Buying a car on PCP / Bubble payments

[theboyfold]

If I were to buy a car on a PCP or with a bubble payment at the end am I allowed to sell the car before the end of the deal and pay the rest of the finance that I owe off before the end of the deal?

Just looking into a new car, but don't want to put down a large deposit so wondering if this is the way to go knowing that I will be selling it before the end of the agreement.

[VXRTOM]

It depends, there could be an early settlement charge as you are not completing the agreed term. If your looking at a very small deposit, you could end up in negative equity quite easily depending on make / model etc. Oh and it's balloon payment not bubble

[theboyfold]

That's why I'm not getting any results in Google for bubble payments!!

Looking at a car worth £30k a £5k deposit would leave about £6k to clear at the end of the term over 4 years I think. The payments sound tempting, but I hate the idea of having that deposit hanging there.

I was just curious if it was possible to get out of the contract.

[P-Jay]

Yes on both - a HP with a final 'balloon' payment is usually far better to terminate early than a PCP.

Balloon, Bubble, CFBP, CBP I've heard them all, there's no offical term they're just payments on 'non-standard' HP's - they're a happy by product of bespoke stuff we write for business like seasons payments etc.

RV, or guaranteed final values etc are different.

[va1o]

Is the GFV on a PCP not the same thing as the final/ bubble payment?

[P-Jay]

va1o said:

Is the GFV on a PCP not the same thing as the final/ bubble payment?

In short no. It's a bit of a common misconception that they are, there's nothing guaranteed about a balloon.

See your friendly Car Finance Broker for more info

Edited by P-Jay on Monday 16th November 17:53

[va1o]

P-Jay said:

va1o said:

Is the GFV on a PCP not the same thing as the final/ bubble payment?

In short no. It's a bit of a common misconception that they are, there's nothing guaranteed about a balloon.

Whats the difference then?

I'd always thought the GFV figure was set at the start of the agreement, and then at the end you either pay the baloon/ GFV to own the car or give it back,

[Dr Jekyll]

va1o said:

P-Jay said:

va1o said:

Is the GFV on a PCP not the same thing as the final/ bubble payment?

In short no. It's a bit of a common misconception that they are, there's nothing guaranteed about a balloon.

Whats the difference then?

I'd always thought the GFV figure was set at the start of the agreement, and then at the end you either pay the baloon/ GFV to own the car or give it back,

With a balloon you have to pay it, no option of giving the car back, and if the car is worth less than the balloon it's your problem.

[P-Jay]

GFV which are only (AFAIK) available via PCP gurantees the value. So you ether buy it or give it back.

Balloons/bubbles/deferred payment whatever the particular bank/broker calls it isn't guaranteed. It's just a normal payment. So if you take a 3 year deal with a balloon they'll take the balloon via DD in month 37, the risk is with you.

They're just a non-standard repayments like a farmer that might make 2 huge payments a year when he gets paid and tidy interest only ones for the other 10 months, or holiday companies that pay more in summer etc.

It's your responsibility to cover it.

If you tell your funder that you do 6k miles a year when you do 30 or trash it, it's a recipe for a nasty neg-equity shock at the end.

[va1o]

Dr Jekyll said:

va1o said:

P-Jay said:

va1o said:

Is the GFV on a PCP not the same thing as the final/ bubble payment?

In short no. It's a bit of a common misconception that they are, there's nothing guaranteed about a balloon.

Whats the difference then?

I'd always thought the GFV figure was set at the start of the agreement, and then at the end you either pay the baloon/ GFV to own the car or give it back,

With a balloon you have to pay it, no option of giving the car back, and if the car is worth less than the balloon it's your problem.

Surely if 'you have to pay it' then its not technically a PCP deal?

[theboyfold]

Essentially what you are doing (in some cases) is moving the deposit to the end of the deal?

[va1o]

Are we all talking about the same thing here?

My understand was all PCP deals have a deposit you pay at the beginning, X monthly payments, then an optional final payment (GFV) to keep the car if you want it.

I've never heard of deffering the deposit until the end or not been allowed to hand the car back.

[theboyfold]

I'm not talking about a PCP, more a deal where there is a large payment at the end which you HAVE to pay off...

Or am I making that up? :S

[va1o]

theboyfold said:

I'm not talking about a PCP, more a deal where there is a large payment at the end which you HAVE to pay off...

Or am I making that up? :S

If your not talking about a PCP, why is PCP in the thread title?

[theboyfold]

va1o said:

theboyfold said:

I'm not talking about a PCP, more a deal where there is a large payment at the end which you HAVE to pay off...

Or am I making that up? :S

If your not talking about a PCP, why is PCP in the thread title?

Because I was unsure what the terms meant at the start of the thread

[P-Jay]

As a rule:

PCP's have GFV's

everything else - unless expressly written into the agreement does NOT. Despite what a Car salesman tells you - "mate, of it's not worth £x! WE'LL buy it off you"

They won't.