Explaining part exchange on a PCP deal
Discussion
I’ve currently made 8 payments on Merc C43, around £600/pm on a 4 year deal. However, I’m now looking to part exchange this car for a cheaper alternative
What I’m clear on is that I’d have to clear the negative equity, which after visiting the dealership is £2800 and then jump into a new contract from there.
If I look through deals and find a suitable car, this means I don’t have to part exchange through the Mercedes dealership right? I could find a new deal and part exchange through that company?
This is because Mercedes are offering A class deals at around £400 which is too excessive for me now.
I need to understand how this all works!
What I’m clear on is that I’d have to clear the negative equity, which after visiting the dealership is £2800 and then jump into a new contract from there.
If I look through deals and find a suitable car, this means I don’t have to part exchange through the Mercedes dealership right? I could find a new deal and part exchange through that company?
This is because Mercedes are offering A class deals at around £400 which is too excessive for me now.
I need to understand how this all works!
If its a PCP you can do what you want with it with regards to PX, you just need to obtain a settlement figure from the finance company and then go from there.
See what WBAC and Evans Halshaw offer - and tootle, that will give you a rough idea of its trade value and how much you stand to lose.
See what WBAC and Evans Halshaw offer - and tootle, that will give you a rough idea of its trade value and how much you stand to lose.
Zain123123 said:
I’ve currently made 8 payments on Merc C43, around £600/pm on a 4 year deal. However, I’m now looking to part exchange this car for a cheaper alternative
What I’m clear on is that I’d have to clear the negative equity, which after visiting the dealership is £2800 and then jump into a new contract from there.
If I look through deals and find a suitable car, this means I don’t have to part exchange through the Mercedes dealership right? I could find a new deal and part exchange through that company?
This is because Mercedes are offering A class deals at around £400 which is too excessive for me now.
I need to understand how this all works!
Are you sure that negative equity is reflective of what the dealer is actually giving you for your car?What I’m clear on is that I’d have to clear the negative equity, which after visiting the dealership is £2800 and then jump into a new contract from there.
If I look through deals and find a suitable car, this means I don’t have to part exchange through the Mercedes dealership right? I could find a new deal and part exchange through that company?
This is because Mercedes are offering A class deals at around £400 which is too excessive for me now.
I need to understand how this all works!
A dealer will hide the true price of your car by moving extra discount from the new car to your car trade in price.
You can find out the real value of your car using something like webuyanycar (and adding maybe £500 on) and using an online broker for the price of your new car - try www.broadspeed.com and www.drivethedeal.com
See how those compare to what the dealer is offering you.
This is going to work out VERY expensive for you to be bailing at this point.
To answer your further questions, theres no obligation at all for you to buy another Mercedes or to trade the car in to the dealer you are buying your next car off.
Split the transaction in to three parts:-
Split the transaction in to three parts:-
- Price for the new car (whos doing the best deal / giving you the most discount) - use brokers to find the best price and ask local dealers to price match
- Value of your car - try evans halshaw, WBAC, local Mercedes dealers (ring and ask to speak to the used car buyer), or local specialists who resell cars like yours
- Best finance options - depending on how much you are spending it may be better to buy with a cheap personal loan.
Deep Thought said:
This is going to work out VERY expensive for you to be bailing at this point.
Why is it expensive if all I’m required to do is pay the dealership £2800 to clear the negative equity then jump into a new contract without a deposit?Also thanks to all for providing me with info, suitable links. This will be handy
Zain123123 said:
Deep Thought said:
This is going to work out VERY expensive for you to be bailing at this point.
Why is it expensive if all I’m required to do is pay the dealership £2800 to clear the negative equity then jump into a new contract without a deposit?Also thanks to all for providing me with info, suitable links. This will be handy
Zain123123 said:
Deep Thought said:
This is going to work out VERY expensive for you to be bailing at this point.
Why is it expensive if all I’m required to do is pay the dealership £2800 to clear the negative equity then jump into a new contract without a deposit?Also thanks to all for providing me with info, suitable links. This will be handy
Did you buy it new?
Have you confirmed you are actually only £2,800 short? The dealer may well be using discount from the other car to bolster the deal. Is the dealer offering to buy the car for that price quoted?
Also, that £2,800 - theres £200 a month for the next 14 months. So if you get a deal at £400 a month it'll be well over a year from now before you've made any finance payment saving.
£600 a month * 8 = £4,800. Lets assume £800 of that was interest. £4,000 in payments off the cost off the car. A dealer would want to have maybe a £4-5K gross markup on your car. Is it reasonable that your car is worth on the retail market exactly what you paid for it or more, given we're hitting 2020 than it was in early 2019? That just doesnt feel right.
Either you put a significant deposit in (which you'll lose the benefit of by bailing from this deal), or the dealer is massaging the trade in figures - or both.
Edited by Deep Thought on Monday 30th December 15:22
Zain123123 said:
funkyrobot said:
Please don't take this the wrong way. But is it wise to bail from one PCP and jump straight into another?
For the monthly cost saving alone it’s worth it, surely?Whats the dealer telling you its worth to him?
Deep Thought said:
How much deposit did you put in?
Did you buy it new?
Have you confirmed you are actually only £2,800 short? The dealer may well be using discount from the other car to bolster the deal. Is the dealer offering to buy the car for that price quoted?
Also, that £2,800 - theres £200 a month for the next 14 months. So if you get a deal at £400 a month it'll be well over a year from now before you've made any finance payment saving.
£600 a month * 8 = £4,800. Lets assume £800 of that was interest. £4,000 in payments off the cost off the car. A dealer would want to have maybe a £4-5K gross markup on your car. Is it reasonable that your car is worth on the retail market exactly what you paid for it or more, given we're hitting 2020 than it was in early 2019? That just doesnt feel right.
Either you put a significant deposit in (which you'll lose the benefit of by bailing from this deal), or the dealer is massaging the trade in figures - or both.
To answer your questions to help understand my situation further;Did you buy it new?
Have you confirmed you are actually only £2,800 short? The dealer may well be using discount from the other car to bolster the deal. Is the dealer offering to buy the car for that price quoted?
Also, that £2,800 - theres £200 a month for the next 14 months. So if you get a deal at £400 a month it'll be well over a year from now before you've made any finance payment saving.
£600 a month * 8 = £4,800. Lets assume £800 of that was interest. £4,000 in payments off the cost off the car. A dealer would want to have maybe a £4-5K gross markup on your car. Is it reasonable that your car is worth on the retail market exactly what you paid for it or more, given we're hitting 2020 than it was in early 2019? That just doesnt feel right.
Either you put a significant deposit in (which you'll lose the benefit of by bailing from this deal), or the dealer is massaging the trade in figures - or both.
A 10k deposit was put down
I bought a brand new 2019 Mercedes C43 Amg. It’s done 4,900 miles.
The settlement value provided by the dealership was £39,412 with the car value at £36,612 giving me negative equity of £2800
The dealer isn’t wanting to buy the car back from me only as a PX.
Two things: the car has cost you £10,000 + £2800 + 8x£600 = £17,600, or £2,200 a month if you give it up now. You should strongly consider whether saving a couple of hundred a month is worth realising such a massive depreciation or whether you can ride it out and even out that depreciation over a longer period of time, ultimately saving you money.
Secondly, there is a manufacturer approved 2019 C43 on Autotrader for £35,650 with only 5000 miles on it. To me this makes it quite suspect that you could get as much as the dealership has offered you without taking out a new finance agreement from them I.e as someone has said above they’re playing games and moving discount from the new contract they’re offering you - one way or another, this means that you are even further in the hole than you think you are.
Personally I’d be feeling a bit sick that I’d paid over 2.2K a month for a car but actually can’t even afford 600 a month for it.
Secondly, there is a manufacturer approved 2019 C43 on Autotrader for £35,650 with only 5000 miles on it. To me this makes it quite suspect that you could get as much as the dealership has offered you without taking out a new finance agreement from them I.e as someone has said above they’re playing games and moving discount from the new contract they’re offering you - one way or another, this means that you are even further in the hole than you think you are.
Personally I’d be feeling a bit sick that I’d paid over 2.2K a month for a car but actually can’t even afford 600 a month for it.
Begall said:
Two things: the car has cost you £10,000 + £2800 + 8x£600 = £17,600, or £2,200 a month if you give it up now. You should strongly consider whether saving a couple of hundred a month is worth realising such a massive depreciation or whether you can ride it out and even out that depreciation over a longer period of time, ultimately saving you money.
Secondly, there is a manufacturer approved 2019 C43 on Autotrader for £35,650 with only 5000 miles on it. To me this makes it quite suspect that you could get as much as the dealership has offered you without taking out a new finance agreement from them I.e as someone has said above they’re playing games and moving discount from the new contract they’re offering you - one way or another, this means that you are even further in the hole than you think you are.
Personally I’d be feeling a bit sick that I’d paid over 2.2K a month for a car but actually can’t even afford 600 a month for it.
Yes, thats what i was getting at. The O/P has turned a £10,000 deposit in to £2800 negative equity if they do this deal right now, which as you say means the car cost them £2,200 a month amortised.Secondly, there is a manufacturer approved 2019 C43 on Autotrader for £35,650 with only 5000 miles on it. To me this makes it quite suspect that you could get as much as the dealership has offered you without taking out a new finance agreement from them I.e as someone has said above they’re playing games and moving discount from the new contract they’re offering you - one way or another, this means that you are even further in the hole than you think you are.
Personally I’d be feeling a bit sick that I’d paid over 2.2K a month for a car but actually can’t even afford 600 a month for it.
If the car was kept for the full 48 month term, then its ((£600 * 48) + £10,000) / 48 = £808 a month. Still a lot but better than £2,200 a month.
Begall said:
Two things: the car has cost you £10,000 + £2800 + 8x£600 = £17,600, or £2,200 a month if you give it up now. You should strongly consider whether saving a couple of hundred a month is worth realising such a massive depreciation or whether you can ride it out and even out that depreciation over a longer period of time, ultimately saving you money.
Secondly, there is a manufacturer approved 2019 C43 on Autotrader for £35,650 with only 5000 miles on it. To me this makes it quite suspect that you could get as much as the dealership has offered you without taking out a new finance agreement from them I.e as someone has said above they’re playing games and moving discount from the new contract they’re offering you - one way or another, this means that you are even further in the hole than you think you are.
Personally I’d be feeling a bit sick that I’d paid over 2.2K a month for a car but actually can’t even afford 600 a month for it.
And yes, that was my other fear. The reality is i'd say the dealer wants that car stocked at £30K ish, so they're bolstering up the price with discount off the new car, hence why they dont want to take the car if the O/P isnt buying a new one off them.Secondly, there is a manufacturer approved 2019 C43 on Autotrader for £35,650 with only 5000 miles on it. To me this makes it quite suspect that you could get as much as the dealership has offered you without taking out a new finance agreement from them I.e as someone has said above they’re playing games and moving discount from the new contract they’re offering you - one way or another, this means that you are even further in the hole than you think you are.
Personally I’d be feeling a bit sick that I’d paid over 2.2K a month for a car but actually can’t even afford 600 a month for it.
The OP would have lost sums of a similar order if he had paid cash for the car. The least expensive C43 deal on CarWow at the moment ( a saloon ) is around £45k, less the circa £30k trade in price that Deep Thought and others have suggested leaves a loss of around £15k
OP, may I ask if your decision to change is motivated primarily by a need to reduce your outgoings? Or is that a man-maths rationalisation to justify an emotional desire to change your car?
You seem quite happy to chuck another £3000 or so at the project which makes me think that there isn't a shortage of cash at the root of this.
If there IS a money issue at the heart of this and there's a chance that the problem may deepen then think very hard before committing to the new car. With the initial depreciation on the new car you will find yourself in much greater negative equity than you currently are which will be a concern if you would like to change or get rid of it as quickly as you are considering changing the C43.
You may wish to consider using the £2800 that you have at hand for the negative equity to instead fund the £200 extra per month that your current car costs for an extra 14 months with the goal that it will pay off the capital more quickly and get you somewhere closer to break even on your current car.
On the other hand if you are just bored with the C43 and fancy a change, if you regard the deposit and monthly payments on the C43 as a sunk cost and don't mind putting in the £2800 to balance the books and the lower monthly payment is just an interesting consequence then go for it! But remember to save some cash for when you want to change the new car - you'll need it!
OP, may I ask if your decision to change is motivated primarily by a need to reduce your outgoings? Or is that a man-maths rationalisation to justify an emotional desire to change your car?
You seem quite happy to chuck another £3000 or so at the project which makes me think that there isn't a shortage of cash at the root of this.
If there IS a money issue at the heart of this and there's a chance that the problem may deepen then think very hard before committing to the new car. With the initial depreciation on the new car you will find yourself in much greater negative equity than you currently are which will be a concern if you would like to change or get rid of it as quickly as you are considering changing the C43.
You may wish to consider using the £2800 that you have at hand for the negative equity to instead fund the £200 extra per month that your current car costs for an extra 14 months with the goal that it will pay off the capital more quickly and get you somewhere closer to break even on your current car.
On the other hand if you are just bored with the C43 and fancy a change, if you regard the deposit and monthly payments on the C43 as a sunk cost and don't mind putting in the £2800 to balance the books and the lower monthly payment is just an interesting consequence then go for it! But remember to save some cash for when you want to change the new car - you'll need it!
Wooda80 said:
The OP would have lost sums of a similar order if he had paid cash for the car. The least expensive C43 deal on CarWow at the moment ( a saloon ) is around £45k, less the circa £30k trade in price that Deep Thought and others have suggested leaves a loss of around £15k
OP, may I ask if your decision to change is motivated primarily by a need to reduce your outgoings? Or is that a man-maths rationalisation to justify an emotional desire to change your car?
You seem quite happy to chuck another £3000 or so at the project which makes me think that there isn't a shortage of cash at the root of this.
If there IS a money issue at the heart of this and there's a chance that the problem may deepen then think very hard before committing to the new car. With the initial depreciation on the new car you will find yourself in much greater negative equity than you currently are which will be a concern if you would like to change or get rid of it as quickly as you are considering changing the C43.
You may wish to consider using the £2800 that you have at hand for the negative equity to instead fund the £200 extra per month that your current car costs for an extra 14 months with the goal that it will pay off the capital more quickly and get you somewhere closer to break even on your current car.
On the other hand if you are just bored with the C43 and fancy a change, if you regard the deposit and monthly payments on the C43 as a sunk cost and don't mind putting in the £2800 to balance the books and the lower monthly payment is just an interesting consequence then go for it! But remember to save some cash for when you want to change the new car - you'll need it!
Yes. By having to put £2,800 in to the pot, the O/P is negating any proposed saving for another 14 months (assuming the next car is £200 a month cheaper).OP, may I ask if your decision to change is motivated primarily by a need to reduce your outgoings? Or is that a man-maths rationalisation to justify an emotional desire to change your car?
You seem quite happy to chuck another £3000 or so at the project which makes me think that there isn't a shortage of cash at the root of this.
If there IS a money issue at the heart of this and there's a chance that the problem may deepen then think very hard before committing to the new car. With the initial depreciation on the new car you will find yourself in much greater negative equity than you currently are which will be a concern if you would like to change or get rid of it as quickly as you are considering changing the C43.
You may wish to consider using the £2800 that you have at hand for the negative equity to instead fund the £200 extra per month that your current car costs for an extra 14 months with the goal that it will pay off the capital more quickly and get you somewhere closer to break even on your current car.
On the other hand if you are just bored with the C43 and fancy a change, if you regard the deposit and monthly payments on the C43 as a sunk cost and don't mind putting in the £2800 to balance the books and the lower monthly payment is just an interesting consequence then go for it! But remember to save some cash for when you want to change the new car - you'll need it!
If circumstances have changed dramatically and the O/P really needs to save money, i'd be either buying a car for cash or taking out a cheap loan over a few years and getting my car payment down to a couple of hundred a month.
If its just because its getting a little tiresome and / or the new car smell has worn off or the O/P "just fancies a change", then given the real numbers involved and the fact the dealer is trying to hide some of the loss via discount off the new car, i'd grin and bear it for another year or so and review the situation then (probably with a view to seeing it through).
Even a £200 a month saving isnt much after a month or two, so unless the OP has (foolishly) pushed himself to the limit in buying the car (i very much doubt it) then making a bit of a saving isnt going to be life changing, and will probably end up in him driving a car he doesnt really want.
Mad!! To save £200 a month you throw away a very big chunk of money? Makes no sense at all. At this stage of the PCP you are just going to loose a lot of money.
Also PCP works best with low deposits because the deposit does not lower the GFV only makes the monthly costs lower. Having equity or not in the end of the PCP tends to be related to how accurate or optimistic the manufacturer set the GFV. If deposite brought down GFV that’s different but as it stands it probably brought your monthlies down by circa £300 compared to no deposit. But maybe some manufacturers use the deposit in a different way.
Also PCP works best with low deposits because the deposit does not lower the GFV only makes the monthly costs lower. Having equity or not in the end of the PCP tends to be related to how accurate or optimistic the manufacturer set the GFV. If deposite brought down GFV that’s different but as it stands it probably brought your monthlies down by circa £300 compared to no deposit. But maybe some manufacturers use the deposit in a different way.
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