PCP?

[xs2man]

You are thinking of Voluntary Termination I think? It's not halfway through the term, but once you have paid off half the loan amount. Which is usually into year 3 on a 4 year term.

You can, however, sell or trade in the car at any time. So long as the finance gets cleared. If you do it much before the 2 year mark, you may find you have negative equity in the car. So you will have to pay an amount to cover the difference between the cars worth and the loan amount outstanding.

 

[Traffic_Warden]

I have PCP and have the option to re-finance the final payment or pay it off in full at the end of the term and keep the car, or ofcourse return the car to the dealer in return for £X amount off a new car of my choice. Which I won't be doing. I'll be paying off the remaining amount in full and then I still have a car worth a lot of money to do with as I please.

Chopping/changing deals half way through the term is the worst thing you can do and the best thing the dealer wants, they make more money and you loose out!

 

[iaind]

How easy is it to get out of a PCP? I know I can return/trade in my car after 2 years of my 4 year PCP deal but is it possible to do it sooner? Although I chose the right car for my financial situation at the time i'm self employed and things are only looking up + I regret not getting something a bit more powerful although the car itself is very nice.

Do yourself a favour and make a spreadsheet, use forecasted depreciation figures (plenty of sites have this, use existing second hand prices too) and plot it month on month against your settlement figure. Bearing in mind you'll not have to pay all the interest so this can be tricky to work out precisely but you should get a rough idea. Plot the 2 lines on a graph - if the car value line is below the settlement figure then for that period you'll struggle to get out of it. For a new car you'll spend the first year or so in negative equity (depending on the deposit), on a nearly new you can get away with never being in negative equity at all if you chose wisely (I managed this myself)

In terms of how to get out, no you can't just walk away after 2 years - voluntary termination is 50% of the value borrowed including the balloon. The nature of pcp means you're not paying 50% in half the time so that point is generally close to the end of the term.

If the car is worth more than the settlement you can just sell it. The process of doing so is a bit tricky - you can't sell it without the finance companies approval and a lot of people won't buy a car with outstanding finance. I sold mine back to the dealer who supplied it, they settled the finance then notified the DVLA - and gave me a cheque for pretty much the same amount as the deposit I put in.

If you're worried about getting out easily, don't buy new and get something that has already suffered a big chunk of depreciation. Put a moderate but not huge deposit in and you should be able to get out without too much hassle. If you buy new with a small deposit, you will end up having to stump up thousands of pounds to make up the balance - that's on top of the deposit you paid too!

 

[paradigm]

It also depends on how much was put down "up front", and if you have been overpaying when possible. I'm well past half-way financially, yet was under half-way (in terms of time elapsed) through the agreement when this point occurred.

I'm also in a position where the car has a healthy amount of equity in it, rather than in most cases, negative equity for the first 2/3rds of the agreement.

 

[RSR]

I have PCP and have the option to re-finance the final payment or pay it off in full at the end of the term and keep the car, or ofcourse return the car to the dealer in return for £X amount off a new car of my choice. Which I won't be doing. I'll be paying off the remaining amount in full and then I still have a car worth a lot of money to do with as I please.!

Mines pretty much the same as this. However, I did put 50% down as a deposit.

 

[hlxbravo]

The wife and I have never entertained the PCP idea, however......

We have just (collect this Friday) purchased a one year old with 6k on clock, Audi A4 S line from the main dealer on PCP, originally it was going to be cash. The reason being at the moment on these plans, maybe only with a used vehicle, not too sure, Audi are doing, iirc up to £1500 payment, in my case I received £1000 off the screen price. I have to pay the plan for a minimum of 7 months, at a cost of £76.00 pcm, where then I can pay off the balance in one lump sum, with no penalties. It ultimately saves me £400 off the screen price, even after the 7 months of interest......and I also get two free services, which could be worth another £600 - £700.

 

[Abyss]

The wife and I have never entertained the PCP idea, however......

We have just (collect this Friday) purchased a one year old with 6k on clock, Audi A4 S line from the main dealer on PCP, originally it was going to be cash. The reason being at the moment on these plans, maybe only with a used vehicle, not too sure, Audi are doing, iirc up to £1500 payment, in my case I received £1000 off the screen price. I have to pay the plan for a minimum of 7 months, at a cost of £76.00 pcm, where then I can pay off the balance in one lump sum, with no penalties. It ultimately saves me £400 off the screen price, even after the 7 months of interest......and I also get two free services, which could be worth another £600 - £700.

I recommend you take a step back for a minute, it sounds to me like a salesman has done a great job of making you think you are going with the best option for you, when it is actually the best option for them.

Why not just exercise your right to withdraw within 14 days and pay zero interest and save the full £1000 plus get 2 free services? Seems mad to pay 7 months of finance and £600 in interest when you can just withdraw within 14 days and keep the incentives. The only reason the dealer will want you to pay 7 months worth is that they likely lose out on their bonus if you withdraw.

I did exactly this when I purchased my car and there are plenty of examples online:
http://www.thecarexpert.co.uk/forums/topic/pcp/
http://www.ttforum.co.uk/forum/viewtopic.php?f=19&t=614337

The free services is also likely their service plan which is 1 major and 1 oil change service for £299, so in total you can potentially "save" £1299

 

[XeNoN89]

How easy is it to get out of a PCP? I know I can return/trade in my car after 2 years of my 4 year PCP deal but is it possible to do it sooner? Although I chose the right car for my financial situation at the time i'm self employed and things are only looking up + I regret not getting something a bit more powerful although the car itself is very nice.

Pretty easy. I got rid of my TT which was just over a year old and on PCP. I got the quote from Audi Finance for the cost to settle the finance, then traded it in with WeBuyAnyCar who offered me more than Audi needed so I actually came out of it with some cash. They paid Audi directly and put the extra cash straight into my bank.