Car finance renewal
Discussion
Evening everyone, I’m just looking to see if anyone could offer some advice on a problem I’m having.
I have a bmw on pcp with bmw FS and I’m coming to the end of my agreement.
About 3 months ago I went to bmw the same dealership where I have purchased my last 2 cars and had a look at some cars.
I found a nice upgrade to which I enquired about the small remaining negative equity on my current car being passed over so I could purchase this car the fee of which was roughly only £150 extra per month which was affordable and management agreed that this could be done.
I then placed a deposit on the car and was told that I would have to have credit checks etc run.
I thought that to be strange considering I’m already in an agreement with them and haven’t ever missed or been late with a payment.
I then received a call a day or 2 later explaining I had failed the checks so was not able to receive the new car.
This is the main question now..
Where does this leave me when my agreement is due for renewal in a couple of months? Will they just ask for me to pay the remainder of my finance and keep the car (which I can’t afford as it’s around £4000 if not more)
Will they repossess the car or what? I’m completely confused as to what will be the outcome any advice would be greatly appreciated.
I have a bmw on pcp with bmw FS and I’m coming to the end of my agreement.
About 3 months ago I went to bmw the same dealership where I have purchased my last 2 cars and had a look at some cars.
I found a nice upgrade to which I enquired about the small remaining negative equity on my current car being passed over so I could purchase this car the fee of which was roughly only £150 extra per month which was affordable and management agreed that this could be done.
I then placed a deposit on the car and was told that I would have to have credit checks etc run.
I thought that to be strange considering I’m already in an agreement with them and haven’t ever missed or been late with a payment.
I then received a call a day or 2 later explaining I had failed the checks so was not able to receive the new car.
This is the main question now..
Where does this leave me when my agreement is due for renewal in a couple of months? Will they just ask for me to pay the remainder of my finance and keep the car (which I can’t afford as it’s around £4000 if not more)
Will they repossess the car or what? I’m completely confused as to what will be the outcome any advice would be greatly appreciated.
Either you take out a loan to pay off the PCP or you hand the car back and go shopping for another.
Finance companies and banks are very nervous about lending right now - and, unfortunately, rolling negative equity across deals probably elevates the risk score, too.
I think you'll be handing it back and finding a cheap runaround that doesn't need finance.
Finance companies and banks are very nervous about lending right now - and, unfortunately, rolling negative equity across deals probably elevates the risk score, too.
I think you'll be handing it back and finding a cheap runaround that doesn't need finance.
What do you mean it’s due for renewal? Do you mean it’s coming to the end?
If it’s coming to the end you have a few options:
Hand the car back and walk away, no more to pay unless you’re over the agreed mileage or there is damage.
Trade the car in against something else/sell it privately (only makes sense if you can get a price which means you are not in negative equity).
If you want to keep the car, pay the balloon payment (you could get a bank loan to pay this) and the car is yours.
I’m not anti-finance at all, but I would say that if you didn’t understand what would happen at the end of the agreement you shouldn’t have signed up to it in the first place.
If it’s coming to the end you have a few options:
Hand the car back and walk away, no more to pay unless you’re over the agreed mileage or there is damage.
Trade the car in against something else/sell it privately (only makes sense if you can get a price which means you are not in negative equity).
If you want to keep the car, pay the balloon payment (you could get a bank loan to pay this) and the car is yours.
I’m not anti-finance at all, but I would say that if you didn’t understand what would happen at the end of the agreement you shouldn’t have signed up to it in the first place.
On a PCP you shouldn't have negative equity. But if you want to keep the car you will need to pay a balloon payment. The balloon payment should be specified on the original PCP paperwork. In rough terms the balloon payment should be similar to the cars current value.
As others have stated you should be able to hand the car back at the end of the agreement without owing any money.
However, if you want another PCP deal you will 'probably' need to stump up another healthy deposit for the new car. If you have not got £4k available, it might start limiting options.... There are deals about but these are getting less attractive....
Check you understand how the deal actually works and will cost you before signing up this time.
As others have stated you should be able to hand the car back at the end of the agreement without owing any money.
However, if you want another PCP deal you will 'probably' need to stump up another healthy deposit for the new car. If you have not got £4k available, it might start limiting options.... There are deals about but these are getting less attractive....
Check you understand how the deal actually works and will cost you before signing up this time.
loskie said:
OP from the sound of your post you don't understand PCP. At the end of the term you will not be in negative equity you will just hand the car back to the finance co NOT garage and have nothing.
NO NEGATIVITY JUST NOTHING
I'm guessing the OP has gone shopping a number of months early, hence being in -ve equity on the settlement.NO NEGATIVITY JUST NOTHING
OP were you trying to do a no deposit new deal with negative equity rolled in? that may have alarmed the finance Co. always good to try and have some deposit. as others have said you should not end up in negative equity if you see the current deal to its end just return the car. Still would need a deposit for a new one.
I’m in a similar position to the OP, my PCP is due to end and I have been told I’m in negative equity. Looking at renewing but quotes are coming back expensive. This is where I fall down a bit now, my basic math is fine but with finance I go number blind. As a poster mentioned earlier, (and as I understand it but am probably wrong) the negative equity is built into the renewal quote resulting in either a large deposit required or larger monthly payments.
I have requested an actual figure for how much negative equity I’m in but the dealer keeps avoiding the question. Would I, possibly like the OP, be better to hand the car back and either start again or get a loan?
Apologies if my post treads on your toes OP.
I have requested an actual figure for how much negative equity I’m in but the dealer keeps avoiding the question. Would I, possibly like the OP, be better to hand the car back and either start again or get a loan?
Apologies if my post treads on your toes OP.
If you don’t want to wait until the end of the agreement and you have paid off 50% of the total balance including interest, you can just voluntary terminate the car also and walk away.
Due to a decent deposit and low APR I will be voluntary terminating our PCP 9 months early.
If you’re in negative equity and the dealer is trying to roll this into a new agreement, just hand the car back and start a new agreement.
Due to a decent deposit and low APR I will be voluntary terminating our PCP 9 months early.
If you’re in negative equity and the dealer is trying to roll this into a new agreement, just hand the car back and start a new agreement.
GaRog said:
Thanks ArthurLee, I suspected handing back would be the better option. I now need to figure out whether to start another PCP (with a limit of about £250 a month) or a loan of around £10k.
That’s the ‘trap’ of PCPs - they’re designed so that the logical thing to do (if you want to keep running newish cars) is start another PCP.I'm not sure it's a trap per-se, it's just what a PCP is specifically designed for.
If the manufacturer has structured the deal right, then at the end of the agreement the equity in your current car is the deposit for the new car and the cycle continues.
The problems come when the monthlies are artificially buggered around with as to be as low as possible by manipulating the size of the balloon payment, or people sign up without understanding what they're doing. There's been plenty of that over the years......
If the manufacturer has structured the deal right, then at the end of the agreement the equity in your current car is the deposit for the new car and the cycle continues.
The problems come when the monthlies are artificially buggered around with as to be as low as possible by manipulating the size of the balloon payment, or people sign up without understanding what they're doing. There's been plenty of that over the years......
I went down the PCP path as I had always bought 2nd/3rd hand cars but had a few expensive issues, so it has been nice to have a new, problem free couple of years driving (albeit it’s a Sportage but it has served its purpose perfectly as a large family car with a big boot for golf clubs etc).
charltjr said:
I'm not sure it's a trap per-se, it's just what a PCP is specifically designed for.
It's designed to keep car factories churning out new cars. I put 'trap' as it's fine if you know what you're doing - I've used it a couple of times - but it's clear from repeated theads like this that many people don't understand what they're getting in to. That's not helped by salesmen often intimating that people will get their deposit back as the car will be worth more than the GFV (final payment).
GaRog said:
Thanks ArthurLee, I suspected handing back would be the better option. I now need to figure out whether to start another PCP (with a limit of about £250 a month) or a loan of around £10k.
Go for a loan if you want another buy a used one with a nice amount of warranty left & then use the Kia extended coverage program.GaRog said:
Thanks ArthurLee, I suspected handing back would be the better option. I now need to figure out whether to start another PCP (with a limit of about £250 a month) or a loan of around £10k.
I can’t imagine what car you could possibly get for £250 a month without also putting down a fairly substantial deposit. Maybe you’re better off just getting a loan for say £5k-£10k, and buy a pre-loved car.Gassing Station | Car Buying | Top of Page | What's New | My Stuff