Lease burrying negative equity?

[I.miss.my.old.cars]

Can't edit misspelling in title - I meant Burying

Sanity checking some things in ChatGPT, which tells me that some dealers can bury small negative equity when selling a car on PCH//ease, which at least for me it's unheard of.

Does it happen really? eg dealer would get my trade in with a small negative equity just to make the PCH /lease happen?
Cheers
V

Edited by I.miss.my.old.cars on Sunday 19th April 21:57

edit misspelling in title

Edited by I.miss.my.old.cars on Sunday 19th April 21:59

[Doofus]

I.miss.my.old.cars said:

Sanity checking some things in AI, it then tells me that some dealers can burry small negative equity into a lease, which at least for me it's unheard of.
Is this AI just being inaccurate, or that does happen?
Cheers
V

Pardon?

[I.miss.my.old.cars]

Rewritten for clarity.

[InitialDave]

I think it's extremely common in the US to roll negative equity forward like this with car finance.

Unsure about the UK. Certainly, with a PCP being more common here, that has an inherent backstop of the value at the end of the term even if the value of the car itself craters vs the balloon payment.

[I.miss.my.old.cars]

InitialDave said:

I think it's extremely common in the US to roll negative equity forward like this with car finance.

Unsure about the UK. Certainly, with a PCP being more common here, that has an inherent backstop of the value at the end of the term even if the value of the car itself craters vs the balloon payment.

Moving to an EV, not sure I'd want a PCP as it's probably leave me in massive negative equity if the EV loses too much value

[InitialDave]

I.miss.my.old.cars said:

Moving to an EV, not sure I'd want a PCP as it's probably leave me in massive negative equity if the EV loses too much value

It shouldn't leave you in negative equity. The nature of a PCP is that the balloon payment at the end is optional.

If you roll up to the end of the term and it's a £15k balloon payment for a car now worth £10k, oh dear, have it back then.

Depends what you want, really. You already said you were looking at leases, I was just suggesting a reason why PCP being relatively common here may mean rolling negative equity into the next car isn't so much of a thing compared to the US.

[Dimebars]

I.miss.my.old.cars said:

Moving to an EV, not sure I'd want a PCP as it's probably leave me in massive negative equity if the EV loses too much value

That's not how PCP works in the slightest

[CMTMB]

I.miss.my.old.cars said:

InitialDave said:

I think it's extremely common in the US to roll negative equity forward like this with car finance.

Unsure about the UK. Certainly, with a PCP being more common here, that has an inherent backstop of the value at the end of the term even if the value of the car itself craters vs the balloon payment.

Moving to an EV, not sure I'd want a PCP as it's probably leave me in massive negative equity if the EV loses too much value

The main benefit of PCP is you don't need to worry about negative equity. You just hand the car back at the end of the term.

[Memento Mori]

So are you looking to trade in a PCP car - that is currently in negative equity - and take out a PCH?

Assuming a main dealer, the best they can really do is improve the offer for your car, they can't roll negative equity into a PCH agreement.

Some dealers (BMW for example) will let you take out a negative equity loan to pay alongside the new PCP agreement. This may be possible for a PCH as well as a PCP.

We'd need more detail to be able to advise properly. What is your current car and who is it financed with, and where are you getting the new EV from?

[mcflurry]

I'd split it into 2 questions.
1 - what's your existing car worth and how much is owed? If it's negative, do the maths work out for a VT? If not, then how much to flatten the books?
2 - What's the best deal on the new car?

[I.miss.my.old.cars]

Thanks all - and apologies for the lack of clarity.
Some considerations:
-PCP would be a good thing in general if I went through the end of it. I tend to change cars every 2 years, and to settle it before the end there's a risk of negative equity. Usually 2 year PCPs are not that competitive price wise - at least couldn't find a deal that worked out


- My car is a 69 Reg Kamiq SE. Settlement around 9.2k, got valuations from 7.7 (WBAC) to 8.4 (Carwow). PCP with VWFS. I'm 17 months in and deposit was low, so far away from VT. I can flatten that, but just seeing what I can do throwing the minimum amount of money on the deal. Therefore if the PCH dealer bought the Skoda for a better price, I could make it work. This was the original question


- Looking at 1+23 deals of the Renault 4 at the moment, it's working out 275 (around there) with 15k miles.

Thanks again
V

[edc]

A trade in at a main dealer isn't going to see a much better if any figure than what you already have. They aren't getting a sale of you. I think you are best off seeing your deal out,handing the car back then looking for a lease if that is what you want.

[ilikejam]

Probably 10 years ago or more I took a new car on PCP through a main dealer and they absorbed the negative equity in my car in order to get me into a new one. They obviously figured that it was still profitable for them somehow and worth doing.

Not sure how common that is nowadays

[Wacky Racer]

Regarding the thread title, if you message a mod, they can alter it.