Early termination of PCP

[jontie]

I have an M3 LR 2021 on PCP with Tesla FS, with an M3 LR Highland on order. The PCP settlement figure is around £1.5k higher than the trade-in Tesla is offering, though this might narrow slightly using CarWow or Motorway.

Payments already made on the PCP exceed 50% of the total amount payable. The small print says I can terminate without paying any more when 50% has been exceeded, subject to the vehicle having been kept in good condition (which it has). The pro-rated excess mileage charge would be £500, so I would need to pay at least this amount.

It looks like potential to save around £1k net compared with Tesla trade-in. However, I am thinking Tesla FS are likely to be combative and come up with reparation/recovery costs, the net result being much hassle and less financial benefit than expected.

Has anyone any experience of early termination of a PCP and returning to the finance company in these circumstances? Thanks ...

 

[DaveW]

I returned my BMW in 2019 on that basis when I got my M3P, the car collection was handled by the regular car auction company and it just had to comply with agreed wear and tear.

BMW were a little snotty with me, trying to put me off with the mark this would leave on my credit file, which stayed at 999 on Experian, but other than that, worked fine.

 

[jontie]

I returned my BMW in 2019 on that basis when I got my M3P, the car collection was handled by the regular car auction company and it just had to comply with agreed wear and tear.

BMW were a little snotty with me, trying to put me off with the mark this would leave on my credit file, which stayed at 999 on Experian, but other than that, worked fine.

So did it affect your credit file? Not sure why it should, its a right available under the agreement with all payments made in accordance with the agreement until its termination. How did the timing work, from notifying BMW Finance to collection of the car (vs collecting your M3P)?

 

[Durzel]

Having never financed a car before, why would Tesla (or BMW in that instance) have problems with this?

Is this because they expect/desire first dibs on the car if the finance agreement is ended early?

 

[DaveW]

So did it affect your credit file? Not sure why it should, its a right available under the agreement with all payments made in accordance with the agreement until its termination. How did the timing work, from notifying BMW Finance to collection of the car (vs collecting your M3P)?

No impact, it supposedly leaves a "mark" on your file, but I'm guessing that just says that the contract was terminated early by the voluntary termination process.

Looks like I got the settlement figure on the 7th August (which in my case was £0), car was collected on the 20th August by the BCA group.

Having never financed a car before, why would Tesla (or BMW in that instance) have problems with this?

Is this because they expect/desire first dibs on the car if the finance agreement is ended early?

Going to assume because of the commission they get (or at least got) from the finance agreement, I doubt they wanted the car back, unless they wanted me to part ex it with another, which they did try and convince me to do.

 

[Morpheus84]

I’ve done this numerous times before with cars. Had no problem with credit file and it’s always remained excellent. The companies all hate doing it and sometimes they try and catch you out when they collect! They will charge for every mark and minor scratch that isn’t deemed ‘normal wear and tear’. I’ve always looked after my cars but on one of them I did have an alloy scratch which I paid to get repaired prior to handing it back.

I’m sure people will be using this option more as Tesla messes with resale values by lowering new car costs and super low interest rates.

 

[spdpsba]

looks like potential to save around £1k net compared with Tesla trade-in.

I didn’t get it, how would you save 1k? - I am on a PCP, would help if this saves some money. Is that the difference between your ballon and trade in value?

 

[jontie]

I didn’t get it, how would you save 1k? - I am on a PCP, would help if this saves some money. Is that the difference between your ballon and trade in value?

I am at nearly 36 months on a Tesla Financial Services 48 months PCP. Aggregate payments made to date are above 50% of the total amount payable which is the threshold for early termination without penalty (qualified on damage etc). Having requested the settlement figure to pay-off the PCP, this is higher than the trade-in figure Tesla are offering by over £1.5k. I would have to pay £500 on excess mileage but should still clear £1k 'saving' by avoiding the settlement payment.

My main concern is about affecting credit checks for my M3 Highland on order for PCP, but I have the CA Auto Finance documents ready to sign (Tesla UK's finance partner nowadays) so I think early termination might be feasible.

 

[Durzel]

Out of curiosity, you weren't put off at all by the 9.6% APR?

 

[Mark89052]

Out of curiosity, you weren't put off at all by the 9.6% APR?

It’s 5.9% on Highland LR and RWD at the moment, only 9.6% on M3P Highland and the old M3 they have in new inventory, these are also still at the old higher price, strange they don’t shift those cheaper?

 

[Lord Farquad]

It’s 5.9% on Highland LR and RWD at the moment, only 9.6% on M3P Highland and the old M3 they have in new inventory, these are also still at the old higher price, strange they don’t shift those cheaper?

Paying a premium for stalks?

 

[Chimpy McChimp]

Havent done it with Tesla but no issues many moons ago when doing this with a Toyota Aygo. Guy that came to collect it examined it for over an hour (over an hour! It's a tiny car! He could have probably dismantled it and rebuilt it in that time!!)

The Aygo was in used condition but he signed it off and left with no issues. Usually they include what is and what isn't acceptable (size of scratches etc. ) in these agreements up front. Do you have that?

 

[WllXM]

Out of curiosity, you weren't put off at all by the 9.6% APR?

Hadn't realised this! Compared to the current 1.8% for a new Model Y it's a compelling argument

 

[jontie]

Out of curiosity, you weren't put off at all by the 9.6% APR?

Absolutely, but once they reduced to 5.9% with a ridiculous GMFHV£ figure it was a game changer. Was able to arrange so monthly payments at same level as I have now.

 

[Durzel]

Ah right, fair enough. I forgot it was only the P (and inventory for some bizarre reason?) that have the crazy 9.6% rate.

 

[Utumno]

I have an M3 LR 2021 on PCP with Tesla FS, with an M3 LR Highland on order. The PCP settlement figure is around £1.5k higher than the trade-in Tesla is offering, though this might narrow slightly using CarWow or Motorway.

Payments already made on the PCP exceed 50% of the total amount payable. The small print says I can terminate without paying any more when 50% has been exceeded, subject to the vehicle having been kept in good condition (which it has). The pro-rated excess mileage charge would be £500, so I would need to pay at least this amount.

It looks like potential to save around £1k net compared with Tesla trade-in. However, I am thinking Tesla FS are likely to be combative and come up with reparation/recovery costs, the net result being much hassle and less financial benefit than expected.

Has anyone any experience of early termination of a PCP and returning to the finance company in these circumstances? Thanks ...

Go to Legal Beagles. They have a simple pack with form letters to make this process as painless as possible including covering all the usual gotchas and clawbacks that finance companies like to try to charge you with.

If you have genuinely paid over half the value of the vehicle, normally including the GFV plus interest payable on the whole of the contract, then VT is generally a simple and straightforward process and heavily protected in law. Just be certain of your figures before starting the process.

There is a legal grey area around excess mileage which Legal Beagles make very clear to you in their pack.

 

[phil4]

If you have genuinely paid over half the value of the vehicle, normally including the GFV plus interest payable on the whole of the contract,

This is the one thing a lot of people miss. It's not about getting 2 years through a 4 year term, or anything like that. Indeed on my previous car, the "halfway point" ended up being month 47 of 48. Obviously it depends on a lot of factors, but don't assume it'll be near the halfway point of the length of the PCP.

 

[FastLaneJB]

Yes it’s heavily protected in law so it’s not allowed to affect your credit score. There will be a mark that you carried out a VT on a finance company so there’s always the risk that a car finance company won’t want to take you on for finance in the future. Having said that and never having done it myself, I’ve known a few who have done it multiple times and still got car finance without issue.

 

[FastLaneJB]

This is the one thing a lot of people miss. It's not about getting 2 years through a 4 year term, or anything like that. Indeed on my previous car, the "halfway point" ended up being month 47 of 48. Obviously it depends on a lot of factors, but don't assume it'll be near the halfway point of the length of the PCP.

Very true, they structure the finance where possible so you won’t get to this point until late in the agreement because they know you can then walk away from it if you choose.

 

[jontie]

This is the one thing a lot of people miss. It's not about getting 2 years through a 4 year term, or anything like that. Indeed on my previous car, the "halfway point" ended up being month 47 of 48. Obviously it depends on a lot of factors, but don't assume it'll be near the halfway point of the length of the PCP.

In my case the agreement states the £ total amount payable including initial and the £ amount which is half of it for the voluntary termination right. Usually, I go for a large initial payment to reduce the monthlies which typically means half the total amount is paid around the end of year 3.