Ending PCP agreement by paying it off/closing it versus making lump sum payments against it first

Mehdime · Wednesday at 2:54 PM

turnitdown said:
The wording in the contract makes it seem like there is an excess charge of 7.2p per mile, regardless of whether you turn the vehicle back over to VW (they own it the whole time). That is, it says there is that charge, and it's not said to be conditional on turning the vehicle back over.

I guess one could say 'but how would they know it has excess miles if I end up keeping it?', which is fair enough, except they are also allowed to inspect the vehicle whenever they want. If it drove 25,000 miles more than allotted, by not checking the mileage even when people do make the balloon payment, they would be leaving £1800 on the table.

In Ireland, it’s part of the “Return Option” section, that only applies to the case when you want to return the van instead of buying it.

2haw · Wednesday at 3:02 PM

They are not interested in how many miles you do each year. It is only there to estimate a value throughout the period of you owning it, just in case you hand it back and walk away.

johns6809 · Wednesday at 4:39 PM

turnitdown said:
The settlement letter I received from VW doesn't have any breakdown or information about where the settlement number comes from, but eyeballing the math it seems like it must include an interest penalty. The original amount of credit was £53,969. I've had the van 47 days, the settlement letter says I have to pay the settlement amount by Dec 16th, meaning if there is no penalty I should be paying interest on between 47 days and 73 days. At 6.9% that's between £479 and £744. I've made one payment of £476, and the settlement figure is £54,551. If I pay that I'll have paid a total of £55,027 to VWFS, against an initial loan plus interest of between £54,448 (47 days interest) and £54,713 (73 days interest. So somewhere between £314 and £579 interest.

Looking at that, I bet it's calculated this way: 47 days interest because I gave them notice, plus 58 days penalty. The 58 days equals £579.

Weirdly the contract itself doesn't say anything about a prepayment penalty.

I once bought a VW on PCP purely because it came with free servicing if i bought it that way. I then paid it of before the end of the cooling off period with virtually zero penalty other than a fortnights interest. But it retained the free servicing. Is that something you could look at doing or have you had it too long for that?

dspuk · Wednesday at 7:44 PM

turnitdown said:
The wording in the contract makes it seem like there is an excess charge of 7.2p per mile, regardless of whether you turn the vehicle back over to VW (they own it the whole time). That is, it says there is that charge, and it's not said to be conditional on turning the vehicle back over.

I guess one could say 'but how would they know it has excess miles if I end up keeping it?', which is fair enough, except they are also allowed to inspect the vehicle whenever they want. If it drove 25,000 miles more than allotted, by not checking the mileage even when people do make the balloon payment, they would be leaving £1800 on the table.

IMHO you’re making it all much more complicated than it needs to be. Pay the remaining. Take the very small hit. Enjoy the van.

turnitdown · Thursday at 10:16 AM

johns6809 said:
I once bought a VW on PCP purely because it came with free servicing if i bought it that way. I then paid it of before the end of the cooling off period with virtually zero penalty other than a fortnights interest. But it retained the free servicing. Is that something you could look at doing or have you had it too long for that?

I considered doing that except there was a £1500 finance contribution and I thought that if I "withdrew" from the financing arrangement, rather than took the early repayment option, they might claw that back somehow. (It would make sense to, frankly.)