month mark where you'd hand it back.
If it's worth less than the balloon, hand it back and walk away.
If it's worth more than the balloon, then either buy it or use the equity for a new deposit.


If you've got a lot of excess miles, then it may be better to VT it before the term runs out as you may not be pursued for them.

facade

The "negative equity" simply means the car is worth less than paying off your agreement now. It most certainly isn't your problem. (Unless you are desperate to change cars) As you pay off more of the loan, the negative equity reduces, until, if the lender got it right, the negative equity is zero at month 36.


Keep paying like you are until you get to:


a) the VT point- you can hand it back, owe nothing, get nothing.
b) the last payment- if it is still worth less than the balloon, hand it back and smile, knowing you are sort of a winner- if it is worth significantly more than the balloon, buy it and flog it again, if worth near the balloon, your choice, buy it or hand it back.


Changing now has only 1 outcome- the dealer makes loads, and the finance company make loads.

Nasqueron

What's wrong with option 3 - keep the car? Do you need a brand new car to replace a 3 1/2 year old one and pay another 20k+ in fees?

stadler123

Thanks a lot for the comments.

I just never intended to buy the car out at the end of the agreement. I am going to check my actual agreement (it's not available online, doh), but do I understand correctly that at the end of the agreement I will have a choice of either to pay the balance and get the car or just walk away? Luckily enough I am OK with mileage (set it below my usual annual amount as I was not going to walk away from the car, but due to some reasons spent much less than usual last year and not I can control it to make sure I am not over or not much).

Herzlos

stadler123 wrote: »

but do I understand correctly that at the end of the agreement I will have a choice of either to pay the balance and get the car or just walk away?

Correct.


A 3rd option, if the value is more than the balance, is to trade it in and use that difference towards a new deal.