Termination of PCP/ HP contracts

[Kazzy51a]

I have been told that work are cutting my hours and I will be £6k down on salary a year. My husband was made redundant and although he managed to get a new job he's had to take a lower paid job. Between us we are down £9.5k a year. We both have a car on PCP/ HP. My husband got his Ford B Max in Sept 15 and has just over a year to go on the 3 year deal. My VW High Up was taken out last June (2016) so I have 2 years left on mine. We really can't afford the cars now due to the cut in salaries and having all the other bills to pay to survive. Is it possible to just hand them back without any penalties or having to pay very little.i am sure we were both told that we could hand them back but can't find anything mentioned in our paperwork.

[xs2man]

Re: Termination of PCP/ HP contracts

There is the option of Voluntary Termination, however, that requires that you have paid at least 50% of the Total Amount Payable (that should be in your contracts). This amount is the total cost of the car + interest + option to purchase costs. The 50% mark includes your deposit (cash or equity in a part exchange) plus you monthly payments.

So, just to keep things reasonably simple, if the car cost £9k, Interest was £900 and option to purchase was £100, then the total amount payable would be £10k. If you paid £1k in deposit, and 24 payments of £166.67, then you would have paid £5k, so 50% of the Total Amount Payable. And would be able to hand the car back, without any more to pay.

If, however, you were only at month 20, for example, you would still be £666.67 short of the 50% mark. You could still hand the car back, but you would have to pay this £666.67 anyway to get you to the 50% mark. If you are 25 months in, you have already paid over the 50% mark. So it's worth trying to figure out how much you have paid already, and how far you would be off hitting the 50% mark of the total amount payable.

Now, it might be that your car is worth more than what you are due on the contract. You should call your finance providers on these cars and as how much the cost to settle would be. This is how much you need to pay the finance companies. If this is less than the value of your car, it might be worth trying to sell it. The least hassle way would be to a dealer, but this also gives you the least amount of money for it. But trying to sell privately for more money may take some time, and dealing with a lot of dreamers and time wasters. It's worth sticking your car details into the likes of We Buy Any Car. They will give you a price which wont be far off what a dealer will give you. You can add a few hundred quid onto that for a private sale.

You could sell it to WBAC or a similar outfit, or a dealer, and they will pay the finance company direct. If you do this, and the car is worth less than the outstanding balance, then you have to pay the rest off yourself, there and then. You can also do this with a private sale. Be aware that the car will show as having finance against it though, and this may put some buyers off. But if they pay the finance company direct, and the account is fully settled, then that gives everyone the piece of mind everything is above board. The alternative is to look for a loan to cover the outstanding balances on both cars, and pay them both off in full. Make sure the loan has no early repayment charge, so when a car is sold, you pay off the loan, or as much of it as you can with the money from the sales. This might be possible with one of these 0% on purchases credit cards, so there would be no interest to pay. But that requires your credit rating to be good enough to get a card with a large enough limit to do this, and for the finance company to accept payment via credit card.

Your husbands B-Max stands a chance at being worth more than the outstanding balance as it's closer to the end of the term, but it really depends on how the deals were set-up originally.

It's worth having a read through the vehicle finance section on this site too. You may find other information there.

[Kazzy51a]

Re: Termination of PCP/ HP contracts

Thank you for the advice. Much appreciated
Kazzy51a

[ostell]

Re: Termination of PCP/ HP contracts

Strictly speaking the car is not yours to sell