Pcp road tax

Kwhiteley1982

Hi.. me and my partner have just got a newish 20 plate car on pcp finance... I've read that for the 1sr 12 months the finance company cover the 1st years road tax and there after it's down to us? Is this the case? Also the salesman kind of rushed through things with regards to the pcp agreement .. like after the 4 years which we have the agreement with if we want to swop the car in for a newer one is there any additional costs incurred or is it a basic swop?  Thank you kris

Car_54

What does your contract say? You can read it: we can't.

Bigphil1474

I think you've misunderstood him and haven't read the contract. Do you think they will swap what is already a 4 year old and will be 8 year old car for a newer car and that there will be no cost? I'd be surprised. Sounds dodgy to me, as PCP are usually on new cars. At least you will have less depreciation to pay off than a new car.

born_again

Not really sure what you mean by PCP road tax.

Your road tax or as it is now known VED is payable by you each year.

When you get to the end of your PCP deal.
You have a couple of choices.
Pay the balloon on your 8 year old car & keep it.
Trade it in against another car at it's then value. Or simply walk away & pay no more. But have no car.

You might also want to question that having PCP on a 4 year old car for 4 years was the best decision. It means that if anything major mechanical goes wrong on the car. You can end up with no car & still paying the PCP, if you can't afford the repairs.
Been a few posts on this of late.

Frozen_up_north

Dealers include the initial road tax so you can drive the car away. After the first year (or 6 months) it is up to you to pay the tax.

At the end of the PCP deal, you still owe a “balloon” payment to keep the car, or hand back the car and walk away with nothing… that is the pitfall as you then have to start again from scratch. You maybe lucky and get a new deal without another deposit, but don’t rely on it. That is the problem with PCP, it’s initially tempting but the novelty wears off the next time around.

Goudy

Generally, with a new car the first years VED is in with the "on the road charges".
These charges obviously cover the first years VED, registration free and things like number plates.

With a used car they might throw the car VED in with the finance package (ie you pay for it plus interest on it) or you might tax it there an then when you pick it up as it's all online these days.
You need to clarify that with the selling dealer. 


As for the end of the contract with a PCP, that's it, you've paid for it and it's yours.
Don't confuse the end as the point where you have options with what to do with the car.

The end of your contract will be when you have paid for the car completely. So something like is 47 monthly payments of a few hundred quid PLUS the GFV (know as the balloon payment) which will be around 50% of it's current value as a final payment (do nothing and they will attempt to take this).

There is a point in the contract before the end, just when this GFV is due that you have some options.
You can obviously do nothing, pay the final payment and complete contract and that's it.

You can hand it back to the finance company (not the dealer) and walk away without paying the GFV or anything else IF the car is still within the contracted mileage and condition.
If it isn't, they will charge you excess mileage and wear and tear costs (see BVRLA fair wear and tear guidelines).

You can of course trade it in at anytime.
Early in the contract you will obviously owe more than the car is worth, so it's not really viable.
Later in the contract, close to when the GFV is due it might be worth the same or hopefully more that you owe.

This means the dealer you are trading it in with clears the outstanding finance and uses any positive equity against your new deal.
If it you owe more than it's worth as trade in, you would take on negative equity and they would roll that into a new finance package (not a great idea), but why would you do that if you can just hand it back??

Arunmor

Who has the V5c?  That will be the where the VED reminder is sent.

photome

You will pay the tax, but more importantly you need to get a handle on your PCP deal. It looks like you have gone in to getting a loan without understanding what you are getting in to.  It’s not a great idea to get a pcp on a 4 year old car, you will still owe money when tye car is 8 years old, but only you can see the terms of your deal

jimjames

Frozen_up_north said:

Some Dealers include the initial road tax so you can drive the car away. After the first year (or 6 months) it is up to you to pay the tax.

Corrected above. It might also be different for second hand and brand new PCP deals

molerat

If you are not sure how long they taxed it for go here and look it up, if you were not being billed for it then likely only 6 months. Also shows when the MOT is due as that is not always made clear on a used car.  https://vehicleenquiry.service.gov.uk/

Also might be worth checking the MOT history to see if anything needed doing on the previous tests https://www.check-mot.service.gov.uk/