Discussion
Hi Guys
Ive got a car on PCP, I was looking at getting a new one but I can’t because ive got too much negative equity!
Basically I had my first car on pcp, went to the dealership and asked if I was able to get a new one, they said ‘yes of course you can’ and then gave me the monthly payments and away we went.
Now, when ive been asking new dealerships, they’ve told me im in too much negative equity, as my first cars negative equity has been passed onto my current car! I was not told this at the time, as if I was told then I would have not had my current car!
Ive been told that I can just hand my current car back in, no strings attached just hand it in and walk away once around 50% has been paid off. Is this true?
Ive got roughly £9900 on my car, its worth £6000. What would happen to the other £3900? Would that just get wiped off???
Thanks for your help
Ive got a car on PCP, I was looking at getting a new one but I can’t because ive got too much negative equity!
Basically I had my first car on pcp, went to the dealership and asked if I was able to get a new one, they said ‘yes of course you can’ and then gave me the monthly payments and away we went.
Now, when ive been asking new dealerships, they’ve told me im in too much negative equity, as my first cars negative equity has been passed onto my current car! I was not told this at the time, as if I was told then I would have not had my current car!
Ive been told that I can just hand my current car back in, no strings attached just hand it in and walk away once around 50% has been paid off. Is this true?
Ive got roughly £9900 on my car, its worth £6000. What would happen to the other £3900? Would that just get wiped off???
Thanks for your help
No, you will owe them the delta between their purchase price and the value to clear any outstanding finance.
Seriously, how can people not be aware of the obligations they take on, you truly believe a company will let you walk away owing £3,900?
This may be negated if you buy / hire / lease or whatever a new car, which seems to have happened to you already.
Seriously, how can people not be aware of the obligations they take on, you truly believe a company will let you walk away owing £3,900?
This may be negated if you buy / hire / lease or whatever a new car, which seems to have happened to you already.
If you were to trade it in just now, you'd need to pay the negative between the offer and the finance settlement. The garage is telling you this must be paid cash, as you cannot carry this negative onto another new car, again.
Once you reach 50% of the total price to be paid (normally 3 years into a 4 year PCP) you can hand the car back to the finance company, with nothing more to pay(other than damage and excess mileage pro-rata).
Once you reach 50% of the total price to be paid (normally 3 years into a 4 year PCP) you can hand the car back to the finance company, with nothing more to pay(other than damage and excess mileage pro-rata).
Jonno02 said:
Once you reach 50% of the total price to be paid (normally 3 years into a 4 year PCP) you can hand the car back to the finance company, with nothing more to pay(other than damage and excess mileage pro-rata).
It was VW that told me that I could hand the car back to Fiat in roughly June time, but even then their will be negative equity on the car as im only paying £205 a month. I really regret getting pcp now Looozzz said:
Ive been told that I can just hand my current car back in, no strings attached just hand it in and walk away once around 50% has been paid off. Is this true?
Yes. It's 50% of the total amount payable. You need to dig out the agreement (or get a copy of it) so see what the figure is. It will all be detailed in there.The snag usually is that you don't hit this figure until very near the end of the agreement's term.
It's been a while since I did a PCP as in my opinion it's one of the worst ways of getting into a new car unless you are very shrewd at cutting a deal. I'm sure to voluntarily terminate a car on PCP you need to have paid 50% of the full loan amount, i'm sure that includes the balloon so effectively 50% of the total value. That is usually around 36 months into a 48 month deal or 26 months into a 36 month deal. It varies depending on rate and individual deal.
nunpuncher said:
It's been a while since I did a PCP as in my opinion it's one of the worst ways of getting into a new car unless you are very shrewd at cutting a deal. I'm sure to voluntarily terminate a car on PCP you need to have paid 50% of the full loan amount, i'm sure that includes the balloon so effectively 50% of the total value. That is usually around 36 months into a 48 month deal or 26 months into a 36 month deal. It varies depending on rate and individual deal.
I'd imagine that most people aren't - but they like the sound of a lower monthly payment than a traditional HP agreement.DuraAce said:
Trexthedinosaur said:
Seriously, how can people not be aware of the obligations they take on, you truly believe a company will let you walk away owing £3,900?
Scary stuff isn't it? Will PCP become the new PPI with regards to misselling claims?!
How do so many people drop the ball?
Dealers usually make things feel rushed or appear to undermine the importance of the documents you're signing, so you don't end up reading it.
Looozzz said:
Aah, if I rang the finance company would they give me this information? Or would they try to avoid it, as obviously they wouldn’t want me to hand the car back
Why would they not, you can ask for a settlement/amount owed figure at any time.You really seem to have gone into this agreement with your eyes shut, a lesson maybe for your next purchase.
Looozzz said:
It was VW that told me that I could hand the car back to Fiat in roughly June time, but even then their will be negative equity on the car as im only paying £205 a month. I really regret getting pcp now
It's law. You can hand back the car at 50% of total payment. Doesn't matter what the car is worth. That's a gamble finance companies take.Did you pay a deposit on this car? I don't think it's possible to roll negative equity into a manufacturer PCP so I suspect the deposit covered the negative in your old deal and the PCP is effectively a zero-deposit deal. Alternatively there was a big discount available on the car you bought but it was sold to you at list price with the discount used to over-allow a PX value which covered the old finance settlement. Either way it's a lesson to learn - make sure you understand the paperwork you're signing, or take someone with you who does.
Regarding the (frankly massive) negative equity I'd be interested to see how this is possible, you say you bought a Fiat, so I'm guessing it's a Bravo or Punto which holds its value like a cheese sandwich on a hot day. Are you over the agreed mileage too?
In reality, I very much doubt anyone has done anything wrong sou you're left with three options, ride it out and keep the car to the end of the deal, pay the negative equity, or voluntary terminate. Unless the balloon payment is tiny you're going to be 3/4 through the deal before you can VT the car but look at the paperwork, read the small print, do the sums and that may be the best option. The finance company won't help you though, so you'll have to do some research then tell them what you want to do.
To the person saying PCPs are a bad idea, I disagree, and so do most new car buyers. I think in this instance the poster has bought a car with piss-poor residuals (and on paper paid way over the odds for it) and wants out early so however you paid for it in the first place it's going to hurt!
Regarding the (frankly massive) negative equity I'd be interested to see how this is possible, you say you bought a Fiat, so I'm guessing it's a Bravo or Punto which holds its value like a cheese sandwich on a hot day. Are you over the agreed mileage too?
In reality, I very much doubt anyone has done anything wrong sou you're left with three options, ride it out and keep the car to the end of the deal, pay the negative equity, or voluntary terminate. Unless the balloon payment is tiny you're going to be 3/4 through the deal before you can VT the car but look at the paperwork, read the small print, do the sums and that may be the best option. The finance company won't help you though, so you'll have to do some research then tell them what you want to do.
To the person saying PCPs are a bad idea, I disagree, and so do most new car buyers. I think in this instance the poster has bought a car with piss-poor residuals (and on paper paid way over the odds for it) and wants out early so however you paid for it in the first place it's going to hurt!
AFAIK, if you've reached the 50% stage, you can VT and walk away.
Any negative equity then belongs to the finance company. This is different to a voluntary surrender (VS), where you're potentially on the hook.
The 50% will be on your docs, or the finance company should let you know it if you call up.
I would imagine the call centre person probably won't care less, as they will get dozens of calls a day to VT, VS, pay off agreements, refinance or buy another car
Any negative equity then belongs to the finance company. This is different to a voluntary surrender (VS), where you're potentially on the hook.
The 50% will be on your docs, or the finance company should let you know it if you call up.
I would imagine the call centre person probably won't care less, as they will get dozens of calls a day to VT, VS, pay off agreements, refinance or buy another car
I had a fiat 500 which was part of a scrappage scheme deal, so I got £2000 towards it, plus fiat offered me some towards it(cannot remember how much now) so I paid £139 a month and had the car for nearly 2 years, I then went back to the same dealership where they offered me a Fiat 500S twin air turbo at £200 a month.
It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
Looozzz said:
I had a fiat 500 which was part of a scrappage scheme deal, so I got £2000 towards it, plus fiat offered me some towards it(cannot remember how much now) so I paid £139 a month and had the car for nearly 2 years, I then went back to the same dealership where they offered me a Fiat 500S twin air turbo at £200 a month.
It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
How far into the deal are you and how long does it run? On a 500S TwinAir I'm amazed it's possible to have 10k outstanding and a 6k trade in value as it's obviously a couple of years old. Unless it has cosmetic damage, has been smoked in or missed a service something doesn't add up.It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
See what similar cars on AutoTrader go for, and stick it into We Buy Any Car to see if they offer more. With the numbers you quoted I was expecting you to say it was a high spec Bravo - I think the VW dealer maybe didn't want the car and bid bottom book for it, or that was the only way they could hit the monthly payment you wanted on the new car.
Looozzz said:
I had a fiat 500 which was part of a scrappage scheme deal, so I got £2000 towards it, plus fiat offered me some towards it(cannot remember how much now) so I paid £139 a month and had the car for nearly 2 years, I then went back to the same dealership where they offered me a Fiat 500S twin air turbo at £200 a month.
It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
The past deal doesn't matter. This car could be 10k, it could be 100k. Once you have paid 50% of the total amount due, you can VT.It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
FN2TypeR said:
nunpuncher said:
It's been a while since I did a PCP as in my opinion it's one of the worst ways of getting into a new car unless you are very shrewd at cutting a deal. I'm sure to voluntarily terminate a car on PCP you need to have paid 50% of the full loan amount, i'm sure that includes the balloon so effectively 50% of the total value. That is usually around 36 months into a 48 month deal or 26 months into a 36 month deal. It varies depending on rate and individual deal.
I'd imagine that most people aren't - but they like the sound of a lower monthly payment than a traditional HP agreement.I realise this isn't relevant to the OP, though...
Please read the paperwork more carefully next time. It's all in there, and most of it makes sense (any bits that don't - google them or ask on here). And no of course you can't just "write off" thousands of pounds that you owe the finance company. You will remain in negative equity until nearly the end of the PCP period - that's kinda the whole point!
Edited by R E S T E C P on Monday 23 January 15:19
jamiebae said:
Looozzz said:
I had a fiat 500 which was part of a scrappage scheme deal, so I got £2000 towards it, plus fiat offered me some towards it(cannot remember how much now) so I paid £139 a month and had the car for nearly 2 years, I then went back to the same dealership where they offered me a Fiat 500S twin air turbo at £200 a month.
It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
How far into the deal are you and how long does it run? On a 500S TwinAir I'm amazed it's possible to have 10k outstanding and a 6k trade in value as it's obviously a couple of years old. Unless it has cosmetic damage, has been smoked in or missed a service something doesn't add up.It was last year I found out about the negative equity when it was about £5000, I was wondering what my options were now to see how I could try and fix the negative equity.
If I knew that I was going to be in this much negative equity I would have not had the fiat 500S, obviously its too late now and im stuck with it.
Just wanted know my options.
See what similar cars on AutoTrader go for, and stick it into We Buy Any Car to see if they offer more. With the numbers you quoted I was expecting you to say it was a high spec Bravo - I think the VW dealer maybe didn't want the car and bid bottom book for it, or that was the only way they could hit the monthly payment you wanted on the new car.
You need to know the total amount financed.
For example, you say you owe £9900 today, if when you bought your current car you financed £12k (Neg Equity + New Car) then you need to have paid 6k to hand back through the voluntary termination route. But you need to be sure your mileage is on track with your finance agreement and that you don't have any damage over fair wear and tear.
When you bought your new car, the dealership essentially paid the settlement on your old car, and what was left over was added to your new car, chances are there was some discount going on and they just reduced the discount accordingly. You will nearly always have negative equity on a PCP.
Here's an example if you're struggling with PCP. (Bear in mind this is a really basic example, and doesn't factor in other depreciation factors that may cause dips in value, such as going outside warranty period while still paying for the car, or even interest on the amount borrowed)
You buy a car worth 20k with a 3 year minimum value of 10k, your payments are going to be around £275.
Your car won't depreciate £275 a month though, say it depreciates 4k once you buy it then about £150 a month thereafter.
If after a year you want to change your car, it's worth £13900, you've only paid £3,300 so you owe another £2800 to balance out that deal if you're selling it/trading it in.
At 2 years you'll have paid 6600, your car is now worth £12,100, so now you owe £1,300 if you want to sell it/trade it in.
With a PCP, it only makes sense to trade it in if the car you're purchasing has stronger residuals and you're getting a stonking deal that cancels out the negative equity, or have enough of a deposit to pay it off. Otherwise you'll be stuck in the same situation in a few years when you get the new car itch again.
For example, you say you owe £9900 today, if when you bought your current car you financed £12k (Neg Equity + New Car) then you need to have paid 6k to hand back through the voluntary termination route. But you need to be sure your mileage is on track with your finance agreement and that you don't have any damage over fair wear and tear.
When you bought your new car, the dealership essentially paid the settlement on your old car, and what was left over was added to your new car, chances are there was some discount going on and they just reduced the discount accordingly. You will nearly always have negative equity on a PCP.
Here's an example if you're struggling with PCP. (Bear in mind this is a really basic example, and doesn't factor in other depreciation factors that may cause dips in value, such as going outside warranty period while still paying for the car, or even interest on the amount borrowed)
You buy a car worth 20k with a 3 year minimum value of 10k, your payments are going to be around £275.
Your car won't depreciate £275 a month though, say it depreciates 4k once you buy it then about £150 a month thereafter.
If after a year you want to change your car, it's worth £13900, you've only paid £3,300 so you owe another £2800 to balance out that deal if you're selling it/trading it in.
At 2 years you'll have paid 6600, your car is now worth £12,100, so now you owe £1,300 if you want to sell it/trade it in.
With a PCP, it only makes sense to trade it in if the car you're purchasing has stronger residuals and you're getting a stonking deal that cancels out the negative equity, or have enough of a deposit to pay it off. Otherwise you'll be stuck in the same situation in a few years when you get the new car itch again.
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