Options needed to sort current PCP and get a new car

rshanbhag84

Hi MoneySavers,

I have a PCP on my car taken in July 2015 for 49 months with a balloon payment of £5.6K at the end. My mileage limit was 54,000 and the term finishes in July 2019 (5 months from now).

Unfortunately, I did not check clearly and assumed that the limit was 74,000 and have already clocked 76,000 miles. Further, I have a baby on its way by April this year and now there is a need to get a better and a bigger car. What options do I have? Should I
1. Return my current car now (earlier than July 2019) and get a new car from the same dealer to save paying the negative equity now even though it will get added to the new car? I assume the negative equity of excess miles gets added to my new purchase. Drawback is that I will be stuck with PCP again but I will have a new car at a higher monthly payment.
2. Wait till the end (July 2019), pay the negative equity and get out of PCP and find another car with a separate car loan as that turns out to have a better interest and no mileage limit. Drawback: Since the car is getting older and I have my baby by April, I would prefer not to wait/ and would prefer to avoid this option.
3. Return my current car now (earlier earlier than July 2019), pay off the negative equity and get out of PCP. Not sure if this option is possible. If this is possible, then purchase a new car from somewhere else on car Loan. Drawback is without a car for a little while but I would be out of PCP and would get a new car before the baby.
4. Any other option I haven't thought of.

Please advice what would be the best option in the current situation where I can get a new car soon and get rid of my current car and pay the least possible overhead as I need to save for the change in circumstance in next few months.

Some conditions on my PCP:
1. Calculated that for first 5,000 of excess miles its 10p and after that its 21p which is approx £4000 of negative equity.
2. I cannot sell to someone outside.

I know I should have checked the mileage limit before and that was a mistake. However, any help now to find the best option will be much appreciated.

angrycrow

If your current usage continues you will be on 84k miles at hand back, 30k over. Using the penalty rates quoted £5750.

You don't say what the car is but 30k miles is unlikely to reduce the value by £5750. The excess mileage charge only kicks in if you return the car. Take a loan to cover the balloon payment of £5600 and buy the car. You can then sell the car on to minimise the loss, trade it against another car with much less negative equity. Or best option keep the car you own outright and run it for another 4 to 5 years. Baby does not have to equal bigger car.

Don't do a deal with the dealer now to return it early and roll the negative equity into the new car, you will get spanked by the dealer.

motorguy

Get a settlement figure on the finance and then a valuation of your car from the dealer(s).

The difference between the two - if there is any - is your negative equity.

Theres no need to hand the car back and worry about mileage charges.

wgl2014

What car do you have currently and what are you considering changing for?

As previously mentioned handing the car back and paying the excess mileage charges would be crazy if you could just make the final payment and own the car for less!

You may also want to consider a Voluntary Termination which is an option once you have paid over half the total balance however this may still leave you being pursued for the excess miles.

onomatopoeia99

Unless the car is smaller than a VW Up, you'll be able to fit a baby in it. I know somone that managed fine with two babies in a Nissan Micra.


So the question previously posed about what the current car is is important in the context of offering advice. Best option looks like paying the balloon and keeping the current car, unless you're someone that places a value on having something near new on the drive so the neighbours can look at it.

jimjames

You don't appear to have considered the option to keep the car? Any reason why not? Mileage is irrelevant if you pay the final payment and the car is then yours to keep. No reason why a 4-5 year old car isn't suitable for a baby, it won't suddenly stop working at 5 years old. With a baby coming finances will be tighter so paying out for a new car doesn't sound like the best choice.

rshanbhag84

Your advice makes sense.
I have a 64 reg Insignia. Its been 4 years since I have had the car and with the amount of wear and tear I thought I may not get much when I make the baloon payment and eventually sell it.
But an online valuation showed that I will still get a decent amount if I sell it and potentially make some profit too.
Thanks for the advice.

rshanbhag84

Yes, VT was an option I read about but I was under the impression this is taken up only in extreme cases when someone is unable to pay due to change in circumstances.
Else everyone would opt for this and get out of the pcp after half term isn't it.

rshanbhag84

Since some of you asked, reason to not continue with the car
A. My current car is a manual and my wife cannot drive a manual, so looking for an automatic now which will be a family car and both of us can drive.
B. 75k done already, changes to break pads, tyres, cambelt wilk be due soon shooting the overhead. Why pay this on a car which I can return and get another.
C. Not for neighbour but yes, having a newer car would be nice if it can fit the above criteria and also fits in my current budget.

marlot

rshanbhag84 wrote: »

...
B. 75k done already, changes to break pads, tyres, cambelt wilk be due soon shooting the overhead. Why pay this on a car which I can return and get another.
....

A bit of maintenance is a lot cheaper than depreciation on a new car!

Cetshwayo

Since it seems that this is all about looking good in the hood, why not just lease and don't fanny around with PCP deals?