Early termination of PCP

Katie_Hawks

Hi there! I'm hoping someone in the know can help me. I have a Range Rover Evoque that I have financed on a 48 month PCP deal, expiring January 2021. We have had two children since purchasing so we are looking to change to a Discovery and I have conditionally agreed a  sale on a stock car which is coming in next week. I've paid a deposit but it is fully refundable. Land Rover were offering me less for my car in the current market so I had assumed (and I'm not sure if I'm right or wrong) that I can voluntarily terminate hand the car back to the finance company and call it quits. All payments have been made on time and I've paid back more than 50% of the total amount financed now. Is that the case? The alternatives are to try to negotiate a part-ex with Land Rover but according to them there was c.£1.5k negative equity in the car and I've already got a very good deal on the new car so I'm pretty sure they wont budge too much, or hand back to the finance company and pay the difference between their valuation and the settlement figure they are quoting. I am going to call them tomorrow but I know from experience they are not particularly helpful and I'd like to be armed with as much information as possible before I do get it touch. Any thoughts would be gratefully received!

Thanks!
Katie   

molerat

Yes.  Once you have paid 50% of the total amount payable then you can hand the car back.  Providing there is no damage and you have not exceeded the agreed mileage pro rata there will be nothing to pay. You simply need to contact the finance co and tell them you are exercising your right to voluntarily terminate the contract.  You do not (must not) need to sign any of their paperwork they may wish to send you. https://debtcamel.co.uk/vt-end-car-finance-early/   has a link to a template letter.

ratrace

Also look into the affect that a VT has on your credit file, i dont have personal experience with this as i have all ways paid cash, but im not sure if it is seen by lenders as a "Bad" thing, it wont stop you getting a new car but lenders may lend at a higher interest rate to mitigate their risk in the future. Just do a bit homework before going ahead with it.

 

MinuteNoodles

Katie_Hawks said:

 All payments have been made on time and I've paid back more than 50% of the total amount financed now. Is that the case?

Depends. It's 50% of the ticket price INCLUDING THE BALLOON PAYMENT, not just the bit you pay on PCP. So have you paid back 50% of the complete new price of the car or just the portion of it which was on PCP, not taking into account the balloon payment?t.

LandyAndy

MinuteNoodles said:

Katie_Hawks said:

 All payments have been made on time and I've paid back more than 50% of the total amount financed now. Is that the case?

Depends. It's 50% of the ticket price INCLUDING THE BALLOON PAYMENT, not just the bit you pay on PCP. So have you paid back 50% of the complete new price of the car or just the portion of it which was on PCP, not taking into account the balloon payment?t.

Very probably paid the necessary amount as it is a 48 month agreement with 6 months to run

LandyAndy

ratrace said:

Also look into the affect that a VT has on your credit file, i dont have personal experience with this as i have all ways paid cash, but im not sure if it is seen by lenders as a "Bad" thing, it wont stop you getting a new car but lenders may lend at a higher interest rate to mitigate their risk in the future. Just do a bit homework before going ahead with it.

 

Shouldn't make any difference. Certainly didn't when I VT'd a car and then bought two more cars on finance. That was nearly 12 years ago though so things could have changed

Katie_Hawks

Thanks so much for your help so far!

I've spoken to the finance company this morning and they have agreed I have paid back more than 50% so have the right to VT. Unfortunately their process seems to be fairly long and drawn out - they will send me paperwork in the next 5 days which I need to return and I can then book to take the car to be assessed or they will send someone out to my house to assess and collect it - that probably wont happen for another 2 weeks. Unfortunately it sounds like I wont have anyone take a look at it until after the new car has arrived. I am reluctant to end up in a situation where the finance company refuse to take it back (although from what you have said seems that legally they are unable to do that) or they try to deduct money because of wear and tear (it is in pretty good condition but there is the odd small scratch) and I could have got more for it by trading it in. 

I think options are to either to go back to the garage selling me the new car to try to trade it in and accept I'll just have to pay back the negative equity or try to get it assessed more quickly so I know what the score is before I get the new car...
Does anyone know if there is a way of speeding up the process?

molerat - It sounds like they are trying to get me to sign something so I'll make sure I have a look at that properly. 

Thanks!
Katie

ratrace

You will almost always be in negative equity with pcp, thats just the way it is especially if you going to not take the agreement to its full term, I dont thing there is a way of speeding up the process for vt, especially in the current climate where there will be more people going down the same route due to financial difficultys. The thing is you signed up for the new car without starting the vt process, You are right it is a long winded as the car has to be assessed, any damage etc.... that does not fall under the BVLRA guidelines will have to be charged to you, most pcp's cars are just sent the auction such Bca, unless it qualifies to be a used approved car in that case it go back on the dealers pitch with a warrenty etc.... so all this takes time

Agree dont sign anything before reading it thoroughly.

DrEskimo

Katie_Hawks said:

Thanks so much for your help so far!

I've spoken to the finance company this morning and they have agreed I have paid back more than 50% so have the right to VT. Unfortunately their process seems to be fairly long and drawn out - they will send me paperwork in the next 5 days which I need to return and I can then book to take the car to be assessed or they will send someone out to my house to assess and collect it - that probably wont happen for another 2 weeks. Unfortunately it sounds like I wont have anyone take a look at it until after the new car has arrived. I am reluctant to end up in a situation where the finance company refuse to take it back (although from what you have said seems that legally they are unable to do that) or they try to deduct money because of wear and tear (it is in pretty good condition but there is the odd small scratch) and I could have got more for it by trading it in. 

I think options are to either to go back to the garage selling me the new car to try to trade it in and accept I'll just have to pay back the negative equity or try to get it assessed more quickly so I know what the score is before I get the new car...
Does anyone know if there is a way of speeding up the process?

molerat - It sounds like they are trying to get me to sign something so I'll make sure I have a look at that properly. 

Thanks!
Katie

You don't have to part-exchange it into the garage you are buying the next car from. Ring a host of different dealers and garages and get a range of quotes and see if any will offer your current settlement amount, or greater.

There isn't one set trade in price for your car. You will get massive variation from one dealer to a next. Some won't want to just buy it from you without selling you another car, but plenty will at the right price.

Katie_Hawks

Great- thanks again. I spoke to the garage who are selling me the new car who will give me what seems like a decent price- I’ll have about £600 negative equity to cover (although probably a bit less as another payment is due today). They will hold that price for a week so I’m going to wait and see if I can get it assessed by the finance company in the meantime but at least I have a plan B. I’ll probably also call round a couple of other garages in the meantime too to see if I can get a price from them...

ratrace

Katie_Hawks said:

Great- thanks again. I spoke to the garage who are selling me the new car who will give me what seems like a decent price- I’ll have about £600 negative equity to cover (although probably a bit less as another payment is due today). They will hold that price for a week so I’m going to wait and see if I can get it assessed by the finance company in the meantime but at least I have a plan B. I’ll probably also call round a couple of other garages in the meantime too to see if I can get a price from them...

Ok im a little confused now, why do you need to get the car inspected as you are not doing a VT anymore as you are not handing it back to the finance company, but instead the dealer who is selling you the new car is buying off you and paying the ammount to the finance comapny and you make up the rest £600 shorfall

so there is no need for it to be inspected etc.... as you have a buyer for it as it is unless ive got it wrong