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Returning a PCP car

laserlad2010

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?

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Danbo!

ForestFire wrote: »

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.

My point was that even though the salesman knew I was only using the pcp for convenience, he still put on the big show of “brand new car for flip all, you’d be stupid not to” etc.. I could imagine many people who cannot afford the car to be blinded by the low deposit and the heavy focus the salesman puts on repeating “only €xxx per month”

laserlad2010

Folks all responses appreciated, try to stick to the questions at hand rather than slagging her off please.

Yeah, look, I can't argue with the line "tough cookies, she should have realised what she was getting into" because that's exactly what's gone on. However, I'm just trying to help her fix the situation.

Her repayments are 320 a month, and with tolls and petrol her car costs approach 700 a month.

I have gone through the paperwork and that's what they want if she returns the car now, which is bizarre but that's the official written response they've given. It possibly includes the mileage charge.

Look, at the end of the day, she can make the repayments but then she struggles for the rest of the month. I feel it's probably a combination of the overall car costs rather than the actual PCP repayments.

My query really is how else can someone get out of a PCP rather than the halfway clause. Has anyone sold the car separately and then given the financiers a cheque?

Water2626262

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?

It’s hard to understand the figures and where this 11k is coming from.

Also if you sell the car privately the wear and tear doesn’t mean anything.

Surely there is some equity between trade in value and gmfv.

Do you know any of these figures;

Original sales price (to calc gmfv %)
Gmfv
Outstanding balance (including gmfv)

colm_mcm

laserlad2010 wrote: »

Folks all responses appreciated, try to stick to the questions at hand rather than slagging her off please.

Yeah, look, I can't argue with the line "tough cookies, she should have realised what she was getting into" because that's exactly what's gone on. However, I'm just trying to help her fix the situation.

Her repayments are 320 a month, and with tolls and petrol her car costs approach 700 a month.

I have gone through the paperwork and that's what they want if she returns the car now, which is bizarre but that's the official written response they've given. It possibly includes the mileage charge.

Look, at the end of the day, she can make the repayments but then she struggles for the rest of the month. I feel it's probably a combination of the overall car costs rather than the actual PCP repayments.

My query really is how else can someone get out of a PCP rather than the halfway clause. Has anyone sold the car separately and then given the financiers a cheque?

Important to note, the car isn't yours to sell, you're renting it.

Water2626262

colm_mcm wrote: »

Important to note, the car isn't yours to sell, you're renting it.

You can sell it no problem. Just need to clear the outstanding finance. The buyer might want to go with you to the bank to settle the finance.

Jobs OXO

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.

Welcome to the shoddy advice hour eh?!

The garage want 11k AND the car.....

colm_mcm

Water2626262 wrote: »

You can sell it no problem. Just need to clear the outstanding finance. The buyer might want to go with you to the bank to settle the finance.

The same way I can sell my neighbours house. I'd need to buy it off him first.

Mooooo

Get her to do up a budget monthly for everything not just car but food rent etc. See where she can cut back to see what she can pay back every month.
Work out what her costs wiĺ be if the car was gone, will she need a replacement, public transport etc. There not be a missive saving if the car has to be replaced. Use mabs to help her if need be. She needs some one to sit down with her to go thru everything. Unfortunately she may have to live frugally and pay off the car

ForestFire

colm_mcm wrote: »

The same way I can sell my neighbours house. I'd need to buy it off him first.

Not quite the same, she has the right/option to buy out the car immediately now or at end of pcp. There is nothing that can block this, were as having enough money to buy your neighbours house does not mean you can, and just chuck them out.

No one can block her from doing this.

This maybe possible with new buyer loging money directly to clear balance, or she could take out a sort of bridging loan to initialy buy car, sell it and pay back loan.

king02

There is something not quite right about what the garage are telling her. OP if you get the original contract and find out what the original GMFV was and add approx €5760 (€320 x 18 months left) that should be roughly the amount she needs to own the car outright. She should not under any circumstances give €11000 and the car back to the garage as they know she is in a pickle. Alternatively, call the finance company directly and get a settlement figure.
There is absolutely nothing to stop you advertising and selling the vehicle privately provided you tell the purchaser exactly what is owed on the vehicle, get them to make that payment directly to the finance company to clear it and give you the balance of what is owed if any. I have been in car sales for many years and your girlfriend is not alone and people should not be making her sound stupid. Some sales people will take any opportunity they can to make money and they are doing it again now by asking for €11k plus her car.

Jobs OXO

This is why Celtic Tiger Mk II will come crashing down. Silly lass trying to live beyond her means. What's next on her shopping list? An apartment in turkey ?

Then of course it's always someone else's fault.....

Toyotafanboi

Sounds like she can't afford commuting really, for €300 per month in diesel she must be doing around 1000kms per week. This can be a strain but as plenty of others have said you don't want to be doing that kind of mileage in a biscuit tin and say borrowing a personal loan of 7500 over 3 years to be a used car would still cost you €250 a month and fuel and tolls won't change so unless you plan to do 1000km a week in a bangernomics car, keeping the Mini at any cost seems the most logical.

If the monthly payments are 320 and assuming she done a minimum deposit of €2200 ish, then she should owe around €14k on the car, so it's very hard to picture how they may want €11k and the car to clear the debt. That would be putting a trade value on the car of €3k which makes no sense, even with a high current mileage of around 75k kms.

Toyotafanboi

Jobs OXO wrote: »

This is why Celtic Tiger Mk II will come crashing down. Silly lass trying to live beyond her means. What's next? An apartment in turkey ?

The next post like this will get banned.

Let's either try to help them or don't bother posting!

ForestFire

laserlad2010 wrote: »

I feel it's probably a combination of the overall car costs rather than the actual PCP repayments.

But are the overall costs going to change if she sells car?

She still needs to drive to work the same distance? Same tolls and same fuel costs?

Is there an alternative that she can use like public transport?
How much will that cost?

What is the plan if she can sell the car.?

Lantus

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.

Sorry to hear that. Contractually she must pay the 36 months of payments. The 12k sounds very high given the deposit and 18 months of payments. You will need to provide more figures to validate that.

Yes if you hand back the car charges can apply by the lender to offset depreciation.

As others have hinted at it is best if at all possible to cut costs everywhere to keep payments going for at least the next 18 months. Then you can hand the car back and only have any mileage costs to handle.

Selling the car privately will be impossible at this stage as I understand it. You cannot fast pay off the 18 months finance outstanding in one lump and you would still need to pay off the balloon payment before someone else will buy it via a bridging loan.

happywithlife

She seems to have an awfully long commute - as she is renting anyway can she move closer to work and cut out the cost of tolls and reduce the fuel bill substantially? Or can she drive part way and commute via public transport for the remainder? The way you are describing getting rid of this car and replacing with a cheap run around doiesnt sound feasible ' that much mileage on a banger will surely end up with big maintaince bills. You mentioned earlier she is afraid of something happening the car and being unable to afford the cost of that - is she servicing the car at the moment? It's easy to put off the cost of services when money is tight but ultimately you end up with a much bigger bill when car reaches crisis point. In this weather I'd at least get the tyres checked to make sure they are road worthy

KCross

laserlad2010 wrote: »

My query really is how else can someone get out of a PCP rather than the halfway clause. Has anyone sold the car separately and then given the financiers a cheque?

Im confused, you are looking for a way out and the halfway rule gives you exactly that. Why are you saying "rather than the half way rule". Its sounds like exactly what you need here.

Selling the car privately and settling finance etc is hassle and is unlikely to leave you any better off.

Just invoke the halfway rule and hand it back.

Then buy a cheap runabout.

Lantus

laserlad2010 wrote:

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

Doesn't the half way rule naturally occur at 3 years give or take? You generally pay of a bit more so there could be some scope to return a few months earlier? Halfway through the first 3 years is roughly one quarter way.

mickdw

Whats the most she will save if she could clear the mini in the morning assuming she needs a car for work - maybe 200 per month overall saving.
Anyway
If the mini cost 23k for example, gfv should be around 9k. 18 further payments of 320 is 5760 so to buy the car outright today will cost in the region of 14760 regardless of mileage.
An 18 month old mini i would have though is worth more than that so do not give it back and agree to give 11k too. Either you are misunderstanding the figures or she is way way behind on her payments or she paid for about 10k of extras when buying it.
From what i know of the figures, best to get cu loan of 14700 and clear dealer finance then sell the car for that amount or more and be clear of debt.

afatbollix

You can't sell the car as you don't own it. The finance company own it. What does the contract say for failed payment or ending the contract early? It should be in the contract. Also it should have the amount per mile when you go over the contracted amount. Should be about 10c a KM.

With that amount of money being spent on commuting I'd move closer to the job and save yourself E700 a month.

frozenfrozen

yeah the 700 euro per month commute is going to cost what, 500 euro if done in bangernomics at best case scenario, but then you'd have to deal with paying off 11k now anyway?

so you have to outlay 11k + the cost of a cheap car still capable of reliably doing that huge mileage?

doesn't seem like it would be any cheaper than keeping the car till the end of the PCP term?

fits

If I were in that position I think I’d be looking at public transport options to get the car back under the mileage limit and pay the loan until the 36 months is up. Then she should be able to hand it back with no penalty.

I have a long commute too and I drive half an hour to catch a bus.

I’m not surprised people are getting into these situations. The pcp loan is very attractive with the low monthly payments.

drunkmonkey

She can't afford her job not the car, the commute is to far and the pay not worth it. She's paying over 8k a year to commute. Ask for rise, move closer to work, change jobs. Is public transport an option?
That's the elephant needs to be tackled first. Cheaper car isn't going to save a huge amount.

thierry14

KCross wrote: »

Im confused, you are looking for a way out and the halfway rule gives you exactly that. Why are you saying "rather than the half way rule". Its sounds like exactly what you need here.

Selling the car privately and settling finance etc is hassle and is unlikely to leave you any better off.

Just invoke the halfway rule and hand it back.

Then buy a cheap runabout.

I don't get it either

Cost wise op needs to forget about running costs

It's the 320e monthly pcp payment that is the only cost here

Bar an EV nothing will be cheaper to run inside warranty than a mini diesel

That thing must be doing 60mpg on long runs, great car

The Mini and 320e month isn't the problem.

OP your girlfriends job doesn't pay enough for that kind of driving, it's madness unless on a very decent salary

Elessar

Some potentially helpful reading here OP:

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

The ‘half rule’
The half rule is part of the Consumer Credit Act 1995 and gives you the right to end a PCP agreement at any time. The half rule limits your liability (the amount you are responsible for) to half the PCP price of the car. Your documentation (the agreement) from the finance company must show the figure for half the PCP price of the car.

If you have paid less than half of the PCP price of the car, you can give the car back, and you will only owe the difference between what you have paid, and half of the price of the car. You do not have to pay half the PCP price to the finance company before you end the agreement under the half rule. However, you will have to pay the difference between the payments you have made to date and half the PCP price.

If you have paid more than half of the PCP price of the car and have not missed any payments, you can end the agreement and hand back the car. You will be responsible for the cost of any repairs that are necessary. If you have paid more than half of the PCP price, you will not be entitled to any refund.

But I would agree with Drunkmonkey the real issue here is her commute and related pay. She is travelling too far to work and the pay is too low. That is not sustainable for anyone.

lawred2

bazz26 wrote: »

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.

If she is struggling to pay the relatively small PCP repayment (small versus repayment on a standard car loan) then she is likely to be refused an unsecured loan wouldn't you think?

893bet

Is a credit union loan an option? Any savings?

What's her approx income?

15k over 5 years? Around 300 a month. But the car outright now and owe the credit union instead?

Now it seems the 300 a month for 5 years is still too much but she could then sell the mini and clear the credit union and borrow 3-4k to make it affordable.

lawred2

Jobs OXO wrote: »

This is why Celtic Tiger Mk II will come crashing down. Silly lass trying to live beyond her means. What's next on her shopping list? An apartment in turkey ?

Then of course it's always someone else's fault.....

And you'll be right on hand to preach from on high. Get over yourself. Young people make mistakes. That's life. It's called experience. Not learning from mistakes is a different matter but everyone deserves at least one second chance.

What Celtic Tiger Mk II are you referring to by the way?

Jobs OXO

lawred2 wrote: »

And you'll be right on hand to preach from on high. Get over yourself. Young people make mistakes. That's life. It's called experience. Not learning from mistakes is a different matter but everyone deserves at least one second chance.

What Celtic Tiger Mk II are you referring to by the way?

https://www.irishtimes.com/business/personal-finance/celtic-tiger-ii-what-2018-may-mean-for-your-finances-1.3331406?mode=amp

http://www.irishexaminer.com/ireland/house-prices-surging-to-celtic-tiger-peaks-465172.html

https://m.independent.ie/irish-news/health/the-celtic-tiger-is-back-in-terms-of-happiness-at-least-36389458.html

alias no.9

You definitely need to get a handle on the full figures. Paying €11k to hand the car back makes no sense under any circumstances.

There has been 18 months of payments on top of the deposit and the car has to be worth €15k in even the most pessimistic valuation.

I'm going to assume a deposit/trade in of at least 10% of the list price even if it includes a deposit contribution from the dealer/distributor so let's assume list price less deposit is ballpark €20k. We don't know the exact APR but €320 a month for 36 months paid off €20k should be leaving a balloon payment in the order of €11k max so with 18 of those monthly payments made, there'll be maybe €16k max outstanding, all very approximate numbers.

With the value of the car, it looks close to break even in a scenario where it's possible to sell it privately and clear the loan. As others have suggested, sticking out the 36 months PCP term may be the most benign option since selling to clear the loan leaves her needing another car, on finance again it would seem.

Couple this with finding somewhere close to work to live as you mention she is paying rent anyway (assuming that it won't be a massive hike in rent) or alternatively find work close to where she lives now. This will help get the commuting costs under control as well as getting the 36 month mileage closer to the agreed PCP target.

All of this is based on crude assumptions filling some of the many blanks. To me, the commuting costs seem to be the elephant in the room.