My car on PCP was written off! What should I do?

yulapkan

Hello! I am a new poster and I am desperately in need of some help/advice on my written off vehicle.

So I have got this approved used car on PCP this Sept, and got hit from behind in November. 3rd party has admitted at fault. Later, the 3rd party insurance has written off the car. Since my car is still on PCP, do I need to inform the finance service? How will the payout work? Will it be to me or directly to the finance service? If directly to the financial service, will they pay the full amount of the credit? Or will I need to pay extra? I don't have GAP insurance but the insurance company should put me back to where I was before the accident right? Will I be left in debt? What should I do next?

Since I have only recently got the car I have only paid about 1.5k in the total amount payable 9.7k.

Sorry for the questions but I am very confused right now. Any help is appreciated. Thanks in advance!

AdrianC

yulapkan wrote: »

Since my car is still on PCP, do I need to inform the finance service?

Yes, obviously! They own the car.

How will the payout work? Will it be to me or directly to the finance service?

They pay the owner - the finance house.

If directly to the financial service, will they pay the full amount of the credit? Or will I need to pay extra?

They pay the value of the car immediately before the collision.

I don't have GAP insurance but the insurance company should put me back to where I was before the accident right?

No, they simply pay the value of the car immediately before the collision.

Will I be left in debt?

If the finance settlement figure is more than the car was worth, yes.

What should I do next?

Pay any shortfall.
Start looking for a replacement car.
Remember to get Gap insurance if you get another car on finance.

foxy-stoat

Ask for a settlement figure and see what the market value of the car is.

If this was a PCP then you shouldnt be in negative equity, unless you over paid for the car in the first place.

At best you will be left with no car and no debt.

Speak to the insurers and go from there, they will settle the finance once the engineer has inspected.

Look for another cheap car to tied you over for a while, as the PCP debt will still show on your credit history and you may not be able to get another PCP agreement and you wont know if your left with a debt when it is settled yet.

motorguy

foxy-stoat wrote: »

Ask for a settlement figure and see what the market value of the car is.

If this was a PCP then you shouldnt be in negative equity, unless you over paid for the car in the first place.

At best you will be left with no car and no debt.

Speak to the insurers and go from there, they will settle the finance once the engineer has inspected.

Look for another cheap car to tied you over for a while, as the PCP debt will still show on your credit history and you may not be able to get another PCP agreement and you wont know if your left with a debt when it is settled yet.

A PCP agreement is almost always in negative equity until close to the end of the term (assuming a reasonably low deposit).

No idea where you're getting a contrary view from

Scrapit

Sadly this is why gap insurance exists.

foxy-stoat

motorguy wrote: »

A PCP agreement is almost always in negative equity until close to the end of the term (assuming a reasonably low deposit).

No idea where you're getting a contrary view from

As I said, unless you overpaid for the car.

If the price was right when you signed up and paid a deposit, it wont be £199 and £199 a month on a secondhand car I would of thought.

motorguy

foxy-stoat wrote: »

As I said, unless you overpaid for the car.

If the price was right when you signed up and paid a deposit, it wont be £199 and £199 a month on a secondhand car I would of thought.

Any retail customer paying an even well negotiated price from a dealer is still paying a retail price for a car that will be worth several thousand less as soon as they drive it out the door.

Add on top of that interest charges and admin fees and you're looking immediately at a delta of £3-5,000 on a typical car purchase.

Some of that can be hidden with a bigger deposit but typically they are in -ve for a considerable part of the agreement.

A simple worked example on a £20K car :-

£20K purchase price
£1K deposit = £19K financed.
Interest charges @ £2K = £21K.
Trade price @ time of purchase £17K

Negative equity £4K.

The car will depreciate during the term to roughly 50% of its purchase price after three years so you end up with negative equity for quite some time.

To dismiss that as "overpaying for the car in the first place" is naive and wrong.

yulapkan

Thanks everyone for the input! I will start looking for a car then. Do you think it's a good idea to negotiate with the financial service? Or will it be possible to argue with the 3rd party insurance about the trade value of the car? :beer:

DrEskimo

yulapkan wrote: »

Thanks everyone for the input! I will start looking for a car then. Do you think it's a good idea to negotiate with the financial service? Or will it be possible to argue with the 3rd party insurance about the trade value of the car? :beer:

What are you going to negotiate with the financial service? You agreed to borrow money from them based on the payment structure outlined at the stipulated interest rate. There is nothing to negotiate.

You are welcome to challenge the insurers value, but you need to be able to evidence why you think the value is underestimated.

foxy-stoat

motorguy wrote: »

Any retail customer paying an even well negotiated price from a dealer is still paying a retail price for a car that will be worth several thousand less as soon as they drive it out the door.

Add on top of that interest charges and admin fees and you're looking immediately at a delta of £3-5,000 on a typical car purchase.

Some of that can be hidden with a bigger deposit but typically they are in -ve for a considerable part of the agreement.

A simple worked example on a £20K car :-

£20K purchase price
£1K deposit = £19K financed.
Interest charges @ £2K = £21K.
Trade price @ time of purchase £17K

Negative equity £4K.

The car will depreciate during the term to roughly 50% of its purchase price after three years so you end up with negative equity for quite some time.

To dismiss that as "overpaying for the car in the first place" is naive and wrong.

Hear what you are saying there partner, what I was meaning was punter buys a £10,000 car for £250 a month (or £15,000) because he gets accepted for finance, then its written off within a few months. Not much interest to pay in that time but unfortunately the purchase price is way over the market value, not the insurers fault.

Instead of paying £10,000 for a £10,000 car, its not going to depreciate thousands by driving it out the door if its a secondhand car so in a few months IF they paid the right money for it the insurance should pay out close to the purchase price and only a small amount of interest to pay.

Unless insurers use webuyanycar site for their valuations of course.

marlot

yulapkan wrote: »

So I have got this approved used car on PCP this Sept, and got hit from behind in November.

Check your own policy too - some will replace a car under 1-year old with a new one.