I bought a car on a 4-year PCP deal  ~3 years ago. At the time it was pre-covid and big plans but after Covid turned up our anual mileage dropped drastically.

Is it possible on PCP to reduce the annual mileage limit (and hopefully the monthly payment) ?

If so does it make any sense to ask for it (from financial point of view) ?

Nothing stopping you from asking. I've heard of people renegotiating mid term if mileage is going to increase hence your monthly payments increase but decrease? I can't think of a single reason why the finance company would want to reduce their income.

 

If you're looking to save money, you could settle your agreement and take out a new PCP on another car.

Edited 11 October, 20223 yr by kodiaqsportline
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You won’t get if you don’t ask, but if it reduces the finance company profit, I can’t see why they would.

 

But remember PCPs are flexible, they are not like leases / hire  (PCH).  I suggest you get a rough idea of value (try couple of car selling sites like Motorway etc) then if it is more than you owe settle the PCP.

 

You can always take out a bank loan to cover the balance, and the car is yours whatever the mileage.   Beware of trying to get new PCPs as interest rate on many has rocketed up to nearer 6.9% which is likely to be lot higher than a loan.   Don’t even think of adding it to your mortgage (you might still be paying for the car in upto 25 years time, long after you have got rid of it)

 

7 hours ago, kodiaqsportline said:

If you're looking to save money, you could settle your agreement and take out a new PCP on another car.

 

With the massive increases in prices over the last 3 years, and high interest rates, I very much doubt that any similar spec car is going to work out cheaper - even with the hopefully still very strong residuals in the current vehicle.

 

9 hours ago, New11 said:

I bought a car on a 4-year PCP deal  ~3 years ago.

 

At the end of the day - you still need to pay the whole amount back to VWFS. Whether that is through monthly payments or a larger balloon payment, it doesn't really make much difference. If you got them to agree to lower payments now, you'll just owe more in a year at the end of the agreement.

 

So no, unless there is a compelling reason to renegotiate (and I think the difference it would make is minimal anyway), I'd stick and see what happens next year. Having said that... if you are wanting to swap the car at the end of the PCP, you probably need to start looking now in case order times are still an issue (and if you order before the end of the year, you'll beat the usual January price increase, which could be significant given how high inflation is at the moment).

Worth asking, but dont hold your breath for a huge saving. Asked a similar question on my lease car, monthly price would drop, but almost all savings wiped out by an 'admin fee', so didn't bother

 

Dont agree with the above, yes VWFS want their money either way, but if you just hand the car back at the end and dont pay the balloon, they get a lower mileage, more valuable car, so logically monthly payment should reduce and balloon increase.

 

6 minutes ago, Brighty75 said:

but if you just hand the car back

 

If it's worth more than the balloon payment, why would you do that!? The only circumstance in which it's worth handing the car back is if it is worth less than the balloon payment. In this case, with used prices as they are - never mind the lower mileage - doing that would be a really bad choice.

26 minutes ago, Yogi-Bear said:

 

If it's worth more than the balloon payment, why would you do that!? The only circumstance in which it's worth handing the car back is if it is worth less than the balloon payment. In this case, with used prices as they are - never mind the lower mileage - doing that would be a really bad choice.

Of course it is silly to hand back if worth more than amount outstanding,  some of the car buyers pay you same day, therefore can settle balance of PCP.   Only an idiot would hand it back if they could sell it for more, pay off the finance, and pocket the gain (or use the money towards next car).

 

note : I have used term ‘gain’ for clarity as common usage, but it isn’t a money gain as its money you have already spent as part of each months payments, so just recovering over paid amounts.

 

9 hours ago, Yogi-Bear said:

 

With the massive increases in prices over the last 3 years, and high interest rates, I very much doubt that any similar spec car is going to work out cheaper - even with the hopefully still very strong residuals in the current vehicle.

 

Who mentioned anything about similar spec?

 

If you want to reduce your monthly outgoings, getting rid of something that's unnecessary is always a good start. Lower spec, smaller car, more affordable insurance, more mpg - sounds sensible, it's what I'd do.  Only the OP will know the figures he has to work with tho.

Edited 11 October, 20223 yr by kodiaqsportline

22 hours ago, New11 said:

I bought a car on a 4-year PCP deal  ~3 years ago. At the time it was pre-covid and big plans but after Covid turned up our anual mileage dropped drastically.

Is it possible on PCP to reduce the annual mileage limit (and hopefully the monthly payment) ?

If so does it make any sense to ask for it (from financial point of view) ?

I asked VWFS the same question regarding my current PCH car.

 

Yes you can (I could) reduce your monthly payment.

 

There is a £60 fee for the pleasure.

 

But, the change in annual mileage must be at least 5,000 miles. And I think maybe multiples of.

 

So it wasn’t a feasible option for me.

 

Next time I’ll go for a lower annual allowance and simply pay the excess should I go over.