Settling PCP back early?

Ioniq

My final PCP payment is due later in the year. I am going to be keeping the car and I am wondering if I should settle it now? Is there any pros or cons to settling it early?

g1983d

Ioniq wrote: »

My final PCP payment is due later in the year. I am going to be keeping the car and I am wondering if I should settle it now? Is there any pros or cons to settling it early?

Depends on interest rate your paying on the payments, if 0% no point settling early, either way with only a few months left not a while pile of difference anyway.
If with vw bank I know they are helpful just call them and they will advise you

mickdw

How are you funding the settlement?
In such uncertain times and depending on job status, one might be well advised to hold any cash you have so might be a good idea to refinance the final payment.
Considering finance is going to be hard to get in coming times, id arrange to settle it now with a refinance package.

Ioniq

g1983d wrote: »

Depends on interest rate your paying on the payments, if 0% no point settling early, either way with only a few months left not a while pile of difference anyway.
If with vw bank I know they are helpful just call them and they will advise you

Cheers its with Bank of Ireland Finance I'll give them a shout tomrrow.

mickdw wrote: »

How are you funding the settlement?
In such uncertain times and depending on job status, one might be well advised to hold any cash you have so might be a good idea to refinance the final payment.
Considering finance is going to be hard to get in coming times, id arrange to settle it now with a refinance package.

I have the cash in the bank for it. I work in IT mostly with setting up remote computing so I'm not worried about my job status.

mickdw

Id just let it run then tbh.

Marcusm

I can’t see any advantage in settling a PCP early in the current environment. Worst case scenario is that you pay what you’ve expected to pay. However, if the arse falls out of the 3 year old car secondhand market, you might be able to make a profit on the settlement (ie if the secondhand value falls below GFMV).

DaveyDave

It's definitely worth being cautious right now given the global pandemic but if you're in a stable job and have the money I'd say go for it. Since you're holding onto the car I wouldn't be too worried about second hand values right now. If it's not 0% then no point paying interest.

Lantus

Marcusm wrote: »

I can’t see any advantage in settling a PCP early in the current environment. Worst case scenario is that you pay what you’ve expected to pay. However, if the arse falls out of the 3 year old car secondhand market, you might be able to make a profit on the settlement (ie if the secondhand value falls below GFMV).

Please explain how that works?? Are you imagining handing it back and then coming in and buying same car for less??

Marcusm

Lantus wrote: »

Please explain how that works?? Are you imagining handing it back and then coming in and buying same car for less??

If there is a massive shift downwards in secondhand prices then that is the theory. In practice, dealers will be wary although they are not taking the hit. It’s only worthwhile if the negative equity is significant. The OP would also have to be willing to play hardball and (credibly threaten to) get a similar car instead.