Giving car back early on PCP finance?

Wondering39

Hi,

I took my car out on PCP finance which is due to be renewed June 2021.  Due to working from home during Covid-19 I am not using my car at all.  Has anyone any knowledge on giving a car back early? I know I may have to pay a fine but still might be cheeper than paying the payments every month until June 2020.  I will be taking out a car via a work scheme in June so don't need to stay with current car provider.

Any advice would be helpful?

Thanks.

Grumpy_chap

Firstly, have you asked the provider about arrangements for returning the vehicle, either in June or now if you want to consider early return?

Secondly, have you reached the 50% point in terms of total payment value (including the balloon)?  If so, you may be eligible to VT (voluntary terminate).

Thirdly, as you are within a few months of the end of term, have you assessed the value of the car against the balloon payment?  You may be able to sell the car for more than the remaining months plus the balloon.  I accept that may not be easy to achieve with 5 payments still to go, but a consideration.

bermudianmark

Thirdly, as you are within a few months of the end of term, have you assessed the value of the car against the balloon payment?  You may be able to sell the car for more than the remaining months plus the balloon.  I accept that may not be easy to achieve with 5 payments still to go, but a consideration.

You may be better making more payments and selling closer to the return date, difficult to sell at the moment with the lockdown, but might be a whole different world come March or April.

CSL0183

With only 4 more payments, you will be able to VT (Voluntary terminate) it for sure. However, I suspect there may be a little equity in it so VT should be last resort. You usually find that the car is worth slightly more than the GFV in the paperwork. 

Find out how much you owe on it then find out how much we buy any car will offer you for it just now. If the WBAC price is higher then it’s a no brainer, or you could sell it privately for more. Although probably a bit difficult just now. 

But yes, plenty options. 

DrEskimo

As @Grumpy_chap says, get a settlement figure from the finance company (usually a self automated service by phone), then stick the reg and mileage into WBAC.

Use that as a starting point and determine whether the value is same or more than the settlement. 

Then ring around some local dealers and garages and get a price to see if you can beat WBAC valuation. Might be difficult just now with lockdown.

If you get a good price that's same/more than settlement, simply sell to that company and they will settle finance for you.

Wondering39

Hi,

Thank you all for your advice.  That's really helpful.  I didn't want to call the car company and get stuck in a conversation where they are trying to convince me of something... hence why I wanted some advice first.  There is no damage to the car and I have come in as well under the mileage allowance. I imagine their resell on the car could be strong, as you say it is a hard time to sell a car.

Do you think I should just call the company and see what their options might be?

Thanks for all your advice and help!

[Deleted User]

Wondering39 said:

Hi,

Thank you all for your advice.  That's really helpful.  I didn't want to call the car company and get stuck in a conversation where they are trying to convince me of something... hence why I wanted some advice first.  There is no damage to the car and I have come in as well under the mileage allowance. I imagine their resell on the car could be strong, as you say it is a hard time to sell a car.

Do you think I should just call the company and see what their options might be?

Thanks for all your advice and help!

You have a legal right under section 99 of the consumer credit act 1974 to VT the car at any point - they CANNOT refuse this. The crucial bit is that after you have paid 50% of the total amount payable in the agreement (that is including the balloon payment balance and any interest) they cannot charge you any extra (before that they can continue to charge you up to 50% point).

Further, the company cannot charge you anything extra except for stuff like damage (the law says you must have taken "reasonable care"), even mileage is debatable - the FOS has ruled sometimes that excess mileage can be charged for.

You can be asked to drop it off at a location, provided this is not an unreasonable distance away or they can pick it up (you should not be charged for this).

When you say "due to be renewed in June 2021" what do you mean? As in, that is when the deal ends and you would either trade it in or pay off the balloon? If so, presuming you started it in around June or January 2018 (depending on if it was 36, 42 month) then you're likely to have reached the 50% already 

As an example, a £20000 car, with 5% interest over 42 months and £500 of fees, you have to pay at least £10959 to get to the normal VT point which isn't possible with the expected monthly fee of £186.47, however if say you were paying £300 a month you would reach 50% by month 37

DrEskimo

It's far easier and also potentially financially in your favour to simply trade the car in. You don't have to buy another car and some garages will happily buy it from you for a price. If that price is more than you owe, you would be losing out by going the VT route.
You would also have to prepare the letter, arrange a pick up, and invariably handle any disputes which seem to be all too common....