Has anybody handed their car back at the end of a PCP?

[sandancer]

As the title suggests, I'm wondering what happens when you reach the end of your PCP. My Leon is three years old on the 1st March and the deal is due to end, but unfortunately the car is approximately £1500 in negative equity so trading in or paying off the balance is not an option. I've looked at early termination but as I only have a couple of payments left this seems a lot of 'chew on' for not a lot of gain.
My plan is to order a new car in the next few days and then hand the Leon back in March but don't know how you go about doing this.
Any information would be greatly appreciated

 

[kazand]

As the title suggests, I'm wondering what happens when you reach the end of your PCP. My Leon is three years old on the 1st March and the deal is due to end, but unfortunately the car is approximately £1500 in negative equity so trading in or paying off the balance is not an option. I've looked at early termination but as I only have a couple of payments left this seems a lot of 'chew on' for not a lot of gain.
My plan is to order a new car in the next few days and then hand the Leon back in March but don't know how you go about doing this.
Any information would be greatly appreciated

we traded previous Cupra in last July, due to finishng PCP early and the high mileage we had a similar amount of negative equity. We were trading in for a new 290 on lease, as part of the deal the dealer cleared the amount owing.

 

[Keyzer Soze]

As the title suggests, I'm wondering what happens when you reach the end of your PCP. My Leon is three years old on the 1st March and the deal is due to end, but unfortunately the car is approximately £1500 in negative equity so trading in or paying off the balance is not an option. I've looked at early termination but as I only have a couple of payments left this seems a lot of 'chew on' for not a lot of gain.
My plan is to order a new car in the next few days and then hand the Leon back in March but don't know how you go about doing this.
Any information would be greatly appreciated

My understanding of PCPs is that negative equity is only an issue if you hand it back early and excess miles are only an issue if you aren't buying it or trading it in at the end of the agreement. You shouldn't be any worse off if you want to trade the car in for another.

 

[sandancer]

Thanks for your replies but both dealers I've spoken to regarding a new Leon both wanted to add the outstanding £1500 to the cost of the new car, so in theory I end up paying it for the next three years, which seems a bit pointless when I can walk away from it after paying the final payment ( forgot that January payment has already been paid) and start afresh, especially when you consider that if this one's in negative equity now, what will the new one be like in three year's time with an extra £1500 on the amount borrowed.

 

[Raymondo111]

Thanks for your replies but both dealers I've spoken to regarding a new Leon both wanted to add the outstanding £1500 to the cost of the new car, so in theory I end up paying it for the next three years, which seems a bit pointless when I can walk away from it after paying the final payment ( forgot that January payment has already been paid) and start afresh, especially when you consider that if this one's in negative equity now, what will the new one be like in three year's time with an extra £1500 on the amount borrowed.

Most PCP's have a GFV (guaranteed future value) which is agreed by the Finance Company at the start of the contract, this means that at the end of the contract period you can give the car back and walk away or use any positive equity (if any) to put towards a new deposit on PCP etc.

I imagine that when your PCP was set up 3 years ago that retained values on your Leon were seen to be a lot higher then VW emissions saga kicked in and retained values in all VW Group cars tanked hence the negative equity you are now seeing. My suggestion would be to just give it back and then start looking at new deals via brokers etc, these point you towards Main Dealers anyway so all financing/offers should be available, the problem you now have is that with Brexit prices have gone up across the board and with lower retained values PCP payments may go up to compensate.

This is one of the reasons why I have joined the leasing community on a PCH as it's certainly a cheaper option than PCP with deposits required of either 3 or 6 months worth of payments and then normally 23 payments and then you start a new lease again.

 

[kazand]

Most PCP's have a GFV (guaranteed future value) which is agreed by the Finance Company at the start of the contract, this means that at the end of the contract period you can give the car back and walk away or use any positive equity (if any) to put towards a new deposit on PCP etc.

I imagine that when your PCP was set up 3 years ago that retained values on your Leon were seen to be a lot higher then VW emissions saga kicked in and retained values in all VW Group cars tanked hence the negative equity you are now seeing. My suggestion would be to just give it back and then start looking at new deals via brokers etc, these point you towards Main Dealers anyway so all financing/offers should be available, the problem you now have is that with Brexit prices have gone up across the board and with lower retained values PCP payments may go up to compensate.

This is one of the reasons why I have joined the leasing community on a PCH as it's certainly a cheaper option than PCP with deposits required of either 3 or 6 months worth of payments and then normally 23 payments and then you start a new lease again.

we managed to get a lease deal with no up front payments as well as getting the negative equity cleared. Payments low too. Happy days, new 290 Cupra sat on drive , old 280 gone

 

[Ckpearce91]

Can't you use the GFV against them? After all it's supposed to be "Guaranteed"

 

[ajg74]

Can't you use the GFV against them? After all it's supposed to be "Guaranteed"

Only if you go full term on the PCP.

 

[Ckpearce91]

Only if you go full term on the PCP.

The OP is going full term isn't he?

 

[Chuggs1]

Dealers are taking orders for the new 300 from Monday.... hopefully delivery March or April

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[sandancer]

Thanks the replies everyone - just had a look at the original finance agreement and it lists the balloon payment as a "Final Payment" with mention of the option to purchase fee but no where does it state Guaranteed Future Value so it would appear that this isn't an option.

Been to see an Octavia this afternoon and was advised by the salesman to pay the final payment and hand it back. When he asked about financing the new one and I said I was thinking of leasing he shook his head and said "No, you'll have nothing to show at the end" when I reminded him that I have nothing to show now except for £1500 shortfall, he said he'd never heard of a PCP giving negative equity - explains why many people are in the same position as me.

 

[chrisRibiza]

My PCP deal def had a guaranteed value. Mines up in November but I've decided to hold onto the car so getting a bank loan to clear the finance now then I can change the car in my own time.

 

[Keyzer Soze]

Thanks the replies everyone - just had a look at the original finance agreement and it lists the balloon payment as a "Final Payment" with mention of the option to purchase fee but no where does it state Guaranteed Future Value so it would appear that this isn't an option.

Been to see an Octavia this afternoon and was advised by the salesman to pay the final payment and hand it back. When he asked about financing the new one and I said I was thinking of leasing he shook his head and said "No, you'll have nothing to show at the end" when I reminded him that I have nothing to show now except for £1500 shortfall, he said he'd never heard of a PCP giving negative equity - explains why many people are in the same position as me.

Where did you get it?

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[marty_34]

Final payment is optional final payment not a guaranteed future value as long as car in ok condition and not exceed mileage agreed send it back


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[andycupra]

i cant help thinking that given the focus on cost to you, is repeatably buying brand new cars really the answer.

 

[Keyzer Soze]

https://www.arnoldclark.com/newsroom/751-what-happens-when-pcp-car-finance-ends

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[JMAC]

Voluntary termination is what I'd do. If you've paid over 50% of the whole amount (price + interest) then just hand it back and walk away.

 

[KXL]

Mine was 24 months PCP, was £15k when i got it 2nd hand @ 2248 miles, 13 months old, 2.0TDI DSG SE Tech 63 plate, 8k per annum. GFV was £9.8k

After 22 months they got in touch (Seat Finance) on what I wanted to do, so I said I wanted to return it. So they adviced me to get this rolling once the last payment was taken out. I promptly did then, tried to argue for money back as in the 23rd month it had only 9.5k on clock...short by 8k miles...anyhow I was unsuccessful, but I tried.

They arranged BCA in contact with me to inspect, 1 day and collect the car (different day) at the end. When they inspect the car needs to be washed same day or day before. Inspected on the Thu, collected on the Fri Car needs to be still taxed, insured, MOTed when they come to collect.
Minor scratches and stone chips were ok. They gave car condition A with £0.00 on work that needed to be done.

They were also meant to charge me £60 option to purchase fee.. but I haven't seen that anywhere on my statements yet, and this was last early Nov 2016.

 

[sandancer]

Voluntary termination is what I'd do. If you've paid over 50% of the whole amount (price + interest) then just hand it back and walk away.

I looked at voluntary termination but with only a couple of payments left, I didn't like the idea of a marker on my credit file. The plan is to hand it back when the PCP is up, and having looked at leasing (as advised by other members) there is some cracking deals to be had so will probably be the way to go

I'm now wondering what actually happens at the end - do VW finance get in touch with me or do I need to contact them to start the ball rolling and what happens on the day the car goes back

 

[sandancer]

Mine was 24 months PCP, was £15k when i got it 2nd hand @ 2248 miles, 13 months old, 2.0TDI DSG SE Tech 63 plate, 8k per annum. GFV was £9.8k

After 22 months they got in touch (Seat Finance) on what I wanted to do, so I said I wanted to return it. So they adviced me to get this rolling once the last payment was taken out. I promptly did then, tried to argue for money back as in the 23rd month it had only 9.5k on clock...short by 8k miles...anyhow I was unsuccessful, but I tried.

They arranged BCA in contact with me to inspect, 1 day and collect the car (different day) at the end. When they inspect the car needs to be washed same day or day before. Inspected on the Thu, collected on the Fri Car needs to be still taxed, insured, MOTed when they come to collect.
Minor scratches and stone chips were ok. They gave car condition A with £0.00 on work that needed to be done.

They were also meant to charge me £60 option to purchase fee.. but I haven't seen that anywhere on my statements yet, and this was last early Nov 2016.

Should have read this before typing last post