Paid off HP early, dealership demanding more money

[JB8]

There's a load of bks being sprouted here.

OP - If you have withdrawn (not cancelled) from the credit agreement and have paid the amount of credit in full to the lender - then you have nothing more to pay.

Your own deposit, any deposit contribution, or any part exchange value, is not included in the 'amount of credit'.

The dealer has no right to claim the deposit contribution back from the customer under any circumstances. They are breaching FCA rules if they try to.

The dealers actions here are not on.

[Sheepshanks]

SOL111 said:

Really?

I can't imagine any HP agreement where the monthly interest would amount to a couple hundred ££ after making 2-3 payments. And on a £15k car.

What were the terms of the agreement in % APR and duration OP?

It will, because you have to give a month notice and they can charge a month penalty - so (very rough approximation) two months at 10% on £15K is £250.

[Sheepshanks]

JB8 said:

The dealer has no right to claim the deposit contribution back from the customer under any circumstances. They are breaching FCA rules if they try to.

I'm not sure about that. Settlement, yes, but if you Withdraw it's like the finance deal never existed, but you're still obliged to pay for the car.

[boyse7en]

defblade said:

Szkoda said:

"If you withdraw from this agreement and you have paid the cash price together with interest payable on that amount to us within 30 days title to the goods will pass to you on the same terms as would have applied had you not withdrawn from this agreement.

IANAL, but to me as a layman what the dealer have sent you there is the exact opposite of having to pay anything extra/back/whatever.

IAANAL but to me you have misinterpreted that clause.
He hasn't paid the cash price, he has paid the financed price.

[33q]

I have paid off two VWFS PCPs with no penalty or claw back and kept the free services

Has anybody been chased for the deposit contribution? And did they pay?

In my case... No....and No

[Szkoda]

boyse7en said:

defblade said:

Szkoda said:

"If you withdraw from this agreement and you have paid the cash price together with interest payable on that amount to us within 30 days title to the goods will pass to you on the same terms as would have applied had you not withdrawn from this agreement.

IANAL, but to me as a layman what the dealer have sent you there is the exact opposite of having to pay anything extra/back/whatever.

IAANAL but to me you have misinterpreted that clause.
He hasn't paid the cash price, he has paid the financed price.

Haven't looked at it that way before, I think you are right I paid the financed amount not the cash amount.

Still irrelevant to my case though, there is nothing in that paragraph that says anything to the contrary - i.e. the deposit contribution can be clawed back by the dealer if I withdraw from the agreement.

[Szkoda]

33q said:

I have paid off two VWFS PCPs with no penalty or claw back and kept the free services

Has anybody been chased for the deposit contribution? And did they pay?

In my case... No....and No

Did you pay off within 14 days or after?

[superlightr]

Szkoda said:

33q said:

I have paid off two VWFS PCPs with no penalty or claw back and kept the free services

Has anybody been chased for the deposit contribution? And did they pay?

In my case... No....and No

Did you pay off within 14 days or after?

done the same on 3x cars all paid off within 14 days.

[Elroy Blue]

I have done this with VW with no problems. However, friend had just bought a Lexus. The dealer told him he 'had' to make one payment before paying off, otherwise he'd have to pay the deposit contribution back. There is nothing on any paperwork to suggest this is so.

[SOL111]

Sheepshanks said:

It will, because you have to give a month notice and they can charge a month penalty - so (very rough approximation) two months at 10% on £15K is £250.

Read up on it as the amount of penalty is capped by law. It should be 1%, which is still £150 but is naturally better than the situation this guy is faced with. Ultimately he'd still have £250 off and 2 years free servicing.

And no follow up.

[HustleRussell]

Amazed by the number of people commenting on here (who must have relevant experience of buying new cars or else why would they be posting?) who'd be happy to pay a punitive inflated cash price if they happened to have the readies to buy a car outright and intended to do so.

People who are criticising the practice of settling the finance early would happily pay thousands of pounds in extra interest over an inflexible period dictated by a finance company? Or would buy outright without a finance product, again paying a large premium compared to the cost to be financed?

Considering how scathing people on here are about people 'who can't afford them' PCP'ing new cars, why aren't the critics in this thread criticising the fact that dealers are manipulating and steering customers into taking unnecessary finance products instead of simply pricing the car equally, with or without the finance product?

In my view, they shift hundreds of cars using these finance products and go on to harvest their gains on most of these agreements. If the minority of savvy customers wish to have their cake and eat it, these dealers get no sympathy from me- as they are incentivising unnecessary debt.

[HTP99]

Sheepshanks said:

Some Gump said:

I'm amazed anyone has a moral compass that sides against the dealer.
OP agreed to a deal, and has gone back on it. If he wanted a different deal, he should have struck a different deal.

This is absolutely standard practice on new cars - I did it for £2750 on wife's Tiguan, no issues whatsoever. Some dealers encourage it. Would you really pay £2750 more if you wanted to pay cash?

I've no idea how the car industry gets away with these schemes, as it's supposed to be illegal to offer different prices for cash or credit.

Edited by Sheepshanks on Wednesday 6th March 22:47

They get away with it as it is a deposit contribution as opposed to straight discount but it is a very fine line.

Rate of withdrawal does get monitored as the FCA have an interest in it and may come down on a manufacturer if the rate of withdrawal is unusually high as it can be classed as mis-selling, it is in the finance agreement T's &C's (for Renault and Dacia) that if you withdraw, you will be liable for any incentives that come with said agreement and they must be payed back, however this isn't acted upon but may well be in the future.

In the OP's case, Santander have said all's well, so I should imagine in this instance the deposit contribution was dealer funded as opposed to finance house or manufacturer funded, hence the dealer itself having an issue with it.

[Szkoda]

HTP99 said:

They get away with it as it is a deposit contribution as opposed to straight discount but it is a very fine line.

Rate of withdrawal does get monitored as the FCA have an interest in it and may come down on a manufacturer if the rate of withdrawal is unusually high as it can be classed as mis-selling, it is in the finance agreement T's &C's (for Renault and Dacia) that if you withdraw, you will be liable for any incentives that come with said agreement and they must be payed back, however this isn't acted upon but may well be in the future.

In the OP's case, Santander have said all's well, so I should imagine in this instance the deposit contribution was dealer funded as opposed to finance house or manufacturer funded, hence the dealer itself having an issue with it.

Strange thing is my signed order form says the contribution is from Santandar and the invoice I have says Mitsubishi?!

There is actually an empty box on my order form for "Dealer Contribution" and a separate empty box for "Deposit Contribution".

[JB8]

Some Gump said:

I'm amazed anyone has a moral compass that sides against the dealer.
OP agreed to a deal, and has gone back on it. If he wanted a different deal, he should have struck a different deal.

Is it moral to incetivise a cash buyer into taking out a credit agreement they don't want or need by offering a discount deposit contribution?

Is it moral for the dealer to omit the fact they'll get a big fat commission from the lender, which the customer will end up paying for in interest, unless they withdraw or settle early?

OP has not gone back on any deal. That deal concluded as soon as the credit agreement was signed. They sold a vehicle, and got paid for the vehicle by the lender.

The OPs 'deal' is now with the lender. And OP has now paid off his end of that 'deal' .

Where in the original deal did it say 'we'll give you a deposit contribution, but we're not really giving it to you, you are actually paying for it through the interest the lender will charge you. Oh and if you pay off your loan early and don't pay enough interest to cover the deposit contribution, you'll have to pay us the deposit contribution back'?

[Sheepshanks]

SOL111 said:

Sheepshanks said:

It will, because you have to give a month notice and they can charge a month penalty - so (very rough approximation) two months at 10% on £15K is £250.

Read up on it as the amount of penalty is capped by law. It should be 1%, which is still £150 but is naturally better than the situation this guy is faced with. Ultimately he'd still have £250 off and 2 years free servicing.

And no follow up.

The 1% is the penalty, there's still the months notice. Actually one of them (notice and penalty) is 28 days and the other 30 days but I forget which way round. So in the OPs case the month(ish) penalty would likely be slightly less than 1%. Of course he hopefully had a somewhat lower interest rate than the 10% I used to make the maths easier.

[Jakg]

Elroy Blue said:

I have done this with VW with no problems. However, friend had just bought a Lexus. The dealer told him he 'had' to make one payment before paying off, otherwise he'd have to pay the deposit contribution back. There is nothing on any paperwork to suggest this is so.

It's likely that the commission paid from the finance company to the dealer is predicated on at least one payment, hence why that would be a dealers suggestion irrespective as to whether it affects the deal for the customer or not.

[HTP99]

Jakg said:

Elroy Blue said:

I have done this with VW with no problems. However, friend had just bought a Lexus. The dealer told him he 'had' to make one payment before paying off, otherwise he'd have to pay the deposit contribution back. There is nothing on any paperwork to suggest this is so.

It's likely that the commission paid from the finance company to the dealer is predicated on at least one payment, hence why that would be a dealers suggestion irrespective as to whether it affects the deal for the customer or not.

I would say that what the Lexus dealer said, was an outright lie.

[33q]

Szkoda said:

33q said:

I have paid off two VWFS PCPs with no penalty or claw back and kept the free services

Has anybody been chased for the deposit contribution? And did they pay?

In my case... No....and No

Did you pay off within 14 days or after?

I paid my Karoq off after 4 days and my wife's Polo afer about a month

[Sheepshanks]

33q said:

I paid my Karoq off after 4 days and my wife's Polo afer about a month

So they're quite different things - the first one is Withdrawing and it's like the finance agreement never existed. The second one is Settling - the agreement is in place, and you paid it off.

In practice with VAG there's little difference expect the second one will cost you a couple of hundred quid. Some companies do reserve the right to recover deposit contributions and other incentives if you Withdraw - a salesman on here said Peugeot does, but in proactice never pursues it.

[33q]

Sheepshanks said:

33q said:

I paid my Karoq off after 4 days and my wife's Polo after about a month

So they're quite different things - the first one is Withdrawing and it's like the finance agreement never existed. The second one is Settling - the agreement is in place, and you paid it off.

In practice with VAG there's little difference expect the second one will cost you a couple of hundred quid. Some companies do reserve the right to recover deposit contributions and other incentives if you Withdraw - a salesman on here said Peugeot does, but in proactice never pursues it.

I understand the differences and the Karoq cost about £15 in finance and the Polo about £150 but the point is that I and many others kept the deposit contribution and free services. I dislike this shift towards selling finance not cars. I'd much rather agree a deal and finance it myself but I guess the other way is much more profitable than my choice. Many dealers actively encourage early pay off it you engage in a cash deal conversation or at least accept it.....and one dealer told me that some people start off by saying they will pay off immediately but then don't and just carry on with the finance.