Loan to pay off pcp

Budster1

Hi guys. Bit of a long winded one here! So please accept my apologies in advance! I just need some clarification that I’m not about to make a big mistake....:

Here goes, I have a pcp agreement on my car that I no longer want, I’m nowhere near the VT point yet, I have a settlement figure of around £22,500 and the car is worth £23000, maybe a touch more

My idea, get a personal loan to pay off the pcp, sell the car straight away. And use the money to pay off the loan with 4 weeks off taking out...

Can anyone see anything wrong with that?

I don’t need a car anymore, I don’t mind being a few hundred out of pocket to just get rid and have no financial commitments on my credit file.

The loan apr is practically the same as the pcp, but I don’t suppose that matters if I plan on paying it off as soon as the car is sold does it?

Thanks for any help

Nearlyold

If you are not planning on selling privately where the PCP finance on the vehicle might scare away buyers, you could just pay the PCP off from the proceeds of selling the car to a dealer - the dealer will settle the finance. Though I guess there is always the risk of the dealer going bust before settling.

Budster1

I understand some loans have a 28-56 days interest charge for settling early, I’m ok with that, but would that mean I’m only paying back the original 23,000 plus a bit if interest or would they look at it differently?

Say I borrow 23k over 5 years and the total repayable would be say 26k if went the whole 60 months term, but if I pay it back within a month, how much am I looking at paying?

Sorry if I sound stupid lol

[Deleted User]

You'd pay a month's interest, plus 2 months interest as early settlement.

Getting the loan in the first place may the challenge.

Budster1

Thanks @Nearlyold


I was not aware I could do that. I thought it was illegal to try and sell a car with existing finance

I wasn’t looking at selling private to be fair, too much hassle, I was actually getting quotes from carwow buying service etc.

Budster1

Zx81 thanks for your reply

I have been offered the loan already, so that’s not an issue

I’m just unsure if it was the best way of basically getting out of another 12 months payments of £450 a month before I could VT it

I also didn’t realise I could sell it to a dealer with existing finance without purchasing another car from them

Nearlyold

Google Guardian Loan Calculator, enter the amount to borrow, the APR, and term - you'll then be able to see how much interest would be charged on the loan each month (it reduces slightly each month), so if you settle after 1 month you'll have to pay the first months interest plus however many months extra for settling early the lender may charge.

DrEskimo

Try lots fo different dealers and online valuation sites like WBAC, etc. Some won't buy it without using it as a P/X, but some do if they think they can sell it easily.

Obviously this might be under the £23k you want for it though. Depends how well you can negotiate a price on it. Nothing wrong with the loan idea, but there is the risk you don't manage to sell it privately for the price you want either. Look at the interest you would pay for a couple of months, plus any early repayment fees that might be added, and see if that outweighs the likely reduction in trade value you get from dealers.

Budster1

Ultimately my plan is to just get rid of the car without me having any finance agreements to pay each month as I use my works van and the Mrs car, I hardly even drive my car anymore!

I think the best route then, would be to see who’d buy it off me with outstanding finance....

Budster1

Really appreciate the replies guys....

I’d like to try and avoid WBAC as their initial valuation was 23k, and I reckon they’ll take the !!!! once I get there with the car. Even though it’s in mint condition, I’ve read the horror stories haha

I’ll try the main dealers first

Can you recommend any online buyers other than WBAC at all?

phillw

Budster1 wrote: »

I thought it was illegal to try and sell a car with existing finance

It would be fraud to sell a car without disclosing that it had finance and then trying to transfer the car without paying the finance off.

The main problem is that people have other options to buy a car than go through the extra hassle, so they might avoid getting involved.

Would you give someone 23k and hope that they would then use it to pay the finance off?