making an offer at end of pcp

whytony

hi. has anyone ever got to the end of a pcp car contract and made them a lower offer?? my son has a 4 year old skoda that they now want £6500 for, is it worth offering 5.500??

many thanks

t

onlyfoolsandparking

Depends how the contract is worded.

AdrianC

He agreed to £6,500 at the start of the contract. It's the balance of the money he borrowed, less what he's repaid.

His choice is £6,500 or hand it back.

DrEskimo

whytony said:

my son has a 4 year old skoda that they now want £6500 for

They didn't suddenly decide they wanted £6,500 for it now, it's been written in the contract since your son first agreed to buy the car with finance 4yrs ago....

whytony said:

is it worth offering 5.500??

Can certainly try, but wouldn't hold your breath....

I've only ever heard of people getting revised GFV's when the car is worth substantially less come the end of the term. Even then it was pretty random who got a revised GFV from the finance house.

If the car is worth more than £6,500 then it wouldn't make any sense for the finance house to renegotiate.

Jonesya

You need to know your position before you start trying to haggle, what's the car worth? 
If it's worth less than the £5500 you're offering then there's a incentive for them to accept your offer, if it's worth more then why would they accept.

Goudy

Your son agreed to take the car on a PCP finance plan.
This contract included 47 payments at £x and 1 payment at £6500 (the GFV) with an option on this final payment that the vehicle can be handed back to the finance company and if it's in the condition set out in the contract, you don't pay the £6500.

Your son will be liable for the vehicle's condition, so if there is damage or excess mileage which obviously effect the vehicles value, these will be charged.

If the finance company got the GFV wrong, that's their problem but we'll come back to that.
If the vehicle is worth less because of excess mileage and condition, that's your son's problem and they will recover this from him. They aren't going to negotiate with him because the vehicle is worth less because of it, they don't need to.

When it comes to working out the value of the GFV, they have a lot of room to play with.
There is probably in excess of 20% profit in the retail price of the car, plus what they made in the interest on the finance so they can take a certain amount of loss when it comes to the GFV, but they can only guess what it'll be, they only have guides and auction valuations to go on.

In the current climate auctions have been closed and though some dealers are resorting to offering incentives to get customers to buy current stock (which again will have 20% or so profit in the price), the guides which are based on what's happening at the auctions haven't changed due to the closed auctions, so to the finance company there's no indication yet this vehicle isn't worth or very near the GFV to them other than damage or excess mileage, so they won't have any incentive to negotiate. 

All this could change in the future if prices tumble but no one yet knows for sure what happens to vehicle prices when the auctions reopen.

Goudy

I'll shut up in a minute, but you also have to question what other incentives a finance company might have for not negotiating.

So say they take a hit on this GFV of around £1000 and perhaps others, they just adjust the figures on future deals to make it back.
Now all those customers are happy they didn't get suckered with high depreciation as they just handed the cars back and let the finance company take the hit, they all want new cars, so go out and sign new, adjusted contracts on cars with 20% profit plus interest in them.