Exiting a PCP finance deal

islandlad

Two years ago I bought a new motorbike on a three year PCP deal. I would now like to exit the deal early and give up the bike but I'm feeling trapped.

I can't sell the bike privately and use the proceeds to settle the finance because I'm not the owner, the finance company is. They have provided me with a settlement figure which is several thousand £££ but I'm very reluctant to wipe out my savings to clear this then seek a buyer. 
I do have a prospective buyer but quite naturally he is reluctant to give me the cash and wait for the finance deal to be cleared before he could drive away legally.
The motorcycle dealer is currently not interested in buying the bike back and who knows might not even be at the end of the PCP in October next year.

So is there a solution? In the T&C's the finance company say they are prepared to take the bike back in order to settle the finance deal but they are in effect acting as an agent and will charge 10% of the selling price at an auction (where it could be sold for a song). They also charge collection fees and admin fees. Not worthwhile!
PCP's sound great on the face of it but it seems like once your in you can't get out.

Thoughts please.

TadleyBaggie

Use your savings to clear the PCP and then sell and recoup. 

DrEskimo

You don't have to sell to the same dealer. You can sell it to any garage/dealer/online broker you like.

Ring around, get quotes and sell to the highest bidder. They will then settle the finance and pay any difference to you (or you pay any remaining shortfall).

Also the final paragraph isn't right. The finance company have already agreed to 'purchase' the bike from you at the end of the term for the GFV. You need to be clear that you are simply executing your right to hand the car back at the end of the term. You will be liable for any excess mileage and wear and tear beyond fair use. What you are describing is voluntary surrender, which is when you would be liable for any auction fee shortfalls. You do not want to do this.

The final option is voluntary termination, which is when you have paid 50% of the total amount payable (that's all costs, including deposit, monthlies and GFV) and hand back to the finance company. If you have not naturally reached this point through your deposit/monthly payments, then you can just pay the difference to get to 50% and hand it back. As with handing the car back at the end of the term, you will also be liable for excess mileage/wear and tear though.

You have the settlement figure now, so just ring around and get quotes from parties that would be willing to buy it. Then look at what it would cost to get to the 50% total payable mark to VT. Go with whichever is cheapest.

As above, if the private buyer is offering the best price, just use your savings to settle the finance and sell it that way.

Nearlyold

TadleyBaggie said:

Use your savings to clear the PCP and then sell and recoup. 

Agree with the advice above.

Other options would depend on the following: -

What are the figures, how much is the bike worth today (prices usually dip at this time of year) and what do you still owe including the balloon. What is the total amount payable shown in your credit agreement and how much have you paid so far.

What type of credit agreement is the PCP based on. Hire Purchase - Conditional Sale - Fixed sum/term loan.

NB On a PCP it's not the dealer who buys the bike back to end the agreement it's the lender who takes it back and effectively clears the loan. The dealer might pay you more for it than is owed on the balloon it they want it for stock though, if they don't want it just goes back to the lender

Rosco32

I had a BMW M140i on a 4 year PCP. 3 years in I asked for a settlement quotation. I sold it to a car buying company, who paid off the finance and I pocketed the rest. It's totally doable. Just check your T's & C's.

MEM62

islandlad said:

They have provided me with a settlement figure which is several thousand £££ but I'm very reluctant to wipe out my savings to clear this then seek a buyer. 

islandlad said:

I do have a prospective buyer 

islandlad said:

Two years ago I bought a new motorbike on a three year PCP deal. I would now like to exit the deal early and give up the bike but I'm feeling trapped.

The top two statements suggest that you are not trapped.  Why are you reluctant to settle the finance and sell the bike on when you have a prospective buyer lined up?    

Herzlos

You should be able to get the prospective buyer to phone the finance company and clear the finance, with any remaining money going to you (or missing money paid by you). That's quicker if the buyer is willing to do that.

It's probably easier and more palatable for the buyer if you use your savings to clear the finance and then sell it as the owner, if the buyer is prepared to wait that long.

This seems like an odd time to be buying a bike though, most don't see much action over winter.

MEM62

Herzlos said:

This seems like an odd time to be buying a bike though, most don't see much action over winter.

It's actually a good time to buy as prices won't be strong - similar to selling a convertible car at this time of year.  

MalMonroe

Hi, if in doubt, why not double check with the lender. At the end of the day they only want what they are owed. Which is fair enough.

As MEM62 says, above, you have a settlement figure, you have savings to pay that off and you have a prospective buyer, I don't see a problem? 

Unless you wanted to make a profit? Not always possible.

My car's on a PCP and the settlement figure is getting more manageable by the month. I could sell it on now and make a profit after paying off what I owe but I've decided to hang on. The finance agreements aren't always as iron-clad as you may think.

flashg67

I sold my PCP car to WBAC - they paid the financ company direct and paid me the balance - happens all the time