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PCP End Balloon Payment-Loan to Refinance
My son has a Mercedes C class now 7 years old. Buy out on PCP now is £10800.
He has gone over the mileage over last 4 years so if he handed back would have to pay around £1500 for this which he can avoid if he buys the car.
Working out best option I guess maybe a car loan over 48 months to clear the balloon payment at around 6% APR and keep the car.
If he hands car back or sells it he still has to finance another car & not sure what he can get for same amount
Comments
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Is the question 'where can i best get a 10k loan?'
Start here
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Is it really the best option? Borrowing for another 4 years and the interest alone will probably be more than the £1500 to get rid now. And the car will be 11 years old by then.
What is the current estimated value?
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if you trade in the car and buy another the mileage charge does not apply
the mileage charge only applies if you hand back the car and walk away completely.
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Though it does affect the GMV i.e. value of the trade-in which was based on the agreed mileage
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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Are you sure about that?
If it was correct then there would be nothing to stop people taking PCP’s out with payments reflecting agreed mileage of 6k per year and doing 30k a year.
I’ll admit to not knowing for definite as it’s nearly 30 years since I took finance on a car and have never done PCP.
For OP, if your son needs finance, ensure he can afford to pay any bills on a 7 year old car. I have a 6 year old Mercedes that up to now has been excellent but have spent over £2k on repairs during the past 2-3 months.
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As mentioned in the following comment, it would affect the value of the trade in. So you would be ultimately end up paying for the higher mileage use through the fact that the car is worth less than the final balloon payment in the form of negative equity (since the balloon payment is determined by age and mileage).
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yes I am, a friend works in the trade.
when you sign up you also have to check the forms carefully as I declared 10k miles on an application and when I went to sign the papers stated 5k
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GMFV is now referred to as the optional final payment
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Are you sure about that Martin?
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