Returning a PCP car

laserlad2010 · 06-01-2018 09:00PM #1

My girlfriend can't afford her PCP contract any more. She is 18 months through a 36 month PCP contract on a 162 Mini One D, and wants to get rid of it.

The garage want her to pay €11,000 if she returns the car now. She's done a fair whack of mileage above her allowance which will hit her when/if she returns the car.

It's obvious that she should never have taken the contract, or been allowed to take the contract (salary not high enough, can't afford balloon payment), but that's a moot point.

Can she sell the car separately and pay the garage?

Has anyone any experience of returning a car halfway through PCP?

happywithlife · 06-01-2018 09:10PM

laserlad2010 wrote: »

My girlfriend can't afford her PCP contract any more. She is 18 months through a 36 month PCP contract on a 162 Mini One D, and wants to get rid of it.

The garage want her to pay €11,000 if she returns the car now. She's done a fair whack of mileage above her allowance which will hit her when/if she returns the car.

It's obvious that she should never have taken the contract, or been allowed to take the contract (salary not high enough, can't afford balloon payment), but that's a moot point.

Can she sell the car separately and pay the garage?

Has anyone any experience of returning a car halfway through PCP?

Nobody forced her. She obviously thought it was idea at the time. It's a hard lesson learned. She can't sell the car as she doesn't own it as such. I assume her only options really are pay the 11k to buy her way out of the contract or look at her finances (really look at them) and see where she can cut back to make the repayments more affordable. Many young women I see make luxuries a priority but really they forget they are luxuries. I'd make a fair guess her grooming bills are quite high - does she get waxing done at a saloon for example? The best of make up? Hair always done every few weeks? There are ways to cut back there for example
I'd be slow to hand the car but still be paying back a loan or repayment plan for the 11k because imo if she's paying she may as well have the car. It's a hard lesson but I hope she learns from it

road_high · 06-01-2018 09:15PM

First instinct would be grin and bare it. How much per month is it?
11k is a lot to pay for having no car...may as well be paying the same money and having the pleasure of the car in my opinion. Without knowing the facts and figures.

bazz26 · 06-01-2018 10:52PM

This is really the worst situation when it comes to PCP - doing high mileage and having to hand the car back.

Her only option may be to sell the car back to the garage and take out a loan to pay off the difference between what the garage give you and the GFMV ~ €11,000. Talk to the likes of your credit union around taking out a loan for 11,000 with them over a longer term where the monthly repayments are more manageable for her. For example, paying €150 per month over 5 years might be more manageable than currently paying €300 per month for 3 years.

Selling the car privately when there is outstanding finance on it is tricky to say the least. Most buyers will shy away when they hear there is outstanding finance or do a history report on the car.

KFed · 06-01-2018 11:51PM

Im not familiar with the mini one D so looked it up. Mini.ie have a 181 for 22k on the road with payments of 181/month.

Is that the car, 22k on the road brand new? If so, and hers is a 162, the dealer wants her to pay another 50% of the cost to hand back a car that she has already made 12-18 monthly payments on if it is c. 18 months old? She will then have paid in total 60% of the cost of the car but have only had 1.5-2years use???

The dealer can probably resell it for 70% of a new model, so she really needs to dig in and find a way to keep the car to get better value for herself.

I think the advice here about talking to the credit union is the best advice. The car at this age is surely worth much more than 50% of retail so financially the best bet is to find a new source of finance to buy the car out of the pcp deal and then have a longer term loan, e.g. 4-5 years and to have as low a monthly repayment as possible.

Even if she can get a credit union loan to buy the car now, that would be an unsecured personal loan. This means she would be free to sell the car at any point. She would almost certainly get a better deal than handing back the car and can use what she sells it for to repay the credit union loan.

Could you help her with the payments until the pcp term is up even and then use a cresit union loan to buy the car with a 3-5y loan term?

Id advise getting good advice. Yoy wont get that from the dealer or pcp finance house who are out for their own interest in the car and collecting the payments/balloon or taking the car back.

The state agency mabs, money advice and budgeting service, also offers help and advise on finances or askaboutmoney has some good advice and people often post with money makeover scenarios. You could post there also and may get good specific advice.

I am an accountant by profession and, without knowing specifics of you and girlfriend finances, if you can manage it youre likely to be best served by finding a way to keep the car and repay over a longer term, or, take a longer term loan and sell the car to clear as much of the loan as possible, leaving a smaller loan than the 11k more that the dealer wants after the car is gone...

MarkN · 07-01-2018 12:22AM

happywithlife wrote: »

Nobody forced her. She obviously thought it was idea at the time. It's a hard lesson learned. She can't sell the car as she doesn't own it as such. I assume her only options really are pay the 11k to buy her way out of the contract or look at her finances (really look at them) and see where she can cut back to make the repayments more affordable. Many young women I see make luxuries a priority but really they forget they are luxuries. I'd make a fair guess her grooming bills are quite high - does she get waxing done at a saloon for example? The best of make up? Hair always done every few weeks? There are ways to cut back there for example
I'd be slow to hand the car but still be paying back a loan or repayment plan for the 11k because imo if she's paying she may as well have the car. It's a hard lesson but I hope she learns from it

Welcome to the patronising hour eh?! Ever find your circumstances in life have changed? No? Lucky you.

OP, all the bank want is their money. If you can sell that car for 15k and give the bank a cheque for 11k and keep the rest, happy days. The problem is someone giving you 15k while you then wait for it to clear and all the while not giving your cash doner the keys or the car as that would be extremely unwise! If the finance was with say BOI you could literally go into a branch with the buyer and lodge the money and be somewhat assured that the money is in your account. I did that with someone when selling a car but the car was mine.

Yes, it’s not technically yours to sell but as I said, they just want the settlement paid.

Squeaksoutloud · 07-01-2018 12:25AM

Would that half rule not apply here?

www.ccpc.ie/consumers/money/debt/problems-making-car-repayments/

Hire purchase contracts, which include PCP, allow you to end your contract and give back the car once you have paid half the hire purchase price – this is called the ‘half rule’. With PCP, a lot of the cost of the car is to be paid at the end of the agreement, so you may be close to the end of the contract by the time you have paid off half of the PCP cost. But ending your contract using the half rule may be an option.

DaveyDave · 07-01-2018 12:27AM

Is it not possible to have an arrangement with the dealer where the person buying the car makes the payment to the dealer?

MarkN · 07-01-2018 12:30AM

Squeaksoutloud wrote: »

Would that half rule not apple here?

www.ccpc.ie/consumers/money/debt/problems-making-car-repayments/

Hire purchase contracts, which include PCP, allow you to end your contract and give back the car once you have paid half the hire purchase price – this is called the ‘half rule’. With PCP, a lot of the cost of the car is to be paid at the end of the agreement, so you may be close to the end of the contract by the time you have paid off half of the PCP cost. But ending your contract using the half rule may be an option.

OP, check the paperwork of the agreement that she signed, the halfway would be in the terms and conditions if applicable.

DaveyDave wrote: »

Is it not possible to have an arrangement with the dealer where the person buying the car makes the payment to the dealer?

Another good suggestion. I had a good relationship with a dealer and needed a car gone ASAP, they wrote me a cheque for what I needed, they could sell the car for whatever they wanted then.

happywithlife · 07-01-2018 12:31AM

MarkN wrote: »

Welcome to the patronising hour eh?! Ever find your circumstances in life have changed? .

I emboldened the bit about the gf shouldn't have been allowed to take out the contract. That grates on my nerves as she wasn't forced to. It's typical attitude of a certain generation where they want everything and want it now. There is such a thing as personal responsibility.
I am not lucky. I have been in tough s****y financial circumstances . My husband was in a similar situation but with a HP agreement he decided on a whim to hand back the car without realising he was liable for a minimum payment. He - we as a couple- had to pay without having the use of a car which is why I urged the op to look at making cutbacks to try and hold onto the car

MarkN · 07-01-2018 12:33AM

happywithlife wrote: »

I emboldened the bit about the gf shouldn't have been allowed to take out the contract. That grates on my nerves as she wasn't forced to. It's typical attitude of a certain generation where they want everything and want it now. There is such a thing as personal responsibility.
I am not lucky. I have been in tough s****y financial circumstances . My husband was in a similar situation but with a HP agreement he decided on a whim to hand back the car without realising he was liable for a minimum payment. He - we as a couple- had to pay without having the use of a car which is why I urged the op to look at making cutbacks to try and hold onto the car

Sorry to hear you’ve had difficulty but you’re assuming an awful lot about a stranger in your previous post all the same.

listermint · 07-01-2018 12:38AM

MarkN wrote: »

Sorry to hear you’ve had difficulty but you’re assuming an awful lot about a stranger in your previous post all the same.

Sage advice, actually better than yours which amounts to trying to sell a car with finance owed on it...

retalivity · 07-01-2018 12:38AM

Isnt one of the options at the end of a pcp contract to just hand the keys back, instead of a final balloon payment? Im in a pcp agreement, 3 yrs up end of march. Options available to me are
1) final lump sum payment 2) structure final payment over 2 yrs 3) use gfmv (or better) as a deposit towards a 181 and a new pcp contract. Or 4) hand back the keys and walk away with no car.
So sticking it out for another 18mths would mean handing it back for nothing instead of handing it back for an 11k penalty now? Is that an option here?

MarkN · 07-01-2018 12:47AM

listermint wrote: »

Sage advice, actually better than yours which amounts to trying to sell a car with finance owed on it...

I’m all ears for how you advise €11,000 disappears into a hole..... have you experience of settling with a finance company early?

laserlad2010 · 07-01-2018 12:52AM

Thanks for all of the responses. I particularly enjoyed the keyboard warrior assumption that my girlfriend was blowing her entire salary on "grooming" and then struggling to pay back her PCP:rolleyes::rolleyes:. It's the other way around really. I say "shouldn't have been allowed" because she clearly can't finance a brand new car if you look at her salary - no way would she have afforded the balloon payment, and the dealership performed all sorts of wizardry to cut down the deposit required as she didn't have that money either. I wasn't with her at the time as I would have stopped her.

The reality is that whilst she can afford the monthly payments, on top of rent it's quite a chunk of her monthly take home pay, and the problem is that she's racking up high mileage commuting to and from work and is terrified something will happen to the car as she's no money to afford replacing stuff. She's also facing a hefty mileage bill in another 18 months.

It's quite stressful for her and I don't see a way out. My finances don't need examining in this situation as I'm not sure how many lads out there would take on a PCP repayment scheme, or offer to pay 11 grand for their girlfriends car

- although I'm close to offering to get rid of my own car and just contribute towards the cost of her repayments.

It seems the best way is to just see out the contract and then get a much cheaper runaround car she can afford to maintain.

Let me know if there are any other options.

MarkN · 07-01-2018 01:05AM

laserlad2010 wrote: »

I'm not sure how many lads out there would take on a PCP repayment scheme, or offer to pay 11 grand for their girlfriends

Better hope you never get married to her

Take away the stress of having to have the balloon payment at least, you don’t have to do that regardless of what happens, as has been said you can just hand back the keys.

Check the halfway rule in the paperwork if you have it (I’m sure you do) and work out how many more payments you’d have to reach that point even, that may help feel there’s light at the end of the tunnel.

Unfortunately it’s easy to get excited in the idea of a new car and it’s easy to forget that the person sitting across from you is still a salesperson at the end of the day, always be closing is drilled into them, although some are nicer individuals than others, the monthly target is always on their mind.

jca · 07-01-2018 01:11AM

retalivity wrote: »

Isnt one of the options at the end of a pcp contract to just hand the keys back, instead of a final balloon payment? Im in a pcp agreement, 3 yrs up end of march. Options available to me are
1) final lump sum payment 2) structure final payment over 2 yrs 3) use gfmv (or better) as a deposit towards a 181 and a new pcp contract. Or 4) hand back the keys and walk away with no car.
So sticking it out for another 18mths would mean handing it back for nothing instead of handing it back for an 11k penalty now? Is that an option here?

Option 3 is wrong, any value over the gmfv is your deposit entering a new deal. Option 4 is a non runner for the op's girlfriend because she has exceeded the stipulated annual mileage allowance and will have to pay for every excess km.

ForestFire · 07-01-2018 01:15AM

I think you need to break this down and at least eliminate some of your concerns.

1. Nobody can afford the balloon payment at the end (or very few if you need PCP in the first place)

A car last at least 10years, So you

A) keep car and Refinance the balloon payment over another 3 to 4 years

sell car and payoff balloon payment, if it covers it all

C) hand back to dealer and walk away (you are going to have to check how much the over mileage will cost in this case.

D) get a new car on PCP ( I guess this is not a real option)

2. Why she worried that something might happen to car now when driving. I presume it's insured with fully comp insurance?

drunkmonkey · 07-01-2018 01:23AM

Think we need to know how much the mini is costing a month and how much she can afford a month. She still needs a good reliable car, can we clear the mini and get a polo for example.

liamog · 07-01-2018 01:31AM

I thought the half rule could be used to get out of the over-mileage fees.
I'd heard that it won't affect your credit as it's classed as settling the debt, though you are unlikely to get another PCH or HP from the financier.

Sadb · 07-01-2018 01:37AM

MarkN wrote: »

Welcome to the patronising hour eh?! Ever find your circumstances in life have changed? No? Lucky you.

OP, all the bank want is their money. If you can sell that car for 15k and give the bank a cheque for 11k and keep the rest, happy days. The problem is someone giving you 15k while you then wait for it to clear and all the while not giving your cash doner the keys or the car as that would be extremely unwise! If the finance was with say BOI you could literally go into a branch with the buyer and lodge the money and be somewhat assured that the money is in your account. I did that with someone when selling a car but the car was mine.

Yes, it’s not technically yours to sell but as I said, they just want the settlement paid.

The garage want 11k to return the car. If she were to sell it, paying back the finance company would cost much more than 11k.

colm_mcm · 07-01-2018 01:42AM

How much a month is she paying? 11000/18 is over €600

Sadb · 07-01-2018 01:42AM

laserlad2010 wrote: »

Thanks for all of the responses. I particularly enjoyed the keyboard warrior assumption that my girlfriend was blowing her entire salary on "grooming" and then struggling to pay back her PCP:rolleyes::rolleyes:. It's the other way around really. I say "shouldn't have been allowed" because she clearly can't finance a brand new car if you look at her salary - no way would she have afforded the balloon payment, and the dealership performed all sorts of wizardry to cut down the deposit required as she didn't have that money either. I wasn't with her at the time as I would have stopped her.

The reality is that whilst she can afford the monthly payments, on top of rent it's quite a chunk of her monthly take home pay, and the problem is that she's racking up high mileage commuting to and from work and is terrified something will happen to the car as she's no money to afford replacing stuff. She's also facing a hefty mileage bill in another 18 months.

It's quite stressful for her and I don't see a way out. My finances don't need examining in this situation as I'm not sure how many lads out there would take on a PCP repayment scheme, or offer to pay 11 grand for their girlfriends car - although I'm close to offering to get rid of my own car and just contribute towards the cost of her repayments.

It seems the best way is to just see out the contract and then get a much cheaper runaround car she can afford to maintain.

Let me know if there are any other options.

Sorry, but your gf sounds like an idiot. Was she unaware of her salary when taking out the finance? Unaware of how much her rent costs? Unaware of how far her workplace was? Surely if she can drive then she is a big girl and shouldn’t need a man to “stop her” or help her with basic math? Sounds like she will just have to suck it up and learn for the future.

beechwood55 · 07-01-2018 01:53AM

*I wasn't with her at the time as I would have stopped her.*

Is she missing a brain cell? Could she not have figured it out by herself?? Actually from what you have posted, she hasn't been able to figure it out.
Maybe she should look on it as a hard learned lesson and realise that she is now living in the adult world where problems can't just disappear because things get tough.

VW 1 · 07-01-2018 01:57AM

listermint wrote: »

Sage advice, actually better than yours which amounts to trying to sell a car with finance owed on it...

Sage advice which consisted of asking the OP does his missus get waxing done at a salon. Fair play.

MissShihTzu · 07-01-2018 02:02AM

We've all made mistakes, I'm sure. Nobody is perfect.

But I have to ask.When your GF decided to buy the car did she not go over her budget? It's so easy to get caught up in the moment, and think you can manage when in fact it might be difficult.

What's changed that she now cannot afford the payments after presumably paying it over half the term? Has she had a pay cut? Rent rise?

I think the idea of the credit union is a great one. I would go there first and get the loan to pay off the car. The max amount of time you can pay back a car loan is 4 years, and the payments will be smaller too. Maybe try the bank as well?

But be careful - Now that credit searches are recorded, it might mess up her credit if too many searches are recorded in a short space of time. Research the options carefully, before making a formal application.

Hope it works out for her.

colm_mcm · 07-01-2018 02:05AM

Surely just paying the PCP monthlies now and taking out a loan for the GMFV amount when the time comes will be the best way to do it?

JoeA3 · 07-01-2018 02:05AM

The comments about the girl’s intelligence are just stupid and unnecessary. Why post crap like that? This isn’t Facebook folks ffs. The guy is looking for constructive advice, that kind of mindless crap is just useless and quite frankly boring for the rest of us to read.

@OP, it would be useful if you could tell us what the car is costing her per month as it stands. I’ve been through pcp deals myself and I’m trying to work out how handing back the car is going to cost €11k. She’s doing big miles for work so she’ll still need something decent and reliable so will need to consider that too.

Danbo! · 07-01-2018 02:15AM

beechwood55 wrote: »

*I wasn't with her at the time as I would have stopped her.*

Is she missing a brain cell? Could she not have figured it out by herself?? Actually from what you have posted, she hasn't been able to figure it out.
Maybe she should look on it as a hard learned lesson and realise that she is now living in the adult world where problems can't just disappear because things get tough.

I’ve a car on PCP and to be honest, the sales tactics were mental. Even though I had the cash to buy the car, at 0% finance, PCP route was more for convenience. Still, after telling the sales guy this, he had his spiel burned into his head so much that I got the full show - “a brand new car for just €3,000 deposit, and sure your trade in is worth €4,000, so your monthly payments will be even lower!” Etc etc.

Does this completely excuse her? Not at all. I completely agree people need to have some personal responsibility but it’s not completely outside the realms of possibilities that someone without much financial savvy could be very easily talked into it.

893bet · 07-01-2018 02:18AM

Do they want 11k from her plus the car back at this point?

Slightly confused.

ForestFire · 07-01-2018 02:20AM

Danbo! wrote: »

I’ve a car on PCP and to be honest, the sales tactics were mental. Even though I had the cash to buy the car, at 0% finance, PCP route was more for convenience. Still, after telling the sales guy this, he had his spiel burned into his head so much that I got the full show - “a brand new car for just €3,000 deposit, and sure your trade in is worth €4,000, so your monthly payments will be even lower!” Etc etc.

Does this completely excuse her? Not at all. I completely agree people need to have some personal responsibility but it’s not completely outside the realms of possibilities that someone without much financial savvy could be very easily talked into it.

At 0% finance that makes perfect sense, to have min deposit and min payments.

Keep your savings earning some kind of interest until end of pcp.

All this of course assumes you can afford the car over it's life in the first place.

Returning a PCP car

Comments