4 year lease - options for getting out early

PrudentSpender

Hi Guys,
I need some advice as i'm in uncharted territory currently.
The key details are as follows.
I have a Mercedes A-Class on PCP with a Mercedes dealership, and I am 3 years in to the 4 year term.
I've recently changed careers to setup my own business and moved to a more rural area, and the Mercedes is no longer ideal for both location and the business i'm doing. So ideally i need to get rid of it, but in classic fashion the car is worth 2k less than i bought it for according to Mercedes. So selling it isnt an option that i relish, i'd rather have a second car for my wife and keep making the normal payments.

Now... i've been told by a couple of different people and also by Mercedes that i can just cancel the contract and give the car back now, and that i wont get any negative credit score impact from this. But this just doesn't sound right to me?! I've a perfect credit score with Experian and I've tried hard to keep it that way for years. So i'm hesitant to take this option without knowing more.

So has anyone got any information on the ins and outs of this? Or has done it before themselves?
Or does anyone have any other options i dont know about here?

thanks,

daveyjp

A PCP isn't a lease.

Once you have paid back 50% of the total amount you borrowed you can voluntary terminate the contract.

I have terminated a HP early many tears ago and there was no effect on credit worthiness.

neilmcl

As mentioned, look in your finance agreement for the Total Amount Payable figure and you will need to have paid 50% of this to allow you to voluntary terminate your agreement and walk away. This information will be available to other providers in the future but it's not classed as a negative mark on your credit history.

Unless you've paid a substantial deposit in the first place it's unlikely you're currently near that 50% mark as yet.

molerat

As above, PCP is not a lease it is hire purchase. Read your contract document.  There will be a "total amount payable" and once half of that is paid, by payments and deposit, you can hand the car back and walk away subject to any charges for damage (and possibly / probably excess mileage).

facade

Remember the total amount payable includes the "optional final payment" or "guaranteed final value" of the car.

PrudentSpender

Thanks for the advice guys, i'll go get that information checked out

DrEskimo

When you say the car is worth £2k less than you bought it for, I'm guessing you mean you are £2k short between what Mercedes are offering for it and the amount you still.owe on it? 

That's just one valuation from a main dealer that will be notorious for offering well below market value. Try other garages and dealerships. Get the settlement figure from the finance company and then you know what price you aiming for at least. That being said, do some research in what a trade price is, don't be guided by what you personally owe, as they are not necessarily related.

Of course, if a garage offers you more or the same as the settlement then it would be far quicker and easier to just sell it to them and settle the finance than go through the faff of termination.
My last on only PCP I owed £28k and my dealer offered just £23k. I rang around and after a bit of haggling I got a local dealer to offer me £28.5k. They came to my house, checked the car, wired me the money and I cleared the finance the next day.

ratrace

Yeah so for example if the total ammount is £30k then would need to have paid £15k (50%) which is normally about month 28 - 42 on a 48mth contract depending on the desposits etc... so pretty much near the end to VT anyway

you will always almost be in negative equity with pcp's leases's etc.... as thats how they can get the monthly payments low to attract people to buy them which otherwise they cannot afford to

Credit score etc.... there is no such thing its a BS number made up credit reference agencys to get you to sign up to the monthly package, Lenders that lend such as banks etc... dont see a "score" when they lend,they lend based on your credit history ie: any missed payments, defaults etc.....

Vt does not have an adverse affect on your credit history as such ie: it wont prevent you getting another car etc... but what it might do is make lenders offer you a slighty higher APR to off set any risk they maybe take. this is what i hear and can be seen online but im not 100% sure all lenders do this some do some dont but do some research on it

PrudentSpender

thanks guys, this is really useful info. Really appreciate you all taking the time out to reply