Getting out of a PCP deal?
Discussion
Hi folks,
I bought an M135i in September of last year on a 4 year PCP deal. I paid £400 up front and £399 per month for 4 years. If I kept it for the full 4 years I can then return the vehicle or pay £12500 to BMW finance and keep the car.
Obviously, I can sell the vehicle at any point over the 4 year period, pay what I still owe on the car and keep any profit (which would be unlikely until year 4 I reckon).
This is probably a silly question but I'm just curious to find out if there is any way of changing cars earlier than this or am I essentially 'stuck' in this deal for the time being?
When all is paid at the end of the 4 years I'll have paid around £32k. Taking off my payments so far and I still owe £29600 which I can't see me getting on my car at present.
Any advice would be great.
Cheers
Martin
I bought an M135i in September of last year on a 4 year PCP deal. I paid £400 up front and £399 per month for 4 years. If I kept it for the full 4 years I can then return the vehicle or pay £12500 to BMW finance and keep the car.
Obviously, I can sell the vehicle at any point over the 4 year period, pay what I still owe on the car and keep any profit (which would be unlikely until year 4 I reckon).
This is probably a silly question but I'm just curious to find out if there is any way of changing cars earlier than this or am I essentially 'stuck' in this deal for the time being?
When all is paid at the end of the 4 years I'll have paid around £32k. Taking off my payments so far and I still owe £29600 which I can't see me getting on my car at present.
Any advice would be great.
Cheers
Martin
It's probably not the best idea to be starting a new finance deal (probably for at least 4 years or more) with a load of negative equity rolled into it (plus a load more interest) if you will be changing your cars so often.
Personally, I'd just be happy that I had a nice car, and realise that perhaps more research before buying may have been prudent. (Lease deals, etc).
Edit - as a wild stab in the dark, I'd say yours is probably worth no more than £25k.
Personally, I'd just be happy that I had a nice car, and realise that perhaps more research before buying may have been prudent. (Lease deals, etc).
Edit - as a wild stab in the dark, I'd say yours is probably worth no more than £25k.
Fire away Rehab - and thanks to both of you for your replies - in all honesty, I love the car but given some of the lease deals for performance cars (which are a bit slower granted) I feel I could be just as happy for £100 less a month!
Rehab - 5 door M135i in white. September 2013 registered.
Options:
Tints
Automatic
Comfort pack
Leather
I think that coveres it - I believe I've done about 4k miles so far.
Cheers
Rehab - 5 door M135i in white. September 2013 registered.
Options:
Tints
Automatic
Comfort pack
Leather
I think that coveres it - I believe I've done about 4k miles so far.
Cheers
TheLordJohn said:
You've hit the nail on the head.
If anyone wants a car less than 2 years old, they'd be stupid not to do some real research into lease deals.
At the time I had just returned a Corsa VXR which was leased and it proved to be such a hassle that when the deal on the BMW arose, I thought I would go down the PCP route for a change. I'm the impatient type though - I'll most likely just get on with it and enjoy the car for at least a couple of years - maybe then I'll be able to trade it in for what I will still owe...hopefully.If anyone wants a car less than 2 years old, they'd be stupid not to do some real research into lease deals.
You can settle a PCP at any time, but the debt and depreciation curves are such that they are a mile apart till then end of the contract. If you try and settle out early on, it can cost you a vast amount of money. It's a necessary part of cheap monthly payments. They talk about halves and quarters as handback milestones, and I think the contract is such that you can dump it early with a lesser penalty at those points. At least it isn't a lease where it's hard to even transfer those to a willing third party nowadays.
you could finish after 2 years,
'Any regulated loan agreement (your PCP deal should be included) is covered under the Consumer Credit Act, and allows you to hand the car back and walk away after your payments have equalled 50% of the total amount payable in the contract. Contact the finance company that organised your loan for the exact amount.'
Consumer Credit Act 1974
'sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.'
'Any regulated loan agreement (your PCP deal should be included) is covered under the Consumer Credit Act, and allows you to hand the car back and walk away after your payments have equalled 50% of the total amount payable in the contract. Contact the finance company that organised your loan for the exact amount.'
Consumer Credit Act 1974
'sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.'
Edited by The Spruce goose on Saturday 8th March 09:29
The Spruce goose said:
you could finish after 2 years,
'Any regulated loan agreement (your PCP deal should be included) is covered under the Consumer Credit Act, and allows you to hand the car back and walk away after your payments have equalled 50% of the total amount payable in the contract. Contact the finance company that organised your loan for the exact amount.'
Consumer Credit Act 1974
'sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.'
But he won't have paid 50% of the total payable after two years. As with any regulated loan, it's front loaded with interest meaning at the start you pay mainly interest rather than capital. Thus, 50% of the actual capital wouldn't have been repaid till much further into the finance agreement than month 24.....'Any regulated loan agreement (your PCP deal should be included) is covered under the Consumer Credit Act, and allows you to hand the car back and walk away after your payments have equalled 50% of the total amount payable in the contract. Contact the finance company that organised your loan for the exact amount.'
Consumer Credit Act 1974
'sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.'
Edited by The Spruce goose on Saturday 8th March 09:29
Sarnie said:
But he won't have paid 50% of the total payable after two years. As with any regulated loan, it's front loaded with interest meaning at the start you pay mainly interest rather than capital. Thus, 50% of the actual capital wouldn't have been repaid till much further into the finance agreement than month 24.....
o.k i was wrong i thought the balloon payment wasn't included. Sarnie said:
The Spruce goose said:
you could finish after 2 years,
'Any regulated loan agreement (your PCP deal should be included) is covered under the Consumer Credit Act, and allows you to hand the car back and walk away after your payments have equalled 50% of the total amount payable in the contract. Contact the finance company that organised your loan for the exact amount.'
Consumer Credit Act 1974
'sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.'
But he won't have paid 50% of the total payable after two years. As with any regulated loan, it's front loaded with interest meaning at the start you pay mainly interest rather than capital. Thus, 50% of the actual capital wouldn't have been repaid till much further into the finance agreement than month 24.....'Any regulated loan agreement (your PCP deal should be included) is covered under the Consumer Credit Act, and allows you to hand the car back and walk away after your payments have equalled 50% of the total amount payable in the contract. Contact the finance company that organised your loan for the exact amount.'
Consumer Credit Act 1974
'sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex, but their main effect can be summarised in brief as follows. If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears. Otherwise, the debtor is liable to pay half the total price, less any payments already made.'
Edited by The Spruce goose on Saturday 8th March 09:29
People keeping the car at the end of the term or buying out the contract are the things that the manufacturers are keen to avoid. The repeat custom that these deals generate help with all the accountancy voodoo and cash flow projections. If they can keep you hooked, they much prefer it. Of course you are perfectly at liberty to buy the contract out or keep the car, but the sweet allure of a new motor after 3 or 4 years with relatively reduced payments is enough to keep most folk hooked.
We had a random call from alfa regarding changing our pcp'd guilletta,it's just half way through a £250 deposit £250 a month. It was miles apart between the valuation and the outstanding balance at around 3k!
Unless there is a hefty upfront involved you really have to go the full term with pcp's
Unless there is a hefty upfront involved you really have to go the full term with pcp's
Shivit said:
Martin_M said:
I have heard of people who have actually been offered improved deals around half way through their term.
I know quite a few people on PCP deals that are offered a new car with lower repayments after a couple of years on the deal. They nearly all take the offer.Speak to dealer they will help if they can. If not nothing lost.
Edited by HumbleJim on Saturday 8th March 16:57
Martin_M said:
I've heard that you can often expect them to call you after a couple of years but I don't think I'll stay with BMW...quite fancy something different...
My Mrs went to view a new Qashqai a few weeks back and talked about a PCP agreement over three years and the guy openly said that they would be calling in two years to get us into a new car.......and a furthe three year agreement I assume....VW are constantly throwing things through our letterbox in regards to a change or an upgrade, we're 25 months into our 36 month deal and I've had some part-ex valuations pretty much bang on what our settlement would be and private sale probably looking at a few hundred over our outstanding balance. Our initial deposit was probably 20% of the cars value mind.
I think we'll aim to get rid before it terminates next year, as we're on course to hit the mileage cap a bit too soon. It's been nice having a hassle free brand new car but I think come change time we'll go bank loan and a few years older, mainly for the overpayment and flexibility perks it can bring.
I think we'll aim to get rid before it terminates next year, as we're on course to hit the mileage cap a bit too soon. It's been nice having a hassle free brand new car but I think come change time we'll go bank loan and a few years older, mainly for the overpayment and flexibility perks it can bring.
Gassing Station | Finance | Top of Page | What's New | My Stuff