Should I VT?

[mtm81]

Hi all,
Just looking to gauge opinion on something I know is personal and subjective (and I accept none of the replies are actual 'financial advice' - but here goes:

My car has 5 months left to run on a 48 month PCP. Car is significantly under the GFV already in terms of it's market value as a trade in.
I have put a significant amount of excess miles into the car (in the first year of the agreement after which time I was back in my 'usual' miles for the following months/years), but even without those, the car is well below the GFV.


Obviously if I hadn't done those excess miles, then I would simply wait till right near the end of the PCP, jump into the next agreement and flatten the equity positive/negative either way - usually a nominal amount.


With THIS car however, because I'll have to pay the excess mileage (I'm fully aware of this and accept it's in the agreement), I've got a bill coming of around £2.5k.

So here's the question:

If I VT the car now, and pay the bill - I can get out of the car now, move onto the next one and only be left with a "mark" on my credit file which says I ended an agreement early.
If I wait until the actual end of the agreement, I'll get an even higher bill (because I'm putting miles onto it still) - likely around £3-3.2k BUT my credit file won't show that "ended early" tag.


I know that ending an agreement early does not affect your credit score, but my credit score is pretty much whiter than white and I would prefer it to stay that way.


So do I VT now and pay the lesser bill or wait and pay at the end but don't have the mark on the credit?


What's people's opinions on this?

[tomsugden]

What's the realistic selling price of it, and how much do you owe on it? What's the car?

[mtm81]

BMW M240i 17 plate

58k on the clock. Likely selling price if private (but can't cos it's on finance) would be around £16.5k. Owe about the same

P/X value way below that.

[PrinceRupert]

mtm81 said:

BMW M240i 17 plate

58k on the clock. Likely selling price if private (but can't cos it's on finance) would be around £16.5k

You can sell a car on PCP privately.

[InitialDave]

What is the PX value?

If you trade it in at the end and that pays off the finance, avoiding the excess mileage charge, could that be the best compromise of hassle to expense?

[mtm81]

Thanks for the reply. Sorry - should have been more clear regarding private sale.

Only done a private sale once before for one my previous cars and it was no end of hassle. Factor in the whole "lockdown" scenario at the moment and finding a buyer who will engage with me to sort out the finance is not something I'm going to entertain.

[mtm81]

P/X value is only 12.5k! Even without my mileage it would be only be around 13.k- 14k tops.

That's still around 2k under the GFV if it was done today and obviously that trade in value is only going one way..

[Gio G]

VT the car, negotiate the bill on excess mileage (which most do) move on to the next one..

G

[Knoxville2410]

If the only thing stopping you is a small, quite insignificant mark on your credit history then I'd say go with the VT. It'll probably have very little to 0 impact on any future credit, and will likely recover quickly.

[samoht]

mtm81 said:

I've got a bill coming of around £2.5k.

If I VT the car now, and pay the bill - I can get out of the car now, move onto the next one and only be left with a "mark" on my credit file which says I ended an agreement early.
If I wait until the actual end of the agreement, I'll get an even higher bill (because I'm putting miles onto it still) - likely around £3-3.2k BUT my credit file won't show that "ended early" tag.

So you're doing more miles than your current PCP includes. You're still doing the miles, so the excess miles over the next five months will amount to another £500-£700 of excess mileage charges.

However, if you start a new PCP presumably you'll either have one based on higher mileage, which will cost more per month, or otherwise you'll end up racking up similar excess mileage charges on the new car too. So I guess the question is, how much more expensive it is to put the extra miles on your current car than taking a new one?

The fundamental issue is that putting miles on a newish car costs money in depreciation, so you will pay regardless of if you continue your current PCP, start a new one, or buy the car outright. But of course it may be that you could find way to pay less per extra mile than your current agreement.

[mtm81]

Thanks for the reply.
The excess mileage I did on this was a "one-off" for a period at the beginning of this particular agreement. The mileage I've done since then has with "within" the mileage for each period.

so I'm not concerned about doing more mileage on a new agreement than stated as that would not be happening.
Example

10,000 mile agreement.
On this car I did in year 1 = 28,000, in year 2 - circa 10k, year 3 - circa 10k etc

on the new car - I would state 10k as my mileage and that would be correct (as it has been for all of my other cars I've had the same way).

Thanks