We've suffered negative equity on our current PCP scheme - should we hand the car back and walk away?

We've had four Toyota Aygo from our local Toyota dealership. This final car's contract will end in February 2019. The dealer has invited us back twice in the past six months to discuss "upgrading" to the a new car, however, the deal has always been very poor in comparison to our existing one. Apparently we have also suffered negative equity on this car even though it has only done 8000 miles (in three years) and is serviced under the dealer service plan, which means the balloon payment would be more expensive than buying an identical car for cash. Would we be better to just walk away and chalk it down to experience?

Asked on 28 August 2018 by admiral.encode

Answered by Honest John
Manufacturers/dealers play PCPs two ways. One way is to make the guaranteed future value over-optimistic, which reduces the monthly payments (or gives them the chance to extract a higher APR on the monthly payments). The other is to make the guaranteed future value pessimistic, which gives the customer equity at the end of the contract to fund the deposit on another PCP, or buy the car and drive away in a car worth more then the final payment. Sometimes dealers operating the former scheme fund the deposit on the next PCP as a disguised discount. But if you're not getting anything advantageous out of your PCP, just hand the car back and walk away.
Tags: pcp
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