PCP & Voulantry Termination

[pjduffill]

You may be aware of the option to voulantry terminate your PCP deal once 50% of the credit has been paid off..
My example: BMW after 30 months Residual Value =£22,000 settlement =£27,000 consequently saved £5,000 to give it back. Plus if i went in to BMW i would get a discount on a new car.

I would imagine a lot of cars will be going back due to current circumstances.

i have taken the option to hand it back under the voulantry termination clause. This has made way for my Ocean week 43 build.

 

[Ch1pbutty]

//
What to watch out for when ending PCP or HP early
If you use voluntary termination to end your agreement early, it’ll show up on your credit file. They’ll be no record of why the agreement was ended. It will make little or no difference to your overall credit score, so is a much better route to take than missing payments, which could have large impacts on your credit file, making it difficult to borrow money in the future.

Using voluntary termination frequently to return cars early can look bad on your credit file though. This is because it costs finance companies more to end agreements early.

Because companies lose money when you end agreements early, it means they’re often not very supportive when you want to get voluntary termination. They might want to make the process last as long as possible.

To avoid this, send them a letter explaining you’re applying for voluntary termination. You don’t need to sign documents or fill out termination packs. Citizens Adviceprovides a template letter for this.

You may also find the finance company wants to give you a penalty based on the mileage of your vehicle. This will be because you’ve done more miles than they expected. Legally they cannot charge you a penalty for this if you’ve taken reasonable care of the car. For more information read The Car Expert page.

Finally, always keep up the payments before applying for voluntary termination. If you’ve missed a payment, the finance company has more rights, and your credit file will reflect missed payments.
//

 

[pjduffill]

As per third scentence paragraph one. It will make little or no difference to your overall credit score,

 

[Saesneg Shaun]

You may be aware of the option to voulantry terminate your PCP deal once 50% of the credit has been paid off..
My example: BMW after 30 months Residual Value =£22,000 settlement =£27,000 consequently saved £5,000 to give it back. Plus if i went in to BMW i would get a discount on a new car.

I would imagine a lot of cars will be going back due to current circumstances.

i have taken the option to hand it back under the voulantry termination clause. This has made way for my Ocean week 43 build.

Sound like a no-brainer to me. The review of the consumer credit act in 2015 was to give some control back to the consumer which is what you are doing.

 

[ReinholdMessner]

"They'll be no record..."

 

[SimonK]

I was going to VT our MINI JCW Convertible next summer at it's 50% point as it's a pointless luxury for us now, and the pandemic has prompted us to re-prioritise what we want in life.

Decided to try and get rid of it earlier, this week. I've actually managed to sell it to a main dealer group. We agreed a price over the phone, they came and looked at it and didn't knock me down on price. So i've managed to get rid of it 9-10 months earlier than planned, saving £4000 in monthly payments, and I get a little bit of cash back.

I'd definitely try and sell a car first, before going down the VT route.

 

[pjduffill]

I guess it depends on the residual position, generally at 50% paid point - 30-36 months the residuals are not so good!

 

[SimonK]

I guess it depends on the residual position, generally at 50% paid point - 30-36 months the residuals are not so good!

I think I’ve been lucky. CAP Clean values for our MINI are £2k higher this month than they were in May

 

[Richard Teale]

Perhaps counter intuitively there is a shortage of used vehicle stock at the moment as people are generally more reluctant to enter into long term financial commitments with all the uncertainty around COVID and Brexit and are instead opting to hang onto car for longer.

The result, prices for used vehicles (and therefore the amount that car buyers are offering) are up.

So agree with previous post - explore sales route first.


Sent from my iPhone using Tapatalk

 

[pjduffill]

Agreed at the “must have” end of the market, the nice to have (BMW /Audi top end) may be a bit different

 

[Jontymo]

No problem with it, I VT'd my Beemer for our Cali last year, BMW couldn't have been more helpful.
On the day the Beemer went back, a nice guy turned up for the car and inspected it for about 20 minutes agreed on any damage(scuffing to 2 wheels) and drove it away.

 

[pjduffill]

Yup, that’s what BMW told me would happen ( British Car Auctions) BMW sent me a list about wear and tear also costs for any damaged (scratches / scuffed wheels) etc. My call to BMW was taken as a perfectly normal thing to do!

 

[SimonK]

Agreed at the “must have” end of the market, the nice to have (BMW /Audi top end) may be a bit different

A metallic silver MINI JCW Convertible without NAV is most definitely not 'must have'. It's a bit of an odd car.

It's being collected this week, 10 months before I could go down the VT route. Happy days. It's definitely worth trying to sell first.

 

[pjduffill]

Simon K, you are possibly quite right at the 10 month before the VT point as you have not shed as much equity and you are selling well before you could have got to the natural VT point (50% of finance paid) My point is "AT" the VT point and beyond at approx 30 - 36 months in to a 48 month PCP the equity is well shed.
My motor is a BMW 440i convertible at £56,000 OTR 28 months ago, market value £22,000 - £23,500. Settlement value £27,000 so if i settled then sold I would be 5K worse off.

 

[SimonK]

Simon K, you are possibly quite right at the 10 month before the VT point as you have not shed as much equity and you are selling well before you could have got to the natural VT point (50% of finance paid) My point is "AT" the VT point and beyond at approx 30 - 36 months in to a 48 month PCP the equity is well shed.
My motor is a BMW 440i convertible at £56,000 OTR 28 months ago, market value £22,000 - £23,500. Settlement value £27,000 so if i settled then sold I would be 5K worse off.

I'm on month 27 of a 48 month deal.
Settlement £19400
Valuation £20000

Back in May, the settlement was £21500 and it was valued at £17850.

I've probably just got lucky. In November, the value on CAP drops to sub £17k, so i'd be back in lots of negative equity over the winter, until the warm weather comes back

 

[Jenny H]

On the general subject of PCP does anybody know if its possible to cancel the PCP agreement but still buy the vehicle from VW? My reason for asking is the announcement the Bank of England are considering dropping rates to 0% & therefore it figures that a much cheaper car loan would be better given all the likely delays with orders anyway!

 

[pjduffill]

If you "Settle" the PCP agreement early(Settle not VTA) you are settling the outstanding finance, you get an early settlement figure (rebate of interest) the vehicle is then yours. You can ask the finance company for the settlement figure over the phone. When you sort a PCP generally you are only financing part of the overall value of the vehicle and pay a balloon payment at the end or walk away. If you finance it with a bank loan you will have to finance the whole vehicle. This makes sense if you have the wherewithal to finance as the money in the bank provides the square route of nothing V a PCP at 2.9%pa?

 

[Jenny H]

If you "Settle" the PCP agreement early(Settle not VTA) you are settling the outstanding finance, you get an early settlement figure (rebate of interest) the vehicle is then yours. You can ask the finance company for the settlement figure over the phone. When you sort a PCP generally you are only financing part of the overall value of the vehicle and pay a balloon payment at the end or walk away. If you finance it with a bank loan you will have to finance the whole vehicle. This makes sense if you have the wherewithal to finance as the money in the bank provides the square route of nothing V a PCP at 2.9%pa?

My PCP was 3.6% & current car loan offers by 1st Direct are 3.3% but what with the delay on orders it will be interesting to see where the loan rate goes & possibly divert onto that option.

 

[Amonkeyhint]

//
What to watch out for when ending PCP or HP early
If you use voluntary termination to end your agreement early, it’ll show up on your credit file. They’ll be no record of why the agreement was ended. It will make little or no difference to your overall credit score, so is a much better route to take than missing payments, which could have large impacts on your credit file, making it difficult to borrow money in the future.

Using voluntary termination frequently to return cars early can look bad on your credit file though. This is because it costs finance companies more to end agreements early.

Because companies lose money when you end agreements early, it means they’re often not very supportive when you want to get voluntary termination. They might want to make the process last as long as possible.

To avoid this, send them a letter explaining you’re applying for voluntary termination. You don’t need to sign documents or fill out termination packs. Citizens Adviceprovides a template letter for this.

You may also find the finance company wants to give you a penalty based on the mileage of your vehicle. This will be because you’ve done more miles than they expected. Legally they cannot charge you a penalty for this if you’ve taken reasonable care of the car. For more information read The Car Expert page.

Finally, always keep up the payments before applying for voluntary termination. If you’ve missed a payment, the finance company has more rights, and your credit file will reflect missed payments.
//

I monitored my clearscore account during my VT with JLR when I bought my Cali. There was no record of the termination on my credit file.

To be honest, the process with JLR was very slick, sent me the paperwork, I completed it and dropped it off at the auction.

 

[westfalia]

VT
VTA?

I need a code cracker.

 

[pjduffill]

Should be VT (apologies) VT =voulantry termination

 

[dripster]

I bought a second hand car a while back through a VW dealer. I could pay for the car cash (I'd just sold my old car and it was cheap!) but he offered me the chance to buy it through a PCP deal so I got the cheap pre-paid servicing offer and said I could pay it off after a couple of months and keep the servicing deal. They were clearly getting a kick back for selling the deal, and they didn't care whether we stuck with it or not. So I gave it a go.

I never checked if it affected my credit score but I didn't notice any adverse impact.

I've just paid off six months early my new Tiguan to swap it for a second-hand Cali Beach. No idea if that's had another impact on my score!

Not sure this is helpful, but if you want to pay it off and it works for you I'd go for it, with the disclaimer that I'm not an expert and I probably wouldn't take my advice!!!

 

[Saesneg Shaun]

If you exercise your right to withdraw (not settle) from PCP and pay the finance company off then its as if the agreement never existed leaving no impact on your credit score. This must be done within 14 days of signing the finance paperwork (usually when you take delivery)

 

[dripster]

If you exercise your right to withdraw (not settle) from PCP and pay the finance company off then its as if the agreement never existed leaving no impact on your credit score. This must be done within 14 days of signing the finance paperwork (usually when you take delivery)

Mine wasn't within 14 days, so that didn't apply in my case.

 

[pjduffill]

Done the deed today. Phoned BMW to request Voluntary Termination.
£27,000 to settle and buy the car worth £21,000 or £501 to take it away - No brainer for me.
Re the credit reference side, BMW stated that VT leaves a neutral footprint (not negative or positive) showing "credit paid off early" on the credit file. To put this in to context, when you ask for an insurance renewal quote or at renewal (if you pay monthly) they put the same type of footprint on your credit file!

Cali being built at the minute, may get mid December!!!