AI Legalese Decoder: Your Key to Unlocking the Confusing Terms of a Trapped Car PCP Deal
- May 16, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Poor Decision-Making: Trading in Owned Mercedes GLC for PCP Deal
So….Incredibly stupidly I traded in my completely owned Mercedes GLC 200 (13k) for a pcp deal on a GLC 300. Now for the next 4 years, I’m stuck in a financial commitment that feels overwhelming and restrictive. At the end of the term, there’s a balloon payment of 18k looming over my head. If I decide to walk away, I’ll undoubtedly be hit with extra mileage charges, leaving me with nothing to show for the money I’ve already invested. The thought of being trapped in another PCP agreement is daunting, especially considering the equity of 13k that I’ve essentially lost forever. The stress of this situation is weighing heavily on me, and I’m desperate for a way out.
### How AI Legalese Decoder Can Help
The AI Legalese Decoder can assist you in understanding the terms and conditions of your PCP agreement, including any potential avenues for early termination or renegotiation. By inputting your contract details into the decoder, you can receive a comprehensive analysis of your rights and options, allowing you to make informed decisions about your next steps. Additionally, the decoder can provide recommendations for alternative solutions or negotiate on your behalf with the leasing company to find a resolution that works in your favor. Don’t let the stress of your current situation consume you – leverage the power of AI technology to navigate the complexities of your PCP agreement and regain control of your financial future.
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****** just grabbed a
Ask for the settlement figure, sell the car privately and pay off the finance.
Depending how old the car is you might be in negative equity but with a £13k deposit you may still be able to recover something.
Don’t stress too much you can resolve this.
– get a settlement figure from the finance company.
– go to the car buying sites and pop in your reg to get an instant estimate.
– pick the best offer, tell them it’s on PCP and give them the payment details and settlement figure.
– they will settle it for you, you pay any deficit, or you get any surplus cash.
Given the sizeable deposit you paid with your PX, you might be able to capture a bit of positive equity back and use it towards something else.
You’ll be okay 👍
I was similar to you in the past, where I felt the need to have a nice new car every two years or so. I wouldn’t admit it to myself, but I was doing it to show off.
I gave up last year and bought a 2014 VW Golf with 160k miles for £5k. It’s been great so far and I’ve only spent £300 in total on tyres and a CV joint replacement.
In that time with a newer car, I’d have spent likely £5k on PCP repayments and I wouldn’t even own it.
Your balloon payment should be equal to the guaranteed future value of the car, which is what the finance company will guarantee your car is worth at the end of the 4 years (assuming you’re within your mileage and the car is in overall good condition). You say you’ve lost the 13k equity but hasn’t this been offset against the cost of the new car?
Your £13k deposit is offsetting the monthly cost and bringing it down. In essence you’ve paid £13k of the 4 year depreciation in advance to have a newer more expensive car.
Even paying for a car with a loan, you’ll lose on depreciation so there’s much of a muchness but £300pcm on a PCP is not the same as £300pcm on a loan.
Either sell up now and pay off the balance of the PCP and take your equity of around £9-10k elsewhere and top up with a loan, or over the next 48 months save £300 a month on top of your PCP payment and you’ll have cash in the bank. If you can’t afford that, then you couldn’t really afford your new car in the first place.
First thing you need to do is find out how much the car is currently worth Vs the value of the GFV/balloon payment.
After 4 years you should be in positive equity so can sell the car and release some of the money you put in at the start.
Otherwise your options are basically as you said, you either finance a new car, hand this one back and walk away, or you can refinance the balloon payment over another x years after which you’ll own the car.
Don’t most contracts for consumers have a 14 day cooling off period?
Shouldn’t really ever put any deposit into these things, try as much as possible to not put a penny down and choose affordable monthly repayments, then around half way through the term you can sell it and give it back. You’d actually be more stuck if you were in a lease, you cannot break a new lease without sizeable penalties. With a pcp if you break it early you’d just be charged the interest for a month, unless you’re in neg equity, but usually if you’ve bought something ok you shouldn’t really be worse off than what’s left on the finance around 2 years in.
I was in the same situation a couple years ago, I sold mine to webuyanycar, but my advise would be to get some quotes of car buyer sites, then speak to your dealer and see what they offer to break, if you have equity you’ll make money if it’s negative you’ll have a balance to pay but it’s a lot smaller than the balloon payment. Becareful with some sites as some will pay off remaining finance others won’t. Alternatively if you can afford to buyout then sell to a car buying company could work out beneficial. Good luck, it caused me some stress but was relieved when I had a lot more money each month
THANKYOU SO MUCH TO EVERYONE HERE! The advice given has been wonderful. And thanks also for sparing me from the obvious….Which is that I’ve been stupid.
I’ve never ended up belly up on a pcp. They are meant to price the balloon so that you’d have some equity at the end. Sounds like someone has done their job wrong. I’ve also never had to pay mileage charges because I know how much I do a year. At one point I was £1000 up as I’d never put a deposit on and they gave me that over the balance left
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PCP isn’t as bad as it’s made out and if you’re clever with choosing the car you can easily go back to zero half way through the contract, or even be up in some instances. After Covid when used car sales were through the roof I made about 2k profit on mine.. Depending on the dealer you can negotiate the equity aswell by playing them off against other buyers.
You’ve got some good advice here, but this is why I’m going to a lease option when I’m ready to switch cars, rather than a PCP
At last someone that has highlighted the PCP trap for what it is…. “Now we have you buying a new car that you never own every three years for the rest of your life”… it’s not a scam but it’s not far off!
The best method for this sort of problem is preventative measures. Check the documentation and understand exactly what you’re signing rather than just seeing the monthly payment and shiny new car. Obviously that’s not going to help you much at this point.
Best method in my opinion is cut your losses, get out of the PCP trap and buy a shitbox car using an unsecured loan from your bank, then work your way back up
This is the exact reason why I would never put a deposit into a pcp agreement. If I had with my Tesla and the huge plummeting value I would do equally been screwed.
Thankfully will have the VT option next year!
I sold my car back to the dealership and ended up walking away with my initial 6k deposit. 3 year deal, had it for 2 years, barely touched the annual mileage. If you bought it from a dealership they generally prefer to keep their brand cars in stock rather than them ending up elsewhere. Just chat with them and see if they offer to pay your settlement and give you any additional equity.
With the way car prices have gone, is it really that bad of a deal? I don’t know anything about that car but the used market doesn’t have the value it used to
You can also walk away and hand the car back once you’ve paid 50% of the amount payable.
You’re not trapped.. yes you paid waaayyy too much up front. But just ask them for a settlement figure and sell the car privately 😅
I know plenty of people will be thinking but might not want to ask…how you did you find yourself in this position?
Is this buyers remorse or some financial situation has happened to make this unaffordable since signing the contract?
When did you buy it?
You figured out how PCP works then.
Sucks that you signed before figuring it out, but you can consider this an expensive lesson
With a PCP deal don’t even give them a deposit. You’re basically long term renting the car. And yes, they will accept you without a deposit. And yes the payments may be slightly higher – but there are loads of deals around so haggle with them. They want the “sale”.
Don’t do PCP, kids.