Paying off Land Rover Hire Purchase early?

[wilwak]

I bought a used Land Rover in September and even though I had the funds to buy it outright I was offered a £4000 deposit contribution if I borrowed £25k+ over three years at 10.9% using the Land Rover Hire Purchase through Black Horse Finance.

They mentioned that I was fine to pay it off after 3 months if I chose to.

I’ve been looking at the paperwork and there’s no mention of this three month restriction and I’m easily able to obtain a settlement figure online through the Black Horse portal already.

If I I suddenly pay it off will I be hit with a reclaim of the deposit contribution?

Does anyone know?

Thank you.

[HustleRussell]

Somebody will correct me if I am wrong, I'm sure;

If you pay up during the first 14 days, it is called 'withdrawal' from the agreement.

If after 14 days, it is called 'Final settlement'

Final Settlement is possible at any time after the initial 14 days but normally the salesman's commission isn't paid unless three months' worth of scheduled payments are made as per agreement.

With respect to your deposit contribution, read your agreement and do some googling concerning how your particular finance company handles this situation.

[JulianPH]

I bought a Range Rover a couple of months ago and was offered the same sort of thing for taking up their finance.

I didn't budge and paid in cash, but if that was the offer made to you then the call should have been recorded (as per FCA rules regarding financial transactions). This may be your starting point for a very quick resolution...



Edited just because of a misplaced capital B!

Edited by JulianPH on Wednesday 23 October 22:08

[wilwak]

It was all done at the dealership. No phone calls so not recorded.

I think you’re right that the dealership won’t receive their kickback if I don’t pay three payments.

I’ll probably just play it safe and pay it off after three payments. I’ll still be £3k+ better off.

Thank you.

[Stella Tortoise]

JulianPH said:

I bought a Range Rover a couple of months ago and was offered the same sort of thing for taking up their finance.

I didn't budge and paid in cash, but if that was the offer made to you then the call should have been recorded (as per FCA rules regarding financial transactions). This may be your starting point for a very quick resolution...



Edited just because of a misplaced capital B!

Edited by JulianPH on Wednesday 23 October 22:08

Not sure about the mandatory phone recording.

[rfoster]

The 3 month thing is certainly the dealer's finance commission, which won't be subject to debit back if you do make 3 monthly payments.
You can 'settle' the agreement at any time (after the 14 day withdrawal period) and benefit from a regulated settlement figure; assuming of course this was written in an individual's name and not a limited company (in which case you can still settle, but the settlement figure isn't regulated.)

[YoungRestorer]

I work for a well known captive finance company, and I can say with 99% certainty: the deposit allowance cannot be taken away at this point. This would be a punitive measure to prevent customers from settling their finance early, which is very dimly looked upon by the FCA. However, you should definitely read your finance agreement carefully. If there is nothing in there about the repayment of the deposit allowance, then they will be unable to take it away from you.

The ONLY reason that your salesman said what he said is because of his commission. Nothing else.

If you are happy to pay 10.9% for the next two months so that your salesman can make a little more money, go right ahead. However, its money which you not need to be paying, and thus my recommendation to you would be to settle the finance TODAY if you are in a position to do so.

Just my 2p, but there we go.

[wilwak]

Thank you.

It’s my local dealer that I use a lot so I may just suck it up and wait for three payments so they get their commission.

I value the relationship and they still saved me money when they could have just let me pay cash.

[YoungRestorer]

wilwak said:

Thank you.

It’s my local dealer that I use a lot so I may just suck it up and wait for three payments so they get their commission.

I value the relationship and they still saved me money when they could have just let me pay cash.

In that case, I recommend calling up and making a partial early settlement for 95% of the outstanding, which saves you paying interest on 95% of the balance while allowing your dealer to make the commission.

Keep making the payments as usual, and then settle the whole thing when you have made 3 monthly payments.

Will save you a boatload of cash if you do it that way...

[KTF]

WV dealers have been known to tell people who want to pay cash to take the finance option to get the contribution, cheap servicing, etc. then pay it off after a few days using the cash anyway.

Seems daft not to go for finance then pay it off straight away given the incentives on offer.

[rfoster]

YoungRestorer said:

In that case, I recommend calling up and making a partial early settlement for 95% of the outstanding, which saves you paying interest on 95% of the balance while allowing your dealer to make the commission.

Keep making the payments as usual, and then settle the whole thing when you have made 3 monthly payments.

Will save you a boatload of cash if you do it that way...

Dealer commission is not protected in this instance, they will be subject to a % debit back depending on the overpayment. But that's not OP's problem, of course!

[wilwak]

I’ve read the agreement again and it definitely seems I’d be ok to clear it now without penalty.

However, the sales guy and manager were very fair to me so I’m not going to risk messing up their commissions to save a few hundred pounds. I’ve done ok on the deal so am happy.

Thanks for the advice. I’ll honour what was discussed when I bought the car and wait for three payments to be made.

[HustleRussell]

wilwak said:

I’ve read the agreement again and it definitely seems I’d be ok to clear it now without penalty.

However, the sales guy and manager were very fair to me so I’m not going to risk messing up their commissions to save a few hundred pounds. I’ve done ok on the deal so am happy.

Thanks for the advice. I’ll honour what was discussed when I bought the car and wait for three payments to be made.

That's what we did recently with VWFS on my Mum's Polo.

[B3NJY]

I did precisely this got the contribution and paid the finance off after 3 months.

[Sheepshanks]

YoungRestorer said:

I work for a well known captive finance company, and I can say with 99% certainty: the deposit allowance cannot be taken away at this point. This would be a punitive measure to prevent customers from settling their finance early, which is very dimly looked upon by the FCA. However, you should definitely read your finance agreement carefully. If there is nothing in there about the repayment of the deposit allowance, then they will be unable to take it away from you.

I don't work for a finance company but I'm 100% certain it can't be taken away at this point, because the OP is already past the Withdraw period, so he'd be Settling.

The grey area is if you Withdraw (within 14 days of signing). Then it's supposed to be as if the finance never existed, hence there's no interest penalty, which is typically amounts to 2 months when you Settle. However you do pay interest on a daily basis until the day you say you want to Withdraw - it's only a few pounds but I'm unclear on what basis (if there's no finance agreement) that this is charged.

As others have said VWFS certainly don't seek to recover the deposit contribution and VAG are not a company known for giving anything away so there must be some legal reason why it's not done.

[Ken Figenus]

You are very kind to the dealer as this will likely cost you hundreds in interest. If they dont churn salesmen and know you did this then all good.

Dont pay it ALL off though - allow £50 in it as they will add a months interest from the date they calculate the settlement. So if you pay it off that day you will still pay a months interest on a loan that doesn't exist. If you leave £20 in there and that is then later collected by DD then your lump sum was a partial repayment and may save you chunky interest. Porsche VWFS tried this with me but I was waiting the 30 days before paying it off and they tried to reset the clock and add 30 days interest again when doing the payment