Buying with PCP & intending to settle early

[Flat6]

I'm looking at buying a 2 year old Audi from a main dealer which is currently being offered with an additional £1000 Audi deposit contribution, 2 year warranty & 2 free services if I buy with an Audi PCP.

The interest rate is much higher than I can get a personal loan for, so I'm considering taking the PCP then clearing it after a month with a personal loan.

The dealer has confirmed there will be no penalties in doing this but they're obviously not keen for me to do it as they lose out.

For anyone who's done this is it as straightforward as it seems or an I missing something? I don't want to find out the settlement figure is somehow overinflated or I am actually hit with unexpected charges. Obviously the dealer is pretty limited in the info they'll give me here and not that helpful...

Any advice/experiences appreciated.

[Rawwr]

Read the finance agreement. If it's not what the salesman claims, don't sign it and don't proceed.

[Butter Face]

Any finance fee? Any option to purchase fee?

You normally have the right to repay any credit in full or partially at any time. Most finance companies do charge a fee of up to 2 months interest.

[datum77]

All finance companies would be very upset if you settle a finance agreement within, say, the first year. The admin costs for them would not be covered by any profit they made from the interest. The dealer, having been paid out the commission on the deal, would then have it ALL "clawed back" by the finance company.
Somewhere in the small print will be various objections and penalties that will prevent you from doing this.

[Butter Face]

datum77 said:

All finance companies would be very upset if you settle a finance agreement within, say, the first year. The admin costs for them would not be covered by any profit they made from the interest. The dealer, having been paid out the commission on the deal, would then have it ALL "clawed back" by the finance company.
Somewhere in the small print will be various objections and penalties that will prevent you from doing this.

Depends on the dealers terms.

Some only get clawed back within 3 months for settlements, 12 for repossessions etc.

[berlintaxi]

datum77 said:

All finance companies would be very upset if you settle a finance agreement within, say, the first year. The admin costs for them would not be covered by any profit they made from the interest. The dealer, having been paid out the commission on the deal, would then have it ALL "clawed back" by the finance company.
Somewhere in the small print will be various objections and penalties that will prevent you from doing this.

Complete bks, nothing to stop you paying it off the minute you walk out of the dealership, the salesman will lose his commission so don't expect a Christmas card, otherwise nothing to stop you,you will probably have to pay a couple of months interest at most, done it many times.

[Basil Brush]

There's a stat limit of 2 month's interest charge on loans repaid early that I assume applies to PCP deals as well.

[Butter Face]

berlintaxi said:

datum77 said:

All finance companies would be very upset if you settle a finance agreement within, say, the first year. The admin costs for them would not be covered by any profit they made from the interest. The dealer, having been paid out the commission on the deal, would then have it ALL "clawed back" by the finance company.
Somewhere in the small print will be various objections and penalties that will prevent you from doing this.

Complete bks, nothing to stop you paying it off the minute you walk out of the dealership, the salesman will lose his commission so don't expect a Christmas card, otherwise nothing to stop you,you will probably have to pay a couple of months interest at most, done it many times.

If you paid it the minute you walked out of the showroom you wouldn't pay a penny in interest or fees ad you'd be withdrawing from the agreement within he first 14 days rather than settling it.

[berlintaxi]

Butter Face said:

berlintaxi said:

datum77 said:

All finance companies would be very upset if you settle a finance agreement within, say, the first year. The admin costs for them would not be covered by any profit they made from the interest. The dealer, having been paid out the commission on the deal, would then have it ALL "clawed back" by the finance company.
Somewhere in the small print will be various objections and penalties that will prevent you from doing this.

Complete bks, nothing to stop you paying it off the minute you walk out of the dealership, the salesman will lose his commission so don't expect a Christmas card, otherwise nothing to stop you,you will probably have to pay a couple of months interest at most, done it many times.

If you paid it the minute you walked out of the showroom you wouldn't pay a penny in interest or fees ad you'd be withdrawing from the agreement within he first 14 days rather than settling it.

You are right, I was speaking figuratively, but you can easily settle immediately after that.

[J1JPE]

Any thoughts on how Withdrawing within 14 days or Settling Early would affect Credit Ratings - for future PCP, Credit Card, Loan / Mortgage etc

[berlintaxi]

If you paid it off after 14 days it would just be recorded as settled,wouldn't say when, so if anything would help your credit score as you paid the loan off early,if you withdrew from the agreement it would just record the credit search.

[berlintaxi]

If you paid it off after 14 days it would just be recorded as settled,wouldn't say when, so if anything would help your credit score as you paid the loan off early,if you withdrew from the agreement it would just record the credit search.

Edited by berlintaxi on Thursday 31st December 11:00

[mattdaniels]

Flat6 said:

I'm looking at buying a 2 year old Audi from a main dealer which is currently being offered with an additional £1000 Audi deposit contribution, 2 year warranty & 2 free services if I buy with an Audi PCP.

The interest rate is much higher than I can get a personal loan for, so I'm considering taking the PCP then clearing it after a month with a personal loan.

The dealer has confirmed there will be no penalties in doing this but they're obviously not keen for me to do it as they lose out.

For anyone who's done this is it as straightforward as it seems or an I missing something? I don't want to find out the settlement figure is somehow overinflated or I am actually hit with unexpected charges. Obviously the dealer is pretty limited in the info they'll give me here and not that helpful...

Any advice/experiences appreciated.

One thing to bear in mind is that you will get two hits on your credit profile, one for the PCP deal and then a second when you go and take out the loan. Once you have the PCP deal on your credit profile your personal loan options *might* be more limited than you are currently seeing.

[Sheepshanks]

Flat6 said:

I'm looking at buying a 2 year old Audi from a main dealer which is currently being offered with an additional £1000 Audi deposit contribution, 2 year warranty & 2 free services if I buy with an Audi PCP.

As they're free, just make sure there's nothing in the T's & C's regarding the warranty and services that says the PCP must continue.

I just withdrew from a VW one on a new car which I took to get the £2750 deposit contribution - there was a discounted servicing package but as I'd paid something towards it I didn't have any doubt it would continue.

Withdrawing was really easy - they're not allowed to ask you why and it was the friendliest interaction I've ever had with anyone VW related. You have 14 days from signing the docs (signing may take place a few days before you collect the car) and fix the amount on the call (it was the amount borrowed plus a few £ interest as I'd waited a few days to make sure the car was OK) then you have 30 days to pay it. You don't pay the doc etc fees if you withdraw.

Edited by Sheepshanks on Thursday 31st December 11:52

[blank]

I did similar with Audi Finance a few years ago...

Took minimum PCP value to get 2 years free servicing, then settled it soon after. Didn't have any issues.

The dealer said I had to make three payments, but upon phoning Audi they said I could settle at any time. I suspect the dealer was trying to protect their commission.

Check the differences between settling and withdrawing and confirm that you keep the bonus if you withdraw.

[Flat6]

I was panicking a bit this morning because the sales guy was pushing me for a decision today, saying the offer ends 31st December but I've since seen on the Audi UK website that this is a nationwide promotion which runs until the end of January!

I feel a bit happier that I can review all the T&C's in detail before signing, so thanks all for the advice. Gives me a bit more time too to see if any other cars come up within budget.

[Flat6]

Sheepshanks said:

As they're free, just make sure there's nothing in the T's & C's regarding the warranty and services that says the PCP must continue.

I just withdrew from a VW one on a new car which I took to get the £2750 deposit contribution - there was a discounted servicing package but as I'd paid something towards it I didn't have any doubt it would continue.

Withdrawing was really easy - they're not allowed to ask you why and it was the friendliest interaction I've ever had with anyone VW related. You have 14 days from signing the docs (signing may take place a few days before you collect the car) and fix the amount on the call (it was the amount borrowed plus a few £ interest as I'd waited a few days to make sure the car was OK) then you have 30 days to pay it. You don't pay the doc etc fees if you withdraw.

Edited by Sheepshanks on Thursday 31st December 11:52

So withdrawing is different from settling?

If that's the case then I guess I don't have to wait a month or two but can decide within 14 days that I don't want the finance and pay for the car separately? (subject to t&c)

If this is the case then it's probably worth me getting the loan approved and the money made available in advance (?) I've got a good credit rating at so would expect (hope!) they'd still give me the finance approval.

Edit to add I've read through the above now and can see the difference - withdrawing is paying off within the 14 day cooling off period but may lose the benefits of taking the PCP. Settling early should keep these benefits but will have to pay a small amount of interest for the first month or so.

Edited by Flat6 on Thursday 31st December 16:47

[Alucidnation]

I thought you couldn't settle unless 50% of the deal was paid off?

[berlintaxi]

Withdrawing is cancelling the agreement and paying for the car in full, settlement is essentially asking how much is owed after the 14 days including any interest and or penalties due and then paying that off in full, the difference with withdrawing is that the credit agreement is scrapped as if it never existed.

[Butter Face]

Alucidnation said:

I thought you couldn't settle unless 50% of the deal was paid off?

That's voluntary termination, handing the car back and walking away.