Unsure what to do with BMW PCP

[AllyBassman]

First of all, be kind.. at the time of 'buying' my 3 series, I fell into the PCP trap and only focused on the monthlies... oh how i've learnt that lesson!

Anywho.... I'm approaching 3 years (Nov) into a 4 year PCP agreement on my used BMW 3 series. I'm in horrific negative equity (up to date settlement figure is £11,579.14) i'm no expert but a 2011 320d Msport on 52k miles is never going to fetch that...ever. I never expected to have 'equity' but never expected to have this sort of negative equity either.. the optional payment at the end of the deal (28 Dec 2018) is around £7500.

My plan was to just suck it up and buy the car at the end of the deal using a cheap bank loan, as it is in great condition for it's age (semi,semi amature detailer!) I love the car and still enjoy owning it etc. But the final figure is putting me off as these models are going from those prices now, so who knows what they'll fetch around December next year..

I've worked out that i'll be able to VT the agreement around April next year, which i'm thinking of doing, but again, excess milage will no doubt play into account as i've just reached my milage limit on the agreement (52k miles) so from here on in i'm racking up the charges... 11.9ppm

Any thoughts, tips or advice welcome!

[Integroo]

AllyBassman said:

First of all, be kind.. at the time of 'buying' my 3 series, I fell into the PCP trap and only focused on the monthlies... oh how i've learnt that lesson!

Anywho.... I'm approaching 3 years (Nov) into a 4 year PCP agreement on my used BMW 3 series. I'm in horrific negative equity (up to date settlement figure is £11,579.14) i'm no expert but a 2011 320d Msport on 52k miles is never going to fetch that...ever. I never expected to have 'equity' but never expected to have this sort of negative equity either.. the optional payment at the end of the deal (28 Dec 2018) is around £7500.

My plan was to just suck it up and buy the car at the end of the deal using a cheap bank loan, as it is in great condition for it's age (semi,semi amature detailer!) I love the car and still enjoy owning it etc. But the final figure is putting me off as these models are going from those prices now, so who knows what they'll fetch around December next year..

I've worked out that i'll be able to VT the agreement around April next year, which i'm thinking of doing, but again, excess milage will no doubt play into account as i've just reached my milage limit on the agreement (52k miles) so from here on in i'm racking up the charges... 11.9ppm

Any thoughts, tips or advice welcome!

Can't you VT at any point after you are past the half-way point?

[AllyBassman]

That's what i thought at first,

but in fact, it's when you're halfway through paing off the total amount borrowed + interest. So for me, this is around the 9k mark

[Dimebars]

Integroo said:

Can't you VT at any point after you are past the half-way point?

VT is at half the total payable, not half the term on PCP

Total payable includes interest and balloon payment

You can technically VT at any point by paying the difference between what you've paid to date and the VT value

[Andy665]

No excess mileage charge if you VT

[daemon]

AllyBassman said:

First of all, be kind.. at the time of 'buying' my 3 series, I fell into the PCP trap and only focused on the monthlies... oh how i've learnt that lesson!

Anywho.... I'm approaching 3 years (Nov) into a 4 year PCP agreement on my used BMW 3 series. I'm in horrific negative equity (up to date settlement figure is £11,579.14) i'm no expert but a 2011 320d Msport on 52k miles is never going to fetch that...ever. I never expected to have 'equity' but never expected to have this sort of negative equity either.. the optional payment at the end of the deal (28 Dec 2018) is around £7500.

My plan was to just suck it up and buy the car at the end of the deal using a cheap bank loan, as it is in great condition for it's age (semi,semi amature detailer!) I love the car and still enjoy owning it etc. But the final figure is putting me off as these models are going from those prices now, so who knows what they'll fetch around December next year..

I've worked out that i'll be able to VT the agreement around April next year, which i'm thinking of doing, but again, excess milage will no doubt play into account as i've just reached my milage limit on the agreement (52k miles) so from here on in i'm racking up the charges... 11.9ppm

Any thoughts, tips or advice welcome!

How are you in "horrific" negative equity and why do you care?

PCP deals arent designed to break even (in terms of whats owed versus value) until very close until the end of term. Who gives a monkeys what the value versus whats owed is right now if you've no plans to change it anyway?

And where are you getting 2010 / 2011 320d M Sports with less than 60K miles being sold for £7,500 now? Cheapest in the country i can find is around £9K ish, so £7.5K ish next December doesnt sound a million miles away.

Your options are :-

=> VT it once you've reached the 50% marker next year and walk away with nothing further to pay (subject to fair wear and tear). They cant enforce excess mileage on a VT
=> Buy the car at end of term, with the knowledge that you are happy with the car, know it, and have cared for it. £7,500 sounds a reasonable sum.
=> Set aside money for the excess mileage you're racking up if you really really want the option to hand the car back at the end of term
=> Trade the car in at the end of term and therefore not have to pay any excess mileage charges anyway.

These are all very positive options (the third one less so) so i dont see what the issue / worry is?

[AllyBassman]

daemon said:

How are you in "horrific" negative equity and why do you care?

PCP deals arent designed to break even (in terms of whats owed versus value) until very close until the end of term. Who gives a monkeys what the value versus whats owed is right now if you've no plans to change it anyway?

And where are you getting 2010 / 2011 320d M Sports with less than 60K miles being sold for £7,500 now? Cheapest in the country i can find is around £9K ish, so £7.5K ish next December doesnt sound a million miles away.

Your options are :-

=> VT it once you've reached the 50% marker next year and walk away with nothing further to pay (subject to fair wear and tear). They cant enforce excess mileage on a VT
=> Buy the car at end of term, with the knowledge that you are happy with the car, know it, and have cared for it. £7,500 sounds a reasonable sum.
=> Set aside money for the excess mileage you're racking up if you really really want the option to hand the car back at the end of term
=> Trade the car in at the end of term and therefore not have to pay any excess mileage charges anyway.

These are all very positive options (the third one less so) so i dont see what the issue / worry is?

- I've read this countless times about the VT milage charges... while i'd like to believe it, i've also read other threads where BMW/other lenders have chased and threatened leagal action and imposed late payment markers on the persons credit file
- I may still do this, but it would only to keep it for a few months then sell it/trade in for my next car so may not bother!
- Sorry i should have put trade in/private sale value, I got a WBAC valuation of 7k - I was curious as to what was being offered

When you put it like that, I guess it does not seem too bad, I guess i'm just kicking myself now as I wish i'd done things differently, love the car though, so that's a plus!

[daemon]

AllyBassman said:

- I've read this countless times about the VT milage charges... while i'd like to believe it, i've also read other threads where BMW/other lenders have chased and threatened leagal action and imposed late payment markers on the persons credit file
- I may still do this, but it would only to keep it for a few months then sell it/trade in for my next car so may not bother!
- Sorry i should have put trade in/private sale value, I got a WBAC valuation of 7k - I was curious as to what was being offered

When you put it like that, I guess it does not seem too bad, I guess i'm just kicking myself now as I wish i'd done things differently, love the car though, so that's a plus!

BMW can huff and puff all they like, but they cant enforce mileage charges on a VT. I dont think they can put late payment markers on either - how could they? The contract is terminated. Voluntary Termination - the clue is in the name - you cant have "late payment" charges for a contract that no longer exists.. Now if someone is dumb enough to sign any "VT" paperwork they send out where they commit to paying excess charges, then thats a different story.

If you cant be bothered with the hassle of them throwing a tantrum, then just drive on until the last payment is due, then either trade it in or take a loan out to buy it.

Ignore the WBAC price. They're a bunch of vultures. Look at relative values on Autotrader. You'd be buying a car you know the history of and enjoy and at a decent enough price.

I wouldnt get hung up on the "wish id'd done things differently" thing. It is what it is now, so i wouldnt worry. You've options - and decent ones at that - at the end of term.

Edited by daemon on Friday 4th August 16:02

[looksfast]

This is interesting as I am in a similar position. I too have a 4 year PCP with BMW and am about to reach the end of year 3 this month. I am considering a VT too as when I took it out (and I know that this is all my own fault) I hadn't appreciated that they would want £1,000 to extend the warranty for another year and of course the MOT kicks in etc.
Coincidentally, I would like to change the car as I am bored of it, so that motivation kicks in.
My settlement figure is about £22k, with a car worth £15k according to WBAC. I am also over the mileage limit, by £1k at present which will probably be £2k this time next year when the PCP ends.
I am not inclined to hand back the car, pay £7k shortfall in the PCP plus any mileage charges (noting that they may not apply as previous posts).
There is a question in here somewhere, which is whether I can hand back on a VT basis having paid 50% of the total due and ignore that settlement figure as a red herring? Or, do I carry on paying for a year and assume no excess mileage costs? Ta.

[daemon]

looksfast said:

This is interesting as I am in a similar position. I too have a 4 year PCP with BMW and am about to reach the end of year 3 this month. I am considering a VT too as when I took it out (and I know that this is all my own fault) I hadn't appreciated that they would want £1,000 to extend the warranty for another year and of course the MOT kicks in etc.
Coincidentally, I would like to change the car as I am bored of it, so that motivation kicks in.
My settlement figure is about £22k, with a car worth £15k according to WBAC. I am also over the mileage limit, by £1k at present which will probably be £2k this time next year when the PCP ends.
I am not inclined to hand back the car, pay £7k shortfall in the PCP plus any mileage charges (noting that they may not apply as previous posts).
There is a question in here somewhere, which is whether I can hand back on a VT basis having paid 50% of the total due and ignore that settlement figure as a red herring? Or, do I carry on paying for a year and assume no excess mileage costs? Ta.

Please dont use WBAC as a reference point. They are thieves and thats not a representative value of your car.

Why would you have to hand back the car and pay a £7K shortfall??

Once you've paid 50% of the total transaction cost (including deposit, admin fees, interest and residual value) you can hand the car back with nothing further to pay, subject to fair wear and tear.

My "gut" feeling RE: the mileage is that the further you are away from average miles or agreed miles, the more likely the finance company will pursue you. So if you're handing back a car with 100,000 miles on it instead of 40,000 then i think they will make significant effort to reclaim further monies - even though legally they cant, they could pursue it relentlessly until you give in OR they could arguably pursue it under "fair wear and tear".

If you do VT, dont sign anything from them, and use a standard templated letter that can be found via google.

Expect them to start billing you but outside of fair wear and tear they cant really enforce it.

[Sheepshanks]

daemon said:

BMW can huff and puff all they like, but they cant enforce mileage charges on a VT.

It's really unclear if that's correct or not, but the balance of opinion I've seen suggests they probably can. VW have recently started to demand excess mileage payments and I've read of other finance companies pushing it to the brink, although not of any where they've needed to take action (every example I've read the customer has caved).

I think people should expect to have to pay. Then if you get away with it it's a bonus.

[daemon]

Sheepshanks said:

daemon said:

BMW can huff and puff all they like, but they cant enforce mileage charges on a VT.

It's really unclear if that's correct or not, but the balance of opinion I've seen suggests they probably can. VW have recently started to demand excess mileage payments and I've read of other finance companies pushing it to the brink, although not of any where they've needed to take action (every example I've read the customer has caved).

It has never been enforced through law. They can take it to an ombudsman but a consumer is not obliged to abide by that decision anyway.

A VT is a contract termination. Its gone. Its an ex-contract. There no contract terms to enforce because its nullified. Its designed to protect people from being pursued relentlessly by finance companies for disproportionate amounts that they cant afford to pay.

They are starting to pursue it more relentlessly but they do only succeed when the customer caves.

I personally would be looking for another exit strategy if i was significantly over a mileage allowance. The further you are over it, the more likely they are to try to make your life miserable to the point of caving in.

I guess it depends on your resilience and resistence to being bullied - i'd wing it for a few thousand miles of a difference but beyond that you're likely to get a world of pain from them.

[daemon]

Sheepshanks said:

I think people should expect to have to pay. Then if you get away with it it's a bonus.

If i was in a PCP deal and due to a change of circumstance i was going to breach the mileage limits, i'd either renegotiate the monthly payments, set aside the correct amount for the excess miles each month if i wanted to maintain the option to hand the car back, or seek to anticipate the difference in value that the excess miles would have and set that aside relative to maybe trading the car in or selling it privately.

I'm personally not a fan of handing them back or a VT as they will bill you for whatever faults they can find and charge you a disproportionate amount for the repair (even though they wont repair it they just bung it through an auction)

[SAS Tom]

I don't know if I'm missing something or not as far as I'm aware you have the following options;

Carry on until the end but you will have to pay any excess mileage
VT when you've paid half the value of the car and interest
Buy the car at the end of the deal
Trade it in and get something else

With the first option am I missing something as I thought this was the case. Pay until the end of the term then hand the car back with nothing to pay apart from anything not deemed as fair wear and tear and excess miles.

[Sheepshanks]

daemon said:

I'm personally not a fan of handing them back or a VT as they will bill you for whatever faults they can find and charge you a disproportionate amount for the repair (even though they wont repair it they just bung it through an auction)

That's probably an even more grey area than the mileage. The law that covers VT says the goods have to be in reasonable condition. That's probably an awful lot less than the leasing company's return standards. Missed servicing is another uncertainty.

[daemon]

Sheepshanks said:

daemon said:

I'm personally not a fan of handing them back or a VT as they will bill you for whatever faults they can find and charge you a disproportionate amount for the repair (even though they wont repair it they just bung it through an auction)

That's probably an even more grey area than the mileage. The law that covers VT says the goods have to be in reasonable condition. That's probably an awful lot less than the leasing company's return standards. Missed servicing is another uncertainty.

There is a document on fair wear and tear by the BVRLA which most finance companies abide by

http://www.bvrla.co.uk/service/fair-wear-and-tear-...

They would i would imagine be able to reference the BVRLA guide for a VT for fair wear and tear.

[AllyBassman]

Cheers for all of the replies, much appreciated.

I'm at my milage limit now, so If I VT as soon as i'm able to, i'll be around 10k over my agreed limit with 9 months to go in my PCP, so pro rata it'll be more like 15k over, shouldn't make too much of a difference to the value of the car, but i doubt they'll see it that way! Roughly £1650 in excess millage charges before any stupid charges their inspection will likely pull up!

I might call BMWFS and talk it through with them, i'm all for not paying i'f I don't have to, but 15k over may be pushing it?

[MrOrange]

Read this http://www.bmw.co.uk/en_GB/topics/financial-servic...

Specifically "http://www.bmw.co.uk/en_GB/topics/financial-services/bmw-finance-explained/bmw-select.html" - but you'll need to keep the car for its full term, but no negative equity.

[daemon]

AllyBassman said:

Cheers for all of the replies, much appreciated.

I'm at my milage limit now, so If I VT as soon as i'm able to, i'll be around 10k over my agreed limit with 9 months to go in my PCP, so pro rata it'll be more like 15k over, shouldn't make too much of a difference to the value of the car, but i doubt they'll see it that way! Roughly £1650 in excess millage charges before any stupid charges their inspection will likely pull up!

I might call BMWFS and talk it through with them, i'm all for not paying i'f I don't have to, but 15k over may be pushing it?

You're not going to get an objective answer if you talk to BMW FS. They will give you a very skewed view as to what you "must" do.

[daemon]

MrOrange said:

Read this http://www.bmw.co.uk/en_GB/topics/financial-servic...

Specifically "http://www.bmw.co.uk/en_GB/topics/financial-services/bmw-finance-explained/bmw-select.html" - but you'll need to keep the car for its full term, but no negative equity.

He'll have significant costs due to excess mileage if he commits to keeping the car to the end of term and then returning it