Dealing with negative equity..

Discussion in 'General chat' started by f30paul, Feb 18, 2020.

  1. f30paul
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    f30paul

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    Hi

    This July I'm 3 years into a 4 year PCP and because I want to change it this summer, I'm also going to find myself in a fair bit of negative equity.

    I've enjoyed the ownership of my A3 cabriolet a lot, especially in the summer months, but now my children are growing up even more the lack of rear doors and rear space is beginning to bite. Having used to own an F30 I'm definitely going to go for as new an F30 as I can afford, preferably in hybrid guise.

    So now my question, if anyone can give their advice: I've foreseen the negative equity for a while now, I think the diesel-gate saga has hit the A3 TDI residual quite a lot, and using some valuation services online I've estimated between £2500-£3000 shortfall. Good news, I've saved enough to pay this off bar £500-£600, and I don't really want to go down the VT route.

    I can see two options ahead 1) keep the money set aside in a bank account, and use what I need to when I know how BMW are going to value my car and what deal may be offered against the newer one, or 2) pay off a lump sum through VWFS so that the finance owed on the car is reduced.

    I can't help but think keeping the money aside is the better option, but if anyone can advise better please let me know!

    Thanks.
     
  2. Wynne71
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    Wynne71 WARLORD Site Supporter

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    Certainly worth going to see the BMW dealer, are you looking for a new one? There are some daft dealer margins being offered against cars at the moment. Might wipe out a big chunk of the negative for you.
    My wife has an A1, she loves it. Audi PCP “promised” positive equity after 2.5 years. They were calling her to talk her into a newer one. When they gave the trade in price it was still at least £1k short of the money owed. She ended up taking it to the end of the PCP and then buying it.
     
  3. f30paul
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    f30paul

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    Thanks,

    I'm unlikely to buy new due to wanting to limit monthly payments, but as you say worth a chat with the dealer. If they're able to make some discounts (which they have always been able to do in the past), hopefully that will wipe quite a bit of the negative away.

    I'm going to be looking at coming back into the F30 fold with a 330e, there seems to be quite a few used around at the moment with the release of the brand new model, and I'd be happy with one up to 3 years old. Just a little disappointed the Audi PCP hasn't delivered as much as my previous BMW one did, but I suppose its swings and roundabouts with the used car market...
     
  4. Peter
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    Peter WARLORD

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    Remember any dealer/used sales 'packaging', to hide negative equity, is not getting rid of it in reality. It doesn't vanish. You need to see what the true value is, before making decisions.

    Got to ask if this is the best time of the year to sell a cab'? Doesn't the market pick up in a few months, when the sun shines? Options may then be better.

    Personally I'd hang on to my money, until the right deal comes along, then make sure everything is transparent. No smoke and mirrors, no hiding negative equity instead of discounts, etc.

    Peter

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  5. Peter
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    Peter WARLORD

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    Success of a PCP is all about timing and the market. A lot has changed in 3-years, market is depressed in general, for a multitude of reasons, as we know, will reflect in lower residuals. Think back to the beginning of the financial crisis, anyone coming out (wanting to come out) of a PCP (not handing the car back), could cost a lot of money.

    Peter
     
  6. f30paul
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    f30paul

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    Yes definitely, I'm not part ex'ing just yet. Firstly I wouldn't cover the negative equity as it stands, but would come July. And even then if we're having a nice summer I may hold on till August... We usually get nice Springtimes, so I'm hoping to make the most of it soon!
     
  7. The Livster
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    The Livster

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    Can you not just Voluntary Terminate ??
     
  8. Phil
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    Phil

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    Agree with @The Livster, by Summer you'll be 3.5 years in and I'd be surprised if you can't voluntary terminate. If you ring the finance company they'll tell you exactly when you will be able to do so.
     
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  9. Kenny
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    Kenny

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    If your 3 years in to your deal and facing negative equity just hand it back and walk away. This leaves you without any blemish on you credit rating and you are also trade in free for your next car. I have just sorted a 4 year pcp for my daughter with vw finance and this was a question we asked. The sales man was a bit vague at first but confirmed if we were half way through the payments on HP we could hand it back but on pcp it was a bit longer. This was still vague and he then confirmed it was at the end of three years. You could of course be on a different deal.
     

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