PCP car finance quandry advice needed

jmb1

I have a 2013 Volvo V60. Purchased 2017 for £14750 plus interest, total £16782. PCP agreement was 48 months so expires Feb 2021. Paying £243 a month. It does now seem a rather expensive deal esp as the car is devalued to/worth only £6k in just two years

I'm unsure what's best to do. The car's mileage is almost 90k so nearing a timing belt change and possibly other more expensive things going wrong. So was looking at replacing it. However the settlement fee is £8500 and car value only 6k so it's in negative equity.

My options therefore appear to be

1. Refinance on a new PCP/new car, paying the settlement and adding the neg equity to the new agreement (upping the monthly cost).

2. Wait until the current PCP expires and hand the car back and a. call it quits, start a new PCP. Or b. Pay the 5k balloon payment using a personal loan (which seems an expensive choice given I've paid 2k in interest so would have to pay more interest on the new loan on top of 16782+5000 balloon =£21782, an expensive total car purchase!

3. Voluntary termination either now before paying anything more toward the finance, or later.

So any advice on best course of action, all things considered?

DrEskimo

Who says it's only worth £6k? Have you checked with different dealerships, garages and online trading companies?

What's the precise details of the PCP? What was the invoice price in Feb 2017 (£14,750?), how much did you put down upfront, and what was the APR? I ask as I think you are getting yourself a bit muddled with this bit:

"which seems an expensive choice given I've paid 2k in interest so would have to pay more interest on the new loan on top of 16782+5000 balloon =£21782, an expensive total car purchase!"

If the £16,782 is the total cost of the entire agreement, then that includes the £5k balloon payment already. So you wouldn't pay another £5k on top, just whatever the interest charges are for borrowing that £5k.

jmb1

Amount of credit 14750. total amount payable 16782. 48 payments of 243.96, final payment of 5072. Nothing upfront, APR 5.1% fixed.

You're right my mistake £16782 is the total so that's something.

I was quote £6k by a dealer for part ex. Autotrader says about the same for part ex. 1-2k more for private sale.

Ok so given the total would be 16.8k plus new loan interest you think thats best way to go? guess I'm effectively buying the car roughly for what will be it's current value in feb 2021 although it will be just over 100k by then so potentially becoming a fixer upper..

DrEskimo

jmb1 wrote: »

Amount of credit 14750. total amount payable 16782. 48 payments of 243.96, final payment of 5072. Nothing upfront, APR 5.1% fixed.

You're right my mistake £16782 is the total so that's something.

I was quote £6k by a dealer for part ex. Autotrader says about the same for part ex. 1-2k more for private sale.

Ok so given the total would be 16.8k plus new loan interest you think thats best way to go? guess I'm effectively buying the car roughly for what will be it's current value in feb 2021 although it will be just over 100k by then so potentially becoming a fixer upper..

Not necessarily, just wanted to be sure I had understood everything!

It's up to you whether you want to keep the car. If you had no car today, would you want to spend £6k + interest to buy your V60?

The deal you did back in Feb is done, there isn't anything you can do to change that. You bought a V60 for £14,750, using a loan that cost you >£2k and now it's worth what it's worth. If you decide you don't want this car and want to change to something else, then as with any car it's about trying to maximise the resale of the car to reduce the depreciation as much as possible. Private sale is likely the best way to go, but having outstanding finance on it makes that tricky, so perhaps first try ringing around and try and find a better trade valuation from other sources.

If you are at the VT, which I think you are, or at least close?

£16,782/2 = £8,391.
£8,391/243.96 = 34 months.
Since you started it in Feb2017, you are currently in month 33?

Perhaps that's the cheapest way to get out if you can't find anyone willing to trade close to the settlement figure. Unless my maths is out...

motorguy

jmb1 wrote: »

I have a 2013 Volvo V60. Purchased 2017 for £14750 plus interest, total £16782. PCP agreement was 48 months so expires Feb 2021. Paying £243 a month. It does now seem a rather expensive deal esp as the car is devalued to/worth only £6k in just two years

I'm unsure what's best to do. The car's mileage is almost 90k so nearing a timing belt change and possibly other more expensive things going wrong. So was looking at replacing it. However the settlement fee is £8500 and car value only 6k so it's in negative equity.

My options therefore appear to be

1. Refinance on a new PCP/new car, paying the settlement and adding the neg equity to the new agreement (upping the monthly cost).

2. Wait until the current PCP expires and hand the car back and a. call it quits, start a new PCP. Or b. Pay the 5k balloon payment using a personal loan (which seems an expensive choice given I've paid 2k in interest so would have to pay more interest on the new loan on top of 16782+5000 balloon =£21782, an expensive total car purchase!

3. Voluntary termination either now before paying anything more toward the finance, or later.

So any advice on best course of action, all things considered?

4. Have the timing belt fitted and keep the car for the duration of the PCP.

Option 4 is by far the cheapest and least costly (and IMHO the most sensible) option. A Volvo - like most modern cars - is well capable of twice those miles with no significant issues.

A friend of mine got an XC60 cheap that had been a garage trade in. Similar miles to yours - presumably disposed of because it was going to be due a timing belt. He got the belt fitted and got it a full service (which it was due too) at a cost of around £600 odd from a Volvo independent specialist. He has 130,000 on the car now and its still going strong

foxy-stoat

I was thinking the same as motorguy, just because you have to replace the timing belt in the scheduled maintenance doesn't mean...oh cripes....I must try and get out of the current PCP deal and refinance the negative equity on another car, thus paying even more interest on the shortfall for another 5 years on another depreciating asset - madness.

The_Rainmaker

Don't take out PCP deals on used cars is the general rule of thumb APR rates are normally a lot higher.

onomatopoeia99

jmb1 wrote: »

The car's mileage is almost 90k so nearing a timing belt change and possibly other more expensive things going wrong.

Expensive things can go wrong at any time and if out of warranty you'll have to pay for them. Your car is only six years old, just replace the cam belt. Compared to all your other options you'll almost certainly save a fortune.

jmb1

Thanks that's much appreciated. Could you explain your thinking as to why its so much a cheaper option? And do you suggest paying the balloon and keeping at end too? Or take out a new deal?

motorguy

jmb1 wrote: »

Thanks that's much appreciated. Could you explain your thinking as to why its so much a cheaper option? And do you suggest paying the balloon and keeping at end too? Or take out a new deal?

Because you're going to end up buying another car that will invariably involve a deposit and / or bigger monthly payments - thats purely if you look at it from the "rental" angle.

Herzlos

2's usually the best option - would you really want to pay £2k to start from scratch with a new car/finance agreement?


Get the belts done from an independent dealer and hang onto the car until the PCP is done. Then if the car is worth more than the settlement figure get a loan and buy the car, if the car is worth less then hand it back and get another car.


Changing a car to avoid changing a belt is crazy unless the car is about to scrapped.