Disposal of Late Father’s PCP Car

Roddyk

I’m looking to see if anyone has any experience to share that might be relevant to my situation.  My Father sadly passed away in November.  This was almost exactly one year into a PCP deal in his new Volvo.  I’m trying to ascertain the best way of disposing of the vehicle, which is currently located on one of the Western Isles, some 500 miles away from where I’m based.  As a result, the option chosen is likely to be a function of the time and effort involved, the achievable value of the vehicle, and of course the prevailing rules around travel.  Naturally there is a large negative equity on the car being only one year old, and we are nowhere near the point of voluntary termination.

The options presented by the finance company are 1) clear the finance, leaving us free to sell the vehicle - with the estate absorbing the cost of the equity difference; or 2) Tell the finance company that we wish to end the agreement, at which point they have said the6 will arrange for collection of the car and sell it at auction.  The proceeds of the auction will be out towards the outstanding finance, with the rest liable to the estate.

My concern is that option 2) is unlikely to raise as much money, especially once the costs involved in recovering the vehicle and the auction are deducted.  Does anyone have any experience of enforced auction to share that might I firm or relieve my concerns?

As executor, I want to achieve what’s best for the estate, but at the same time there may be a convenience to option 2 that makes it worth considering.

i am grateful for any advice, experience shared or suggestions.

daveyjp

This happened to a friend whose husband died unexpectedly.  She chose option 1 as it was the easiest.  To be fair the Audi dealer was excellent.  They gave her a few weeks to get her head around what happened, sorted out the settlement figures with the finance company and arranged for the car to be picked up.

A different story to the BMW dealer and her Mini which was on a PCP.  They took real advantage of her situation and monumentally stitched her up.

AdrianC

Talk to the financier. Get the numbers. Until you've done that, you don't have a clue which option is likely to work out better.

Talk, also to local garages - both on the islands and the nearest Volvo dealer - and find out what they'd pay for it.
You may also want to investigate the cost of getting it transported to you, and the price your nearest dealer would pay for it.

Does your father have a friend or neighbour who may be willing to help transport it to the mainland? That would cut down the transport cost to you or to a dealer massively.

Roddyk

 Thanks everyone.  The settlement figure is around £27k, and the variety of dealers I have spoken to would pay around £21k.  So I know there will be a hit to take - that’s fine, I just want to try and minimise it.  Fortunately there will be assets in the estate to cover it.

What I don’t want to happen is for it to go to auction and do poorly.  Is it fair to expect that the car will fetch significantly less at auction than dealers are offering to me?

The original dealer that supplied the car specifically mentioned to me that it’s exactly the sort of used vehicle they like to have in stock - but they are currently prohibited from acquiring more stock by head office, sadly.

Supersonos

It appears option 1 and 2 are essentially the same - the car is sold and any difference is repaid by the estate.

But with option 2 it's sold at auction where I suspect it will command a lower price than selling privately.  Option 1 has the negative of the hassle, but you'd be losing less money.

facade

If there are other beneficiaries you might be better off letting the finance take it back, and paying the difference between settlement and auction from the estate.

Otherwise, the beneficiaries could claim it was undersold, and that you owe them. At auction it finds its true value.

.

AdrianC

facade said:

If there are other beneficiaries you might be better off letting the finance take it back, and paying the difference between settlement and auction from the estate.

Otherwise, the beneficiaries could claim it was undersold, and that you owe them. At auction it finds its true value.

Except for the minor detail that if the auction returns less than other routes, they have a legitimate grievance, too.

facade

AdrianC said:

facade said:

If there are other beneficiaries you might be better off letting the finance take it back, and paying the difference between settlement and auction from the estate.

Otherwise, the beneficiaries could claim it was undersold, and that you owe them. At auction it finds its true value.

Except for the minor detail that if the auction returns less than other routes, they have a legitimate grievance, too.

Their grievance can only be if items are sold below fair market value. Auction prices are fair market value. As long as the executor acts responsibly, and I'd argue returning it to the owner- the finance house, is acting responsibly, there is no comeback, the Executor's duty is to realise the current value of the estate, and ensure due taxes are paid before distribution to beneficiaries.

I presume that if it sold for £50, there would be some comeback against the finance house for not setting a reasonable reserve.

AdrianC

If somebody else is offering £21k, and it sells at auction for £18k, then why is £18k more accurately "fair market" than £21k?

Roddyk

Fortunately in this instance it is all quite simple.  My brother and I are jointly and equally beneficiaries and executors.  My initial question was just aimed at getting the best result for the estate in my capacity as executor and beneficiary.

I can see how in a more complex situation one would have to take his or her responsibility as executor seriously.

DrEskimo

Roddyk said:

 Thanks everyone.  The settlement figure is around £27k, and the variety of dealers I have spoken to would pay around £21k.  So I know there will be a hit to take - that’s fine, I just want to try and minimise it.  Fortunately there will be assets in the estate to cover it.

What I don’t want to happen is for it to go to auction and do poorly.  Is it fair to expect that the car will fetch significantly less at auction than dealers are offering to me?

The original dealer that supplied the car specifically mentioned to me that it’s exactly the sort of used vehicle they like to have in stock - but they are currently prohibited from acquiring more stock by head office, sadly.

So the negative equity is £6k.

What is the cost to reach VT (including any likely damage/excess mileage charges that may apply)?