'Trading in' lease car to dealer for a non lease car buy
Discussion
My current car is a Citroen C3 bought on a HP lease from a Citroen dealer through PSA Finance, I 'traded in' my previous Skoda on lease at the end of its 3 years to the Citroen dealer. The Citroen is a 4 year deal, but on buying I was told I could hand back the car after 3 years and end the lease. At the time they were probably thinking to get me into another contract for a new car.
Now, with everything Covid related and working from home for the foreseeable, I want to get off the lease train and stop paying monthly for something barely being used. The 3 years is up next month, and it's booked in for its service and MOT. Would I be able to 'trade in' the lease against a car bought upfront from a different dealer (with current funds, probably a shed/£2k car) ? I phoned the Citroen dealer to book in the service/MOT and they said I could take the car back to them, or try WBAC. It's low mileage (barely driven since March as I'm working from home and other travel has been limited), so if it is possible, would any higher value against the trade price go towards the car bought upfront?
Now, with everything Covid related and working from home for the foreseeable, I want to get off the lease train and stop paying monthly for something barely being used. The 3 years is up next month, and it's booked in for its service and MOT. Would I be able to 'trade in' the lease against a car bought upfront from a different dealer (with current funds, probably a shed/£2k car) ? I phoned the Citroen dealer to book in the service/MOT and they said I could take the car back to them, or try WBAC. It's low mileage (barely driven since March as I'm working from home and other travel has been limited), so if it is possible, would any higher value against the trade price go towards the car bought upfront?
ajprice said:
It's a HP, I was calling it a lease as a generic term and because I'm not really on top of all the jargon.
You can hand the car back to the finance company once 50% of the total amount repayable is reached. Are you sure it's HP if you are 3/4 into the agreement before being able to hand it back? Isn't it a PCP with a balloon payment at the end?
If you have a HP/Hire Purchase agreement:
You will pay a deposit and a fixed monthly amount for the car. The car will be yours at the end.
Example- 2000 deposit, 199 per month.
If you have a PCP agreement:
You’ll pay lower monthly payments than you would with a HP, but with a much higher final (balloon) payment at the end before the car becomes yours.
Example - 2000 deposit, 139 for 47 months, 3000 balloon payment to keep the car.
From the point you have paid 50% of all monies due on a PCP (including balloon payment) you can hand the car back and walk away.
You can trade in a car which on HP or PCP at any point, but there is a strong likelihood of negative equity.
My thoughts are that when the dealer says “trade in after 3 years” they mean they will take your current car, buy it from you and pay off the remaining finance, silently rolling any negative equity into a new deal. Potentially the car on the forecourt which is showing as 199 per month then costs you 239 per month, because of the negative equity on top. But this is just a guess, as with the terminology above, your situation is not very clear
You will pay a deposit and a fixed monthly amount for the car. The car will be yours at the end.
Example- 2000 deposit, 199 per month.
If you have a PCP agreement:
You’ll pay lower monthly payments than you would with a HP, but with a much higher final (balloon) payment at the end before the car becomes yours.
Example - 2000 deposit, 139 for 47 months, 3000 balloon payment to keep the car.
From the point you have paid 50% of all monies due on a PCP (including balloon payment) you can hand the car back and walk away.
You can trade in a car which on HP or PCP at any point, but there is a strong likelihood of negative equity.
My thoughts are that when the dealer says “trade in after 3 years” they mean they will take your current car, buy it from you and pay off the remaining finance, silently rolling any negative equity into a new deal. Potentially the car on the forecourt which is showing as 199 per month then costs you 239 per month, because of the negative equity on top. But this is just a guess, as with the terminology above, your situation is not very clear
Step 1 - Request a settlement figure from your finance provider.
Step 2 - Get a few valuations, WBAC, Arnold Clark, your local dealership.
Step 3 - Compare the two... It won't be 'exact' as the valuations may vary dependant on exact condition but it should let you know what equity (positive or negative) you've got and thus your position.
Don't make it overly complicated, it really is just two numbers... Amount owed and current car value. If you've paid 50% of the value and yet you're still somehow in negative equity then proceed with a VT (Voluntary Termination) and hand the car back.
Step 2 - Get a few valuations, WBAC, Arnold Clark, your local dealership.
Step 3 - Compare the two... It won't be 'exact' as the valuations may vary dependant on exact condition but it should let you know what equity (positive or negative) you've got and thus your position.
Don't make it overly complicated, it really is just two numbers... Amount owed and current car value. If you've paid 50% of the value and yet you're still somehow in negative equity then proceed with a VT (Voluntary Termination) and hand the car back.
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