Voluntary Termination - Excess Mileage

tank0106

https://forums.moneysavingexpert.com/discussion/comment/81937353#Comment_81937353

Yes £2.8 is settlement vs what i’m being offered on most places. I might try autotrader to try and get a bit more in terms of price, Carwow reserve would leave me £2.5 in negative. Remaining is £1.3k for voluntary termination (50% way through payments) but i’d have to pay mileage on top of that and the also deal with VT on file. Agreement is up Sep 2027 so a while off yet.

facade

When I put settlement I meant the total amount to clear the finance (and own the car), so it is the outstanding payments plus the GFV, less interest on the remaining term. I assume it is a lot more than £2.8K or paying it would be a no-brainer 😉

If I understand you correctly, you can get out now by selling the car and paying the sale price plus an additional £2.8K to the financier (so the settlement is £2.8K + what you have been offered for the car), VT is years away and you'd be stuck with a car you don't like all that time, only to pay out £2.6K anyway.

If you look at it as only being £200 more down to get out now it seems there is an obvious choice if you want rid of it…

tank0106

Voluntary termination can happen once 50% of total payment has been made. That would be in 4 months time of continued monthly payments or if I pay upfront now £1.3k which is obviously less than the negative equity. However if I have to pay excess mileage it would work out probably the same.

LightFlare

Don’t forget to include the balloon in that 50%

DrEskimo

https://forums.moneysavingexpert.com/discussion/comment/81937718#Comment_81937718

Just thinking out loud - might it make sense to move ahead with getting a replacement car, but just continuing to pay the finance for the next 4-months until you reach the VT point? It essentially just acts as a 4-month payment plan for that £1.3k VT payment.

The advantage being that you accrue 4-months of 'mileage use time', but put 0 miles on the car during that period. So in effect, the pro-rata mileage allowance increases, but the amount of miles you are putting doesn't change, lowering the possible excess mileage charge?

I might be missing something obvious as it's still early!

Obviously the situation regarding the car value and finance owed will likely change too, so can reassess both options in 4-months time.

facade

https://forums.moneysavingexpert.com/discussion/comment/81937718#Comment_81937718

I misunderstood.

Your PCP ends in Sept 2027.

You reckon you are £1.3K/4 months short of the zero cost VT point (Are you sure? The zero VT point figure is in your paperwork, and it includes 50% of the balloon/GFV/final payment, normally you won't get there until a few months before the PCP ends as the GFV is around 50% of the total loan)

If that figure is correct, keep the car 4 months and then VT it paying the mileage. Then you potentially get some use out of it for your £1.3K.

I suspect you can't VT for nothing after 4 months though, and would have to pay half the GFV as well.

If the negative equity is only £2.8K now it will probably be best to just pay it. Again, have you asked the lender for a settlement figure and compared that with the offer for the car? It will need a lot of positive equity in the car to wipe out the GFV and the 18 months of payments you have left even if you save some interest. (You have to pay the settlement figure- remaining payments plus the GFV to the lender if you sell the car)