- 9 February 2018 at 11:00 am #128008
Hi, I was after a bit of advice please. I’ve run a BMW on a PCP for just over 3 years of a 4yr deal. The car is great and I was thinking I might consider purchasing it from BMW Finance at the end of lease. The balloon payment is around £15.5k which I appreciate I’d have to pay at the end in order to make the car mine. With all the bad press of late for diesel cars though, I’d be buying a car for £15.5k which could actually only be worth £11-12k which doesn’t make sense. So my question is:
Do I hand the car back and make the problem BMWs? They will presumably auction the car to the network and may well achieve a few £k under the balloon payment thus taking a hit on the car.
Or can I go to BMW and make them an offer that’s somewhere in between what I owe and what they might realistically achieve through auction. Thus we both win a little from the deal.
I fully appreciate I signed up to the agreement and BMW are under no obligation to drop the balloon if they don’t want to. In that case I’ll just hand the car back under the terms of the agreement.
But I wondered in this current climate where finance companies are presumably quite exposed to having written PCP deals with higher balloons than they’d have liked, obviously knowing now what they didn’t 3-4 years ago, how willing they would be to negotiate or even legally whether they can actually negotiate. Would appreciate your thoughts. Thanks.
- 13 February 2018 at 2:38 pm #128234
JB makes an excellent point in my opinion. I am in a similar situation with my diesel Avensis coming to the end of a 3 yr PCP. Is it worth paying off the balloon payment to own the car or should I just hand the car back to Toyota. There is absolutely nothing wrong with the Avensis (or the BMW I suppose) but the balloon payment could well be more than the car is worth. Diesels are now under threat from increased taxation and additional charges for entering cities etc. So even though a diesel may be economical to run now, they might not be so indefinitely.
It seems to me that paying the balloon to own the car now implies that you are intending to keep the car for a long time and even maybe run it into the ground. On the other hand, giving it back to the dealer releases you to invest that balloon payment into another car of your choosing.
- 19 February 2018 at 9:29 am #128607
Hi Iwan. Yes, those are your choices. If a diesel car is still the best option for you, there will be no shortage of car companies with offers to lure you into another model when your current PCP completes. However, you may find that falling residual values and a recent bump in interest rates mean that the deal is not as attractive as your current one.
As with any car buying process, we advise you to look at all your options in a rational manner and make a decision that suits your circumstances.
- 19 February 2018 at 9:25 am #128606