I plan to Voluntary Terminate my PCP this time next year when I have paid 50% of total value. This is due to fast depriciation and excess mileage.

I plan to save a deposit of a few thousand for a new vehicle possibly on PCP again. How can I do this successfully without losing access to a vehicle to get to work and not having 1 credit agreement on a car whilst applying for the new one at the same time. The new credit would be rejected.

Thanks.

Edited 9 July, 20169 yr by tigermad

Apologies for duplicate post.

Sorry I'm not a car finance professional and don't know the answer to the main crux of your post, but I would assume you have done the maths and are satisfied that a VT is the best option? I understand your concerns but my understanding is that depreciation of the car makes no difference to the amount you owe under a PCP and you are protected by the GMFV, allowing you to walk away at the end of the term if the car is worth less than that. However you were perhaps counting on having equity towards your next vehicle? Excess mileage is a different matter though and you should read the terms of your contract as a basis for how much extra you could end up owing. If you have greatly exceeded the mileage in your contract then a VT may save you some money as you are not obliged to pay pro-rata of the excess, although it's highly likely you will be pursued for it by the finance company.

For VT to apply you must have paid off over 50% of the total amount payable, which includes deposit, monthly payments, interest and the final lump sum. You appear to understand this already but it's worth making absolutely sure to avoid an error in your decision making. My understanding is that time is not relevant though and you could serve your VT notice whenever you have the means to settle the minimum 50% payable.

A salesman may help you get out of your existing contract, but the finance company almost certainly will have reservations about providing any further finance, leading to the dilemma in your above post. Although a VT will not affect your credit score, it is visible on a detailed credit search.

Have you considered taking out a straightforward loan from a bank prior to issuing your VT notice? May raise questions from the bank, but at least you won't be alerting the car finance company.

Sorry I'm not a car finance professional and don't know the answer to the main crux of your post, but I would assume you have done the maths and are satisfied that a VT is the best option? I understand your concerns but my understanding is that depreciation of the car makes no difference to the amount you owe under a PCP and you are protected by the GMFV, allowing you to walk away at the end of the term if the car is worth less than that. However you were perhaps counting on having equity towards your next vehicle? Excess mileage is a different matter though and you should read the terms of your contract as a basis for how much extra you could end up owing. If you have greatly exceeded the mileage in your contract then a VT may save you some money as you are not obliged to pay pro-rata of the excess, although it's highly likely you will be pursued for it by the finance company.

For VT to apply you must have paid off over 50% of the total amount payable, which includes deposit, monthly payments, interest and the final lump sum. You appear to understand this already but it's worth making absolutely sure to avoid an error in your decision making. My understanding is that time is not relevant though and you could serve your VT notice whenever you have the means to settle the minimum 50% payable.

A salesman may help you get out of your existing contract, but the finance company almost certainly will have reservations about providing any further finance, leading to the dilemma in your above post. Although a VT will not affect your credit score, it is visible on a detailed credit search.

Have you considered taking out a straightforward loan from a bank prior to issuing your VT notice? May raise questions from the bank, but at least you won't be alerting the car finance company.

Thanks for the reply. This is what I have just written in another thread.

I will be over by about 15k miles by the end. I'm over by nearly 10k now.

I'm sure they would deal with someone again after a VT. There are many people that have walked out with new cars after handing their other cars back. In fact it's says as part of my agreement that I will be entitled to return the goods after £11,100 has been paid and you will not have to pay any more. It's not even under a header of voluntary termination it just says termination, your rights.

So I will probably just make extra payments if I am allowed so I get to the 11,100 quicker.

I still don't understand how people walk away with a new car though. Until you hand in the old car you are still paying for it so how can they afford credit on a new order at the same time? I am guessing they must have a fantastic credit rating to have 2 expensive cars on finance at the same time.

I don't really want to go down the loan route because I don't ever want to own the car. I am happy with effectively leasing it. If I go the Pcp route again I will give a more correct estimate of my mileage this time.

Just been working out some figures for next year. By July/August next year I will have paid 50%. So I will go into the dealer in June and state that I will be using the termination option that is is clearly in my contract and that I want a new PCP. I will hopefully have a much larger deposit this time too so that will help.

Have you considered taking out a straightforward loan from a bank prior to issuing your VT notice? May raise questions from the bank, but at least you won't be alerting the car finance company.

Clearly if you organise a loan and receive the cash into your bank before the VT then it won't be on your credit file at time of application. But you might give yourself a problem 2 or 3 years down the line when you next apply for credit for something else. If you know you are likely to apply for credit for other items eg, furniture, new kitchen etc then you need to seriously consider if you want to put negative marks on your credit file.

Every car depreciates, so if that is your only reason for a VT, need to think very carefully. normally VT follow a life event (new baby, made redundant, family death etc) which means you need to unwind a deal due to unforeseen circumstances.

Clearly if you organise a loan and receive the cash into your bank before the VT then it won't be on your credit file at time of application. But you might give yourself a problem 2 or 3 years down the line when you next apply for credit for something else. If you know you are likely to apply for credit for other items eg, furniture, new kitchen etc then you need to seriously consider if you want to put negative marks on your credit file.

Every car depreciates, so if that is your only reason for a VT, need to think very carefully. normally VT follow a life event (new baby, made redundant, family death etc) which means you need to unwind a deal due to unforeseen circumstances.

I'm not sure why there is so much stigma attached to a termination. It is clearly written on the first page of my contract as stated above that I can hand the car back. It's the excess mileage not the depriciation I am concerned about. At the end of the Pcp there is a balloon payment/fgv which is only a thousand less than what they offered me yesterday. So i do not not need to worry about negative equity at the end since they have to give me the fgv anyway. Maybe I should just ride it out until the end. Worse case scenario is I will have to pay the excess mileage (probably about £1300) but hopefully by then I will have substantial deposit towards a new car. The dealer may hopefully do me a good deal if he wants me buy another car.

Clearly if you organise a loan and receive the cash into your bank before the VT then it won't be on your credit file at time of application. But you might give yourself a problem 2 or 3 years down the line when you next apply for credit for something else. If you know you are likely to apply for credit for other items eg, furniture, new kitchen etc then you need to seriously consider if you want to put negative marks on your credit file.

Taking out a loan and paying it off should over time improve your credit rating. A VT should not affect your credit rating, but will show up on a detailed search which 'may' affect your ability to obtain credit from some vendors. But like you say, not a decision to be taken lightly.