Help on car PCP

loey93

Hi All

I weren't sure whether to put this on the debt forum or this forum as it is to do with reducing my outgoings but at the same time aimed at my car PCP.

Basically I pay £285.00 a month on a PCP deal over a 48 month period - I have been paying it for 30 months so I have 18 months left and then a HUGE balloon payment of £10k, baring in mind I have already put a 6k deposit down !! (Don't ask why I ended up doing this stupid PCP deal as in hindsight I would of never done gone for it)

Anyway... I really need to reduce my monthly outgoings as personal circumstances have changed (I won't go into detail on here). So I have been thinking about a few options and I just need peoples thoughts on what they think is best.

Option 1:
My settlement figure is 14k currently. I could get a personal loan of 14k, pay the finance company off and sell the car privately (worth about 13k so I will lose a bit) - I can buy a cheaper car for say 5k and pay a huge chunk off the loan

Option 2:
Go to the dealer that I got the car from and ask if I can downgrade in anyway therefore reducing my monthly payments. Ideally I don't want to be paying anymore than £180.00 pm

Option 3:
Hand it back ... BUT it has a slight few scuffs (scratches and chips), I have gone over mileage and they charge 7p per mile plus I'm sure they will charge me for the minor damage

Any feedback would be great please

Thanks in advance

Herzlos

Do you want to keep the car afterwards? You could maybe get away with borrowing the £14k @ around £180/month.



It sounds like your options are either to borrow to cover the settlement then sell it, or find out how much it'll cost to get it to the Voluntary Termination (VT) point where you can just hand it back. If you VT then you shouldn't get charged for the suplus mileage or anything that would be regarded reasonable condition.

DrEskimo

Easy, option 1.

Option 2 will never end well (they will offer you poor P/X and take the opportunity to roll the negative equity into your new deal, which will leave you financing an even higher sum on a worse car...).

Option 3 won't be possible without paying to get to the VT mark, which will be roughly 10/12 payments. By which point you might as well just keep paying it monthly and keep the car until you reach the VT in your contract...(which you wouldn't do because it's likely you've now paid enough of the finance off that the car could be sold privately for a bit more than the finance owed....).

DrEskimo

loey93 wrote: »

Basically I pay £285.00 a month on a PCP deal over a 48 month period - I have been paying it for 30 months so I have 18 months left and then a HUGE balloon payment of £10k, baring in mind I have already put a 6k deposit down !! (Don't ask why I ended up doing this stupid PCP deal as in hindsight I would of never done gone for it)

NB the size of the upfront payment has no bearing on the balloon payment. That is what the dealer has predicted a 48month old version of your car with the agreed mileage is worth.

You have agreed to pay (285*47+6000) £19,395 over the course of 48months. This is the depreciation + interest to borrow the money. How you decide to break that down (high deposit low monthlies/low deposit high monthlies) is immaterial (bar a few quid savings in interest due to financing a slightly lower amount). It doesn't change what the dealer thinks your car will be worth in 48months time with X miles on the clock...

That's why new cars are expensive, they depreciate a lot! That's also why PCP is expensive, it charges a shed tonne of interest!