PCP - Handing the car back 1/2 way through the term

[Carl_Spackler]

When I bought my Saab 93 last year I bought it on a PCP with a balloon payment at the end of the 4 year term, now at the time of signing the agreement the salesman told me I could hand the car back 1/2 way through the term, I think he called it seconds and thirds.

Now not being a lazy git, I've googled this and been on money saving expert etc to get more info, I'm confused about the legality of what I'm doing, apparently you are canceling the agreement by handing the car back, so is this saying you can't pay? or are you quite within your rights?

Also I was tied to 12,000 miles and have done a bit more (about 1.5k in a year, but could fix this by using the wifes car for a while), apparently if you hand back the car and cancel the agreement you don't have to pay an excess mileage charge?

Anybody had any experiance with this/done it?

[Carl_Spackler]

I wasn't realy looking for any money back, it's just given the way used car prices have gone since I bought it along with the unceranty about Saab's future and the excess milage thing it seems to good to be true, you just walk in to the dealer and say there is your car back, bye.

[Carl_Spackler]

a_bloke said:

Its not half way through the term - its when you've paid more than half of the total cost of the transaction.

Say you bought a car for £25K and put down £2K of a deposit. Say your payments were £400 a month with a £11K baloon after 4 years.

Total cost would be £11K + £2K + (48*400) = £11K + £2K + £19.2K = £32.2K

For half the amount to be paid you would need to pay £16.1K. Divide that by £400 (ie, your monthly payment) and you'd have to have made 41 payments before you've broken the 50% threshold.

Hope thats clear.

Yes thanks, a bit longer to go then.

[Carl_Spackler]

tim2100 said:

ray951 said:

a_bloke said:

Carl_Spackler said:

I think he called it seconds and thirds.

apparently if you hand back the car and cancel the agreement you don't have to pay an excess mileage charge?

Anybody had any experiance with this/done it?

Your rights change after you've made 1/3 of the total transaction costs and 1/2.

Also as far as i know, yes, you arent liable for excess mileage if you do this. I had an audi salesman tell me 'not to worry' about excess mileage because of this.

Excess milage is a bit of a grey area as the legal wording on the agreement states that no more is payable if you hand the car back early but some finance companies will send you a bill for excess mileage. If this happens then you could refuse to pay it stating the wording from the document but of course they may not agree and take you to court. Although I don't beleieve that would happen as it would set an interesting precedent, if the judge agreed with you, as the early termination rights could be used to get out of all charges at the end of an agreement.

When I worked at a large lease company a few years ago they certainly did charge for excess miles on early termination vehicles.

Your policy will state the conditions you can hand the car back.

Thanks everyone for your help, I'll have a look at the conditions when I get home tonight.