PCP Options

rarasarr23

I have a car on PCP, 4 year agreement, and I’ve had it 14 months. Took on the car and size, large SUV to suit someone else, sadly they became housebound two months later and have barely been in the car. I find it way too big for my own needs, and keep kicking myself that I sold my almost smaller SUV which was on HP, and nearly paid for.

I’ve read the finance information and I am aware to cancel I need to pay half the finance off, which is £16,000, I can’t afford to do that.

What other options do I have, I was led to believe by the salesman that I could downsize and swap my car for something more suitable should my circumstances change, but feel I have been misled.

Can I downsize to something smaller, and change the PCP agreement, the thought of keeping this car for close to another 13-months is not sitting well with me.

I have worked hard to get myself out of debt, and really don’t want this car to be a downfall! 

DrEskimo

Paying half the contract is one way, but typically not the best option. 

As with a car you own, you are free to trade/sell the car whenever you like. But of course you will need to settle the outstanding finance. 

So what I would do is get a range of quotes for the car in its current mileage and condition from a range of dealers and garages. 

Next is to request a settlement figure from the finance company to see how much you need to pay today to settle the finance in full. 

Any shortfall is what you would need to pay, or alternatively you might find the value is same of higher than you settlement figure. That will all depend on your specific finance arrangement though. 

Arunmor

As above, start by looking at Autotrader for prices and knock off about 10% to give a bit of wiggle room.  Then follow Dr Eskimo's plan.

rarasarr23

DrEskimo said:

Paying half the contract is one way, but typically not the best option. 

As with a car you own, you are free to trade/sell the car whenever you like. But of course you will need to settle the outstanding finance. 

So what I would do is get a range of quotes for the car in its current mileage and condition from a range of dealers and garages. 

Next is to request a settlement figure from the finance company to see how much you need to pay today to settle the finance in full. 

Any shortfall is what you would need to pay, or alternatively you might find the value is same of higher than you settlement figure. That will all depend on your specific finance arrangement though. 

Thank you very much for replying. This has been really helpful. Certainly a place to start now.

rarasarr23

I got a Settlement Figure from VW, for £19,941, and the likes of Motorway are offering £17,420 to currently buy (obviously I would look around) 

Will any company I see / trade in pay the finance off directly for me to VW? This was what happened when I switched from HP to PCP, in 2022.

I've seen a lovely little low mileage VW Polo, which would be ideal for my needs.

DullGreyGuy

rarasarr23 said:

I got a Settlement Figure from VW, for £19,941, and the likes of Motorway are offering £17,420 to currently buy (obviously I would look around) 

Will any company I see / trade in pay the finance off directly for me to VW? This was what happened when I switched from HP to PCP, in 2022.

I've seen a lovely little low mileage VW Polo, which would be ideal for my needs.

Yes, if you sell it to trade the money will paid to the finance company but you're in negative equity as they'll pay less than the settlement figure. You will need to speak to the potential buyer to confirm how to deal with it, they may require you to have reduced the settlement figure to or below their offer before they'll buy it rather than risking you not paying off the remaining charge.

rarasarr23

DullGreyGuy said:

rarasarr23 said:

I got a Settlement Figure from VW, for £19,941, and the likes of Motorway are offering £17,420 to currently buy (obviously I would look around) 

Will any company I see / trade in pay the finance off directly for me to VW? This was what happened when I switched from HP to PCP, in 2022.

I've seen a lovely little low mileage VW Polo, which would be ideal for my needs.

Yes, if you sell it to trade the money will paid to the finance company but you're in negative equity as they'll pay less than the settlement figure. You will need to speak to the potential buyer to confirm how to deal with it, they may require you to have reduced the settlement figure to or below their offer before they'll buy it rather than risking you not paying off the remaining charge.

Thanks for this. I wonder would the finance company allow me now to make a payment to the account to take into account a future sale?

Nearlyold

rarasarr23 said:

DullGreyGuy said:

rarasarr23 said:

I got a Settlement Figure from VW, for £19,941, and the likes of Motorway are offering £17,420 to currently buy (obviously I would look around) 

Will any company I see / trade in pay the finance off directly for me to VW? This was what happened when I switched from HP to PCP, in 2022.

I've seen a lovely little low mileage VW Polo, which would be ideal for my needs.

Yes, if you sell it to trade the money will paid to the finance company but you're in negative equity as they'll pay less than the settlement figure. You will need to speak to the potential buyer to confirm how to deal with it, they may require you to have reduced the settlement figure to or below their offer before they'll buy it rather than risking you not paying off the remaining charge.

Thanks for this. I wonder would the finance company allow me now to make a payment to the account to take into account a future sale?

Yes it is a statutory requirement that all regulated finance HP, PCP etc must offer the option for borrowers to make an overpayment at any time (aka Partial Settement) should they wish to do so.

The lender must then offer a reduced term or reduced  future payments. Lenders only have to offer one of those options but can offer both should they wish to do so

rarasarr23

Nearlyold said:

rarasarr23 said:

DullGreyGuy said:

rarasarr23 said:

I got a Settlement Figure from VW, for £19,941, and the likes of Motorway are offering £17,420 to currently buy (obviously I would look around) 

Will any company I see / trade in pay the finance off directly for me to VW? This was what happened when I switched from HP to PCP, in 2022.

I've seen a lovely little low mileage VW Polo, which would be ideal for my needs.

Yes, if you sell it to trade the money will paid to the finance company but you're in negative equity as they'll pay less than the settlement figure. You will need to speak to the potential buyer to confirm how to deal with it, they may require you to have reduced the settlement figure to or below their offer before they'll buy it rather than risking you not paying off the remaining charge.

Thanks for this. I wonder would the finance company allow me now to make a payment to the account to take into account a future sale?

Yes it is a statutory requirement that all regulated finance HP, PCP etc must offer the option for borrowers to make an overpayment at any time (aka Partial Settement) should they wish to do so.

The lender must then offer a reduced term or reduced  future payments. Lenders only have to offer one of those options but can offer both should they wish to do so

Thank you! Really helpful! 

Goudy

You could look to trade this SUV in for a Polo and the outstanding amount owed can be negotiated, sort of.
There is nothing to stop you trying to negotiate the value of the SUV at trade in.

You would need for the dealer of the Polo to take your SUV in as trade in and settle the finance on the SUV completely (or very very near) and start again with the Polo.

By the sounds of your settlement figure and Motorway quotes you aren't that far off.
Any shortfall can be paid off at the time of the deal or if you can't bridge that gap they might try and roll that short fall into the next finance deal on the Polo.
Neither of those are ideal and you want to try close that gap completely or as near to complete as possible.

What I would do is let the dealer know you want the whole of the settlement figure on the SUV covering before you think about a new deal on a new car.

You might have to try a few different dealers.
Be firm and pleasant but be up front. 
Tell them that's your plan, that's what you want and you're are ready to go if they can do that.
If they go off to "look at the figures" tell them to "Wow you" but be careful what they try and roll into the next finance package.

With some effort I reckon you could make a fairly big impact on that £2500 difference.
There's obviously some details we don't know, like the value/deal being offered on the Polo, but if it's making them a healthy profit you should be able to bite into that with negotiating the trade in valve.
 
You might not get it all but I bet you can do better than the £2500 you are looking at now.