Paying off Finance on a Credit Card; Possible?
Discussion
tankplanker said:
With a PCP deal can't you hand the car back and walk away even if its worth less than the current fiance after the 18 month period? Obviously it needs to be within the mileage allowance and in good condition.
How far are you off from the 18 month period? Can you suck up the payments till then?
Personally I would look into this ^^^^^How far are you off from the 18 month period? Can you suck up the payments till then?
usually if you pass a break-even / half way point in the PCP deal you have the option to just had the car back to the finance company and walk away. Given the negative equity, it may be a few months away... but check the contract in the first instance and save you putting yourself in a financial hole.
And even if you haven't made the point in time yet, when you can hand the car back it may just be a few months off - short term pain over 2years of repayment could be more favorable.
tankplanker said:
With a PCP deal can't you hand the car back and walk away even if its worth less than the current fiance after the 18 month period? Obviously it needs to be within the mileage allowance and in good condition.
How far are you off from the 18 month period? Can you suck up the payments till then?
What he said ^How far are you off from the 18 month period? Can you suck up the payments till then?
Rather than be paying a £5,000 loan for the next 24 months and have nothing to show for it (no car). Just ride it out till you finish the PCP, hand it back and walk away.
Also means you don’t need the company car and the tax implications that come with it until the Jeep has gone.
sidekickdmr said:
Rather than be paying a £5,000 loan for the next 24 months and have nothing to show for it (no car). Just ride it out till you finish the PCP, hand it back and walk away.
But looking at it another way he's paying £350 for a Jeep he doesn't want or need.He could just hand it back and pay £150 a month - a saving of £200.
So in effect he is paying an EXTRA £200 a month for the car.
Obviously that ignores that the car doesn't just cost £350 a month but also needs insurance, fual, servicing, tyres, tax etc...
Three years worth!
There is no getting away from the £5k debt.
Either he covers it with the car payments or he does it with a loan.
The car payments are more expensive and will require further expense, on top.
walm said:
But looking at it another way he's paying £350 for a Jeep he doesn't want or need.
He could just hand it back and pay £150 a month - a saving of £200.
So in effect he is paying an EXTRA £200 a month for the car.
Obviously that ignores that the car doesn't just cost £350 a month but also needs insurance, fual, servicing, tyres, tax etc...
Three years worth!
There is no getting away from the £5k debt.
Either he covers it with the car payments or he does it with a loan.
The car payments are more expensive and will require further expense, on top.
No, its only another six months of payments, as PCP allows you to hand the car back after eighteen months and walk away regardless of what is owed or what the car is worth as long as it is in good condition and within the mileage allowance. 6 * 350 is £2100.He could just hand it back and pay £150 a month - a saving of £200.
So in effect he is paying an EXTRA £200 a month for the car.
Obviously that ignores that the car doesn't just cost £350 a month but also needs insurance, fual, servicing, tyres, tax etc...
Three years worth!
There is no getting away from the £5k debt.
Either he covers it with the car payments or he does it with a loan.
The car payments are more expensive and will require further expense, on top.
tankplanker said:
o, its only another six months of payments, as PCP allows you to hand the car back after eighteen months and walk away regardless of what is owed or what the car is worth as long as it is in good condition and within the mileage allowance. 6 * 350 is £2100.
Absolutely wrong. (Though so are my original figures, shown in the post below mine)!You can hand back once you have paid half of the total credit price.
If this is a three year credit agreement for £25k starting price, £19k owed and allowing £3k for possible interest, at £350 per month × 48, you get:
Total credit price: £28k
Assuming 12 payments made, 24 to go, £1200 of interest paid so far.
- Amount paid so far - £3,000 against principal + £1,800 of deposit + £1,200 of interest = £6,000
At £350/month, £14,000 - £6,000 = £8,000 = 22.8 months
Therefore half the total credit price will have been paid one year before the end of a four-year PCP. The total cost to get back into equity will be £8,000, not £5k, plus the OP will have to deal with running costs (but will of course also not have to pay £50 per month of company car tax for two years).
I've made a few basic assumptions but either a bank loan or credit card is likely to be the cheapest way out here.
Edited by CYMR0 on Tuesday 12th July 17:39
CYMR0 said:
tankplanker said:
No, its only another six months of payments, as PCP allows you to hand the car back after eighteen months and walk away regardless of what is owed or what the car is worth as long as it is in good condition and within the mileage allowance. 6 * 350 is £2100.
Absolutely wrong.You can hand back once you have paid half of the total credit price.
If this is a three year credit agreement for £25k starting price, £19k owed and allowing £2k for possible interest, at £350 per month × 36, you get:
Total credit price: £27k
Assuming 12 payments made, 24 to go, £900 of interest paid so far.
- Amount paid so far - £4,200 against principal + £1,800 of deposit + £900 of interest = £6,900
At £350/month, £13,500 - £6,900 = £6,600 = 21.7 months
Therefore half the total credit price will have been paid two months before the end of a three-year PCP. The total cost to get back into equity will be £6,600, not £5k, plus the OP will have to deal with running costs (but will of course also not have to pay £50 per month of company car tax for two years).
I've made a few basic assumptions but either a bank loan or credit card is likely to be the cheapest way out here.
The idea that you can easily get out of negative equity with some arbitrary number did seem a little fantastical.
(e.g. take out a 5 year PCP and just walk away after 18 months!!!?)
Oh and it's a 4 year agreement that the OP is in isn't it?
Actually the numbers may not be as bad as I've painted them.
I wonder if the OP thinks he owes £19k on the basis that he has £19k left to pay from the annual statement of the PCP.
If there is £19k left to pay (3 years' payments + an MGFV of £6,400) then that would include a substantial element of interest and therefore the negative equity may not be that bad.
If £19k is the amount outstanding, OP paid a hell of a lot of money for what is basically a fat Fiat Panda :-)
I wonder if the OP thinks he owes £19k on the basis that he has £19k left to pay from the annual statement of the PCP.
If there is £19k left to pay (3 years' payments + an MGFV of £6,400) then that would include a substantial element of interest and therefore the negative equity may not be that bad.
If £19k is the amount outstanding, OP paid a hell of a lot of money for what is basically a fat Fiat Panda :-)
Unfortunately i can only hand it back once half the payments have been made, which is December 2018 with the PCP running till August 2019 when the GFV is due.
I've got a settlement figure of £19k, actual amount outstanding including interest is £22k. Car was £23k when I bought it. Looking back I shouldn't have done it, especially as I work in car sales, but as I drove them on a daily basis as I worked for Jeep at the time I really wanted one and it worked out favourable compared to having one as a demonstrator due to the way my previous employers company car scheme worked. I went to the boss and he sorted out the deal, but another year in the trade has helped me realise what a bad decision it was.
I've only just paid the insurance (at £835 for the year!) so will get a fair chunk of this back. I know by taking on a loan I'll have nothing to show for it once it's paid, as the Jeep will be off to its new owner and I'll be in company cars. But as pointed out earlier, I'll be £200 a month better off, and will easily offset the CC tax if I sell just one more car per month, which is getting easier now I'm settled in at Peugeot. Also, while I have a 2 year service plan already paid for (cost £100 and was a no brainer) the 3rd and 4th year services won't be cheap, and I've got a year of no warranty if I keep the Jeep, which, given recent issues with the electronic parking brake, won't be great.
I'm talking to the bank tomorrow to go through my options. Again, I know it isn't great, just trying to make the best of a bad situation
I've got a settlement figure of £19k, actual amount outstanding including interest is £22k. Car was £23k when I bought it. Looking back I shouldn't have done it, especially as I work in car sales, but as I drove them on a daily basis as I worked for Jeep at the time I really wanted one and it worked out favourable compared to having one as a demonstrator due to the way my previous employers company car scheme worked. I went to the boss and he sorted out the deal, but another year in the trade has helped me realise what a bad decision it was.
I've only just paid the insurance (at £835 for the year!) so will get a fair chunk of this back. I know by taking on a loan I'll have nothing to show for it once it's paid, as the Jeep will be off to its new owner and I'll be in company cars. But as pointed out earlier, I'll be £200 a month better off, and will easily offset the CC tax if I sell just one more car per month, which is getting easier now I'm settled in at Peugeot. Also, while I have a 2 year service plan already paid for (cost £100 and was a no brainer) the 3rd and 4th year services won't be cheap, and I've got a year of no warranty if I keep the Jeep, which, given recent issues with the electronic parking brake, won't be great.
I'm talking to the bank tomorrow to go through my options. Again, I know it isn't great, just trying to make the best of a bad situation
CYMR0 said:
Absolutely wrong. (Though so are my original figures, shown in the post below mine)!
You can hand back once you have paid half of the total credit price.
If this is a three year credit agreement for £25k starting price, £19k owed and allowing £3k for possible interest, at £350 per month × 48, you get:
Total credit price: £28k
Assuming 12 payments made, 24 to go, £1200 of interest paid so far.
At £350/month, £14,000 - £6,000 = £8,000 = 22.8 months
Therefore half the total credit price will have been paid one year before the end of a four-year PCP. The total cost to get back into equity will be £8,000, not £5k, plus the OP will have to deal with running costs (but will of course also not have to pay £50 per month of company car tax for two years).
I've made a few basic assumptions but either a bank loan or credit card is likely to be the cheapest way out here.
I didn't spot that it was a 4 year deal, my bad. However I'm not sure on your numbers either, I'm not seeing the GFV being taken off the fiance agreement in your figures, am I missing it? You can hand back once you have paid half of the total credit price.
If this is a three year credit agreement for £25k starting price, £19k owed and allowing £3k for possible interest, at £350 per month × 48, you get:
Total credit price: £28k
Assuming 12 payments made, 24 to go, £1200 of interest paid so far.
- Amount paid so far - £3,000 against principal + £1,800 of deposit + £1,200 of interest = £6,000
At £350/month, £14,000 - £6,000 = £8,000 = 22.8 months
Therefore half the total credit price will have been paid one year before the end of a four-year PCP. The total cost to get back into equity will be £8,000, not £5k, plus the OP will have to deal with running costs (but will of course also not have to pay £50 per month of company car tax for two years).
I've made a few basic assumptions but either a bank loan or credit card is likely to be the cheapest way out here.
Edited by CYMR0 on Tuesday 12th July 17:39
With early termination you have to pay 50% of the outstanding loan but as you aren't directly "borrowing" the GFV you do not factor in the GFV in the amount loaned.
For example, based on your figures and assuming early termination at 24 months not 12 (I do not know if these are exact to OPs):
£25k starting price, £1.8k deposit, £13.2k owed, £9k GFV and allowing £6k for interest (£3k seemed far too low for half way in a 4 year deal), at £350 per month × 48, you get:
Total credit price: £19.2k (13.2+6)
Assuming 24 payments made, 24 to go, £8400 paid so far.
£8400 - £19200 = £10800 outstanding
50% of total credit price is £9.6k
At £350/month, OP would still be short by £1.2k or months or 3.5 months, this figure would vary dependant on actual deposit paid and interest owed over the life time of the agreement.
If you settle the PCP early you pay the outstanding fiance plus the GFV:
£25k starting price, £1.8k deposit, £13.2k owed, £9k GFV and allowing £6k for interest (£3k seemed far too low for half way in a 4 year deal), at £350 per month × 48, you get:
Total settlement figure: £28.2k (13.2+9+6)
Assuming 24 payments made, 24 to go, £8400 paid so far.
£8400 - £28200 = £19800 outstanding - resale value of the car, assume its £4k, leaving £15800 outstanding.
Early termination should always mean less paid back if the car is worth less than the GFV, if it is worth more then you are usually better off selling the car and settling instead. If the finance company has set the GFV too high then that is their fault and they are liable for the negative equity, that is the primary benefit of a PCP deal when compared to HP. Only a moron wouldn't hand back a car within agreed mileage and good condition at the end or earlier if the GFV is more than the trade in/private sale value offered. Doing so means the finance company gets stuck with the negative equity rather than you, as the future value is guaranteed regardless of actual value, the clue is the G in GFV.
Most agreements that I have seen the hand back point is set at the half way point in the agreement as the earliest possible point. Only reason this should be missed is lack of/or tiny initial deposit or the GFV is small percentage of the total amount or the OP doesn't actually have a PCP agreement but has a HP agreement with no GFV.
Allow me to clarify the numbers.
Car was £22k. On a 4 year PCP. Interest was indeed £3k (staff deal as I worked for Jeep at the time)
£350 deposit paid, £350 per month x48 with a GFV of £8985. From what I've read, the GFV is included when calculating how much I need to pay before VTing the agreement.
I've made 12 payments, which means £4200. So total amount outstanding (including interest) is c£21k. Have got settlement which rebates interest and gives £19.5k.
I've got some values on my car which are around £14.5k. Meaning I could sell the car and give Jeep Finance the money, but I'd still have an outstanding balance of £5k.
The two options for getting rid of the car are:
1) bank loan for £5k at 4.9%, paying off over 3 years (same amount of time as I would be paying if I kept the Jeep) is £150 a month. When I have a particularly good month, I could pay more of a chunk off. However, a colleague has informed me that most banks will drop the interest rate when you borrow £7.5k, so it could be worth taking that amount, then straightaway paying off £2.5k. This in theory will give me the £5k at c3%.
2) Put the £5k on a 0% credit card. Looking at Halifax's online calculator, if I paid £200 per month off it (so still £150 up compared to if I keep the Jeep), it's 24 months 0% which is £4800. The final month would incur interest to a grand total of £3. Again, if I was to have a very good month at work, I could pay off more. This is the cheaper option, if it is possible to clear the £5k of outstanding finance on a CC.
So, I can be £150-200 a month better off if I get rid of the car. Company car tax would be around £50 per month, but like I said, one extra sale per month will cancel this out.
I'm speaking to the bank today to see what my options are. Will report back.
Car was £22k. On a 4 year PCP. Interest was indeed £3k (staff deal as I worked for Jeep at the time)
£350 deposit paid, £350 per month x48 with a GFV of £8985. From what I've read, the GFV is included when calculating how much I need to pay before VTing the agreement.
I've made 12 payments, which means £4200. So total amount outstanding (including interest) is c£21k. Have got settlement which rebates interest and gives £19.5k.
I've got some values on my car which are around £14.5k. Meaning I could sell the car and give Jeep Finance the money, but I'd still have an outstanding balance of £5k.
The two options for getting rid of the car are:
1) bank loan for £5k at 4.9%, paying off over 3 years (same amount of time as I would be paying if I kept the Jeep) is £150 a month. When I have a particularly good month, I could pay more of a chunk off. However, a colleague has informed me that most banks will drop the interest rate when you borrow £7.5k, so it could be worth taking that amount, then straightaway paying off £2.5k. This in theory will give me the £5k at c3%.
2) Put the £5k on a 0% credit card. Looking at Halifax's online calculator, if I paid £200 per month off it (so still £150 up compared to if I keep the Jeep), it's 24 months 0% which is £4800. The final month would incur interest to a grand total of £3. Again, if I was to have a very good month at work, I could pay off more. This is the cheaper option, if it is possible to clear the £5k of outstanding finance on a CC.
So, I can be £150-200 a month better off if I get rid of the car. Company car tax would be around £50 per month, but like I said, one extra sale per month will cancel this out.
I'm speaking to the bank today to see what my options are. Will report back.
DanB7290 said:
2) Put the £5k on a 0% credit card. Looking at Halifax's online calculator, if I paid £200 per month off it (so still £150 up compared to if I keep the Jeep), it's 24 months 0% which is £4800. The final month would incur interest to a grand total of £3. Again, if I was to have a very good month at work, I could pay off more. This is the cheaper option, if it is possible to clear the £5k of outstanding finance on a CC.
I suspect that it's going to be more than £4,800 to pay off £5k!!But ignoring that, check: https://www.mbna.co.uk/compare-credit-cards/money-...
There's ALWAYS a handling fee to get cash from a credit card. (Assuming you can't pay off the balance with the PCP on a CC, which I still doubt.)
But these guys are doing one for just 1.99%.
Which is better than the 3% fee on the £7.5k loan.
tankplanker said:
I'm not seeing the GFV being taken off the fiance agreement in your figures, am I missing it? With early termination you have to pay 50% of the outstanding loan but as you aren't directly "borrowing" the GFV you do not factor in the GFV in the amount loaned.
Yes, the whole price of the car is borrowed, less any deposit/deposit contribution and discount, of course. It would be great for the consumer if that wasn't the case, but PCP is literally no more than HP where the whole amount isn't paid off by the monthlies. Jeep doesn't seem to have a proper finance calculator online but here's something similar from BMW on a 2 Series Active Tourer.
In this case, the total credit price is just shy of £28k, though the whopping £250 deposit contribution from BMW would count towards that and payment to the half-way point.
Edited by CYMR0 on Wednesday 13th July 11:37
typer0612 said:
Surprised nobody has said it but how about getting rid of the car in a method that does not see you paying for it. How you do it, you choose.
It'd work out significantly cheaper even if the insurance goes up (depending)
Great idea, if you don't mind having a criminal record and become uninsurable once you leave prison!It'd work out significantly cheaper even if the insurance goes up (depending)
Poor people and car finance 
If its only £5k then money transfer via a CC such as MBNA will work providing you can handle the debt after the promotion period has ended.
Why have you not got £5k in your savings before even considering a new car?
I hope you have learnt from your bad decision/lack of disciplin.
If its only £5k then money transfer via a CC such as MBNA will work providing you can handle the debt after the promotion period has ended.
Why have you not got £5k in your savings before even considering a new car?
I hope you have learnt from your bad decision/lack of disciplin.
Thought I'd give an update. Been in to see about getting a loan today, and it's not happening.
I was honest about the whole situation, but from the bank's point of view, the loan is in addition to the outstanding finance on the Jeep, and due to that balance being £19k, they wouldn't loan me the money. Kind of annoying, but I can see where they are coming from. I now have three options:
1) Don't bother with a company car, keep the Jeep. I've ran it through my balance sheets, and I can afford to do this comfortably. Would have been nice to have got rid of it and made the outgoings even smaller, but hey ho.
2) Use £5k of the £8k in my ISA to help get rid. This isn't a preferred option as this money is earmarked for the house deposit. I could after a few good months replenish the money but I'd rather not dip into it.
3) Smash car up, claim on GAP insurance. Probably end up sharing morning showers with a 7ft, 20 stone chap called Sweetums. And require some rather nasty bumhole repair surgery. Not great.
Back in the real world, it looks like I'll be taking option 1. I do love the car, and the payments aren't an issue, but the possibility of saving more money was quite appealing.
I was honest about the whole situation, but from the bank's point of view, the loan is in addition to the outstanding finance on the Jeep, and due to that balance being £19k, they wouldn't loan me the money. Kind of annoying, but I can see where they are coming from. I now have three options:
1) Don't bother with a company car, keep the Jeep. I've ran it through my balance sheets, and I can afford to do this comfortably. Would have been nice to have got rid of it and made the outgoings even smaller, but hey ho.
2) Use £5k of the £8k in my ISA to help get rid. This isn't a preferred option as this money is earmarked for the house deposit. I could after a few good months replenish the money but I'd rather not dip into it.
3) Smash car up, claim on GAP insurance. Probably end up sharing morning showers with a 7ft, 20 stone chap called Sweetums. And require some rather nasty bumhole repair surgery. Not great.
Back in the real world, it looks like I'll be taking option 1. I do love the car, and the payments aren't an issue, but the possibility of saving more money was quite appealing.
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