VT PCP agreement or wait it out?

Stewart239_2

Hi

I have a PCP with VW finance. The final monthly payment is due mid-December and then the ballon mid-January. I’ve decided to hand the car back and not enter into another PCP agreement due to a change in circumstances.

I called up the other day to book in a collection following my final payment, which I asked to pay early, but the finance company refused. I was told that they will not look into booking in the collection until after the scheduled day for the final payment (14th December). The collection will then take four weeks later, so they won’t come and get the car until mid-January.

At that point, the car will be out of MOT as it will be three years old and also will be due an annual service, which I am told will be required for the collection. More money!

I asked if there was anyway round this, as I’m ready to give the car back now and they suggested voluntarily terminating the agreement (which requires my final payment + an extra £45) to bring me up to the 50% point. The collection process would then take around 14 days to arrange and at that point the car will have a valid MOT and service. It also removes the temptation to rack up more excess mileage charges (currently about £500).

It seems to make sense to VT, but I’ve got in the back of my head that when it comes to VT the inspection will be with a finer tooth comb than normal to compensate the finance company for the car going back early (more than likely in negative equity).

Also, I have concerns about my credit rating, but it seems to suggest online that a VT mark does not affect credit rating (unless a finance company has a policy not to lend where someone has a VT mark).

I would be grateful for your thoughts.

Stewart

Goudy

First off, any inspection should comply with the BVRLA's Fair Wear and Tear guidelines.
https://www.bvrla.co.uk/service/fair-wear-and-tear-guides
These guidelines protect you and them, so everyone is on the same page.

In regards to ending your contract, to be fair to the finance company they want the car back as stated in the contract, so it should be serviced and road worthy or you'll be charged, just as you would if you broke the agreed mileage.

You could chance it, but you would be effectively throwing any rights away in terms of the fair wear and tear guidelines
They will more than likely chase you for costs to mot and service it and you could end up paying out for a lot of unnecessary MOT "advisories" and service parts that it may or may not actually need.

You could VT it, again they only do this if you (and the car) comply to the contract.
The main point being you have paid at least 50%, but you still have to meet the other points in the contract, like the mileage and fair wear and tear or again, you'll be charged.
It won't yet be due the MOT and service, so you dodge that bullet.
Under the contract, the finance has been "settled" and won't bother your credit rating, though it will likely cast a shadow on any future VW finance products you might want to take.

Another option would be to settle the finance and sell the car yourself.
You may take a hit with it having a short mot and needing a service but you could check out those car buying sites first and see if you might break even this way.

I did this once and ended up with a few hundred quid in my pocket.
I used an interest free credit card to pay it off and it was fairly hassle free, I settled the finance, sold the car to WBAC and paid the card off in three days.

The wear and tear parts and broken mileage target only count in the value they offer as you are not returning it to the finance company, so there's no further charges.
You could probably take a hit of £500 to sell it to them, if that's the figure the finance company is likely to charge you for mileage and if you do it soon enough, you've no MOT or service to worry about either.

One other option I have used is to sell it back to the dealer for their stock.
I have done this twice, but to be fair I knew them very well, I had a lot of cars from them over the years
I explained my circumstances truthfully and they saw quick profits so readily agreed,

They took the cars and settled the finance on them, I didn't gain anything either time, they were just straight deals that suited both parties at the time.
Again, the wear and tear and mileage would be in their offer for the car, so no further charge for these and you could again probably accept £500 less due to the expected mileage charge from the finance company you'll certainly pay if you VT it or just handed it back at the end.

tonyh66

Can't believe you have only one payment and the balloon to pay and haven't reached the 50% point for VT, it doesn't sound right, I would check the sums again, the balloon can't be nearly 50% of the finance surely.

foxy-stoat

tonyh66 wrote: »

Can't believe you have only one payment and the balloon to pay and haven't reached the 50% point for VT, it doesn't sound right, I would check the sums again, the balloon can't be nearly 50% of the finance surely.

With the low deposit and low monthly payments then your 50% point is at the end of the contract.

stewart239

Thanks for your comments.

On reflection, i’ll probably VT as the car is in negative equity and going down the easier route of an online car buying service will still leave £1500 + to clear the balance due.

I’m pretty sure the figures are correct. Thanks to naivety on my part when agreeing the PCP (and the gargae manipulating the figures to meet my budget at the time).

I’m a working professional and work with contracts all day long, so I NOW appreciate my obligations. I do think that garages sell these agreements focussing more on the monthly payments and not the true long term commitments, which is a shame. They also do not paint the true picture of what happens at the end of the agreement.

That same approach now seems to be following through to the Help to Buy scheme, with boards focusing on the monthly repayments instead of the price of the house...another bubble which (in my opinion) will inevitably burst.

Thanks

Penelopa.Pitstop

BCA won't care if you doing early termination of not. They will do the same checks regardless of early or normal handback.

stewart239

Thanks for your help, it’s put my mind a rest.

I’ve checked the VT pack and it says that if any damage is found then they give you an opportunity to take it to an approved repair centre to get it sorted prior to collection, which seems fair.