Car PCP. Can I avoid the fee at the end of my agreement ?

bobstheboy

My PCP finishes in three months. I want to pay the final lump sum to own the car. If I wait until the end, I pay the payment plus a fee of £200. If I settle early, do I avoid this admin fee ?

Grumpy_chap

Probably not.  What do the details of the contract say?

You will, however, save 3 months interest (not the same same as three months' payment).

molerat

Likely an "option to purchase" fee so there will only be one way of not paying it 

Grumpy_chap

In fact the way for the OP to find out is quite simple:

1. Add up all the costs for the remaining payments, final value balloon payment plus any other fees.
2. Obtain settlement figure.  The figure given should include any admin fees, or make clear they are additional.
3. Compare the difference and make a decision.

MalMonroe

I have a car on PCP.

You will need to have a look at your agreement and check the specifics of early settlement.

If you contact the finance company (in my case the dealer is also the finance company) they will give you a settlement figure. You don't have to settle though, just because you ask for the figure. I've asked for a couple of settlement figures during my time as a customer (and still haven't settled.)

They will just then calculate what you owe them. What I like about my PCP agreement - and yours is probably the same - is that there really are no hidden extra charges. Everything is listed in the agreement and I know exactly where I am. 

Give them a call, they'll be able to give you the exact figure and then you can decide what to do.

Nearlyold

bobstheboy said:

My PCP finishes in three months. I want to pay the final lump sum to own the car. If I wait until the end, I pay the payment plus a fee of £200. If I settle early, do I avoid this admin fee ?

If it's a Hire Purchase based PCP (as most are) it will have an "Option to Purchase Fee" payable to the lender to transfer ownership of the vehicle from the lender to the borrower. All Hire Purchase agreements have this fee (though oddly the fee can be set at zero). If you don't pay it, you won't own the goods - this fee is not to be confused with the balloon payment.