PCP contract coming to an end

MsGeorge88

Hi,

I have 3 months left on my PCP agreement but would like to Terminate my contract early, however I have been told I have not paid 50% of its value yet.

Cash price was 19,636.40
Deposit - 1,895.20
1st payment 315.24
32 months of 252.24

total paid to date 10,318.12
Total cost of finance after 37 months is 21,538.34

The balloon payment after 37 month is 10,463.50 (includes £149 fee)

My question is, am I not contracted to pay half the value of the car or is it half the value of the finance? Surely if I VT it now I shouldn't have to pay any interest I would have incurred/paid for the remaining 3 months if I am not going full term?

Would appreciate your advice.

Thank you

foxy-stoat

These PCP deals are structured so you never really get to the half way point before the last month or 2.

You should pay for the interest upto this point so its the total cost of the agreement.

DrEskimo

The VT 50% is based on the entire amount of interest owed over the full term. It doesn't take off interest because you are not settling. So you are £473.38 off being able to VT.

Have you checked what the car is worth as a straight trade in based on it's current mileage/condition? Your settlement isn't going to much less than the GFV if you are only 3months away from completing the term, so if you get a figure around or higher than £10,500, then it would be much simpler and obviously economically better to take that route.

If not, why not just wait till the term is up? What's so urgent that you want to VT now, rather than wait till 3-months?

MsGeorge88

Thanks for your reply.

The car has been giving me problems in the last couple of months. I have taken into the dealership for repairs that they cannot seem to fix (they claim car works perfectly fine when with them). I have also exceeded my mileage allowance, which I am well aware I will have to pay the excess. so rather than continue clocking up the mileage I might as well save myself a few extra £££ and terminate now.

Keeping the car is not an option for me purely because of the issues I am experiencing. The car is not even 3 years old yet and I've had engine issues.

Sorry Dr Eskimo, did you mean 50% is the total agreement amount of the agreement which includes the remaining interest?

AdrianC

50% of the total contractual amount = 0.5 x £21,538.34 = £10,769.17

DrEskimo

Yes VT is defined as paying off 50% of the total amount, which includes total cost of the car and all interest and fees. It doesn't matter that you are terminating the contract early, that is the condition of terminating it.

You would save on the remaining interest if you settled the finance, which is what I am suggesting you look into. Get a settlement figure and find out how much the car is worth given its current mileage and condition as trade value. If it's the same or more than the settlement, it would be the best way forward. Start with WBAC.

The fact the car is having problems does introduce logistical (and perhaps ethical) issues though....