The half you have to payback includes the mgfv.

 

This is correct, its half the full finance balance, INCLUDING the mgfv, as that is part of the finance agreement. Its a common misunderstanding that others have found in the past that it is not half the repayments, its actually half the full finance amount including the balloon payment.

 

The small payments on PCP mean you reach this point far later than half the agreement, it could be right up to 3.5 years through a 4 year agreement. PCP is popular because of the low repayments, but it delays the VT point by a considerable margin. In fact, if the final payment is more than half the amount borrowed you'll never reach a VT point.

 

Even worse with PCH, there is no VT point at all since it is a lease agreement and not a finance one. Once you commit to a PCH you are in it for the duration.

 

Found this on the web.

How voluntary termination works

As long as you repay 50% of the Total Amount Payable (not the total amount borrowed, as you need to include interest and fees), you are entitled to terminate the agreement and return the car to the finance company.  As long as there are no “damages if you have failed to take reasonable care of the goods (over and above normal wear and tear)”, you have nothing further to pay.

The total amount payable (which is the total amount borrowed plus interest and fees, and also includes the Guaranteed Minimum Future Value on a PCP) must be clearly shown on any car finance quotation and contract, so you should be able to find it easily enough.  You must pay off half of this figure to be able to voluntarily terminate your PCP or HP.

http://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

Edited 10 February, 201610 yr by mannyo

the only thing to note about handing the car back and walking away is that is the only time you pay excess mileage charges, those can mount up very quickly

 

so what was the mileage you signed up for and how does your actual compare to the actual, multiply this with your excess charge to see if it is cheaper to walk away or give the dealer a little of the difference in deal

 

if you don't believe people about handing back ring VAG finance up and ask them, they are very open about it when you ask for a settlement figure

At the time you take out the PCP, the percentage of the car you physically "own" is divided into equal monthly payments.    Obviously, the closer you get to the end of the term, the less it will cost to get you into a new car.   Dealers have a profit margin in the new car, and providing you've looked after your present car and the mileage is as expected or lower, a potential to make a profit on selling the used car.   The dealer also earns a bit of commission from the financier and from any bolt-ons you take, such as GAP insurance, service contracts etc.    That is where the dealer sharpens his pencil and brings out the abacus and the shrewd salesman and finance manager are able to put together an attractive package for you - the closer you are to the end of your term, the easier their job becomes!

My appreciation to anyone (probably most of you) who can give me some much-needed advice on the early-termination of a PCP.

I took out a 3 year PCP with Skoda (actually VW)in June 2015. I'm more than happy (ecstatic even) with my Elegance model, and I WAS planning to simply P/E for another Elegance when the PCP runs out (June 2018).

BUT (& it is a BEEG "but") would I be better off to ask for an early termination, and buy another Citigo in, say 2017?

I have a mileage allowance of 9k pa, but am likely to be well BELOW that: I'd like (preferably) to have both Cruise Control & a DAB radio - which means that I'd have to order a new set of wheels well in advance.

I took the PCP because it was zero interest, but mainly because I'm now 75 yoa, & I didn't know for long I'd be able to drive.

Opting for the MAXIMUM deposit permissible(£3,365) GAVE ME A pcp OF £7,855 - with a CMP of £92 pm, gives me the option to then buy outright, for £4,635.

So, I will have paid VW/Skoda, some 6,675 over the 3 years, and with the final payment (if I choose to exercise it), a total of £11,310 - basically, the total cost of the car.

Factors to take into account are:-

If I wait until 2018 to change the car, then I'll have to shell out a further £400 (just over a 3 year period) in RFL (thank you Mr Osborne):

Keeping the car for a 3 year period, inevitably means that I'll also have to replace the tyres - say £250-£300. All in all, around £650-£700.

Both of the above will be avoided if I change/can change at the 2 year point. AND I'll have a "brannie" & with all the innovations that Skoda may introduce with their next model.

Someone out there will have the definitive answer, so I'll wait - & hope.

Thanks again for whoever bends their minds to the conumdrum - without necessarily coming up with a bent answer.

You don't necessarily have to VT. You can P/X the car at any point as long as you have equity in the vehicle. In fact you can part ex the car if it's in negative equity, but the missing money has to be found from somewhere obviously. If your car is worth the money it owes between now and the time you want to swap for a Citygo, then go to visit a dealer and see if a deal can be made.

Thanks, Lady Elanore - much appreciated.

I'll nip in to see the Head Honcho at the Skoda Dealership, and try to ruin his day - although if he's going to be flogging a new citigo (with VW Finance enduring whatever pain there may be) he may be more than happy to be of assistance.

The car is now only -10 months old, and has less than 4k on the clock - I just fancied one with DAB radio & Cruise Control, and am willing to shell out for it.

Thanks again for your prompt reply.

The only thing is your car has had roughly £4k paid off (very rough maths) and so even if it is worth what you owe, you will still have to find a deposit on a new PCP car (if you take that route).

Edited 3 March, 201610 yr by Lady Elanore

Not sure if cruise can be retro fitted and you can buy good add on DAB tuners, might be the cheaper option?

Not sure if cruise can be retro fitted and you can buy good add on DAB tuners, might be the cheaper option?

 

Been covered a lot - I think it CAN be retro fitted but only if you have a certain ECU version / Model number (something like that) - Not sure about DAB, but I dont see any real reason why it couldn't be retro fitted.