PCP and car already worth less than final payment

Grumpy_chap

How much does the OP's mileage vary from the PCP agreement mileage?

Nasqueron

MyRealNameToo said:

Nasqueron said:

xorsyst said:

. It would make sense to me for them to allow me to pay the auction value of the car (plus a bit) to save them the hassle of taking it back and selling it.

It makes sense to you but there is literally no upside for them to accept this lesser amount

Either
You pay the balloon - they get full payment
You do another PCP deal - they get the car + interest you paid + a new finance package
You hand it back for the GMV - they get the car + interest you paid

Any of the 3 they win so there is zero reason for them to accept your offer of a lesser amount where they could lose money. 

Worst case if you didn't pay in full they seize the car back and sell it anyway and give you any credit balance or chase any debt

Don't follow your logic @Nasqueron

In option 3 they get the car, they can then sell it on their forecourt and lets say hopefully achieve £30,000 but will have to pay the sales guys commission, have to pay to collect the car, clean it, test it etc. 

Alternatively they put it to auction where maybe after paying the sellers commission they get £25,000 if they're lucky, still have to pay for collection etc but dont bother with cleaning/fixing it up, testing etc. 

The OP could offer them £31,000 rather than the balloon of £35,000 and in principle the finance company is in a better financial position than had they gotten the car back and the OP has paid fractionally more for a car that they know and so "trust". In principle it would be a win win.

Now I know they generally won't entertain the idea, I know why with lease cars they cannot due to the VAT consideration but dont know why they wouldnt consider it on PCP 

The logic is the interest....

Take the Q4 e-tron, 4 year deal, 35k credit (16k deposit from customer/Audi contribution) at 6.9% APR
GMV is £17,560, total amount is £56118. At the point of balloon payment, OP has paid £30,808 (plus £7750 audi contribution for the balance). There is a fairly high chance that is more than the COGs of the car anyway.

If that car is worth £12,560 on WBAC or something like that it's not necessarily a good deal no, but Audi can resell it on finance, (13.4% is their approved rate) say over 3 years and earn another £15.7k with interest for that car and hope the next person trades in for another PCP deal 

Again there is no incentive for them to sell it below the GMV especially not 5k

MyRealNameToo

Nasqueron said:

MyRealNameToo said:

Nasqueron said:

xorsyst said:

. It would make sense to me for them to allow me to pay the auction value of the car (plus a bit) to save them the hassle of taking it back and selling it.

It makes sense to you but there is literally no upside for them to accept this lesser amount

Either
You pay the balloon - they get full payment
You do another PCP deal - they get the car + interest you paid + a new finance package
You hand it back for the GMV - they get the car + interest you paid

Any of the 3 they win so there is zero reason for them to accept your offer of a lesser amount where they could lose money. 

Worst case if you didn't pay in full they seize the car back and sell it anyway and give you any credit balance or chase any debt

Don't follow your logic @Nasqueron

In option 3 they get the car, they can then sell it on their forecourt and lets say hopefully achieve £30,000 but will have to pay the sales guys commission, have to pay to collect the car, clean it, test it etc. 

Alternatively they put it to auction where maybe after paying the sellers commission they get £25,000 if they're lucky, still have to pay for collection etc but dont bother with cleaning/fixing it up, testing etc. 

The OP could offer them £31,000 rather than the balloon of £35,000 and in principle the finance company is in a better financial position than had they gotten the car back and the OP has paid fractionally more for a car that they know and so "trust". In principle it would be a win win.

Now I know they generally won't entertain the idea, I know why with lease cars they cannot due to the VAT consideration but dont know why they wouldnt consider it on PCP 

The logic is the interest....

Take the Q4 e-tron, 4 year deal, 35k credit (16k deposit from customer/Audi contribution) at 6.9% APR
GMV is £17,560, total amount is £56118. At the point of balloon payment, OP has paid £30,808 (plus £7750 audi contribution for the balance). There is a fairly high chance that is more than the COGs of the car anyway.

If that car is worth £12,560 on WBAC or something like that it's not necessarily a good deal no, but Audi can resell it on finance, (13.4% is their approved rate) say over 3 years and earn another £15.7k with interest for that car and hope the next person trades in for another PCP deal 

Again there is no incentive for them to sell it below the GMV especially not 5k

Ok, so understand you're considering the finance that may be used to buy the now secondhand car off the forecourt which will outweigh any cost of sales etc...

But many cars end up at auction instead of on the forecourt so no additional future income from interest on those? This was indeed the fate of my own Mercedes PCP which was returned with the balloon being massively more than its value. Unfortunately dont know what happened to the car... was MOTed just after they collected it and sold at auction. DVLA has no record of any owners after that, no MOTs, no Tax and no export record. Guess is it did go overseas but wasnt registered as doing so. 

The OP doesnt say they necessary have the money sitting about and so may consider another finance deal with the company too so even the OP buying the car at below the balloon doesnt definitely exclude them from the potential of additional interest. 

eschaton

MyRealNameToo said:

Nasqueron said:

MyRealNameToo said:

Nasqueron said:

xorsyst said:

. It would make sense to me for them to allow me to pay the auction value of the car (plus a bit) to save them the hassle of taking it back and selling it.

It makes sense to you but there is literally no upside for them to accept this lesser amount

Either
You pay the balloon - they get full payment
You do another PCP deal - they get the car + interest you paid + a new finance package
You hand it back for the GMV - they get the car + interest you paid

Any of the 3 they win so there is zero reason for them to accept your offer of a lesser amount where they could lose money. 

Worst case if you didn't pay in full they seize the car back and sell it anyway and give you any credit balance or chase any debt

Don't follow your logic @Nasqueron

In option 3 they get the car, they can then sell it on their forecourt and lets say hopefully achieve £30,000 but will have to pay the sales guys commission, have to pay to collect the car, clean it, test it etc. 

Alternatively they put it to auction where maybe after paying the sellers commission they get £25,000 if they're lucky, still have to pay for collection etc but dont bother with cleaning/fixing it up, testing etc. 

The OP could offer them £31,000 rather than the balloon of £35,000 and in principle the finance company is in a better financial position than had they gotten the car back and the OP has paid fractionally more for a car that they know and so "trust". In principle it would be a win win.

Now I know they generally won't entertain the idea, I know why with lease cars they cannot due to the VAT consideration but dont know why they wouldnt consider it on PCP 

The logic is the interest....

Take the Q4 e-tron, 4 year deal, 35k credit (16k deposit from customer/Audi contribution) at 6.9% APR
GMV is £17,560, total amount is £56118. At the point of balloon payment, OP has paid £30,808 (plus £7750 audi contribution for the balance). There is a fairly high chance that is more than the COGs of the car anyway.

If that car is worth £12,560 on WBAC or something like that it's not necessarily a good deal no, but Audi can resell it on finance, (13.4% is their approved rate) say over 3 years and earn another £15.7k with interest for that car and hope the next person trades in for another PCP deal 

Again there is no incentive for them to sell it below the GMV especially not 5k

Ok, so understand you're considering the finance that may be used to buy the now secondhand car off the forecourt which will outweigh any cost of sales etc...

But many cars end up at auction instead of on the forecourt so no additional future income from interest on those? This was indeed the fate of my own Mercedes PCP which was returned with the balloon being massively more than its value. Unfortunately dont know what happened to the car... was MOTed just after they collected it and sold at auction. DVLA has no record of any owners after that, no MOTs, no Tax and no export record. Guess is it did go overseas but wasnt registered as doing so. 

The OP doesnt say they necessary have the money sitting about and so may consider another finance deal with the company too so even the OP buying the car at below the balloon doesnt definitely exclude them from the potential of additional interest. 

Does the car show as being untaxed and invalid MOT?

if not the car has probably been sold to someone who has immediately put on a private plate. 

xorsyst

To answer a couple of questions with some (rounded) figures...

Original car cash price: £34k
Original credit taken: £20.4k
GFV/balloon payment: £14.7k  (my mistake, I had thought this was £19k, I had misremembered until I looked it up )
Current car value (based on autotrader) £14.2k
Final payment due: December 2026

Mileage: I expect to be slightly under the agreed mileage (40k), but not enough to have a huge impact on value.

Given my mistake with the GFV not being as high as I thought it was, then my current plan will be to pay it at the end of the agreement (I have the savings) unless the value drops significantly further.

But let's suppose it does drop to £9k. I would still hope the finance company might offer me the option of splitting that difference somehow, as surely they'd rather have say £11k in cash than a £9k car they have to auction?

MyRealNameToo

eschaton said:

MyRealNameToo said:

Nasqueron said:

MyRealNameToo said:

Nasqueron said:

xorsyst said:

. It would make sense to me for them to allow me to pay the auction value of the car (plus a bit) to save them the hassle of taking it back and selling it.

It makes sense to you but there is literally no upside for them to accept this lesser amount

Either
You pay the balloon - they get full payment
You do another PCP deal - they get the car + interest you paid + a new finance package
You hand it back for the GMV - they get the car + interest you paid

Any of the 3 they win so there is zero reason for them to accept your offer of a lesser amount where they could lose money. 

Worst case if you didn't pay in full they seize the car back and sell it anyway and give you any credit balance or chase any debt

Don't follow your logic @Nasqueron

In option 3 they get the car, they can then sell it on their forecourt and lets say hopefully achieve £30,000 but will have to pay the sales guys commission, have to pay to collect the car, clean it, test it etc. 

Alternatively they put it to auction where maybe after paying the sellers commission they get £25,000 if they're lucky, still have to pay for collection etc but dont bother with cleaning/fixing it up, testing etc. 

The OP could offer them £31,000 rather than the balloon of £35,000 and in principle the finance company is in a better financial position than had they gotten the car back and the OP has paid fractionally more for a car that they know and so "trust". In principle it would be a win win.

Now I know they generally won't entertain the idea, I know why with lease cars they cannot due to the VAT consideration but dont know why they wouldnt consider it on PCP 

The logic is the interest....

Take the Q4 e-tron, 4 year deal, 35k credit (16k deposit from customer/Audi contribution) at 6.9% APR
GMV is £17,560, total amount is £56118. At the point of balloon payment, OP has paid £30,808 (plus £7750 audi contribution for the balance). There is a fairly high chance that is more than the COGs of the car anyway.

If that car is worth £12,560 on WBAC or something like that it's not necessarily a good deal no, but Audi can resell it on finance, (13.4% is their approved rate) say over 3 years and earn another £15.7k with interest for that car and hope the next person trades in for another PCP deal 

Again there is no incentive for them to sell it below the GMV especially not 5k

Ok, so understand you're considering the finance that may be used to buy the now secondhand car off the forecourt which will outweigh any cost of sales etc...

But many cars end up at auction instead of on the forecourt so no additional future income from interest on those? This was indeed the fate of my own Mercedes PCP which was returned with the balloon being massively more than its value. Unfortunately dont know what happened to the car... was MOTed just after they collected it and sold at auction. DVLA has no record of any owners after that, no MOTs, no Tax and no export record. Guess is it did go overseas but wasnt registered as doing so. 

The OP doesnt say they necessary have the money sitting about and so may consider another finance deal with the company too so even the OP buying the car at below the balloon doesnt definitely exclude them from the potential of additional interest. 

Does the car show as being untaxed and invalid MOT?

if not the car has probably been sold to someone who has immediately put on a private plate. 

I handed it back just before its 3rd birthday, it had an MOT 2 days after I handed it back which it passed and hasn't had one in the 7+ years since. Its not currently taxed

Maybe someone has just had it in their private land but it's not an off road vehicle and forecourt price at the time was about £35k so a fair chunk to pay for a lawn ornament. When checking what the car was worth before surrendering it the dealership recommended selling it overseas as the colour way went for a premium in sunnier climates hence speculating whoever bought it took it overseas and just didnt do the paperwork correctly.