PCP and half way point query

[spunko2010]

Hi all, I have a query. I bought a car 24 months ago on a 48 month PCP deal with intention of changing it for a newer car at the half way point, i.e. now. Just went into the dealers and they told me I have £8k negative equity in the car... Gulp. So I've had a look at cancelling it as it's a 0% deal but it appears you need to have paid off 50%... Not be 50% through the term as I thought.

So looking at the 50% value, is this the total value of the amount to be paid back, or 50% of the total value of the car? I'm not sure if it should include the FMGV. Example: Cash price £50k, with a FMGV of £20k. So do I need to have paid 50% of £50k off, or 50% of £30k?

Thanks...

[Soov535]

spunko2010 said:

Hi all, I have a query. I bought a car 24 months ago on a 48 month PCP deal with intention of changing it for a newer car at the half way point, i.e. now. Just went into the dealers and they told me I have £8k negative equity in the car... Gulp. So I've had a look at cancelling it as it's a 0% deal but it appears you need to have paid off 50%... Not be 50% through the term as I thought.

So looking at the 50% value, is this the total value of the amount to be paid back, or 50% of the total value of the car? I'm not sure if it should include the FMGV. Example: Cash price £50k, with a FMGV of £20k. So do I need to have paid 50% of £50k off, or 50% of £30k?

Thanks...

You have to have paid half of the total amount payable back before you can VT.

[spunko2010]

Oh, bks. I worried you'd say as much. Oh well, you live and learn. Is there an online tool to figure out when my negative equity will be less? Obviously as each month ticks by I've paid more off, but the value will also drop.

Edited by spunko2010 on Wednesday 4th February 16:19

[Crusoe]

I'd expect them to charge you the additional mileage too if you have a 4 year 8k mile a year deal and hand it back after two years you would pay for anything over 16k miles.

[twing]

The GFV is included and will always be sat there. Fag packet exercise ... you'll be halfway through after month 40.

[LouD86]

Soov is correct, so on a 50k car, you need to be at 25001 to VT it

[chrispmartha]

Crusoe said:

I'd expect them to charge you the additional mileage too if you have a 4 year 8k mile a year deal and hand it back after two years you would pay for anything over 16k miles.

I could be wrong but I don't think they can charge you for excess mileage when you VT?

[LordGrover]

This may be of interest: click.

[spunko2010]

chrispmartha said:

I could be wrong but I don't think they can charge you for excess mileage when you VT?

Researched this earlier, it appears this is correct, but the finance company doesn't like it.

[alistair1234]

Problem with PCP's is that the VT point is a lot later than the middle payment due to the balloon.

Doesn't matter about depreciation if you've VT'ing so you don't need to calculate anything other than when you've paid off 50%.

Doesn't matter about mileage either when VT'ing.

Used to work in Collections and Recoveries for Capital Bank, lot's of dealers used to sell it as handing it back when 'half way through' knowing the buyers thought it was in number of payments not % of balance.

[Butter Face]

Add up your montlhly payment (x48) + the GFV + any fees. Then divide by 2. That's the amount you will need to have paid.

Eg

Monthly payment £300 x 48m = £14,400

+ fees (maybe £149 at each) = £298

+ GFV £10,000

Total = £24,698

Half is £12,349

To reach this point is 42 months.



It's all broken down on your finance docs.

[Sheepshanks]

alistair1234 said:

Used to work in Collections and Recoveries for Capital Bank, lot's of dealers used to sell it as handing it back when 'half way through' knowing the buyers thought it was in number of payments not % of balance.

To be fair to the OP, there's a member on a Mercedes forum I use who was told exactly this and only found out what really happens when he wanted to change cars at 18mths into a 3yr deal.

The ironic thing is that he's an Economist. He looks at big pictures, he said - not little details.


One of the big advantage of PCPs to the car industry is that the VT risk is very much reduced.

[Andy665]

spunko2010 said:

Hi all, I have a query. I bought a car 24 months ago on a 48 month PCP deal with intention of changing it for a newer car at the half way point, i.e. now. Just went into the dealers and they told me I have £8k negative equity in the car... Gulp. So I've had a look at cancelling it as it's a 0% deal but it appears you need to have paid off 50%... Not be 50% through the term as I thought.

So looking at the 50% value, is this the total value of the amount to be paid back, or 50% of the total value of the car? I'm not sure if it should include the FMGV. Example: Cash price £50k, with a FMGV of £20k. So do I need to have paid 50% of £50k off, or 50% of £30k?

Thanks...

Just think how much worse you'd feel if you didn't have the safety net of the GMFV as you're unlikely to have a car worth more than it at month 48, at least it won't be your £ loss

[spunko2010]

It was 2 years ago so I can't remember the exact conversation, but they certainly didn't tell me it'd take ~40 months to reach positive equity.

[LordGrover]

Haven't I seen contracts with an excess mileage charge, 10p per mile over x miles for example?

[R39S1]

Hi there. Give the finance company a call. I called mine yesterday and was surprised how close to the voluntary surrender point I was at 25 months into a 48 month PCP. Dealer and manufacturer contributions to the original cost count toward the amount paid although a straight discount wouldn't, subtle difference. My initial down payment was minimal so it got to be worth asking. HTH

[R39S1]

Hi there. Give the finance company a call. I called mine yesterday and was surprised how close to the voluntary surrender point I was at 25 months into a 48 month PCP. Dealer and manufacturer contributions to the original cost count toward the amount paid although a straight discount wouldn't, subtle difference. My initial down payment was minimal so it got to be worth asking. HTH

[daemon]

Crusoe said:

I'd expect them to charge you the additional mileage too if you have a 4 year 8k mile a year deal and hand it back after two years you would pay for anything over 16k miles.

Your rights to return the car when you've paid 50% are under the Consumer Credit Act. That is not subject to mileage restrictions at the end of term.

IF you dramatically exceeded what could be deemed reasonable, then they could claim money back from you, but if you did say, 13,000 a year they wouldnt have a leg to stand on.

[daemon]

spunko2010 said:

chrispmartha said:

I could be wrong but I don't think they can charge you for excess mileage when you VT?

Researched this earlier, it appears this is correct, but the finance company doesn't like it.

Awww thats a shame for them.

[daemon]

Butter Face said:

Add up your montlhly payment (x48) + the GFV + any fees. Then divide by 2. That's the amount you will need to have paid.

Eg

Monthly payment £300 x 48m = £14,400

+ fees (maybe £149 at each) = £298

+ GFV £10,000

Total = £24,698

Half is £12,349

To reach this point is 42 months.



It's all broken down on your finance docs.

It also includes your deposit, as its the "overall transaction cost", not the amount you financed.

Edited by daemon on Wednesday 4th February 18:40