PCP - Handing the car back 1/2 way through the term

[Carl_Spackler]

When I bought my Saab 93 last year I bought it on a PCP with a balloon payment at the end of the 4 year term, now at the time of signing the agreement the salesman told me I could hand the car back 1/2 way through the term, I think he called it seconds and thirds.

Now not being a lazy git, I've googled this and been on money saving expert etc to get more info, I'm confused about the legality of what I'm doing, apparently you are canceling the agreement by handing the car back, so is this saying you can't pay? or are you quite within your rights?

Also I was tied to 12,000 miles and have done a bit more (about 1.5k in a year, but could fix this by using the wifes car for a while), apparently if you hand back the car and cancel the agreement you don't have to pay an excess mileage charge?

Anybody had any experiance with this/done it?

[sinizter]

I think you dont get any money back if you hand the car in early. So you just hand them the keys and walk away. If you did finish the term, if you had any equity in the car, you could have used it towards the next car.

The way the salesman explained it to me was rather than equity, you would keep whatever payments you did not make, so it would work out more or less the same for you, depending on when you terminated the agreement with some time frames better than others.

[G_T]

Woman I work with did it.

She'd paid just over half the payments and just gave them the keys and the car back. No more payments but no more car. Reason being the remaining payments outweighed the value of the car.

Seems pointless she bought the car to me, but there you go.

[a_bloke]

Its not half way through the term - its when you've paid more than half of the total cost of the transaction.

Say you bought a car for £25K and put down £2K of a deposit. Say your payments were £400 a month with a £11K baloon after 4 years.

Total cost would be £11K + £2K + (48*400) = £11K + £2K + £19.2K = £32.2K

For half the amount to be paid you would need to pay £16.1K. Divide that by £400 (ie, your monthly payment) and you'd have to have made 41 payments before you've broken the 50% threshold.

Hope thats clear.

[Carl_Spackler]

I wasn't realy looking for any money back, it's just given the way used car prices have gone since I bought it along with the unceranty about Saab's future and the excess milage thing it seems to good to be true, you just walk in to the dealer and say there is your car back, bye.

[a_bloke]

Carl_Spackler said:

I think he called it seconds and thirds.

apparently if you hand back the car and cancel the agreement you don't have to pay an excess mileage charge?

Anybody had any experiance with this/done it?

Your rights change after you've made 1/3 of the total transaction costs and 1/2.

Also as far as i know, yes, you arent liable for excess mileage if you do this. I had an audi salesman tell me 'not to worry' about excess mileage because of this.

[a_bloke]

Carl_Spackler said:

I wasn't realy looking for any money back, it's just given the way used car prices have gone since I bought it along with the unceranty about Saab's future and the excess milage thing it seems to good to be true, you just walk in to the dealer and say there is your car back, bye.

You dont hand the car back to the dealer, you hand it back to the finance company.

I did it a while ago on a Rover and then got a letter from the finance company saying not to pass them by when i was looking for finance again as i was a 'valued' customer.

[Carl_Spackler]

a_bloke said:

Its not half way through the term - its when you've paid more than half of the total cost of the transaction.

Say you bought a car for £25K and put down £2K of a deposit. Say your payments were £400 a month with a £11K baloon after 4 years.

Total cost would be £11K + £2K + (48*400) = £11K + £2K + £19.2K = £32.2K

For half the amount to be paid you would need to pay £16.1K. Divide that by £400 (ie, your monthly payment) and you'd have to have made 41 payments before you've broken the 50% threshold.

Hope thats clear.

Yes thanks, a bit longer to go then.

[escargot]

a_bloke said:

Its not half way through the term - its when you've paid more than half of the total cost of the transaction.

Say you bought a car for £25K and put down £2K of a deposit. Say your payments were £400 a month with a £11K baloon after 4 years.

Total cost would be £11K + £2K + (48*400) = £11K + £2K + £19.2K = £32.2K

For half the amount to be paid you would need to pay £16.1K. Divide that by £400 (ie, your monthly payment) and you'd have to have made 41 payments before you've broken the 50% threshold.

Hope thats clear.

This man speaks the truth.

[ray951]

a_bloke said:

Carl_Spackler said:

I think he called it seconds and thirds.

apparently if you hand back the car and cancel the agreement you don't have to pay an excess mileage charge?

Anybody had any experiance with this/done it?

Your rights change after you've made 1/3 of the total transaction costs and 1/2.

Also as far as i know, yes, you arent liable for excess mileage if you do this. I had an audi salesman tell me 'not to worry' about excess mileage because of this.

Excess milage is a bit of a grey area as the legal wording on the agreement states that no more is payable if you hand the car back early but some finance companies will send you a bill for excess mileage. If this happens then you could refuse to pay it stating the wording from the document but of course they may not agree and take you to court. Although I don't beleieve that would happen as it would set an interesting precedent, if the judge agreed with you, as the early termination rights could be used to get out of all charges at the end of an agreement.

[tim2100]

ray951 said:

a_bloke said:

Carl_Spackler said:

I think he called it seconds and thirds.

apparently if you hand back the car and cancel the agreement you don't have to pay an excess mileage charge?

Anybody had any experiance with this/done it?

Your rights change after you've made 1/3 of the total transaction costs and 1/2.

Also as far as i know, yes, you arent liable for excess mileage if you do this. I had an audi salesman tell me 'not to worry' about excess mileage because of this.

Excess milage is a bit of a grey area as the legal wording on the agreement states that no more is payable if you hand the car back early but some finance companies will send you a bill for excess mileage. If this happens then you could refuse to pay it stating the wording from the document but of course they may not agree and take you to court. Although I don't beleieve that would happen as it would set an interesting precedent, if the judge agreed with you, as the early termination rights could be used to get out of all charges at the end of an agreement.

When I worked at a large lease company a few years ago they certainly did charge for excess miles on early termination vehicles.

Your policy will state the conditions you can hand the car back.

[Carl_Spackler]

tim2100 said:

ray951 said:

a_bloke said:

Carl_Spackler said:

I think he called it seconds and thirds.

apparently if you hand back the car and cancel the agreement you don't have to pay an excess mileage charge?

Anybody had any experiance with this/done it?

Your rights change after you've made 1/3 of the total transaction costs and 1/2.

Also as far as i know, yes, you arent liable for excess mileage if you do this. I had an audi salesman tell me 'not to worry' about excess mileage because of this.

Excess milage is a bit of a grey area as the legal wording on the agreement states that no more is payable if you hand the car back early but some finance companies will send you a bill for excess mileage. If this happens then you could refuse to pay it stating the wording from the document but of course they may not agree and take you to court. Although I don't beleieve that would happen as it would set an interesting precedent, if the judge agreed with you, as the early termination rights could be used to get out of all charges at the end of an agreement.

When I worked at a large lease company a few years ago they certainly did charge for excess miles on early termination vehicles.

Your policy will state the conditions you can hand the car back.

Thanks everyone for your help, I'll have a look at the conditions when I get home tonight.

[runboy]

I've just handed my Skoda back to VW finance that was on a PCP. Agree with some of the above - you can not terminate the agreement until half of the total loan has been paid, so this will be over half of the physical monthly payments (might be 21 months on a 36 month PCP for example). You sign a form to say you want to cancel, they send you some bumph on what they expect the condition of the car to be and what so on (service book, 2 keys, decent tyres, MOT if applicable etc) then you get a call from a local agent to arrange a time for him to come and pick up the car. He turns up, inspects the car, gives you a bill for any damage over and above acceptable and off the car goes (to auction). My car was in general good condition, a few stone chips, one kerbed alloy but that was it so I didn't have to pay any extra.

[mattviatura]

Not read the whole thread but whoever said it is half the total cost of the agreement is right. Too man dealership sales people don't understand what they are selling and tell you what you want to hear.

If there's a contractd excess mileage yoou'll have to pay it. Imagine you'd taken the car on a two year 10000 per annum contract and handed it back after twelve months with 100k on the clock - what do you honestly think would happen?

[Scrumper]

If you are doing a VT are you able to 'top up' to reach the 50% paid amount if you are under it at the time? Say 50% paid is £10K, but you've paid £9K, can you give them the car and a cheque for £1,000?

[Jordan-C1994]

I am in a similar position but wondered if anyone knows if the balloon payment should be included in this?

I currently have a new fiesta which I need to get rid of ASAP due to a new job which provides a fully expensed work car... I could also do with the extra money as the job also means relocation!

Ford Credit said that I haven't paid over half of the contract yet, I then replied- 'how can that be if i have had the car longer than 18 months on a 36 month contract?' and they said its because the balloon payment at the end of the contract is also added on to this total payable figure.

Now, on the PCP deal I have I can just hand the car back after three years and walk away- so I never had the intention of paying a balloon payment at any point anyway.

Ford made me aware of halfs and thirds when I bough the car but I thought it was of the contracts duration.

Is what Ford is telling me correct or are they just trying to get more money out of me?

Thanks!

[sjg]

My understanding is that you can VT if you've paid more than 50% of the total amount - on PCPs this would include the "final payment" / GMFV.

[HTP99]

sjg said:

My understanding is that you can VT if you've paid more than 50% of the total amount - on PCPs this would include the "final payment" / GMFV.

50% of the total amount payable, not amount borrowed and yes it does include the balloon/MFV/GFV/final payment or whatever you want to call it.

Have a look on your finance paperwork, all the figures will be in there.

[Sheepshanks]

Jordan-C1994 said:

Ford made me aware of halfs and thirds when I bough the car but I thought it was of the contracts duration.

Is what Ford is telling me correct or are they just trying to get more money out of me?

It's correct. You were probably miss-sold the deal though, so you should make a complaint against the dealership (not Ford, unless it's one of the dealers they own).

[HTP99]

Sheepshanks said:

Jordan-C1994 said:

Ford made me aware of halfs and thirds when I bough the car but I thought it was of the contracts duration.

Is what Ford is telling me correct or are they just trying to get more money out of me?

It's correct. You were probably miss-sold the deal though, so you should make a complaint against the dealership (not Ford, unless it's one of the dealers they own).

He said, she said; if it isn't in writing then it isn't going anywhere