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Child Item

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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frozenfrozen

Don't go too far off topic anyway there are already threads just about pcp

givyjoe

ForestFire wrote: »

Why is it so hard for people to understand that if you buy a car for €25 000 you will need to pay it all back???

It doesn't matter have big/small the deposit is....
how big/small the monthly repayments are....
how big small the ballon payment is.....

You have to pay back €25, 000 in total!!!

And if you are not on 0% PCP/finance then you have to pay back the cost of credit also. Normal you are told this up front too and can easily added to you 25K total.

No magic sales man talk should hide the fact that if you buy an expensive car that you are going to have to pay for it all.

Take you 25K + 3K COC (example) = 28K

Pay it back over 5 years (Reasonable amount of time)

28K /5/12 = 466 per month

If you do not have close to this, as disposable income, then you cannot afford the car.

(Fell free to take any savings off or spread the payments out over longer time but this should be your first rough estimate on "Can I afford this car")

It's quite simple... its deceptively marketed by some sales people and all dealers who use the term GMFV.

The amount is constantly referred to as a future value, that is completely misleading and incorrect. The GMFV has nothing to do with the value whatsoever, its the minimum amount you need to pay at the end of the 3 years to keep the car. I.e. the numerical difference between whatever you've been paying monthly and what you gave as a deposit, deducted from the original cost price.

The car could be worth more than than GMFV or less, you still owe them that figure. Again my point was, stop calling it future value and start calling it what it actually as.. 'balloon payment'

munchkin_utd

givyjoe , from what i gather, with BMW the minimum guaranteed final value is guaranteed and once the car is in good condition and not over mileage you can throw the keys back with only an admin fee.
https://www.bmw.ie/en/topics/owners/for-owners/bmw-financial-services/financing-your-bmw/bmw-select--pcp--finance.html

I've heard a lot of bad press about PCPs but honestly I dont get the problem.
You pay a deposit (or not as the case may be) , pay an amount per month, and throw back the car at the end of the period.
Wheres the scam ?

Cashmerewrap

I haven't read through all the posts but I was in this position. It wasn't because we couldn't afford the repayments but because my husband changed job and needed a different vehicle. We got a credit union loan and paid off the outstanding balance on the pcp. Then we sold the car separately and were left with 4500 at the end. We probably lost out on money overall but it was a solution to a problem for us at the time. Best of luck.

ForestFire

Cashmerewrap wrote: »

I haven't read through all the posts but I was in this position. It wasn't because we couldn't afford the repayments but because my husband changed job and needed a different vehicle. We got a credit union loan and paid off the outstanding balance on the pcp. Then we sold the car separately and were left with 4500 at the end. We probably lost out on money overall but it was a solution to a problem for us at the time. Best of luck.

Call the Guard's, someone sold a Car they did not own as were only renting:eek::D

Only joking, but good to see confirmation that at least this is a possible solution from exiting a PCP early.

Did you need to get any prior agreement from Car dealer/ Finance company?
Was there any penalties for paying back early?

Vronsky

munchkin_utd wrote: »

givyjoe , from what i gather, with BMW the minimum guaranteed final value is guaranteed and once the car is in good condition and not over mileage you can throw the keys back with only an admin fee.
https://www.bmw.ie/en/topics/owners/for-owners/bmw-financial-services/financing-your-bmw/bmw-select--pcp--finance.html

I've heard a lot of bad press about PCPs but honestly I dont get the problem.
You pay a deposit (or not as the case may be) , pay an amount per month, and throw back the car at the end of the period.
Wheres the scam ?

It's not a scam, but it is being mis sold. There are people buying new cars with this financial product that clearly cannot afford them.

In the rush and good feeling that buying a new car generates, many people get suckered by the fact that the salesman doesn't have their interest at heart. He's only interested in making the sale

Casati

Cashmerewrap wrote: »

I haven't read through all the posts but I was in this position. It wasn't because we couldn't afford the repayments but because my husband changed job and needed a different vehicle. We got a credit union loan and paid off the outstanding balance on the pcp. Then we sold the car separately and were left with 4500 at the end. We probably lost out on money overall but it was a solution to a problem for us at the time. Best of luck.

This is a good idea for the OP. It’s obvious that the BMW dealer is trying to take advantage here. Another option is to go to any other garage and see would they be interested in the car and would their bid come closer to clearing the finance owed, this would avoid messing with taking out loans

Trying to clear the settlement of 19k on a now two year old higher mileage Mini is extremely high mid you

givyjoe

munchkin_utd wrote: »

givyjoe , from what i gather, with BMW the minimum guaranteed final value is guaranteed and once the car is in good condition and not over mileage you can throw the keys back with only an admin fee.
https://www.bmw.ie/en/topics/owners/for-owners/bmw-financial-services/financing-your-bmw/bmw-select--pcp--finance.html

I've heard a lot of bad press about PCPs but honestly I dont get the problem.
You pay a deposit (or not as the case may be) , pay an amount per month, and throw back the car at the end of the period.
Wheres the scam ?

Thats the thing, it's never guaranteed by any dealer. Good condition is subjective and one (very sound) salesman steering me away from it, said himself.. every little scratch whether it be to paintwork or alloys will be chipping away at the actual value of the car. Go in and ask any dealer, how many/what proportion of their cars end up getting at least their GMFV... watch them squirm.

Anyway, this 'value' that they promise has nothing to do with the actual market value of the car, it is literally just the amount you owe on the last day of the contract!

awec

Am I the only one who thinks someone earning ~35k a year spending ~27k on a car over 3 years before the costs of driving are even factored in is absolutely insane?

I don't think PCP is the problem here. It sounds like his gf just bought a car she cannot afford, PCP or not. Though in fairness, maybe PCP does a good job of hiding the real cost to the customer.

Lantus

Shadowthrone wrote:

Edit: However, under S. 63 of the Consumer Credit Act 1995, the 'Half Rule' clause allows you to terminate the agreement and return the vehicle owing nothing further, if more than half the repayments (including interest) have been made on the car.

One of the three options available on PCP is hand the car back after 3 years which is when over half of all payments have been made so it's an advertised benefit from the get go.

Shadowthrone

givyjoe wrote: »

Thats the thing, it's never guaranteed by any dealer. Good condition is subjective and one (very sound) salesman steering me away from it, said himself.. every little scratch whether it be to paintwork or alloys will be chipping away at the actual value of the car. Go in and ask any dealer, how many/what proportion of their cars end up getting at least their GMFV... watch them squirm.

Anyway, this 'value' that they promise has nothing to do with the actual market value of the car, it is literally just the amount you owe on the last day of the contract!

Tbh its pretty straight forward and so far I have had no issues using pcp. Its just seems people choose to be ignorant and want an excuse to complain about what is a pretty good product. (That said I would advise HP if you are looking to actually keep the car. PcP is perfect if you like a new car every few years. I mean why would you ever pay the full price for a car just to trade it in again?)

I have gone through 4 pcps so far. 3 for my wife and 1 for myself.
As I said in my post on page 8, I handed mine in early for no charge using the voluntary termination.

my wifes first 2 pcps, ended and instead of paying the balloon payment we handed the car back and took out a new one (basically just renting a car, we wanted a new one so didnt see the point in paying for one in full just to trade it in).

Her third pcp has just finished and this time we decided to keep the car, we just paid the balloon payment and took the car, the fact we were 25k over the mileage limit did not matter as we are keeping the car. that only effects you if you are looking to hand it back and walk away or trade in for a new car. (We actually payed off this last pcp 12 months early because we were moving back to ireland)

The first 2 times we traded the wifes car in instead of paying the balloon the car was worth more than their estimate so they took that off the new car which lowered the monthly payments. even though there was a scratch here and there, the mileage was under the agreed limit.

All that being said I think the OPs best option is to look into voluntary termination and get out of the contract without any large payments.

Shadowthrone

Lantus wrote: »

One of the three options available on PCP is hand the car back after 3 years which is when over half of all payments have been made so it's an advertised benefit from the get go.

No thats a different concept. That is part of the pcp offer to just hand the car back and walk away. Basically renting the car.

But you can potentially take advantage of the voluntary termination before this. which is why you need to check if you are eligible.
The cost of the car you are purchasing is a factor here. I had a 4 year pcp on my mazda and was able to hand it in using this after 21 months

Mooooo

Just for the op's partner I think the INTO have some crowd that negotiate loans for them or something, maybe it's just mortgages or whatever but perhaps no harm checking out

rustynutz

givyjoe wrote: »

Thats the thing, it's never guaranteed by any dealer. Good condition is subjective and one (very sound) salesman steering me away from it, said himself.. every little scratch whether it be to paintwork or alloys will be chipping away at the actual value of the car. Go in and ask any dealer, how many/what proportion of their cars end up getting at least their GMFV... watch them squirm.

Anyway, this 'value' that they promise has nothing to do with the actual market value of the car, it is literally just the amount you owe on the last day of the contract!

The GFV is usually an amount that is considerably less than the market value of the car, the difference between the GFV, and the actual market value, goes towards the deposit on your new car, should you decide to trade up after the 3 years. The dealers design it this way to work in their favour if you decide to hand the car back after 3 years. Unless you wreck the car, or go well over the mileage, I cant see you not getting the GFV when returning with the car.

As an example, I ended a PCP last year, my GFV was somewhere between 8 & 8.5k, but I ended up getting 11.5k for the car when I traded it, and that was after going over my mileage allowance by 10,000km. Now in the event of another recession, and the dealer is left with a lot of people returning cars at once, this may effect market value.

I think low interest PCP is a great way of financing a car, but only if you fully understand it, and can afford the deposit, repayments AND the balloon payment at the end if everything goes tits up!

Lantus

givyjoe wrote:

The amount is constantly referred to as a future value, that is completely misleading and incorrect. The GMFV has nothing to do with the value whatsoever, its the minimum amount you need to pay at the end of the 3 years to keep the car. I.e. the numerical difference between whatever you've been paying monthly and what you gave as a deposit, deducted from the original cost price.

I would say final payment is even better. Balloon makes it sound too jolly.

It's not guaranteed value because if car prices tumble you still owe it as debt. There is no value to the consumer unless prices in the market remain unchanged.

Cashmerewrap

ForestFire wrote: »

Call the Guard's, someone sold a Car they did not own as were only renting:eek::D

Only joking, but good to see confirmation that at least this is a possible solution from exiting a PCP early.

Did you need to get any prior agreement from Car dealer/ Finance company?
Was there any penalties for paying back early?

I just rang up boi who were the finance company and got the settlement figure from them. I then went to the credit union and explained why I needed the money. They granted me the loan and I paid off the settlement figure. Then I owned the car outright. Then I sold the car on done deal, paid back the credit union loan in full and had 4500 left over for my husband to put towards his new car. I didn't have any penalties, I didn't go near the garage. The garage didn't care what I did, as far as they were concerned my agreement was with the finance company (bank of ireland in this case).

mickdw

As long as this lady has not made a mess of her credit rating, she will easily get other finance if she wanted to clear off the car and sell it. As I see it though, seeing as she needs a car, its best to keep it, ignore the mileage restriction on the pcp, use it normally to end of term then refinance the baloon with bank or cu and continue to drive it for many years to come.
Throwing money at it just to get rid is madness considering she will have to get another car.

mickdw

Cashmerewrap wrote: »

I just rang up boi who were the finance company and got the settlement figure from them. I then went to the credit union and explained why I needed the money. They granted me the loan and I paid off the settlement figure. Then I owned the car outright. Then I sold the car on done deal, paid back the credit union loan in full and had 4500 left over for my husband to put towards his new car. I didn't have any penalties, I didn't go near the garage. The garage didn't care what I did, as far as they were concerned my agreement was with the finance company (bank of ireland in this case).

Absolutely, the perfect way out. No doubt if you had attempted to return it or something the figures would have worked out alot worse - probably owe money along with the car as dealer would screw you on buying it back.

iomusicdublin

In the UK

Financial Conduct Authority (FCA) announced it will begin investigating “irresponsible” lenders after revealing it was “concerned” about a lack of transparency in the market. The watchdog said some buyers, particularly poorer customers, may be paying too much for their car finance and there are also concerns about the so called 'sub-prime' finance market where car buyers with bad credit ratings are given car loans without the proper checks. Lenders found to have mis-sold finance could face millions in penalties.

http://www.autoexpress.co.uk/car-news/consumer-news/99331/car-finance-market-faces-a-potential-mis-selling-scandal

colm_mcm

That article deals with the complete other end of the market.
You can be sure the documentation in this case was A1

iomusicdublin

from the op

laserlad2010 wrote: »

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.

Pelvis

iomusicdublin wrote: »

from the op

Her salary is high enough, the problem is her commute is essentially doubling her costs.

Sadb

givyjoe wrote: »

It's quite simple... its deceptively marketed by some sales people and all dealers who use the term GMFV.

The amount is constantly referred to as a future value, that is completely misleading and incorrect. The GMFV has nothing to do with the value whatsoever, its the minimum amount you need to pay at the end of the 3 years to keep the car. I.e. the numerical difference between whatever you've been paying monthly and what you gave as a deposit, deducted from the original cost price.

The car could be worth more than than GMFV or less, you still owe them that figure. Again my point was, stop calling it future value and start calling it what it actually as.. 'balloon payment'

Or just call it the remainder of what you owe. When you’ve payed €11000 over three years for a €27000 car do people think that the rest of the money owed disappears?

[Deleted User]

With PCP You pay a deposit based on what you want to pay back monthly, Higher deposit lower monthly payments, lower deposit , higher monthly payments.

What seems to have happened here is that either the garage coaxed the Lady to claim she's doing far less mileage than she actually was to make it appear more attractive, ( lower mileage lower monthly payments) or she deliberately lied about it to pay a lot less per month failing to realise the consequences if handing the car back after the 3 years with much higher mileage on the clock.

So there are a couple of options.

1 : get a loan and pay the balance off over 5 years, the car is then hers.

2 : get a loan and pay it back for the remaining term of the agreement which is what again, another 18 months ? then hand the car back and pay the excess mileage.

3 : get approval from the finance company to sell the car, people are under the illusion the car can't be sold privately when on finance, pcp etc, yes it can with the finance companies approval, this is how I bought my Prius ! I met the man, test drove the car, went to the bank paid the finance, got letter to say I cleared it and the car is now mine, paid him the balance and off I drove. I did all the usual car checks first which showed up outstanding finance of course this is how I found out, he had planned to get the money then pay off the finance but this is not how it's done, not for your sake as he could easily pocket the cash and report the car stolen.

No.1 is really the only sensible option here and she can sell the car after the finance company are paid off with the loan, then she can clear the loan and buy a cheaper car but would that save much money ?

I got my last car on PCP and this one I have now, no problems once you know what's what, PCP offers advantages and flexibility traditional loans do not offer. It's a great way to drive cars that you do not intend to own. Irish people are obsessed about owning a car, I do not want to own a depreciating asset, not at this time, If I want to buy a car and keep it 10 years then I'll pay a loan but when I intend to change in 3 years there is no advantage to owning a car or paying the full cost of the car with interest.

With PCP you pay depreciation + interest based on the total calculated mileage at the end of the contract. Cost of monthly payments + cost of balloon is the total cost of the car and you'll find that it can be cheaper than a traditional loan because the interest is usually half that of a regular bank loan.

PCP gets a bad name but it's a great way to drive a car once you are aware of what you are getting into!

The moral of the story is this, if you can not afford to pay for a new car then it does not matter how you're paying for it, it will eventually come back to bite you.

OP I hope it works out for your Girlfriend, we all do things that are mad sometimes, it's not the end of the world, she'll be fine !

Cee-Jay-Cee

givyjoe wrote: »

That's quite a lot of condescending and ignorance in one post.

I apologise and its 'condescension'.

Brian Scan

Cee-Jay-Cee wrote: »

I apologise and its 'condescension'.

Sincere apology.

btkm8unsl0w5r4

Condescending means talking down to somebody, you might not know that, and it use in the above sentence is fine. Condescension would be fine as well, but such nitpicking in such an informal means of communication would be beneath most.

spyderski

Sadb wrote: »

Or just call it the remainder of what you owe. When you’ve payed €11000 over three years for a €27000 car do people think that the rest of the money owed disappears?

This, this, this! Sick of people saying "sure you have nothing to show at the end after paying for a car for 3 years"! Not surprising really, considering you've only paid half what the car cost.

There's a huge lack of understanding of PCP's out there. While they don't suit everyone, they are certainly not a "scam". Assuming wear and tear and mileage are as agreed, the absolute worst case scenario is that you have no equity in the car at the end of the agreement.

If that's the case, it will mean either the used car market as a whole has fallen through the floor, or the model of car you bought has depreciated more than expected. in that situation, the GMFV (or whatever you want to call it) is a positive thing, as it acts as a backstop to your losses.

There's lots of people would have loved to hand back large engined cars in 2008/2009 and walked away, instead of being left with major negative equity in cars which overnight became unsaleable..

The manufacturers could really do a better job of explaining PCP's to customers though - the amount of misunderstanding out there is amazing, which means either: 1. People are stupid or 2. the motor trade is doing a bad job of explaining PCP's. While 1. might be a factor, 2. is the biggest issue, IMO.

hooch-85

I bought a new car in Jan 16 but i went down the plain old HP route as i knew my mileage was too high for PCP. It was a similar price of just short of 24k and I paid 3k up front. I got a settlement figure of just under 14k when I enquired with the finance company this week. I was paying 399 a month and the car has a book value now of approx 17k. So if i wanted to trade up I'd have equity of nearly 3k in my own car. I can't see how 11k plus the car is still owed in OPs situation.

barryfitz

Some useful info for the OP, hopefully...
https://www.ccpc.ie/consumers/money/loans/paying-for-your-car/pcp/?gclid=Cj0KCQiAkNfSBRCSARIsAL-u3X_tagkSAasDc1L_s-woRDAA5DOFex0I0I5oBb1gaoiC4RoOn59-gB4aAly6EALw_wcB#credit

That link has some excellent info re the 'half rule'. And examples of scenarios to be able to avail of the rule. Plus template letters.
The figure of 11000 + returning the car sounds mental. The following example makes some random assumptions.
Assuming an initial cost of €25,000 for the car.
Half rule should be somewhere around €12,500
If she paid €3,000 deposit
+12 x payments of €250 (€3,000)
that amounts to €6,000
which would mean she should be able to pay €6,500 to get her to the half way point at which point she could avail of that right. she'd be left with no car.