M4 CP. Settling a PCP the day after taking it out

[Superlightdaa]

Looking at buying a pre registered (June 18) M4 CP tomorrow, dealer has offered an extra £5k off the purchase price if I take out the PCP, total 22k off the RRP of a new car.
Total PCP novice as my purchases are usually cash/personal loan, which I was intending to do with this one, however the salesman has advised that I can settle the PCP the very next day and only pay daily interest charge of under £5 plus the finance balance and still get the £5k. Been trying to find the catch with the deal but come up short, can’t see one. Has anyone done this before?

[Chamon_Lee]

plenty of people seem to do this that have the means to do it.

Someone can correct me if I am wrong but its a bit like paying it off within your 14 day cooling off period. Its a financial product and as such you have time to read over the documents and decide if you are still happy with everything. What he says is correct that you will incur minimal interest charge but are allowed to pay it off in full.

Generally salesman don't advise customer you can do this and I dont think they are allowed to but desperate times call for desperate measures and all that coming towards Xmas targets

[Pioneer]

My FA told me to run any loan for min. 3 mths before settling as it can adversely effect my credit rating. I'm a landlord so I have a lot of mortgages, had 999 with Experian for ages now so not sure how much truth is in it. I've taken finance and settled almost immediately with various products just to get a deal and have had no issues.

[JMBMWM5]

Pioneer said:

My FA told me to run any loan for min. 3 mths before settling as it can adversely effect my credit rating. I'm a landlord so I have a lot of mortgages, had 999 with Experian for ages now so not sure how much truth is in it. I've taken finance and settled almost immediately with various products just to get a deal and have had no issues.

They were lying you can get it paid off inside 2 weeks, you will be charged a day rate.

[Terminator X]

Don't they add all the interest on to the loan on Day One, how do you avoid having to pay all of that?

TX.

[tuffer]

I have done this with a couple of BMW's, take the credit and the extra discount and then just pay it off, no big deal. Major issue is when you come to trade it in, despite the big discount up front you will still see a massive hit.

[HTP99]

tuffer said:

I have done this with a couple of BMW's, take the credit and the extra discount and then just pay it off, no big deal. Major issue is when you come to trade it in, despite the big discount up front you will still see a massive hit.

Care to explain please?

[HTP99]

Terminator X said:

Don't they add all the interest on to the loan on Day One, how do you avoid having to pay all of that?

TX.

Pay it off within the 14 day cooling off period and you will only incur a day rate of interest.

Pay it off once the agreement is in place; ie 2 months down the line, then the settlement figure will take into account a refund of upfront interest calculated on a pro rata basis.

[Sheepshanks]

In the first 14 days you're Withdrawing - so it's like the agreement never existed. Beyond 14 days you're Settling.

As others have said, Withdrawing just incurs daily interest until the day you say you want to Withdraw, so will be a few £.

To Settle you have to give a months notice and the finance company can (and usually does) charge another month's interest as a penalty. Might be a few hundred pounds on an expensive car at chunky APR.

In theory if you Withdraw they can reclaim the incentives but I've never heard of that happening on any make of car. Done it myself on a VW and if there was any way VWFS could have taken the £3K contribution back I'm sure they would have.

[AW10]

Regardless of what the salesman says it would be well worth reading the fine print of the agreement before you assume what you're trying to do will work. At the end of the day the finance agreement is binding; the salesman's word isn't.

And perhaps post in the finance section for a wider/more correct audience.

[Pioneer]

JMBMWM5 said:

Pioneer said:

My FA told me to run any loan for min. 3 mths before settling as it can adversely effect my credit rating. I'm a landlord so I have a lot of mortgages, had 999 with Experian for ages now so not sure how much truth is in it. I've taken finance and settled almost immediately with various products just to get a deal and have had no issues.

They were lying you can get it paid off inside 2 weeks, you will be charged a day rate.

Yep, done this a few times but does it effect your credit rating? I've been told it does but can't see how or why

[HTP99]

Sheepshanks said:

In theory if you Withdraw they can reclaim the incentives but I've never heard of that happening on any make of car. Done it myself on a VW and if there was any way VWFS could have taken the £3K contribution back I'm sure they would have.

In our finance paperwork (Renault and Dacia), it does state that they will claw any incentives back from the purchaser, however at the moment it is policy that they don't, but it is monitored and if there is a large % age of agreements that are withdrawn from within the 14 day cooling of period and it becomes the norm, then the policy may change.

There can also be an issue with the FCA and mis-selling of the finance agreement, if the only reason that the agreement is being set up is for the end purchaser to take advantage of the incentives and then withdrawing.

[JMBMWM5]

Pioneer said:

Yep, done this a few times but does it effect your credit rating? I've been told it does but can't see how or why

How can it?, you've paid your debt in full.

[Superlightdaa]

Thanks for the info, deal is done, collecting my new (to me) M4 CP on Friday 7th Dec. I'm going to settle the finance hopefully the same day if not early on Saturday, will let you know how easy or difficult it is.

[VvrooomM]

Superlightdaa said:

Thanks for the info, deal is done, collecting my new (to me) M4 CP on Friday 7th Dec. I'm going to settle the finance hopefully the same day if not early on Saturday, will let you know how easy or difficult it is.

would you be kind enough to share some details of your deal, looking for an m3cp and would be interested what can be haggled from who. PM me if necessary. Many thanks

[tuffer]

HTP99 said:

tuffer said:

I have done this with a couple of BMW's, take the credit and the extra discount and then just pay it off, no big deal. Major issue is when you come to trade it in, despite the big discount up front you will still see a massive hit.

Care to explain please?

It will lose a st tonne of money. So despite the initial saving you will still lose a load in depreciation.

[Pioneer]

JMBMWM5 said:

Pioneer said:

Yep, done this a few times but does it effect your credit rating? I've been told it does but can't see how or why

How can it?, you've paid your debt in full.

This is how I see it. Maybe someone with a financial background will tell me why - apart from the obvious of not having anything on credit means no credit history. I have plenty of utility bills and BTL mortgages going out every month but he still said it's not good to keep clearing large loans early.

[bigandclever]

Pioneer said:

This is how I see it. Maybe someone with a financial background will tell me why - apart from the obvious of not having anything on credit means no credit history. I have plenty of utility bills and BTL mortgages going out every month but he still said it's not good to keep clearing large loans early.

Not having things on credit today doesn't mean you haven't got a credit history. I would've thought it's not 'bad', but someone lending you some cash wants to see a reasonable return on it so it puts future lenders off. I have no experience in such matters though (well, the paying off early bit anyway!).

[Superlightdaa]

tuffer said:

It will lose a st tonne of money. So despite the initial saving you will still lose a load in depreciation.

Thanks for the advice, but when does a car not lose money. If the GFMV of the car is comparable with the PCP quote then I won't lose the st tonne of money as you say. Oh and the sky might also fall in, I better have a contingency plan for that one too.

[dogz]

Pioneer said:

JMBMWM5 said:

Pioneer said:

Yep, done this a few times but does it effect your credit rating? I've been told it does but can't see how or why

How can it?, you've paid your debt in full.

This is how I see it. Maybe someone with a financial background will tell me why - apart from the obvious of not having anything on credit means no credit history. I have plenty of utility bills and BTL mortgages going out every month but he still said it's not good to keep clearing large loans early.

Credit scores peddled by Experian, equifax and call credit are a misnomer. What a lender is looking for is evidence that you can manage your credit obligations well.

Each lender will have their own scorecard based on a variety of factors and based on the type of business they want to write. Paying off a loan early may detract some lenders but I’m betting not many if any at all. I’d not get hung up on maintaining a 999 score with Experian or whichever credit reference agency. What matter is paying your obligations on time. Having accounts for many years will the same provider will help this

If it was me I’d take the deal and pay it off as soon as I could. It will not impact your score adversely and I’d say the person saying to stick it out for 3 months is misinformed and actually wrong