Question on PCP car finance

[ThelmaLouise72]

Hello,

Not sure if anyone can help but here goes...

I have a car on PCP that I've had 2.5 years now. I set the annual mileage to 10,000 and have the choice, in November next year, to either pay the £6k final payment or hand the car back.

However, I have just changed jobs and my mileage is now considerably higher than 10,000 a year and I could also do with changing the car due to my changing needs. To avoid being penalised (and, I've read it can be quite a lot they charge you) I can pay the £6k next year and the car is mine outright. The car will probably be worth more than this at this point.

As I am thinking of changing the car, what are my options? Can I part ex the car at another dealer and pay off the balance on the PCP and take out a new finance deal or am
I tied to the PCP finance deal? I was thinking of requesting a final balance from
Black Horse.

If you have paid more than half of the full amount including the balloon payment you can just give it back. My husband phoned black horse to enquire about it last month. Don't know if that helps at all.

It'd make financial sense to pay the amount due and then just keep the car.

You have several options if you're more than half way through your term.

You can go to your original dealer, and see what they'll offer you (giving the car back)
You can go to another dealer and have the same conversation
You can just give the car back and start from scratch (check in your Ts and Cs about the exact date when you can do this from, but it sound like you'll be well within this)
You can settle the finance (inc balloon payment) and own the car

Which of these works best for you depends on lots of things, but I'd weigh them all up against each other. If you are considering another PCP, make sure you have a clear idea of how many miles your new job will involve (this is much easier if it's just commuting to a place of work, rather than travelling to clients, which could be unpredictable) and add a few 000 miles for safety. I used to PCP all the time before Covid, and my annual mileage fluctuated a lot (depending on which clients I was working with), so I always added about 3,000 to the average of the previous few years.

Talk to the dealership.

We had this issue some years ago. Car on PCP with 9k miles per annum which had been just my partner's work/domestic stuff would have been fine. Then mine, which was supposed to do the heavy lifting developed a serious fault shortly before we went on a 3k mile holiday in France. Her car stepped up and was so good as a family vehicle that mine was relegated to station hack!!

We paid the balloon and kept until 10 years 150k miles. Financially that's almost certainly the cheapest option. However if the dealer can make money on selling you a bigger/faster/better trimmed car on PCP he probably would.

Is the car not suitable for the increased mileage or is there some other issue?

To avoid being penalised (and, I've read it can be quite a lot they charge you) I can pay the £6k next year and the car is mine outright. The car will probably be worth more than this at this point

The charge will be in your agreement as Xp per mile above the contracted amount.

If you think the car will be worth more than the £6k balloon payment, you'd be throwing money away if you just handed it back.

You could ask your dealer what options there are to change the car now (when I had a car on PCP they'd ring me every so often claiming that they could do me a deal on another car - they want to tie you into another agreement for longer, but you might decide this suits you if you stop racking up miles on this car, and get a different car that suits you better.

If you have money available, you could pay off your current agreement in full, then sell it or use it as trade in against another car from any dealer you like.

Which is best depends on how desirably your current car is, what your appetite for selling the car vs trading it in is and how keen the dealers are to sell you a different car.

It might not even be that much on the extra mileage (obvs depending on how many miles over you are). I was 3k over and it cost me £120 🤷‍♀️

It's probably best I keep it and pay the balloon payment. I'll have a think!