"Negative equity" at the end of a PCP deal

Options
2

Comments

  • Cornucopia
    Cornucopia Posts: 16,156 Forumite
    First Anniversary Name Dropper First Post Photogenic
    edited 12 March 2018 at 8:33PM
    Options
    Indeed, and to emphasise: if the car is in negative equity at the end of the term, then only one option makes sense, which is to hand the car back with nothing more to pay.

    It sounds as though there is a fundamental misunderstanding of what "guarantee" means in this context. It doesn't mean that the future value of the vehicle is guaranteed in the second-hand market - that simply isn't possible. What it means is probably better described as having the value of the vehicle underwritten. Whatever the car ends up being worth at the end of the term is irrelevant, because you can simply hand it back with nothing more to pay.
  • flashg67
    flashg67 Posts: 3,997 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Options
    helsmet1 wrote: »
    Yes I realise I can just hand it back too - but I can get more for the car by paying for the remainder and part exchanging elsewhere so I!!!8217;m not considering that as an option

    So could you tell the salesman this, or buy a different make / or from a different dealer, or sell it to a we buy any car type place & let them pay off the finance and then give you any balance.
  • verityboo
    verityboo Posts: 1,017 Forumite
    edited 12 March 2018 at 9:19PM
    Options
    helsmet1 wrote: »
    Yes I realise I can just hand it back too - but I can get more for the car by paying for the remainder and part exchanging elsewhere so I!!!8217;m not considering that as an option

    So why start a thread complaining about being in negative equity when now you say your not? Genuinely baffled

    Just be careful if you went to a different garage that they havent offered you a greater trade in price by reducing the normal discounts you would expect on the new car. Check on somewhere like broadspeed.com and drivethedeal.com to check your not better off handing the existing car back and buying the new one without a tradein
  • bazzyb
    bazzyb Posts: 1,584 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    helsmet1 wrote: »
    Yes I realise I can just hand it back too - but I can get more for the car by paying for the remainder and part exchanging elsewhere

    So do that then? I'm not sure what complaint you've made, or why, if your car is actually in positive equity rather than negative equity as you stated. Even if it is in negative equity, which it sounds like may not actually be the case, you don't have grounds for complaint as you can simply hand the car back to avoid this.
  • helsmet1
    helsmet1 Posts: 4 Newbie
    Options
    I started the thread to try and find out if this is common and acceptable practice or whether they have misrepresented the way that the process is supposed to work and whether I have legitimate grounds for escalating a complaint, and whether it has happened to others.
  • bazzyb
    bazzyb Posts: 1,584 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    helsmet1 wrote: »
    I started the thread to try and find out if this is common and acceptable practice or whether they have misrepresented the way that the process is supposed to work and whether I have legitimate grounds for escalating a complaint, and whether it has happened to others.

    From what you have stated, it sounds like they explained the process correctly and you possibly misunderstood. I genuinely can't see why you feel you have grounds for a complaint, especially as you are in a strong position - hand the car back with no repercussions, or trade it in elsewhere and benefit from.some equity in the deal.

    As for if it has happened to others, yes - PCP is often misunderstood by people who take it out, you will find multiple threads on this forum.
  • Typhoon2000
    Typhoon2000 Posts: 1,122 Forumite
    First Anniversary First Post Combo Breaker
    edited 12 March 2018 at 10:09PM
    Options
    Your PCP deal is with the finance company. Not with dealership. You dont owe the dealership any money at all. The finance company has already paid the dealership in full for the car.

    At the end of the PCP deal, you either hand the car back to the finanace company, pay the balloon payment to the finance company and keep the car, or sell the car to dealership who then pays off the finance company. Some times in the last case, the dealership thinks, it can make good money selling your old car on to someone after paying off the finance for you, and it will offer you a sweetener to buy another new car off them. Sounds like the last case is not going to happen. The dealership do not want to buy your car for the ballon payment amount.

    So you have to choose between handing the car back to the finance company or paying the balloon and selling the car your self. In either case you are free to get another PCP deal this or any other dealership, without any penalty.
  • neilmcl
    neilmcl Posts: 19,460 Forumite
    First Anniversary Name Dropper First Post
    Options
    helsmet1 wrote: »
    What they were essentially saying was that I owed approx £11,000 on the car, but they were only valuing it at £10,000, meaning that if I started a new PCP deal, I would owe them £1,000 on top of the cost of the new car
    I don't think they were saying that at all. If your car is in negative equity you don't "trade in", you simply hand the car over and start again should you wish to do so.
  • IanMSpencer
    IanMSpencer Posts: 1,517 Forumite
    First Post First Anniversary Combo Breaker
    Options
    neilmcl wrote: »
    I don't think they were saying that at all. If your car is in negative equity you don't "trade in", you simply hand the car over and start again should you wish to do so.

    I think they were saying that - trying to scare the OP into early termination and more debt as the OP doesn't understand their contract and they know it.
  • Frozen_up_north
    Frozen_up_north Posts: 2,420 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    Welcome to the not so wonderful world of car finance! I’ve had a PCP deal several cars ago and would not recommend them. Initially they appear good, but at the end of the deal you generally have nothing and have to start from scratch again.

    PCP... the law of diminishing returns :mad:
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards