PCP car finance - half way through contract, can I give car back early?

Db54321

Hi Everyone
I took out PCP on a car around 2 years ago on a 4 year contract, but am not happy with the car and would like to change brand. I need some guidance on what options I now have.
I’ve seen it said that you can give a car back as long as you’ve paid half of the original loan...is this true? If som how do I go about doing that?
I know that I could just pay the finance off and then part ex the car with a new dealer but don’t really want to part with my hard earned cash in one go. Could I get another brand to pay off my PCP and essentially transfer the balance to a new car that I buy from them? I know that I can’t sell the car as it’s owned by the finance company not me.
Any other advice/suggestions welcome.

Thanks

MEM62

What does your agreement say?

[Deleted User]

You can VT at 50% of the TOTAL VALUE of the deal which includes the balloon payment
As an example, £25,000 car, £500 deposit, £10,000 GMV, 0% interest, 42 month PCP. Once you reached £12500 you would be halfway. VT is a legal right and cannot be refused. Damage above wear and tear and excess mileage charges may apply.

Remember that for most PCP, especially that which charged interest, it is normally into the final 12 months of the deal that you reach the 50% mark. In the example above, say you were paying £345 a month (25000-500-10000/42) you wouldn't reach 50% until month 35 of 42

On your other points
You are allowed to sell the car, don't know why you think that - you just have to settle up the balance including any shortfall.
You can trade it in if anyone will take it (not as likely now given the mass of cars that are piling up on old race tracks as they can't be sold) and the buyer will pay off the finance (if it covers it) and any balance can be kept (or you make up the shortfall).
Check WBAC or similar and see what you'll get for it, that will get you a good idea of where you stand financially.

DrEskimo

If you want to end the agreement early you have two choices, you either pay to get to the voluntary termination point (as explained above, this is 50% of the total amount payable) or you look at the current finance settlement fee and compare that with a trade in valuation from WBAC or any garage/dealer that will offer to buy/trade the car in (whether as a straight purchase, or part exchanging against a car).

It's highly likely you will have to either pay to reach the 50% payable point, or that there will be a shortfall in the cars current value relative to the finance owing on it (you pay finance off at a fixed sum every month, whereas deprecation on a new car is non-linear over the first few years). You can simply weigh up which one would be more cost effective.

I would strongly advise against simply rolling any negative equity of your current deal into another PCP deal though. Make sure you are getting the best possible trade value for your current car and best possible discount on your next car, and settle any outstanding negative equity. Otherwise you risk compounding the financial risk, whereby the finance owing on your next car will be substantially higher than its value.

Db54321

@Deleted_User Thanks for that. I did some Googling before coming here and most sites said that you can’t sell the car because there is still outstanding finance. E.g. I have possession of the car but I don’t own it. If that’s incorrect, then that’ fine because it gives me more options than I thought I had.

@DrEskimo thanks for the info, makes perfect sense

DrEskimo

Db54321 said:

@Deleted_User Thanks for that. I did some Googling before coming here and most sites said that you can’t sell the car because there is still outstanding finance. E.g. I have possession of the car but I don’t own it. If that’s incorrect, then that’ fine because it gives me more options than I thought I had.

@DrEskimo thanks for the info, makes perfect sense

You can't sell the car without having the financed settled, which would require either the buyer settling the finance and then providing any additional payments to you, or you providing any shortfall.

Of course with a private seller things just become more complicated. It's already a bit of a headache when it comes to transferring large sums of money, but adding the complexity of ensuring finance is fully repaid just makes it more of a headache. The buyer will obviously want confirmation that any finance is cleared before transferring funds, and often the finance company will only deal directly with the named person on the finance.

macman

You've been 'happy' with the car for a full 2 years, now you're not happy. What's changed?

Db54321

To be honest, it’s turned out to be a bit of a rust bucket and it isn’t even that old

Grumpy_chap

How can a car only half way through a 4-year PCP turn into a rust bucket?  It must take a serious amount of neglect, possibly even abuse.

Db54321

Not at all, I bought it used but never checked underneath it. Now exhaust and other parts of the frame are rusting up underneath, I assume the previous owner lived near the sea or something similar which could have accelerated corrosion. I have the car in a garage, have bought similar models of the same car in the past and never had an issue

macman

So, you want to change your car because it's got a bit of rust on the exhaust?
Keeping a car in a closed unheated garage full of damp air is going to accelerate corrosion, not prevent it.