Advice on returning a PCP car/rehiring another

rhardyman

Hi all,

Apologies if this has been covered before, which it probably has.

I have a vehicle that I have a 2 year lease on. For info, I put down £3k on it. It costs me approx £130 per month, and I have an allowance of 6k miles per year. I am half way through the lease and have only put 2k miles on it to date.

Assuming that it continues in this fashion, I will return the car having done approx 4-5k miles. Well below the allowance.

Who can tell me what happens when I return it, based on the questions:

Do I use the return value of the vehicle as a deposit against another (the car should have more value than agreed at the start of the lease)?
Do I have to put ANOTHER deposit for the next car?
Or, can I lease another car at the same (ish) monthly value with no further downpayment?

I've only had one PCP lease before and I returned the car and bought an old car instead as at the time I couldn't keep up with continuing that level of payments. Ideally i'd like to trade this one back in, and get a larger vehicle that costs me the same per month with the same milage allowance but I don't know how this really works.

TIA

LightFlare

Think you need to be clearer on whether you have:

1) PCP finance
2) A lease agreement
3) something else

Ayr_Rage

PCP is not a lease, it is a type of Hire Purchase.

Arunmor

Assuming it's a lease when the contract ends you just hand the car back.  If it's a PCP you either hand the car back or pay the residual and keep the car (or use the car as a deposit with any remaining funds after the PCP company has been paid)

DullGreyGuy

rhardyman said:

Apologies if this has been covered before, which it probably has.

I have a vehicle that I have a 2 year lease on. For info, I put down £3k on it. It costs me approx £130 per month, and I have an allowance of 6k miles per year. I am half way through the lease and have only put 2k miles on it to date.

Assuming that it continues in this fashion, I will return the car having done approx 4-5k miles. Well below the allowance.

Who can tell me what happens when I return it, based on the questions:

Do I use the return value of the vehicle as a deposit against another (the car should have more value than agreed at the start of the lease)?
Do I have to put ANOTHER deposit for the next car?
Or, can I lease another car at the same (ish) monthly value with no further downpayment?

I've only had one PCP lease before and I returned the car and bought an old car instead as at the time I couldn't keep up with continuing that level of payments. Ideally i'd like to trade this one back in, and get a larger vehicle that costs me the same per month with the same milage allowance but I don't know how this really works.

PCP <> Lease

With a Lease you simply return it, there is no "value" consideration, if its under mileage doesn't mater, if its over mileage you pay the excess mile fee and you start again from 0. 


With PCP you have two choices, you either surrender the vehicle in which case you walk away or you buy the vehicle for the balloon. You need to work out what the value of the vehicle is via your different disposal methods so if the balloon is £10,000 but WBAC will pay your £12,000 for it then you sell it to them, they pay the £10,000 balloon for you and give you £2,000. If the car is only worth £8,000 though then unless you love the car you'd surrender it for nothing and walk away from the negative equity. 

Most sales people will tell you that the PCP is priced such that there should be equity in the car so if you trade it in there will be some left over cash after the balloon is paid to pay the deposit for the next car but it doesn't always work that way. The balloon on our last car was circa £40,000 but the sticker price for a similar car on the forecourt was £35,000. I didnt even bother asking what they'd have given me for trade in as clearly it was in massive negative equity and so just surrendered it back.