Personal Contract Hire - Honda/Arval

manxaccie

Hi

Just looking for a bit of advice please. Halfway through a 36 month personal contract hire agreement with Honda. Personal circumstances dictate that I could do with settling early. They have given me two options: -

1. Actual cost - ESTIMATE only of £50.00 depending on market prices on day of sale.

Or

2. 50% outstanding rentals - £1800

Obviously the actual cost method would be the cheapest, but does anyone know how this works? Ie. If Honda sell this at auction for £5k less than the estimated price, do I get sent a bill for the £5k?

Is it a bit of a gamble to settle by this method as opposed to just paying the 50% rentals?

Many thanks

Stephen

DoaM

I don't understand ... with PCH you never actually own the vehicle? (The clue is in the name ... Personal Contract Hire). So why is the onward sale of the vehicle relevant to you?

Is this actually a Personal Contract Plan with a final option to purchase/balloon payment? With these you have a Voluntary Termination option that you can invoke once you've reached 50% payments against the contract value (including balloon payment amount and contractual interest). On a 36 month plan you probably don't reach the 50% milestone until month 33. (After the contract term you can either pay the balloon amount and keep the vehicle, or pay no more and hand it back).

manxaccie

The onward sale would be relevant to me if I get stiffed for excess charges!

Honda have given me two different options to terminate early.

The first option is An actual Cost Termination. The figure produced is an estimated cost. (£50.00) The figure would depend on market prices on the day the vehicle was sold.

Or

50% of outstanding rentals - £1800.00

So they have given me the option of paying £50.00 or £1800 to terminate the agreement. It's a no brainer, unless what they call the estimated figure suddenly shoots up. I don't know how it's calculated and nobody is answering the phone. Just wondered if anybody had any experience of this?

Thanks

Stephen

neilmcl

I agree Honda only charge 50% of the remaining rentals but are you sure you are understanding this other option correctly, it doesn't sound right to me. I'd keep trying to get hold of them and get them to explain in detail.

manxaccie

Finally managed to speak to someone at Honda.

The Honda estimate of £50.00 is based on their (undisclosed) market valuation. In summary, they sell the car at auction and I am liable for any shortfall between what they achieve at auction and their market value.

They claim that they wouldn't just accept any old value for the car, but that would be a heck of a gamble for me to take! It can take up to 3 months to sell the car, and, potentially, you could be hit with a rather large bill.

Thanks for all who replied!

Kind regards

Stephen

neilmcl

Market value will simply be the trade value. If the car's in reasonable condition I doubt the difference between what it sells at auction and the trade value will be near the £1800 you're being asked to pay with the other option. However, as you say it's a gamble, and something only you can decide whether to take.

DoaM

I still don't understand how you are liable for termination costs (selling of the vehicle) with a Personal Contract Hire (lease) arrangement. (As per this thread title). If you mean a Personal Contract Plan then this thread makes sense, otherwise it doesn't.

neilmcl

DoaM wrote: »

I still don't understand how you are liable for termination costs (selling of the vehicle) with a Personal Contract Hire (lease) arrangement. (As per this thread title). If you mean a Personal Contract Plan then this thread makes sense, otherwise it doesn't.

This is just an option the hirer is giving the OP and seems quite reasonable, either pay 50% of the remaining rental or we'll sell the car at auction and you'll pay any shortfall between the auction price (and presumably incl. fees) and the current market value. I don't see any confusion there.

DoaM

Thanks. Explained THAT way it makes sense.