PCP options

chifans

Hi all,
I’d appreciate some advice regarding my options around a pcp deal.
I currently have a Honda CRV on a 3 year pcp deal with 6months left based on 20k miles per year. I’ve recently started a new job which I envisage will mean more miles and I,m currently about to hit the 60k limit with approx 6 months left and I reckon I’ll do another 10k in that time.
I went to the dealer last week to discuss options and they said that my car is in negative equity by approx 1.5k and will be roughly the same when the deal ends. I only put in £1k at the start of the agreement and am paying approx £500 month inc servicing. They were quoting me £650 month for the sa,e deal on a new model,
I spoke to Honda finance who told me that there would be no penalties for giving the car back and it would be the same as if I give it back in 6 months time, I,m guessing they mean via voluntary termination.
What’s my best options based on my circumstances?
Run the deal out and look to buy the car?
Hand in early and look for another pcp deal?
Are there any hidden implications in handing it back early?

Any advice greatly appreciated?

motorguy

£650 a month seems an awful lot to be spending on a new car.

What about taking a personal loan on your current car for the balloon payment and running on at it?

Being a Honda it should be reliable. Big miles = big depreciation = big monthly payments on a PCP deal

neilmcl

I'm sure Honda Finance meant there would be no penalties as long as you meet the criteria of handing the car back in a reasonable condition and not exceeding the agreed mileage allowance. With 6 months to go and only a small deposit paid I doubt you'd be in a position to VT just yet.

wgl2014

What are excess miles charged at?

If the car is actually going to be worth £1.5k less than the optional final payment it may be best to hand the car back and pay for the miles or consider a VT once you have paid half the TOTAL cost (which is going to be quite near the end of the agreement).

As for a replacement I would consider buying a 2 or 3 year old car outright (or with a low APR bank loan). Let the first owner take the hit for depreciation.

Cornucopia

These PCP figures are very high, and not entirely explained by a low deposit.

I'd always recommend comparing PCP figures with a Lease for the same/similar vehicle. In this case, Honda CR-V leases start at around £260pm, with £1550 down and 36 months/10,000miles agreement. (Or with a lower deposit, £275pm + £825 down).

If Honda Finance are amenable to VT (which is what I take from the OP's comments), then I would do that, but look very carefully at the next deal. I suspect that the £650 payment includes debt taken over from the current car, which under the VT option is not required.

As an example of what is possible on Lease, I have just ordered a new Skoda Octavia at £183pm including maintenance and auto gearbox, with £1700 down on a 36 month deal, 10,000 miles pa.

DrEskimo

Is £1,500 less than the settlement figure a fair valuation for your car??

I can’t believe the amount of people that just accept whatever the first dealer offers them and treat it as gospel!

The dealer is trying to get the car off you as cheaply as possible to increase his profit when he sells it on. Shop around! Look on AutoTrader, ring other dealers, try a site called Tootle, look at WBAC and Evans Halshaw. Do your research and establish whether you can get a better price for it, before just accepting that it’s in ‘negative equity’.

chifans

Thanks for all the replies. I have confirmed with Honda that I can terminate early with no penalties.
I,m doing more research looking at current valuation but I’m thinking I may just buy it out at the end and piling the miles on it!

DrEskimo

chifans wrote: »

Thanks for all the replies. I have confirmed with Honda that I can terminate early with no penalties.
I,m doing more research looking at current valuation but I’m thinking I may just buy it out at the end and piling the miles on it!

Might as well buy now if possible and save on 6months worth of interest.

James2k

Cornucopia wrote: »

These PCP figures are very high, and not entirely explained by a low deposit.

I'd always recommend comparing PCP figures with a Lease for the same/similar vehicle. In this case, Honda CR-V leases start at around £260pm, with £1550 down and 36 months/10,000miles agreement. (Or with a lower deposit, £275pm + £825 down).

If Honda Finance are amenable to VT (which is what I take from the OP's comments), then I would do that, but look very carefully at the next deal. I suspect that the £650 payment includes debt taken over from the current car, which under the VT option is not required.

As an example of what is possible on Lease, I have just ordered a new Skoda Octavia at £183pm including maintenance and auto gearbox, with £1700 down on a 36 month deal, 10,000 miles pa.

he does double your mileage

Cornucopia

I doubt that would increase the payments hugely.

I found an Octavia on 20k miles, 48 months, £238pm + £484 down.

James2k

well that is 30% more pm, on a different term length

you are right though, and if i was looking to replace my car every few years for some reason, id lease.