Car Finance Deal - is there a way out?

DullGreyGuy

Goudy said:

flashg67 said:

Depends on the market, the car model and how much deposit you put in at the start, but I've found it's between 24-30 months , on a 3 year PCP before you 'break even'. PCP are designed ideally to run their course - settling early will usually mean a shortfall as you've found

It's not just PCP.
On HP you will still pay interest and have the same non linear depreciation. 
You would still have the problem of not paying off the finance fast enough to match depreciation/interest in the earlier  years. You'd still have to wait until roughly the same time as the PCP to see it all start breaking even.

The breakeven point however is earlier on a HP because your paying off more of the capital whereas with PCP (which is just a marketing name for HP with a balloon anyway) there is a big slug of the capital, the balloon, that you are not repaying but just clearing the interest on. 


As to the OP... I assume you have considered the Benefit In Kind tax you'll be paying on the company car? Your questions suggest you may be new to all this and have seen some people come unstuck as they weren't aware of BIK

Goudy

The time might earlier but the point in repayments will be the same with both, you have to pay off whatever depreciation the car has suffered. Plus any interest.

But I get what you mean in terms of capital, though there are some other factors at play like interest rate and size of deposit will effect both HP and PCP.

With a health deposit contribution on a PCP that time could actually be earlier than HP as it soaks up some of the depreciation before you even have the keys in hand.
Deposit contributions don't really effect residuals which are based on invoice prices and the invoice will be full but show a deposit off what you (eventually) pay.

MEM62

Grumpy_chap said:

CluelessIndividual said:

Hi,

I currently possess a car I purchased in November 2023. I like the car so am in no rush to dispose of the car but I dislike paying for it ! However, I have been offered a company car, which in my role, would greatly outlay the car allowance I receive plus I travel a lot for work so any servicing/mileage wouldn't affect myself directly. So it's something I wish to pursue.

The problem I have is, the car value is ~14k, but the finance deal is a PCP which has an early settlement of 17.1k. Therefore, the finance includes nearly 3.1k interest on top of the car value which I am reluctant to pay out of my own pocket. Despite the company car deal serving me savings over a long-term, it's not feasible for 3.1k outlay.

My question is this, is the settlement agreement legal that there is this much interest sat within the agreement that exceeds the car value by this amount? With my deal being 15 months old also, is there usually a midway point in an agreement that the finance company will offer me a "get out" option? My previous deal with Stellantis, they offered me a chance to return/p exchange the car at 24 month mark. Is this common with all PCP agreements?

Have you considered the BIK tax arising from switching to a company car?
Have you considered the change (if any) in business mileage rates that may be reimbursed from switching to a company car?
Do you have any choice over when you make the switch to the company car?
Do you receive a car allowance instead of the company car in the mean time?

Absolutely this!  Even when I had a 90-mile per day round trip commute, it was cheaper for me to run my own car than have a company car.  

DullGreyGuy

Goudy said:

With a health deposit contribution on a PCP that time could actually be earlier than HP as it soaks up some of the depreciation before you even have the keys in hand.

It would be the same if you made the same sized deposit on HP... I assume when comparing HP and PCP that we take the other variables to be equal otherwise you arent comparing the finance methods but the difference the size of the deposit makes etc.

paul_c123

Did you take out GAP insurance? Were you offered it, understood it but declined?