PCP quandary...
Discussion
Hi Guys
I bought a car on PCP from a main dealer. The PCP ends in Aug 23. And then I have a final payment of just over £21k. I've been prepared to let the PCP run its course and then decide wether to buy the car outright for the £21k or hand it back and start again.
My quandary is this. The car is worth more now than when I signed up the PCP and the dealer, more than a year earlier than the PCP ends are very keen to get the car 'back in stock'. I've already had an offer of the PCP being extended for 2 yrs and my question was, why would I do that? I've also had the main dealer on to me to end the PCP early, and my question is again why would I do that? The answer has to be linked to the value of the car now, and how much I can pay for it outright in August 23, or earlier if I so choose t take the financial hit.
I'm reading all over the forums that the dealers hold all the cards at the moment because of the shortage of cars, but I'm feeling the opposite in my specific situation right now. Am I missing something? And if I end the PCP early surley I can negotiate a piece of that upturn in price? I mean I have first dibs on the car when the PCP runs out, or even earlier because I am in the contract.
Any thoughts?
I bought a car on PCP from a main dealer. The PCP ends in Aug 23. And then I have a final payment of just over £21k. I've been prepared to let the PCP run its course and then decide wether to buy the car outright for the £21k or hand it back and start again.
My quandary is this. The car is worth more now than when I signed up the PCP and the dealer, more than a year earlier than the PCP ends are very keen to get the car 'back in stock'. I've already had an offer of the PCP being extended for 2 yrs and my question was, why would I do that? I've also had the main dealer on to me to end the PCP early, and my question is again why would I do that? The answer has to be linked to the value of the car now, and how much I can pay for it outright in August 23, or earlier if I so choose t take the financial hit.
I'm reading all over the forums that the dealers hold all the cards at the moment because of the shortage of cars, but I'm feeling the opposite in my specific situation right now. Am I missing something? And if I end the PCP early surley I can negotiate a piece of that upturn in price? I mean I have first dibs on the car when the PCP runs out, or even earlier because I am in the contract.
Any thoughts?
M.F.D said:
What's the car in question? Sounds like they want the car as they can sell it on quickly and make some decent cash.
You could sell it at any time, even privately, so long as the finance is cleared. Anything extra over settlement is yours.
Original M2 (Not comp).You could sell it at any time, even privately, so long as the finance is cleared. Anything extra over settlement is yours.
Yeah I've got the private sell option always. I was wondering if there'd be a decent deal going on another M, maybe M4 or X5M etc etc.
RSsteveH said:
Original M2 (Not comp).
Yeah I've got the private sell option always. I was wondering if there'd be a decent deal going on another M, maybe M4 or X5M etc etc.
Without asking them, the answer will be based on market conditions a no. There is a shortage of cars to buy, most manufacturers are running at 6-12 month lead times, and I for one had been advised to consider ordering 9-12month before my pcp expires.Yeah I've got the private sell option always. I was wondering if there'd be a decent deal going on another M, maybe M4 or X5M etc etc.
The finance company/dealer will want your car as the pcp ends as they can resell it for good money, additionally interest rates on finance is going up, and prices too, with fewer discounts. New cars are going to get (even more) expensive.
If you're happy with what you have I'd get off the treadmill and keep it...
RSsteveH said:
Hi Guys
I've also had the main dealer on to me to end the PCP early, and my question is again why would I do that?
What terms have they offered you to do this?I've also had the main dealer on to me to end the PCP early, and my question is again why would I do that?
Is it a straight "hand the car back now and walk away"
If so, you're absolutely right not to do that.
If they are offering an incentive, well that's a different matter.
Likewise extending the PCP - are they offering you an improved GFV at the end? If not, again no reason to take that up.
As I see it; your options to do well out of this are to buy the car outright now, if the exit terms of the finance are favourable and you can get rid at a profit or re-finance it.
Or wait until August 23, hope that prices have held up and make some money then.
Muzzer79 said:
RSsteveH said:
Hi Guys
I've also had the main dealer on to me to end the PCP early, and my question is again why would I do that?
What terms have they offered you to do this?I've also had the main dealer on to me to end the PCP early, and my question is again why would I do that?
Is it a straight "hand the car back now and walk away"
If so, you're absolutely right not to do that.
If they are offering an incentive, well that's a different matter.
Likewise extending the PCP - are they offering you an improved GFV at the end? If not, again no reason to take that up.
As I see it; your options to do well out of this are to buy the car outright now, if the exit terms of the finance are favourable and you can get rid at a profit or re-finance it.
Or wait until August 23, hope that prices have held up and make some money then.
On August 23rd, the OP can hand back the car to the Finance company, which would be pointless as it's worth more than he owes and he would be losing money.
The OP can sell/trade in the car before the 23rd and take advantage of it's increase in value.
Extending the PCP makes sense if the OP wants to keep the car, needs finance and the terms offered are favourable.
51mes said:
Without asking them, the answer will be based on market conditions a no. There is a shortage of cars to buy, most manufacturers are running at 6-12 month lead times, and I for one had been advised to consider ordering 9-12month before my pcp expires.
The finance company/dealer will want your car as the pcp ends as they can resell it for good money, additionally interest rates on finance is going up, and prices too, with fewer discounts. New cars are going to get (even more) expensive.
If you're happy with what you have I'd get off the treadmill and keep it...
My original thought when I took out the PCP was keep the car and pay it off - it was and remains a very low mileage car, and is unmolested - someone out there will always take an M car in good nick and that has been looked after, off you. The advantage to that now is clear with car prices and the market being what it is.The finance company/dealer will want your car as the pcp ends as they can resell it for good money, additionally interest rates on finance is going up, and prices too, with fewer discounts. New cars are going to get (even more) expensive.
If you're happy with what you have I'd get off the treadmill and keep it...
I won't end the PCP early unless there's something in it for me.
Muzzer79 said:
What terms have they offered you to do this?
Is it a straight "hand the car back now and walk away"
If so, you're absolutely right not to do that.
If they are offering an incentive, well that's a different matter.
Likewise extending the PCP - are they offering you an improved GFV at the end? If not, again no reason to take that up.
As I see it; your options to do well out of this are to buy the car outright now, if the exit terms of the finance are favourable and you can get rid at a profit or re-finance it.
Or wait until August 23, hope that prices have held up and make some money then.
They first offered to extend the PCP for 2 yrs which utterly bemused me. When I askd what the FV would be if I did it, and it hadn't changed, I asked that 'why would I do that?' question.
Another salesman from same dealership called and said the optimum time (to do something) was 9 months before end of PCP, which OK, not sure why but ok. We didnt talk specifics but if there's nothing in it for me come Oct/Nov I'd walk away, keep the car for the duration. I have to say I'm happy with the car and would only really change 'up' to another M. I'll talk to them in November.
Is it a straight "hand the car back now and walk away"
If so, you're absolutely right not to do that.
If they are offering an incentive, well that's a different matter.
Likewise extending the PCP - are they offering you an improved GFV at the end? If not, again no reason to take that up.
As I see it; your options to do well out of this are to buy the car outright now, if the exit terms of the finance are favourable and you can get rid at a profit or re-finance it.
Or wait until August 23, hope that prices have held up and make some money then.
They first offered to extend the PCP for 2 yrs which utterly bemused me. When I askd what the FV would be if I did it, and it hadn't changed, I asked that 'why would I do that?' question.
Another salesman from same dealership called and said the optimum time (to do something) was 9 months before end of PCP, which OK, not sure why but ok. We didnt talk specifics but if there's nothing in it for me come Oct/Nov I'd walk away, keep the car for the duration. I have to say I'm happy with the car and would only really change 'up' to another M. I'll talk to them in November.
RSsteveH said:
My original thought when I took out the PCP was keep the car and pay it off - it was and remains a very low mileage car, and is unmolested - someone out there will always take an M car in good nick and that has been looked after, off you. The advantage to that now is clear with car prices and the market being what it is.
I won't end the PCP early unless there's something in it for me.
Option A- pay off the finance and then have a car with equity in it!I won't end the PCP early unless there's something in it for me.
Option B- Call the dealer ask them for deals on the cars you fancy next and see what your options are, for a low mile M2 they may offer you some money on another car, as other had said finance has got more expensive and the deals aren't that great, I was after a 340m and not found the local BMW dealers very keen to do a deal. I got pressured into a car buying an example which I only showed interest in because I wanted to drive one and decide if its worth the upgrade, with the line someone else wanted it! Its not at the on show at dealer now but its showing as not taxed and no new v5!
I first got messed around for a test drive as they were using a 340m as a service runner at the local dealer, who told me to go to the nearest city dealer to drive one.
It looks like you're overthinking this.
Firstly - do you want to keep this car, or do you want a different one?
If you want to keep this car, how do you plan to pay off the balloon on the PCP? Taking out another PCP isn't a totally stupid idea, it all depends on the APR. The timing of when you pay off the balloon is part of the overall consideration, but there's no point in doing it early unless you've got access to cheaper finance.
If you want a different car, then how much equity do you have in your current car? Will you have more equity in 9 months time? Possibly as you'll have made 9 monthly payments in the interim, but possibly not if 2nd hand prices start to soften. That equity, combined with a monthly payment and an APR will tell you how much you can afford to spend on a new car.
PCP is just a method of financing a car - there's nothing magical or particularly complicated about it.
Firstly - do you want to keep this car, or do you want a different one?
If you want to keep this car, how do you plan to pay off the balloon on the PCP? Taking out another PCP isn't a totally stupid idea, it all depends on the APR. The timing of when you pay off the balloon is part of the overall consideration, but there's no point in doing it early unless you've got access to cheaper finance.
If you want a different car, then how much equity do you have in your current car? Will you have more equity in 9 months time? Possibly as you'll have made 9 monthly payments in the interim, but possibly not if 2nd hand prices start to soften. That equity, combined with a monthly payment and an APR will tell you how much you can afford to spend on a new car.
PCP is just a method of financing a car - there's nothing magical or particularly complicated about it.
omniflow said:
It looks like you're overthinking this.
Firstly - do you want to keep this car, or do you want a different one?
If you want to keep this car, how do you plan to pay off the balloon on the PCP? Taking out another PCP isn't a totally stupid idea, it all depends on the APR. The timing of when you pay off the balloon is part of the overall consideration, but there's no point in doing it early unless you've got access to cheaper finance.
If you want a different car, then how much equity do you have in your current car? Will you have more equity in 9 months time? Possibly as you'll have made 9 monthly payments in the interim, but possibly not if 2nd hand prices start to soften. That equity, combined with a monthly payment and an APR will tell you how much you can afford to spend on a new car.
PCP is just a method of financing a car - there's nothing magical or particularly complicated about it.
Hmm, overthinking, maybe, but not the fact that PCP is just a form of car finance. I've been buying cars for the best part of 40 odd years. What I possibly was overthinking were the reasons that a dealer would be trying to get MY car back in stock some 14 months before the end of a PCP, which was the point of my OP.Firstly - do you want to keep this car, or do you want a different one?
If you want to keep this car, how do you plan to pay off the balloon on the PCP? Taking out another PCP isn't a totally stupid idea, it all depends on the APR. The timing of when you pay off the balloon is part of the overall consideration, but there's no point in doing it early unless you've got access to cheaper finance.
If you want a different car, then how much equity do you have in your current car? Will you have more equity in 9 months time? Possibly as you'll have made 9 monthly payments in the interim, but possibly not if 2nd hand prices start to soften. That equity, combined with a monthly payment and an APR will tell you how much you can afford to spend on a new car.
PCP is just a method of financing a car - there's nothing magical or particularly complicated about it.
I would probably pay the balloon off with cash, which would leave me with choices if I decide to sell up. The more I think about it the less I like the idea of ending the PCP early. It didn't even cross my mind before being contacted by the dealer.
surveyor_101 said:
Option A- pay off the finance and then have a car with equity in it!
Option B- Call the dealer ask them for deals on the cars you fancy next and see what your options are, for a low mile M2 they may offer you some money on another car, as other had said finance has got more expensive and the deals aren't that great, I was after a 340m and not found the local BMW dealers very keen to do a deal. I got pressured into a car buying an example which I only showed interest in because I wanted to drive one and decide if its worth the upgrade, with the line someone else wanted it! Its not at the on show at dealer now but its showing as not taxed and no new v5!
I first got messed around for a test drive as they were using a 340m as a service runner at the local dealer, who told me to go to the nearest city dealer to drive one.
Yes, it's down to that old Option A and Option B isnt it? To be honest I'm not in a despearte rush. I'll go talk to the dealer in November and see what they say, see what they offer me, if anything. But I'm more than willing to let the PCP run it's course then make a decision. Option B- Call the dealer ask them for deals on the cars you fancy next and see what your options are, for a low mile M2 they may offer you some money on another car, as other had said finance has got more expensive and the deals aren't that great, I was after a 340m and not found the local BMW dealers very keen to do a deal. I got pressured into a car buying an example which I only showed interest in because I wanted to drive one and decide if its worth the upgrade, with the line someone else wanted it! Its not at the on show at dealer now but its showing as not taxed and no new v5!
I first got messed around for a test drive as they were using a 340m as a service runner at the local dealer, who told me to go to the nearest city dealer to drive one.
You have first dibs come end of contract but you need to make your move 30-60 days before the official end date. As in, signal your intent by e-mail and phone to the finance house what your decision is.
Your options are:
1. Buy it outright if you love it and keep the equity. It’s an appealing option to some as cars are more expensive to buy at the moment.
2. Re-finance it (PCP or HP). Again, someone might choose this as it may appear cheaper to them. You’ll lose your equity here with a second round of finance as they will make another round of interest etc.
3. Hand it back. Not something really done when you have equity. It’s like giving away free money. Often the BCA or whoever it is might kick up a stink about the condition and you could end up paying them because a scratch is too long or something.
4. Part-exchange it. The PCP game is designed with this in mind. You’ll have just enough equity to enter another PCP and so the game rolls on.. of trying to get you into a newer or higher specification model. You don’t have to use the same dealer. You might even be surprised by WBAC or something. You could then take your equity to a different dealership pending the value that is feasible.
The answer here is simple. You decide what works for you and your requirements. Happy with the car? Stick it to the end as it is likely cheaper than entering a fresh PCP. Got £9k equity and always wanted a weekend toy? Go for that if you’d like and already have another daily car to use.
No one knows what exactly will happen with car values. The market has been hot and there are slight signs of slowing down although values remain somewhat favourable. It’s anyone’s guess when semi-conductor and wiring harness issues might resolve. Could be later this year might be earlier next year. So you might still have higher than usual equity come 2023. It’s normal in the meantime for dealerships to canvass you as you approach the end of your contract. Particularly in the last year. Even if you enter a different dealership for service, their buyer might show interest.
You hold the cards in this one because of the equity and car shortages.
Good luck.
Your options are:
1. Buy it outright if you love it and keep the equity. It’s an appealing option to some as cars are more expensive to buy at the moment.
2. Re-finance it (PCP or HP). Again, someone might choose this as it may appear cheaper to them. You’ll lose your equity here with a second round of finance as they will make another round of interest etc.
3. Hand it back. Not something really done when you have equity. It’s like giving away free money. Often the BCA or whoever it is might kick up a stink about the condition and you could end up paying them because a scratch is too long or something.
4. Part-exchange it. The PCP game is designed with this in mind. You’ll have just enough equity to enter another PCP and so the game rolls on.. of trying to get you into a newer or higher specification model. You don’t have to use the same dealer. You might even be surprised by WBAC or something. You could then take your equity to a different dealership pending the value that is feasible.
The answer here is simple. You decide what works for you and your requirements. Happy with the car? Stick it to the end as it is likely cheaper than entering a fresh PCP. Got £9k equity and always wanted a weekend toy? Go for that if you’d like and already have another daily car to use.
No one knows what exactly will happen with car values. The market has been hot and there are slight signs of slowing down although values remain somewhat favourable. It’s anyone’s guess when semi-conductor and wiring harness issues might resolve. Could be later this year might be earlier next year. So you might still have higher than usual equity come 2023. It’s normal in the meantime for dealerships to canvass you as you approach the end of your contract. Particularly in the last year. Even if you enter a different dealership for service, their buyer might show interest.
You hold the cards in this one because of the equity and car shortages.
Good luck.
Edited by anonymous-user on Thursday 2nd June 07:15
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