Just coming to change my car and the car balloon payment is more than the value of the car. I thought there was some intelligence by the finance/car companies to make sure this didn’t happen.

I have been told it’s £2.5k, is there anything I can do to get out of it when I hand the car back besides dying.

Read the contract ?

If you read the credit agreement, there’s usually a clause whereby you can voluntarily terminate the contract and hand the car back if you’ve paid off over 50% of the price.
If you do this it’s really straightforward, I know a couple of people who’ve done it.

Should be a guaranteed future value, you only pay the balloon payment if you want to keep it. Otherwise you just give it back. I’ve never heard of them asking for more other than excess mileage

Burn it out?

Well its gone back and they say its only worth £8k against £10.7 so burning it is out of the question. Now chasing for the deficit.

Tell them to go **** themselves?

What are they going to do, repossess it?

If you owe it according to the contract then they can take you to court for breach of contract and get a CCJ for the outstanding balance.

Just coming to change my car and the car balloon payment is more than the value of the car.

So what, and even if you want to buy it – let it go, and spend the money on another one.

Well if I could find the contract! Its the phrase guaranteed future value.

Have to see what they say when I

Tell them to go **** themselves?

who “guaranteed” the future value?

ebay the balloon ?

BTW I had a car on one of these agreements; in my case, there was the option of “keep it and keep making the payments” – which I did, the balance outstanding was paid off in a further 18 months.

The gfv is supposed to be subject to mileage and condition. How close are they to the contract agreement (is it significantly higher mileage or trashed?)

If both of them are in line, you should be able to hand back and walk away. If they’re arguing on the basis that car is in the correct condition as per contract, but the market has declined / your car isn’t worth that now, it’s tough on them is my understanding. But you might need a second opinion to ‘prove’ that the value isn’t lower because of the condition it’s now in.

This is the reason I don’t Lease Purchase – I do 40k+ PA, so not a chance the vehicle would be worth anywhere near the balloon.

You’ve used a vehicle to the extent where it’s worth less than what you’ve paid for it. Just as if you’d bought it outright from new, you have to take the hit for the depreciation – most of that being when you drive it away, the rest being what you choose to do with it over the term.

The finance company are gonna want a return > than the price they paid for the motor and is made up from monthly payments/balloon payment/residual value – something has to give and it won’t be them.

All a gamble – my vehicle is financed through a dealer (if I sold it now, it wouldn’t cover the outstanding finance due to my mileage (as the finance co wants it’s interest etc) – meh, it’s all a loss at some point) And that was buying it 11 months old with 7.5k on the clock.

Goes to check his own contract ….

For my last two cars I have taken the dealer finance to get all the manufacturer discounts etc and then refinanced it a few months later on a cheaper M&S car loan, generally with slighter higher monthly payments but a much smaller balloon payment. Only works if less tha 15k being borrowed.

Doesn’t really address the problem at hand but I feel it puts me back in control and IMO is more flexible

Goes to check his own contract ….

For my last two cars I have taken the dealer finance to get all the manufacturer discounts etc and then refinanced it a few months later on a cheaper M&S car loan, generally with slighter higher monthly payments but a much smaller balloon payment. Only works if less tha 15k being borrowed.

Doesn’t really address the problem at hand but I feel it puts me back in control and IMO is more flexible

My business partner bought a Mini One – always discussed a 3 year plan and signed a 3 year plan. But they didn’t read the details and they actually signed a 4 year plan! So after 3 years of paying out £350ish a month they have just found out they ‘owe’ £9000 on it 😮

Once you’ve paid more than 50% of the total owed (including interest) you are legally entitled to hand the car back. I did this last year; I owed about 12k and the car was worth 8. Simples. Did you tell them you wanted to do a voluntary termination when you got to the end?

There are two different products being discussed above.

PCP lease purchase with a guaranteed final value is a safe way of lowering your monthly payments, just don’t put a big deposit in if your likely not to buy the car at the end.

Loans with balloons at the end are potentially trouble as the final payment is not guaranteed to be covered by the car, in really not a fan. Your monthly payments will be lower but your liable for this exact scenario.

In pretty sure handing the car back on the 50% rule doesn’t affect your credit rating (it’s a legal entitlement, after all) but I’m guessing it will affect an internal rating with the credit company you used.

You often here people saying PCP are not a good idea as you don’t own the car at the end. It’s an of sentiment as if you’ve only repaid £20k of a £30k car loan, how could you expect to own it at the end? Not being said above, I know.

My business partner bought a Mini One – always discussed a 3 year plan and signed a 3 year plan. But they didn’t read the details and they actually signed a 4 year plan! So after 3 years of paying out £350ish a month they have just found out they ‘owe’ £9000 on it

How is that possible? I bought my wife a Mini Copper brand new from my local dealer, price £6k over 48 months @ £195 per month with final payment of £5400. Old car was the deposit at £3k.

*reminds himself NOT to buy a car on any finance such as this, and to keep buying the second hand models*

My business partner bought a Mini One – always discussed a 3 year plan and signed a 3 year plan. But they didn’t read the details and they actually signed a 4 year plan! So after 3 years of paying out £350ish a month they have just found out they ‘owe’ £9000 on it

£21,600 for a Mini One !!!

And that’s not even counting whatever deposit they paid.

Someone has been ripped off.

(Or can’t do sums properly ?)

The repayments were a small fortune to say the least, well doing the maths I think they did bloody well.

Think I might just get something for about £6-7k and run it for a year then part ex it now, see how that wrks as right now feel I’m getting stung.

How is that possible? I bought my wife a Mini Copper brand new from my local dealer, price £6k over 48 months @ £195 per month with final payment of £5400. Old car was the deposit at £3k.

How is * that* possible – it’s less than the price of one new surely? (£14,400 against new list of £14,900)

But yes, my partner was shafted – basically they changed the deal and didn’t say – nothing in writing anywhere to prove otherwise either… (Ohh and it did have some extras so not a basic One)

How is * that* possible – it’s less than the price of one new surely? (£14,400 against new list of £14,900)
But yes, my partner was shafted – basically they changed the deal and didn’t say – nothing in writing anywhere to prove otherwise either… (Ohh and it did have some extras so not a basic One)

Typo the price was £16k, had a couple of options on it.

The Mini one might of had a few extras but paying back over £21k 😯 my interest rate is only 3.9%

The Mini one might of had a few extras but paying back over £21k my interest rate is only 3.9%

Don’t forget the deposit.

Unlikely they got into it without paying a couple of grand up front too.

Mrs Ambrose was in a similar situation to the OP with her Passat a couple of years ago. When changeover arrived the alarmingly conflicting information from VAG, the (their) credit/ finance company and our recollection of the deal were at such a variance that we read everything again, really closely. We’d originally had an ex demo car and they had mis-recorded the mileage on it on the original lease documentation. That, and a ‘goodwill gesture’ to mitigate against theit months of conflicting advice and demands saved us about £4,000 in the end. I will never enter into a similar agreement again in my life.;

Not seeing a general consensus here have to wait and see and try and stand my ground.

Have you yet gone back and read the documents? I suspect that is the one thing on which there is consensus. The answer should be within. If they are chasing you and you cannot find them then ask for a copy.

Read the T&C’s on your finance agreement carefully. On a PCP agreement, the finance company decide on the GMFV (guaranteed minimum future value) before the start of the contract. They use the cars value, anticipated mileage & length of term to decide this.

You normally have 3 options at the end of the contract, 1) pay the GMFV and own the car outright, 2) get a trade in price and part exchange it if there’s any equity, or 3) hand it back to the finance company. Option 3 should be your best bet, however, if you’ve exceeded the final anticipated mileage (that was set at the start of the agreement), you will have to pay a mileage charge, which can vary from 4 to 25p per mile, again look at your contract closely to see what you signed for.

Voluntary Termination may be an option, although only when 50% of total monies owed has been paid by yourself. If you’re nearing the end of your contract and haven’t missed any payments, you should be past that stage by now. Be careful though, any deposit big or small is gone, kept as part of the agreement. You hand the car back and walk away with nothing.

Above I did mention that there are normally 3 options at the end of a PCP agreement, however there are some Personal Loan PCP agreements on the go, these should be avoided as you don’t get the option to VT. But worst of all, you Tend to have only 2 options at the end of the agreement, 1) pay the GMFV and 2) trade the car in, take equity or pay the negative equity. There is no hand back to finance company. These tend to be rarer agreements, hence read your contract carefully.

You could go down the route of complaining you’ve been mis-sold the finance, saying it wasn’t properly explained at point of sale. Follow the complaints procedure on your agreement. A complaint getting to the FOS, results in a £850 case fee to the dealership, regardless whether you or they are in the right.

Good luck with this.

Just read that you’ve handed it back already, £2.5k is a massive chunk of negative equity. You could contact the Finance & Leasing Association for some advice on this.

I’m making an assumption here, but I’m guessing you either exceeded the anticipated mileage or the car wasn’t in a ‘fair wear & tear’ condition when you returned it? If neither, there’s something not quite right and I hope you get to the bottom of it.

Don’t let this put you off PCP agreements, they don’t suit everyone but can be an excellent way of funding a car. A good sales exec should be able to identify your buying/motoring requirements and present you with different finance options, allowing you to make an informed choice.

Thanks all.

Has the mileage gone over the anticipated miles on the contract?

What sort of condition is the car in?

Finally what car is it?