Options needed to sort current PCP and get a new car

anfieldred

rshanbhag84 wrote: »

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.

Is this with Lloyds or Black Horse finance? the charges seem very similar to mine. If so, the mileage only counts if you give it back within the final 3 months of when it's due back. If you have paid more than 50% you can VT and walk away with no charges - I've had this confirmed 3 times over the phone recently as I'm in a similar position.


Maybe consider just handing the car back (check you wont get hit with mileage charges first) and start a new one?

neilmcl

rshanbhag84 wrote: »

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.

This is indeed the original intention for the VT legislation, however more and more people on finance are using this as way to get out of their agreements early, many often attempting to get better deals in the first place by going for low, unrealistic mileage allowances and then trying to get out of paying for this later by the means of a VT.

The requirement for a VT is not the "half term" of the agreement, it's by paying 50% of the total amount payable. For most PCPs this usually near the end of the agreement.

LandyAndy

I understand the need to change to get an automatic but you really don't NEED anything bigger than an Insignia.

Of course you are allowed to WANT anything you like. :cool:

neilmcl

anfieldred wrote: »

Is this with Lloyds or Black Horse finance? the charges seem very similar to mine. If so, the mileage only counts if you give it back within the final 3 months of when it's due back. If you have paid more than 50% you can VT and walk away with no charges - I've had this confirmed 3 times over the phone recently as I'm in a similar position.


Maybe consider just handing the car back (check you wont get hit with mileage charges first) and start a new one?

Confirmed by who?

Don't be surprised if you VT with excess mileage, particularly if it's by a large margin, when you start getting letters from the finance company chasing you for the extra amount owed. Whether this is legally enforceable is a different matter altogether, and one you'll only ever find out if you end up in court.

anfieldred

neilmcl wrote: »

Confirmed by who?

Don't be surprised if you VT with excess mileage, particularly if it's by a large margin, when you start getting letters from the finance company chasing you for the extra amount owed. Whether this is legally enforceable is a different matter altogether, and one you'll only ever find out if you end up in court.

Sorry, should have said. In my case it's specific to Lloyds car finance - can't confirm for any other lender. 3 separate staff from Lloyds car finance over the phone, when I've called up to get settlement figures. Initially, on the first call they said it only comes into account when given back, so on the 2nd + 3rd calls I asked a couple of times for clarification - the last time was only on Friday just gone.

The guy said "If you voluntarily terminate the agreement before the final 3 months then the mileage charges do not apply, however if it's within the final 3 months then you'll have to pay the mileage fees".

I outright asked him again "So, if I'm over the mileage limit as of today, and I hand the car back tomorrow when there's still several months to run on the agreement, there's definitely no mileage charges", and he said "that's correct"

neilmcl

anfieldred wrote: »

Sorry, should have said. In my case it's specific to Lloyds car finance - can't confirm for any other lender. 3 separate staff from Lloyds car finance over the phone, when I've called up to get settlement figures. Initially, on the first call they said it only comes into account when given back, so on the 2nd + 3rd calls I asked a couple of times for clarification - the last time was only on Friday just gone.

The guy said "If you voluntarily terminate the agreement before the final 3 months then the mileage charges do not apply, however if it's within the final 3 months then you'll have to pay the mileage fees".

I outright asked him again "So, if I'm over the mileage limit as of today, and I hand the car back tomorrow when there's still several months to run on the agreement, there's definitely no mileage charges", and he said "that's correct"

Well either he's clearly wrong or misunderstood what was being asked. As already mentioned VT has nothing to do with the period in the agreement when you terminate and everything to do with how much of the total amount you're liable for ie, 50%. For the majority of PCP agreements you wouldn't normally have reached this point until your within the last 3 months of the agreement so perhaps this was what he was getting at, although there's nothing to stop you exercising your right to VT at any time.

anfieldred

neilmcl wrote: »

Well either he's clearly wrong or misunderstood what was being asked. As already mentioned VT has nothing to do with the period in the agreement when you terminate and everything to do with how much of the total amount you're liable for ie, 50%. For the majority of PCP agreements you wouldn't normally have reached this point until your within the last 3 months of the agreement so perhaps this was what he was getting at, although there's nothing to stop you exercising your right to VT at any time.

Him and 2 other members of staff said the same thing. I've passed the 50% point with my most recent monthly payment, but I made it clear I've exceeded the mileage limit already, and they all said that there's no mileage charge unless I give it back at the end of the contract

neilmcl

anfieldred wrote: »

Him and 2 other members of staff said the same thing. I've passed the 50% point with my most recent monthly payment, but I made it clear I've exceeded the mileage limit already, and they all said that there's no mileage charge unless I give it back at the end of the contract

Again, sounds like they didn't quite understand that your were talking about terminating the agreement rather than settling. I would be very surprised that they have this policy you've described in relation to VT.

rshanbhag84

anfieldred wrote: »

Is this with Lloyds or Black Horse finance? the charges seem very similar to mine. If so, the mileage only counts if you give it back within the final 3 months of when it's due back. If you have paid more than 50% you can VT and walk away with no charges - I've had this confirmed 3 times over the phone recently as I'm in a similar position.


Maybe consider just handing the car back (check you wont get hit with mileage charges first) and start a new one?

Its with Black Horse finance and if what you said is true for them too, I am totally saved. Will check with them tomorrow and find out. Thanks a lot for this advice - won't harm in trying.

rshanbhag84

LandyAndy wrote: »

I understand the need to change to get an automatic but you really don't NEED anything bigger than an Insignia.

Of course you are allowed to WANT anything you like. :cool:

No denying that Insignia is a brilliant and spacious car and had there been no other issues like it being manual and with other bits and bobs having issues, I would have considered keeping the car too. But it is genuinely uncomfortable for a 1-1.5 hr drive with 2 people sitting in the rear with the car seat for the baby. I have a large extended family :P