Hi guys

Just a quick query really.

I know that ending a finance agreement too early can lead to huge penalties because of the amount owed / amount still to be paid etc, but how does it work if you end early and you opt for a cheaper model? For example my car cost £15,500 and my PCP deal was for £12,250 (IIRC), having paid one years finance and taking into account the GFV is £5650 (according to FGA Capital) what would happen if I wanted to buy a Dynamic Multijet Panda within the next couple of months?

This might sound quite lame to most people, but then this is a forum for advice, and that's what Im after. I assume that the current value of my car would purchase the Panda outright but how would my repayments be affected, working on the principle that I still owe £9,500 - £11,000 on finance?

Steve

Knowing that there is finance outstanding this is basically how it works:
1. The dealership pays off the finance on the current car
2. The value of your current car is deducted from your new car
3. A new agreement is drawn up based on how much the new car costs + however much extra the dealership had to pay the finance company - the px value of the 'old' car. (eg. New car costs £4,995, you have £10,000 left to pay, current car value is £5,295, new agreement would be for £9,700.)

By the sounds of it, you'd pretty much have exactly the same amount to pay back at the end of it all.
However, bear in mind that most finance companies will only make agreements until the car is 10 yrs old, after that they won't even look at it. So although you could end up with the same amount to pay, depending how old the Panda is you may have to pay back larger monthly amounts.