- 2 November 2017 at 10:15 am #123066
I have my car under a PCP contract and i am due to make my 23rd payment on 11 November (so just over a week). Since I first got the car in December 2015, my circumstances have changed – I no longer live with parents, I am in a new job where my pay is slightly less than my previous job and I no longer drive to work every day (I now have to get the train instead which has become an extra cost). All of this obviously means less disposable income, coupled with the fact that I barely drive my car anymore and so I am essentially paying £250 a month (finance payments plus insurance) for the car to sit on my drive. The car dealership where I got the car had a quick look through my contract and advised me that once I had made 23 payments, I would be able to voluntarily terminate the contract and hand the car back. As I’m now approaching the 23rd payment, I contacted the car finance company and said that I would like to voluntarily terminate my contract. They have sent me a letter through the post which states that half the total amount payable for the vehicle is £6,404.48 and that to date I have paid £5733.34, and that to ‘VT’ the contract, I have to pay £671.14. It also states that the balance for additional products (GAP insurance) is £832.30, and that to date I have paid £523.16, and so to ‘VT’ the contract I also need to pay £309.14, as well as the £671.14. These figures surprised me, so I had a look at my contract again and the financial details section. In this it states that:
(A) Total cash price £12,961
(B) Less: Deposit £1,840 (I handed my old car in)
(C) Amount of credit £11,121 (A-B)
(D) Interest £680.25
(E) Initial arrangement fee
(F) Final arrangement fee
(G) Total charge for credit £680.25 (D+E+F)
Total amount payable: £13,641.25 (B+C+G)
I rang my finance company again this morning to ask why my deposit (figure B) had been included in the total amount payable. The woman I spoke to kept putting me on hold whilst she tried to work it out, and eventually she said that she wasn’t sure why it said B+C+G next to the total amount payable, but that the total amount payable is correct. When I questioned why it included the deposit I put towards the car, she said it was correct because the total amount payable is the total cash price of the car (figure A) plus the interest (figure D). I didn’t feel like I was getting anywhere so decided to end the call, but I’m really confused as to why my deposit now isn’t being taken into consideration? What was the point of me handing in my old car (as the deposit) if I now have to pay that amount back anyway? It means I could have just kept the old car, as well as the new one, if this is the case. If my deposit was taken into account I would be able to come out of the contract now with nothing left to pay, as over half the total amount payable has been paid.
I was just hoping if someone could advise me as to whether this is correct, and whether my deposit does become redundant when I choose to voluntarily terminate the contract?
- 7 November 2017 at 10:19 am #123263
Yes, your Total Amount Payable – and therefore your VT amount – includes your initial deposit.
Total Amount Payable is the cost of the car plus all interest and fees. It does not take into account how that is broken down into part exchange, cash and finance.
So your £1,840 deposit is already a substantial chunk towards your VT point.