There are now many ways in which drivers can buy a car. As well as the standard bulk payment, there are a myriad of car finance deals, which allow you to pay off the car over a period of time specified by the lender. Drivers who have financed their car with an agreement that allows them to purchase the vehicle at the end of the contract (for instance, a PCP deal) may be wondering what happens as they approach the end of their arrangement. What are your options as you approach the end of your contact?
One of the most cost-effective solutions for drivers is to hand their travel car back to the lender. This ensures you do not have to make any additional payments on top of your previous monthly instalments. Well, as long as you have not exceeded the mileage allowance agreed between you and your lender at the beginning of the contact, of course , and you are returning it in an acceptable condition. In these instances, you will almost certainly be charged an additional fee. Once you have given the car back, you the option to begin another PCP contact for a different car.
However, many drivers will have fallen in love with their car during the contract period. They may want to keep it once the agreement has finished. Drivers can keep their car by paying the ‘balloon payment’ once the deal has ended. Essentially, this means you pay off the rest of the car’s value on top of what has already been paid in monthly repayments. Alternatively, you could consider refinancing so that you become the car’s legal owner.
If you think it is time to own a car but you are still in a PCP contract, part-exchanges can be agreed with the lender once a deal has ended. This is a very popular option for drivers who have reached this point at the end of the contract. To do this, the difference between the guaranteed minimum future value and the trade-in value would be used as a deposit towards another car. You can learn more about guaranteed minimum future values via the Daily Mirror or call us on 01525 305016 for more information.