As the title suggests, I'm wondering what happens when you reach the end of your PCP. My Seat Leon is three years old on the 1st March and the deal is due to end, but unfortunately the car is approximately £1500 in negative equity so trading in or paying off the balance is not an option. I've looked at early termination but as I only have a couple of payments left this seems a lot of 'chew on' for not a lot of gain.

My plan is to order a new car in the next few days and then hand the Leon back in March but don't know how you go about doing this.

Any information would be greatly appreciated

It's exactly as you think it is, you just drop the keys off with the car at the dealership along with the V5 docs.
The point of the PCP is to protect the dealership, you've been paying over the odds to basically rent half a car and pay off the rest. You're not taking the option to buy the half you've been renting.

We handed our Mini Countryman back at half way due to the poor performance of the car and just walked away. No issues and no costs. Mini wrote to us to say it was all sorted and we owed nothing.

Cheers Zukabak

I know lots of people with cars on PCP but nobody has ever handed them back, and I didn't know what the process was or what hoops I would need to jump through, hopefully it will be as easy as you say

FelisBengalensis

Was yours a "voluntary termination" I spoke to the finance company who said it wouldn't be a problem and wouldn't affect my credit score but would put a marker on my file - seemed a bit pointless with only one payment left, but sounds very painless to hand back the keys and walk away

Edited 7 January, 20179 yr by geordiebloke

A lot depends on the dealer.   We had a Renault which we handed back with about 400 miles over the agreed mileage figure.   The dealer not only tried to "sting" us for the excess mileage (despite the car being in immaculate condition) but also attempted to charge us for non-existent damage to alloy wheels and scuffs and scratches to the doors.   Fortunately, the collection driver had exclaimed what perfect condition the car was in and given us a signed sheet with no entries and I had photographs of each wheel and the car from all angles date and time stamped.   We referred the matter to Renault Finance and sent a cheque to settle the Excess Mileage stating that in our letter that agreement was with them and not the dealer.   Renault Finance refunded our excess mileage payment and told us there was nothing outstanding.   A few weeks later, that Renault Dealer was stripped of its franchise - apparently they had been up to all sorts of dirty shenanigans. 

 

Our Volkswagen dealer, on the other hand, couldn't have been nicer.   When my wife took early retirement, she decided to manage without a car to start with and we took our Touran back at the end of its PCP agrerement.   The dealer's sales manager was astounded that we just wanted to hand the car back and hang on to our Polo - he told us we had over £1700 equity (we had paid £1500 deposit initially) so what he did was give us a credit note of £1700 valid for 5 years (which could be redeemed at any VAG dealership) for when the Polo needed replacing or if we decided we wanted a second car.
 

Edited 7 January, 20179 yr by bealine

Check the value on something like WBAC to see if it really is worth £1500 less.

A PCP is like any other finance deal. You can go to any dealer for your new car and see what they offer you trade in.

If your lucky you might get more than the final payment, some equity towards the new car.

People seem overly keen to just 'hand it back'. You've put your hard earned money into it, see if you can get some equity back.

SEAT are currently running a £1000 extra discount sale, so if you traded it in there I'd expect you get close to break even, maybe some deposit.

Edited 7 January, 20179 yr by glosrich

I did a VT on my SEAT and it was basically a phone call to VW finance. Super easy.

 

Make call, transporter comes when you agree to it, man checks your car to see it's in good conditions (the odd stone chip and a little mark on a wheel is fine), car goes away, you stop paying. 

 

Take photos first if you can (one with a dated object) to show the condition of car if there is a problem further down the line. 

I spoke to VAG Finance well before Christmas about handing back my Polo and the woman on the phone said, I could Voluntary Terminate in January and give car back in February with nothing to pay. Would be collected by transporter after checks with nothing to owe. 

 

The car is due its second service next week and as I have payed for that upfront, I will get the benefits of that for a few miles until I find something I really like. Then I`m going back to nearly new on a low rate personal loan from the likes of Sainsburys. Old style car buying!

As the title suggests, I'm wondering what happens when you reach the end of your PCP. My Seat Leon is three years old on the 1st March and the deal is due to end, but unfortunately the car is approximately £1500 in negative equity so trading in or paying off the balance is not an option. I've looked at early termination but as I only have a couple of payments left this seems a lot of 'chew on' for not a lot of gain.

My plan is to order a new car in the next few days and then hand the Leon back in March but don't know how you go about doing this.

Any information would be greatly appreciated

 

Life is one big learning curve. You've basically been paying over the odds as the car is worth less than the balloon payment.

 

Hindsight is a wonderful thing, if you'd have known for sure you were handing the car back a PCH (lease) would have been a lot cheaper.

 

One thing that is becoming clear is that there are a lot of VAG PCP cars out there in negative equity.

 

As for the Leon, as has already been suggested you need to be sure of the actual value of the car, don't take WBAC's valuation as gospel. You could still claw back some value out of the car by paying the final payment and selling it privately, although it is a bit of a chore.

 

I wouldn't be VT'ing with only two months to go, you might as well use the time in the Leon to secure a decent PCH deal.

 

If you fancy another Leon here is a good PCH deal, £207 deposit then 35 months at £207...

 

http://pulmanseat.co.uk/contract-hire/leon-1-6-tdi-115ps-personal-contract-hire

 

How does the £207 per month compare to the PCP you're about to finish?

Sorry to bang on about PCPs, but the great thing about them is you have some protection from negative equity. I did a VT with over a year to run on my PCP. Brilliant! I feel sorry for the poor sods that paid cash for their beloved VAG car. The rules of VT also apply to HP agreements as well don't forget :) m

Yes, one disadvantage of PCH is no option to VT (so risky in case of redundancy etc.)

 

It is the trade-off for paying less than a PCP.

 

However most PCH deals are 2 years so a bit shorter than the typical 3 year PCP.

 

Remember though the cheapest way to run a a car is buy at 2 years old and run it until it becomes uneconomical to repair. You are stuck with the same car for 10 years / 200,000 miles though  :D

Edited 8 January, 20179 yr by silver1011

^ but if you like it, there's no hardship. I considered changing a five year old Octavia vRS TDi with 60k on it for a new Mk3 or a Superb. Couldn't justify spending £10 or £15k plus mine to get the same standard of car that's obviously newer and with a warranty.

It's the modern way, cars are now the latest consumable. People like the latest shiny things and want them now.

 

Here's my old barge, 2011 model bought at 18 months old with 14,000 miles on for £12,500. Paid off a year or so ago, no monthly payments anymore, just a few quid put away each month to pay for any maintenance when she gets close to dying...

 

 

It's got 115,000 miles on it now and I'll be looking to squeeze another 3 or 4 years out of it, 5 if I'm lucky (30K / year).

 

But then the wife has this on a PCH, £200 per month all in for 2 years, 8,000 miles per year...

 

 

Best of both worlds.

Edited 8 January, 20179 yr by silver1011

Life is one big learning curve. You've basically been paying over the odds as the car is worth less than the balloon payment.

 

 

This I don't understand - surely they've been paying under the odds if the car is worth less than the final payment?

 

1. Buy 30K car cash, sell it 3 years later for 10K. Total cost to you, 20K.

2. Buy 30K car on PCP (0% for ease of figures - mine is on 0%), balloon payment 12K. At end of PCP, car is worth 10K. You hand car back and walk away. Total cost to you, 18K.

 

How have you lost out by going for option 2? Surely in that situation the finance company have lost out?

This I don't understand - surely they've been paying under the odds if the car is worth less than the final payment?

 

1. Buy 30K car cash, sell it 3 years later for 10K. Total cost to you, 20K.

2. Buy 30K car on PCP (0% for ease of figures - mine is on 0%), balloon payment 12K. At end of PCP, car is worth 10K. You hand car back and walk away. Total cost to you, 18K.

 

How have you lost out by going for option 2? Surely in that situation the finance company have lost out?

 

You are exactly correct. If the car happens to be worth less than the GFV then it's saved you paying for the extra depreciation.

 

Even if it *is* worth a bit less at the time it still may be worth paying off and keeping it, as long as you are happy with the car, as the alternative is buying something new or newer and starting at the worst part of the depreciation curve again.

A hypothetical car bought for £22k with a GFV of £9k has depreciated £13k in three years (and it'll end up on a forecourt at £12k anyway).

If you chose to run it for another three years then it has to depreciate less. Even if it's only worth £3k at 6 years old, that's £6k extra drop in value - under half of what it cost you for the first three.

 

My PCP is up in October and I know I have the choice whether to part-ex, sell or keep it as suits me at the time.

I'm old school - strictly cash only - hate any form of monthly payment.

Edited 17 January, 20179 yr by Brian69

I'm old school - strictly cash only - hate any form of monthly payment.

I could have bought mine outright, but with 0% finance, why bother.

Even if offered an interest-free loan I'd rebuff it - mad perhaps, but it's the way I like to run my finances :P .

My employer offers an interest-free loan to invest in the company shareplan, but I've never used it - always stixk in a lump sum up front.

Edited 17 January, 20179 yr by Brian69

This I don't understand - surely they've been paying under the odds if the car is worth less than the final payment?

 

1. Buy 30K car cash, sell it 3 years later for 10K. Total cost to you, 20K.

2. Buy 30K car on PCP (0% for ease of figures - mine is on 0%), balloon payment 12K. At end of PCP, car is worth 10K. You hand car back and walk away. Total cost to you, 18K.

 

How have you lost out by going for option 2? Surely in that situation the finance company have lost out?

 

In your example, then yes VT'ing would cost less, however a PCH is almost always cheaper if you plan to hand the keys back at the end of the term and you don't have the marker on your credit rating.

 

A PCP is better if you know for sure you want to buy the car at the end of the term. The 0% and free servicing incentives can make a PCP cheaper than a straight forward bank loan (Sainsbury's @ 2.9% APR).

 

I've yet to see a PCP that is cheaper than a PCH.

 

Note: A PCP remains more secure, a PCH cannot be VT'd.

Even if offered an interest-free loan I'd rebuff it - mad perhaps, but it's the way I like to run my finances :P .

My employer offers an interest-free loan to invest in the company shareplan, but I've never used it - always stixk in a lump sum up front.

Isnt it a breach of some share trade regs to borrow money to use to buy shares? Pretty sure it is over here as it was one the big sticks used to beat a couple of our now facing prison dodgy bank execs..

Isnt it a breach of some share trade regs to borrow money to use to buy shares? Pretty sure it is over here as it was one the big sticks used to beat a couple of our now facing prison dodgy bank execs..

You're not buying shares initially - it's a five-year investment - at the end of which you can either convert the value of the 'shareplan' into physical shares or press 'collect'.

My PCP is up in October and I know I have the choice whether to part-ex, sell or keep it as suits me at the time.

 

September for mine. I had been planning on keeping it; but after its second trip (this time for 5 days) to the garage in the space of a year, I'm having second thoughts about keeping it much beyond the end of the warranty period. Might just clear the remaining finance and give in to my (strange) desire for a petrol VW Touran.

In your example, then yes VT'ing would cost less, however a PCH is almost always cheaper if you plan to hand the keys back at the end of the term and you don't have the marker on your credit rating.

 

 

Does handing the car back at the end of the PCP period result in a marker on your credit rating? Not terminating the agreement early, merely choosing not to exercise your option to buy?

Even if offered an interest-free loan I'd rebuff it - mad perhaps, but it's the way I like to run my finances :p .

My employer offers an interest-free loan to invest in the company shareplan, but I've never used it - always stixk in a lump sum up front.

 

I'll have to go for mad, you're essentially turning down free money :D

 

I don't like being in debt either, but stashing the value of the loan in an ISA and taking the 0% finance was an easy choice in this case. Especially as they gave a deposit contribution if you took the finance.