Toyota early exchange?

ceetp

Hi everyone, 

I have a Toyota CHR (71 plate) which I got last September brand new on PCP finance from an actual Toyota showroom. This is the first car I have ever financed.

Today Toyota called me and said because of my mileage I am eligible for an early exchange on my car. The lady invited me in for a chat which apparently would be exploratory, nothing ventured nothing gained (her words), and explained that the used car market is in high demand currently so I might be able to part-exchange my car early whilst keeping the same monthly cost. I have 29 payments left on my original contract/car. 

This isn't something I'd heard about before so I just wanted some advice. I am not desperate for a new car, but if I really can get a brand new one for the same price as I'm paying now I might as well right? What is the catch? Anything I should be wary about before bothering to go in for this chat? I'd been considering going full electric next so maybe this is an early opportunity to do so? (granted I haven't done any recent research to see if thats a good idea now with all the cost of living/energy stuff going on). 

TIA! 

facade

The catch is

1) you are losing the positive equity on your current car (but there is no guarantee there will still be positive equity after the remaining 29 payments, and you only get the positive equity if you pay the GFV/residual for the car and then sell it/trade it anyway)

2) you are signing up for another PCP, which even if the monthly cost is the same is going to commit you to paying it for longer.

Not a problem if you intend to spend the rest of your life paying to borrow a new car by continually taking out PCP deals. (which is what PCP really is)

DrEskimo

You are free to part exchange your car for another car whenever you like. This is true of a car finance on PCP or if you had bought it outright. The process is exactly the same. This is nothing unique to PCP....

It depends on what the car is, and when you will be able to get it. Used prices are inflated due to poor supply of new cars. As above, it is locking you into another agreement which will end later than your current agreement (rather than 29 payments you currently have left, you will have, say, 36 payments on the new agreement).

DullGreyGuy

The "catch" is normally you will be signing up to a new 3 year agreement (or whatever duration you signed up to last year). So you get a new car and they get you into finance for an extra year

flashg67

Personally, I'd get a settlement figure for your finance (the dealer can get this too) and get a value from 'We buy any car' for your current car. And also check the target price for the new car on What Car etc - It can be easy to hide a poor discount on the new car when the trade in for yours is relatively high

Goudy

The dealer is basically touting for business and as has already been described they hope rope you into a new deal.

It is true used car prices are quite high at the moment but you need to factor in your current cars value to what you still owe (the settlement figure).

A cars depreciation isn't linear.
It will lose big chunks of value early on and then even out to small amounts as the car gets older.

How you pay your finance is linear, you pay a monthly figure each month with a balloon payement at the end.

There is usually (but not always) a point in PCP finance where your car is worth roughly the same or more than you owe, if this occurs it is usually towards the end of the deal when you have only the odd monthly payment left and the balloon as this is when your payments have a chance of catching up with the cars depreciation.

If you try and arrange a new deal before this point you end up with negative equity, you owe more than the value of your car you are trading in so they roll this amount into the new deal.

So you don't notice or care about this they then inform you the monthly payments are the same, great, but they do this by extending the period you repay.
So instead of 36 months you might end up with a 48 month contract or more.

Now you end up paying more interest on a 48 month contract for the car plus the refinanced negative equity over 48 months and the interest on that.

To consider a new deal being anywhere near like for like, the monthly payments would have to stay the same over the same period as the original, which would mean they would have to fully clear the original finance with the trade in value of your current car.

But even this won't fully leave you with a like for like deal as new car prices have risen since your last deal and I presume you paid a deposit on your original deal.

So even if they did offer you enough to clear the finance off of your trade in and the deal was over the same amount of months, you will pay more as the car is now dearer and you haven't the deposit in the deal.