Take up PCP and pay it back immediately
Discussion
Quick question please
I am in process of buying a used car - PCP finance has a horrible interest rate but the dealer is willing to throw in a £2k deposit contribution.
If I go ahead with the PCP, can I then take a bank loan (at a much smaller rate) and pay back the PCP immediately?
Would the dealer have any comeback on the £2k contribution?
I am in process of buying a used car - PCP finance has a horrible interest rate but the dealer is willing to throw in a £2k deposit contribution.
If I go ahead with the PCP, can I then take a bank loan (at a much smaller rate) and pay back the PCP immediately?
Would the dealer have any comeback on the £2k contribution?
There are two things in play here.
Firstly your right to withdraw from the finance agreement within 14 days of commencement. You will then need to pay the full amount outstanding less any deposit paid.
Secondly after 14 days settling the outstanding balance on the live finance agreement.
The first is a legal right and the second is likely to be fine but check for any early repayment fees.
Done it loads of times and it's a good way to secure a discount. As someone else said check your credit suitability given you'll need to have two finance products live at the same time while you settle the first one.
Firstly your right to withdraw from the finance agreement within 14 days of commencement. You will then need to pay the full amount outstanding less any deposit paid.
Secondly after 14 days settling the outstanding balance on the live finance agreement.
The first is a legal right and the second is likely to be fine but check for any early repayment fees.
Done it loads of times and it's a good way to secure a discount. As someone else said check your credit suitability given you'll need to have two finance products live at the same time while you settle the first one.
My point is that I think they still get their pay if you wait 14+ days - you can ask them what the conditions are. And so if it doesn't cost you anything meaningful, then you might as well let them get their money.
This might have changed in the last few years but that was my understanding.
This might have changed in the last few years but that was my understanding.
trashbat said:
My understanding is that the salesperson loses their commission if the finance is cancelled/paid off within some short time period, maybe someone can confirm. There might be a compromise you can reach so they still get paid.
Yes, a friend of mine did this after buying a car and using. His willingness to take a PCP agreement to leverage a better deal and dealer contribution. The salesman called him to complain the day after the finance was settled! The absolute cheek of it. Who the f
k would do that? 
piddy44 said:
This. Don't exercise your legal right to 'cancel' the agreement with the first 14 days as the dealer could in theory come after you for their 'deposit contribution'.
It's unheard of for dealers / finace arms of manufacturers to do this. I've Withdrawn from a VWFS agreement that included £2750 of deposit contribution and if there was a way VW could claim that back then they would. But they didn't, and they never do. I wonder if it's because when you Withdraw there's still a nominal daily interest charge. If it really was unwound like it never existed then there'd be no fee.piddy44 said:
Instead, give it a few days until the finance paperwork drops through your letterbox & you have an account/agreement number, phone them to get your settlement figure, & exercise your right (under the CCA) to repay the finance off immediately. .
You have no right to Settle immediately - you have to give a month's notice and the finance company can (and always do) charge another month for early replaayment. It's going to cost several hundred quid, depending on the amount financed and the interest rate. Withdrawing after a few days costs typically £30.piddy44 said:
I understood that you could exercise your right to withdraw within 14 days but that the manufacturer/dealer could, in theory, reclaim their contribution (though apparently they never seem to do so).
On our last purchase there wasn't anything in the paperwork that suggested they had the right to do so. I thought a price of X was agreed based on negotiation, dealer/OEM contribution etc. - then deposit of Y paid, and balance of Z on the finance deal. I couldn't see anything in the deal for settling Z which would cause X to change.Venisonpie said:
OP, don't worry about any potential impact to the sales team - you're not their benefactor.
100% correct.However, if I was buying a car and the saleperson was doing a good job to get me the car I wanted on a good deal, and I knew that paying back the finance early could mean someone would potentially lose out on their commission, I'd think it was only the decent thing to have a chat with them first to see if there was a solution that would benefit all parties, rather than taking a 'f
k 'em, not my problem' stance...If it costs you anything in interest, they may be able to cover that elsewhere in the deal.
piddy44 said:
I understood that you could exercise your right to withdraw within 14 days but that the manufacturer/dealer could, in theory, reclaim their contribution (though apparently they never seem to do so).
That's correct - you described it as "cancelling" in your earlier post. Withdrawing and Settling are very different.matrignano said:
Quick question please
I am in process of buying a used car - PCP finance has a horrible interest rate but the dealer is willing to throw in a £2k deposit contribution.
If I go ahead with the PCP, can I then take a bank loan (at a much smaller rate) and pay back the PCP immediately?
Would the dealer have any comeback on the £2k contribution?
I thought it was illegal to financially incentivise one particular payment method, isn't it? Surely they could (should) offer the same deposit contribution however you are paying.I am in process of buying a used car - PCP finance has a horrible interest rate but the dealer is willing to throw in a £2k deposit contribution.
If I go ahead with the PCP, can I then take a bank loan (at a much smaller rate) and pay back the PCP immediately?
Would the dealer have any comeback on the £2k contribution?
Have I remembered this wrong?
LimaDelta said:
I thought it was illegal to financially incentivise one particular payment method, isn't it? Surely they could (should) offer the same deposit contribution however you are paying.
Have I remembered this wrong?
I thought that as well.Have I remembered this wrong?
From what I remember it was brought in ages ago and was partly triggered by Petrol stations charging more if you paid by credit card for your fuel.
I could be wrong though, and there are always inventive ways around some of these rules.
Gassing Station | Car Buying | Top of Page | What's New | My Stuff