Returning a PCP car

lawred2 · 07-01-2018 02:37PM

Jobs OXO wrote: »

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

A few opinion pieces... I'm sold.

This is a supply and demand situation. Not a credit bubble.

Although some would argue quite reasonably that PCP is a lending bubble. This thread would attest to that

Staplor · 07-01-2018 02:46PM

I would suggest doing up a budget and learning how to live within this situation. The repayment isn't horrendous for a properly maintained, reliable car. If she gets something cheaper of will need mechanical work, which will cost time, money and missed days at work. Mabs have budgets online to help you get a handle on where your money is being spent. Once you know where you are (financially) you can make big improvements. A coffee on the way to work could be costing €65 a month, add in a banana from the coffee shop and you're north of €100.

Jobs OXO · 07-01-2018 03:00PM

lawred2 wrote: »

A few opinion pieces... I'm sold.

This is a supply and demand situation. Not a credit bubble.

Although some would argue quite reasonably that PCP is a lending bubble. This thread would attest to that

Look at hard data yourself on GDP, unemployment rates, credit & wage growth, tax cuts, increase car sales and house prices if you want or just act ignorant. I really don't care.

NinjaTruncs · 07-01-2018 03:10PM

Jobs OXO wrote: »

lawred2 wrote: »

A few opinion pieces... I'm sold.

This is a supply and demand situation. Not a credit bubble.

Although some would argue quite reasonably that PCP is a lending bubble. This thread would attest to that

Look at hard data yourself on GDP, unemployment rates, credit & wage growth, tax cuts, increase car sales and house prices if you want or just act ignorant. I really don't care.

How about you keep that to a treat not about repaying a PCP loan early.

Jobs OXO · 07-01-2018 03:12PM

NinjaTruncs wrote: »

How about you keep that to a treat not about repaying a PCP loan early.

What "treat"?

gandalf · 07-01-2018 03:40PM

Firstly I think you need to see if your GF can continue with the repayments as that 11k figure seems excessive especially if she doesn't have a car for transportation after paying it.

Read the T&C's of the agreement and see what options you actually have if she can no longer service the debt. Maybe engage with MABS.

If your GF is going to hold onto the car she needs to ascertain what liability she has from the milage over the agreed amount she is doing or else she could come to the end of the term and have a big bill to settle. I have a colleague who had to shell out 9k because he went way over the allowance and wasn't aware there was one. He was doing in excess of 50k per year and the allowance was 15k per annum.

iomusicdublin · 07-01-2018 04:02PM

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?

Can you tell us how many tolls she uses a day?

How is she spending 300 a month on fuel (for now will est. €80 on tolls).

That car should do 5,000 kms for 300 euro. Is she driving 250km daily.

The car is reliable, is in good condition, is covered for warranty, I think she should keep it.

road_high · 07-01-2018 04:10PM

drunkmonkey wrote: »

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.

This. I can never understand people that commute long ways for poor pay- surely you could get a similar paying job close to home- in my experience all/a lot of the well paying jobs are in Dublin and the main reason people commute is to benefit from the higher wages and live in cheaper areas- your GF seems to be getting the worst of all worlds here

Panrich · 07-01-2018 04:36PM

alias no.9 wrote: »

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.

It seems crazy that they want the car AND €11K at this point.

As you have pointed out, the car must be worth €15K and the OPs gf has already paid close to €6K in payments and presumably another couple at least in deposit, so....

She effectively pays €11K + €6K + €2K or €19K in total to rent a car for 18 months. That's over €1K per month for a mini.

The garage/finance compnay end up with an 18 month old mini worth €15K and €19K in payments or €34K value in total.

lawred2 · 07-01-2018 06:51PM

Jobs OXO wrote: »

lawred2 wrote: »

A few opinion pieces... I'm sold.

This is a supply and demand situation. Not a credit bubble.

Although some would argue quite reasonably that PCP is a lending bubble. This thread would attest to that

Look at hard data yourself on GDP, unemployment rates, credit & wage growth, tax cuts, increase car sales and house prices if you want or just act ignorant. I really don't care.

None of those imply a Celtic tiger in the pejorative sense that you mean. Most of those are a consequence of economic growth.

Economic growth not delivered on the back of reckless lending so that people can buy and sell houses to each other.

But whatever.

Wallow away for all I care.

MarkN · 07-01-2018 07:22PM

Jobs OXO wrote: »

Welcome to the shoddy advice hour eh?!

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

Seriously, if you’ve nothing to contribute would you ever do one.

The agreement is with a bank, not the garage. So far it hasn’t even been clear what it is that they want back exactly.

Jobs OXO · 07-01-2018 07:57PM

MarkN wrote: »

Seriously, if you’ve nothing to contribute would you ever do one.

The agreement is with a bank, not the garage. So far it hasn’t even been clear what it is that they want back exactly.

11k and the car. It's been stated numerous times. There's no place for your confusion if you can't understand the basic issue here.

mickdw · 07-01-2018 08:19PM

Jobs OXO wrote: »

11k and the car. It's been stated numerous times. There's no place for your confusion if you can't understand the basic issue here.

Yes but there is a strong / almost certain possibility that that is not what is actually needed by the bank as it doesnt make sense.
Those cars are only about 23k so assuming the op has made the 18 payments to date, the outstanding amount to buy out the car today should only be 14.5 to 17k range. To suggest that the only solution is to pay 11k and hand in a car worth circa 15k as well is nuts.

Jobs OXO · 07-01-2018 08:23PM

mickdw wrote: »

Yes but there is a strong / almost certain possibility that that is not what is actually needed by the bank as it doesnt make sense.
Those cars are only about 23k so assuming the op has made the 18 payments to date, the outstanding amount to buy out the car today should only be 14.5 to 17k range. To suggest that the only solution is to pay 11k and hand in a car worth circa 15k as well is nuts.

Yes it would be nuts.

alias no.9 · 07-01-2018 08:46PM

Jobs OXO wrote: »

11k and the car. It's been stated numerous times. There's no place for your confusion if you can't understand the basic issue here.

There's no shortage of confusion. It's been pointed out, backed up with basic calculations, that €11k plus the surrender of the car really doesn't add up. It is either a total pisstake by the garage or there's a very big piece of information missing.

Is there maybe a history of missed payments where the extra interest and penalties do actually mean that €11k plus the car back is the correct figure, that'd be a lot of missed payments or very punitive penalties.

Maybe the deposit was bigger than we've been assuming or the op neglected to mention a trade in and the figure of €11k is full and final settlement of the outstanding finance with outright ownership of the car, it's just been poorly communicated.

Maybe one of the previous posters was correct and it was spec'd up with thousands in extras ant the list price was closer to €30k. The point is we don't know what's going on, there's no shortage of confusion.

The op needs to gather all of the information

How much of a deposit?
How much was financed at what interest rate?
How much was repaid to date and have there been any missed payments and penalties?
Most importantly, they need a figure from the finance company and not the garage of what is currently outstanding.

The only solid figures we have to date is that it is 18 months into a 36 month term and the scheduled monthly payment is €320.

Jobs OXO · 07-01-2018 08:55PM

alias no.9 wrote: »

There's no shortage of confusion. It's been pointed out, backed up with basic calculations, that €11k plus the surrender of the car really doesn't add up. It is either a total pisstake by the garage or there's a very big piece of information missing.

Is there maybe a history of missed payments where the extra interest and penalties do actually mean that €11k plus the car back is the correct figure, that'd be a lot of missed payments or very punitive penalties.

Maybe the deposit was bigger than we've been assuming or the op neglected to mention a trade in and the figure of €11k is full and final settlement of the outstanding finance with outright ownership of the car, it's just been poorly communicated.

Maybe one of the previous posters was correct and it was spec'd up with thousands in extras ant the list price was closer to €30k. The point is we don't know what's going on, there's no shortage of confusion.

The op needs to gather all of the information

How much of a deposit?
How much was financed at what interest rate?
How much was repaid to date and have there been any missed payments and penalties?
Most importantly, they need a figure from the finance company and not the garage of what is currently outstanding.

The only solid figures we have to date is that it is 18 months into a 36 month term and the scheduled monthly payment is €320.

The OP and his lass are obviously completely muddled. What is v clear is that selling the car to clear the debt and still have cash over isn't possible as someone suggested.

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.

btkm8unsl0w5r4 · 07-01-2018 09:25PM

The advice of sucking it up and refinancing the baloon at the end makes sense. Just make sure the car is serviced properly. Agree with asking for a raise in work.

On a general note, this is going to happen a lot. PCP really only suits people who do small milage and like new cars. You are also using your equity or deposit to make the repayment smaller rather than as a asset for the next car. Seems to me a lot of people who want or need a new car do big milage. There is a PCP bubble and its going to pop soon.....bring on the cheap second hand cars.

laserlad2010 · 07-01-2018 09:34PM

Went through the letters again.

The letter asking for 11k and the car was from earlier this year as she had enquired about this previously.

The most recent figure is 19,000 to buy the car. It was 27,000 initially with credit costs.

She's a primary school teacher so can't just change jobs, or get public transport as the school isn't near a bus or train.

I think she just has to keep the car until the contract is up and then take out a loan for the GMFV.

Thanks all for your comments.

colm_mcm · 07-01-2018 09:37PM

How much was the car originally?

How much is the GMFV?

happywithlife · 07-01-2018 09:39PM

If past of a union can she finance the loan through Their credit union? Will she be paid for the holidays? Presuming she is she won't be commenting during the summer etc - I'd encourage her to leave the car parked during every holiday as much as possible to limit the mileage

btkm8unsl0w5r4 · 07-01-2018 09:39PM

Well look she has a permenent reliable job. Just rebudget and it will be fine.She could get a summer jobs too....I jest I jest

MarkN · 07-01-2018 09:44PM

laserlad2010 wrote: »

Went through the letters again.

The letter asking for 11k and the car was from earlier this year as she had enquired about this previously.

The most recent figure is 19,000 to buy the car.

She's a primary school teacher so can't just change jobs, or get public transport as the school isn't near a bus or train.

I think she just has to keep the car until the contract is up and then take out a loan for the GMFV.

Thanks all for your comments.

So the settlement figure is €19,000? It’s very important that the word settlement is present as there can be two figures - one of the total outstanding and one that the bank will accept if it were to be paid off today.

happywithlife · 07-01-2018 09:45PM

Kailee Muscular Shrapnel wrote: »

Well look she has a permenent reliable job. Just rebudget and it will be fine.She could get a summer jobs too....I jest I jest

She could though.
I know a teacher in my children's school does a summer camp at The start of the holidays. She does it with another primary teacher friend in a different school. They rotate which school goes the first week and which goes the 2nd week and they always seem to get good enough numbers. Just simple art and craft kind of stuff

laserlad2010 · 07-01-2018 09:47PM

MarkN wrote: »

So the settlement figure is €19,000? It’s very important that the word settlement is present as there can be two figures - one of the total outstanding and one that the bank will accept if it were to be paid off today.

Yep letter says settlement. Really appreciate all of the Boards knowledge and opinions on this!

Jobs OXO · 07-01-2018 09:54PM

laserlad2010 wrote: »

Yep letter says settlement. Really appreciate all of the Boards knowledge and opinions on this!

Sure, no problem

MarkN · 07-01-2018 09:57PM

laserlad2010 wrote: »

Yep letter says settlement. Really appreciate all of the Boards knowledge and opinions on this!

Right well at the very least this helps us work things out more. So the dealer asked her for €11,000 AND the car on an agreement based on €19,000 being owed. I’m sure you’re aware, the car is worth a lot more than €8,000. I’d be reporting the dealer to the financial regulator and Consumer Affairs for starters!

Despite changing my car sometimes more than once a year for nearly 20 years and many times with finance, I’m reluctant to comment further due to a small number of smart arses in this thread.

Hope it works out for her in whatever way possible though, the idea of summer earnings isn’t a bad one to be fair.

rustynutz · 07-01-2018 10:01PM

colm_mcm wrote: »

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

Her name is on the logbook, its hers to sell. The only problem she may have is the new owner may look for proof she has paid off remaining finance.

Same as selling your own house (rather than your neighbours) with an outstanding mortgage on it, people do it every day of the week.

UrbanFret · 07-01-2018 10:02PM

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?

can you not help her out here? bail her out as such.

James Bond Junior · 07-01-2018 10:17PM

OK, my advice was to check the teacher Credit Union, Comhar Linn but €19k, assuming this is the settlement fee, would cost €370 a month over 5 years. Have a look yourselves and see what they may do.

Secondly, it is pretty easy for us teachers to pick up a grind. 1 a week would net her about €120 - €150 a month. Two a week would be easy enough to get and would pay the bulk of the PCP. I guess this is a bit bold to extol as a solution as it is taxable income rarely declared but quite a few teachers I know do it, especially those saving for a house or wedding.
Another option would be to suggest to her principal that she set up a homework club in her school. 1 hour a day for 15 kids over 4 day could pay the PCP and more.

Thirdly, she has an easy way of pulling together a good few months payments by signing up for July Provision. I know of some colleagues who net over a €1,000 for a few hours a week over the holidays.

Fourthly, have a look at the day to day finances. I save about 10/15 a week by popping a coffee in a travel mug before I leave instead of stopping on the way. Making my own lunch instead of buying saves money too. Tell her to claim her flat rate expenses on Revenue online along with any other tax breaks she is entitled to. The flat rate expenses alone could pay 2/3 months if she hasn't claimed them already.

I don't mean to be patronising but if a teacher in Ireland can't afford €320 a month there is something seriously wrong. If you are living in Dublin I can understand but that should be still a reasonably manageable monthly outgoing.

alias no.9 · 07-01-2018 10:17PM

laserlad2010 wrote: »

Went through the letters again.

The letter asking for 11k and the car was from earlier this year as she had enquired about this previously.

The most recent figure is 19,000 to buy the car. It was 27,000 initially with credit costs.

She's a primary school teacher so can't just change jobs, or get public transport as the school isn't near a bus or train.

I think she just has to keep the car until the contract is up and then take out a loan for the GMFV.

Thanks all for your comments.

Is staying near her work, even three or four nights a week an option? The commuting costs seem crazy, I can only imagine the time commitment is similarly crazy. She might find a room in an owner occupied house where Monday to Thursday at a reasonable rent suits the owner. If an arrangement like that worked as a short term measure until the end of June this year, things could be on a much better footing.

It doesn't sound like there's any option right now to sell the car, clear the finance and have something left over for a less expensive car. Continuing with the PCP until the end of the 36 months seems like the least bad option.

Returning a PCP car

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