Car on PCP - Best way to avoid further financial loss

[BigCarMistake]

About 12 months ago I took out a 36 month 0% PCP finance agreement. I traded in my small car (owned outright) and added approx £3000 for the deposit. I pay around £400 a month.

It was a mistake. I should have bought a used car outright.

At the end of the term there will be a £22,000 balloon payment to keep the car. If I decide not to keep the car, there’s likely to be a hefty mileage charge as the mileage is already double the anticipated limit, despite WFH.

I’m at a loss how best not to compound this financial mistake further. I can afford the payments but I feel like a fool for wasting so much money on this car (awful mental state at the time). It’s electric so I am benefitting from cheap home charging, but I feel that recent government policy changes have devalued electric vehicles.

Has anyone got experience of regretting a car finance agreement? Should I just chalk it up to experience, minimise my mileage and start putting money aside for another vehicle?

Why are you so far over the mileage limit per year OP? If this was an aberration and your mileage will level back to nearer the permitted level you may not have such a large bill at the end. If your mileage is going to remain a lot higher than the allowed mileage you need to contact the lease company and tell them. They can increase permitted mileage and you can pay the additional fee in your monthly payments which will make it more manageable.

I have always had PCPs and not regretted them. There tend to be three ways to end the contract - either you pay the balloon payment (I've never done this), you hand back the car and walk away or - and this only works if you will get more for the car in part-ex than the balloon payment - use the car as part ex against your next car and clear the balance this way. I did this once many years ago when the balloon payment was £17k but the dealership were offering me £23k for part ex, so I ended up with a £6k deposit. Usually I just get another lease car from the same company.

I believe most PCP's have a clause where if you re more than two thirds of the way through the contract you can void it, hand the car back and walk away. I did this once on a car I loathed. It was on a 48 month contract but I gave it back at 36 months. That doesn't help you with the additional mileage issue of course but is an option if you really just want out. You will need to check your contract to see if this is an option for you.

If you aren't going to be able to get down to a reasonable mileage before the end of the contract period I would recommend you contact the lease company and tell them as soon as possible.

Factors like driving when I would have previously taken the train (train service is terrible post Covid) and I also took a trip to Scotland, driving a lot whilst I was there.

I think the mileage can be eased back if I’m careful. I think it’s just regret at entering into such a significant financial undertaking just for the sake of a car. I think about ´what if I’d used that money to invest’ etc. I guess I just have to chalk it up to experience and know not to do it again.

Car leasing is definitely a mindset @BigCarMistake. I completely understand what you are saying. In fact my husband bought his last lease car at the end of the period and has now (4 years later) finished paying for it and owns it outright. It's a nice feeling to have.

I have always gone into it thinking that I'll have to spend money on a car in some form anyway - as a car gets older it needs things like tyres, brakes, replacement this and repairs to that, which can be very expensive. Then there is the initial outlay. If I spend £400 per month on a car over 3 years that is £14,400. If I'd bought a nearly new car it probably would have cost me £30k, so I would have to keep that nearly new for 6 years before covering the cost of two 3 year leases. During the lease period I would have a car which is unlikely to need serious work or expenditure.

I also like a change and tend not to lease the same car twice.

If you really want out of the contract you need to talk to the lease company and see what they can do. I have always found those I've dealt with to be approachable.