Voluntary termination - talk to me

Bandy2023

I can VT my car in around September, full hand back is end of March 2027.

I'm quite interested in doing this as the payments that were decent in March 2023 are now shocking and I can save around £150 a month just for the same car, or get a much better one for the same money.

At the same time, for the sake of a few months more of the high payments I can't help thinking it's a faff and it will be a bit ropey on my credit report.

What do people think of VT?

XRS200

VT has never affected my credit ability.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6667828/voluntary-termination-talk-to-me

What type of finance do you have on the car?

Is it a PCP scheme?

Lease / PCH (personal contract hire)?

Hire Purchase?

All of the above types of finance would have different monthlies for exactly the same car.

When comparing with offers to get the same car for lower monthlies, have you considered the upfront and balloon payments attached to the alternative offer?

Dependent upon the form of finance you have, there may be far better options than VT.

If the car is on PCP or hire purchase, what is the current settlement figure and what is the value of the car to sell to WBAC or similar?

Bandy2023

https://forums.moneysavingexpert.com/discussion/comment/81994980#Comment_81994980

I'm investigating VT, so it's obviously PCP.

I know everything else you've mentioned, thanks

Goudy

Voluntary terminating a PCP or HP contract (you can't VT a Lease) is a statutory right built into your contract and comes under the Consumer Credit Act 1974.

It's called the 50% rule and comes under sections 99 and 100.

It should not effect your credit file unless you go into arrears for some reason, so you must understand and follow the rules to VT it properly. Though it might effect your relationship with that particular lender, if you ever want to use them again.

I mention this as some people might miscalculate this 50% point. This point includes the whole cash value (including the GFV), interest and any admin charges and of course if you fail to pay any related repair or items outside of the fair wear and tear policy charges.

Before doing it, I would investigate other ways as there is a possibility the car might be worth more than what you still owe at this point, which should help make your next car even cheaper.

daveyjp

I VT'd a HP agreement many years ago. Called finance company to terminate under VT, they sent me a form, I took the car to the local car auction, dropped it off, paperwork signed and I heard nothing more.

Bandy2023

https://forums.moneysavingexpert.com/discussion/comment/82002870#Comment_82002870

There's a big negative equity on the car.

So it's a case of VT around September ( confirmed by the finance company ) or just hang on and hand it back in March 2027.

I'm erring towards the former as the payments that were acceptable in 2023 are now uncompetitive, plus I'm paying 10p per mile excess miles ( I don't do high mileage, so that should only run into a few hundred £ )

I can save around £110 a month just for the same car, or get a nicer one for the same monthlies.

facade

I'm erring towards the former as the payments that were acceptable in 2023 are now uncompetitive, plus I'm paying 10p per mile excess miles ( I don't do high mileage, so that should only run into a few hundred £ )

Remember that excess mileage is pro-rata, so if you were on say 12K a year for 4 years and VT six months early they will charge per mile from 42K (3.5 x 12K)

Bandy2023

https://forums.moneysavingexpert.com/discussion/comment/82004514#Comment_82004514

Not sure what you mean

I was on 20k for the four years, I'm already over that.

Goudy

Mileage is per year and in the event of VTing, it's part year.

So 20,000 miles over four years is 5,000 miles a year.

You are handing it back/VTing it at three and a half years not four, so the mileage "allowance" is 17500 miles, so they will charge you 10p per mile from 17500 to whatever is on the clock.

You have only part completed the contract, so you only get part of the mileage allowance.

So now as an example, if you VT it at 3.5 years with 21,000 miles on it, they will charge you 3600 x 10p and not 1000 x 10p as they might at the end of the four year contract with 21,000 miles on it.

They don't let customers take cheaper, low mileage PCP contracts, rack up lots of miles and VT them scot free, otherwise everyone would do it!

facade

They don't let customers take cheaper, low mileage PCP contracts, rack up lots of miles and VT them scot free, otherwise everyone would do it!

Which is why excess mileage is now most definitely part of the contract, including at VT.

Years ago people did exactly as Goudy says, take out a 20k mile 4 year PCP for very low monthlies, VT it a couple of months before the end with 40k on the clock, then argue that excess mileage was not enforceable at VT, and hope that the finance company would write it off rather than spend time & money pursuing it.