Buying car on PCP and settling it straight after ?

[Stefan05]

So I’m thinking of buying a car in the region of about 20k and happy to pay cash for it l. However I have been told that if you agree a PCP with the dealer then they are likely to give you a bigger discount on the car?

Once you have agreed the deal and taken out PCP you then pay it off with the original cash that was going to be used to buy the car and therefore saving money on the deal...is this correct ?

Thanks

[littleredrooster]

Exactly what I did - £1000 finance contribution from dealer, no penalty charges, no extra interest. Paid it off after the first payment had gone through. Win-win.

[Z4MCSL]

This is genius!

I would have thought there would be Early Repayment Penalties but if not then on a long deal with a st interest rate I can totally imagine they would give you a significant discount on the finance package as e.g 6.9% APR is going to get them more margin.


Main Dealers seem more like finance houses these days and they seem to have no interest in cash which I guess makes sense, the finance deal is worth more than the raw margin on the car.


Out of interest what sort of discount do you think you managed to secure?

[Stefan05]

littleredrooster said:

Exactly what I did - £1000 finance contribution from dealer, no penalty charges, no extra interest. Paid it off after the first payment had gone through. Win-win.

What’s the procedure like to settle the finance ? Do you have to wait until the first payment? I know the showroom gets commission at some point but by that time from my point of view the deal is already done

[kiethton]

Stefan05 said:

littleredrooster said:

Exactly what I did - £1000 finance contribution from dealer, no penalty charges, no extra interest. Paid it off after the first payment had gone through. Win-win.

What’s the procedure like to settle the finance ? Do you have to wait until the first payment? I know the showroom gets commission at some point but by that time from my point of view the deal is already done

You can call and withdraw any time within the first 14 days, paying only a small interest charge, linked to the number of days that finance has been had for. Will result in a lower charge versus doing so afterwards as a slightly worse calculation for interest/fees can be applied from then IIRC.

[Zooks]

kiethton said:

You can call and withdraw any time within the first 14 days, paying only a small interest charge, linked to the number of days that finance has been had for. Will result in a lower charge versus doing so afterwards as a slightly worse calculation for interest/fees can be applied from then IIRC.

Yep this is the way to do it. I did this when I bought my TT couple of years ago.

Really easy with VWFS as they actually have their own telephone menu option for withdrawing from an agreement and couldn't have been more helpful.
Call up a couple of days after collecting the car, transfer what I owed via bank transfer plus £30 interest, sorted.
Easiest £4.5k saving i ever made.

Obviously the deaer gets thei finance bonus reclaimed which I doubt they were chuffed about but I've been back to the same dealership for servicing etc since so its not as if their never getting any dosh from me.

[CAPP0]

I bought a car for that sort of money last year and asked the same question - happy to pay cash but I'd take the finance if it was beneficial. The dealer advised me that he doesn't get paid until you've had the finance agreement in place for x months (I think he said 6, possibly 3) during which time you would be paying interest and that overall the sums involved for both parties didn't stack up to a worthwhile saving where he could offer me any additional discount worth having.

[PSRG]

I discovered another, unexpected, benefit of doing this when my partner wrote off a 10 week old Seat Ibiza bought through CarWow with, from memory, a £1,500 'deposit contribution'. As expected with a write-off in the first year we were entitled for a like for like new replacement. Unfortunately the WLTP emissions changes meant that the exact car was no longer available, and there was a 4 to 6 month wait just for the nearest equivalent (we'd bought an FR auto with most of the options) . So LV offered to pay the invoice value as settlement, which seemed fair to me. Particularly as the invoice price didn't reflect the deposit contribution - that was accounted for in the 'how to pay for it' section. I'd only settled the finance a few weeks before it was written off...but, I ended up £1,500 better off So I spent almost twice as much money on a MINI Cooper S Clubman

I'm not recommending this as a way of making money, though if I'd only put a £500 deposit down I'd have quadrupled my money in under 3 months

[Deep]

CAPP0 said:

I bought a car for that sort of money last year and asked the same question - happy to pay cash but I'd take the finance if it was beneficial. The dealer advised me that he doesn't get paid until you've had the finance agreement in place for x months (I think he said 6, possibly 3) during which time you would be paying interest and that overall the sums involved for both parties didn't stack up to a worthwhile saving where he could offer me any additional discount worth having.

I don't follow. If what everybody says is correct then;
You get the discount straightaway and you repay in the first 14 days. The dealer may not get his commission but that's not your problem .
Or did he tell you that you can't pay it back for 3/6 months? If that's the case then either he is telling you lies or other people who have replied on this thread are incorrect.

I'd like to know the real answer as I'm thinking of doing the same thing!

Thanks

[Stefan05]

Deep said:

CAPP0 said:

I bought a car for that sort of money last year and asked the same question - happy to pay cash but I'd take the finance if it was beneficial. The dealer advised me that he doesn't get paid until you've had the finance agreement in place for x months (I think he said 6, possibly 3) during which time you would be paying interest and that overall the sums involved for both parties didn't stack up to a worthwhile saving where he could offer me any additional discount worth having.

I don't follow. If what everybody says is correct then;
You get the discount straightaway and you repay in the first 14 days. The dealer may not get his commission but that's not your problem .
Or did he tell you that you can't pay it back for 3/6 months? If that's the case then either he is telling you lies or other people who have replied on this thread are incorrect.

I'd like to know the real answer as I'm thinking of doing the same thing!

Thanks

I dnt care about the dealers profits infact quite enjoy getting one over on them for once

[bassanclan]

When my wife bought a used Mercedes she had to sign a "waiver" saying that if she paid off the PCP in full within 10 months she would lose the deposit contribution and the 2 year warranty.

So after the first month she paid off most of it, leaving her with their "minimum repayment" which is £25 per month.

I think she should have been allowed to set the payment to £0.01 per month as there is nothing in the contract which states a minimum payment, but she wasn't bothered about quibbling.

[Stefan05]

bassanclan said:

When my wife bought a used Mercedes she had to sign a "waiver" saying that if she paid off the PCP in full within 10 months she would lose the deposit contribution and the 2 year warranty.

So after the first month she paid off most of it, leaving her with their "minimum repayment" which is £25 per month.

I think she should have been allowed to set the payment to £0.01 per month as there is nothing in the contract which states a minimum payment, but she wasn't bothered about quibbling.

Very smart 😎

[CAPP0]

Stefan05 said:

Deep said:

CAPP0 said:

I bought a car for that sort of money last year and asked the same question - happy to pay cash but I'd take the finance if it was beneficial. The dealer advised me that he doesn't get paid until you've had the finance agreement in place for x months (I think he said 6, possibly 3) during which time you would be paying interest and that overall the sums involved for both parties didn't stack up to a worthwhile saving where he could offer me any additional discount worth having.

I don't follow. If what everybody says is correct then;
You get the discount straightaway and you repay in the first 14 days. The dealer may not get his commission but that's not your problem .
Or did he tell you that you can't pay it back for 3/6 months? If that's the case then either he is telling you lies or other people who have replied on this thread are incorrect.

I'd like to know the real answer as I'm thinking of doing the same thing!

Thanks

I dnt care about the dealers profits infact quite enjoy getting one over on them for once

The conversation, after we'd agreed a price for the car, was along the lines of "do you want to knock a further £x off the price to me in which case I'll take your finance and you'll get that back in commission". The rest was as per my post above.

Of course you could then just go ahead and try to "get one over" but bear in mind that at £20k you're almost certainly not buying a new car, therefore if you have any issues with it and need to go back you can expect them to be rather less helpful than they might have been. Depends what sort of dealer you're buying from and what sort of person you are morally I guess; in my case they were a pair of decent guys and not some dodgy backstreet assholes.

[Zooks]

Deep said:

I don't follow. If what everybody says is correct then;
You get the discount straightaway and you repay in the first 14 days. The dealer may not get his commission but that's not your problem .
Or did he tell you that you can't pay it back for 3/6 months? If that's the case then either he is telling you lies or other people who have replied on this thread are incorrect.

I'd like to know the real answer as I'm thinking of doing the same thing!

Thanks

Just for clarification,

I got offered 'incentives' of £4500 from Audi and another £4000 from the dealer on a car taken on PCP finance.

I agreed a price for the car less the £8500 incentives and ordered.

I withdrew from the finance agreement 4 days after signing the paperwork for my new car (on collection day). This is within the CCA rules and I did not have to wait any longer to do this or inform the dealer I was going to pay it off.

I paid the balance of the car off less the £8500 'incentives' and paid £30 in interest on the sum I owed for the 4 days the agreement was in place.

This was 2 years ago and I did not have to return any of the incentive money to either Audi or the dealer.

Can't comment for other makes but for VAG group cars its a no-brainer

Edited by Zooks on Tuesday 21st January 17:29

[Graveworm]

Not PCP but similar. Was buying the car. Got put in touch with fleet sales. Only downside is no dealer handover. He was pretty up front. Said go to car wow and then he would take another 10 percent off the best offer. Which he did, then said if I finance any amount they can give 2k additional deposit contribution and I can pay that off right away. So financed the minimum amount 3K got another 2K off and cleared the 3K as soon as they sent the paperwork no interest. Worked out cheaper than any used same make and model at the time.

[Sheepshanks]

bassanclan said:

When my wife bought a used Mercedes she had to sign a "waiver" saying that if she paid off the PCP in full within 10 months she would lose the deposit contribution and the 2 year warranty.

I've never heard of that before - I can't imagine the FCA would be happy about it.

Withdrawing (within 14 days) seems a slightly grey area - apparently some manuacturers finance arms do reserve the right to recover incentives but in practice never do. Beyond 14 days you're Settling, and I think penalties are illegal.

[Stefan05]

Zooks said:

Deep said:

I don't follow. If what everybody says is correct then;
You get the discount straightaway and you repay in the first 14 days. The dealer may not get his commission but that's not your problem .
Or did he tell you that you can't pay it back for 3/6 months? If that's the case then either he is telling you lies or other people who have replied on this thread are incorrect.

I'd like to know the real answer as I'm thinking of doing the same thing!

Thanks

Just for clarification,

I got offered 'incentives' of £4500 from Audi and another £4000 from the dealer on a car taken on PCP finance.

I agreed a price for the car less the £8500 incentives and ordered.

I withdrew from the finance agreement 4 days after signing the paperwork for my new car (on collection day). This is within the CCA rules and I did not have to wait any longer to do this or inform the dealer I was going to pay it off.

I paid the balance of the car off less the £8500 'incentives' and paid £30 in interest on the sum I owed for the 4 days the agreement was in place.

This was 2 years ago and I did not have to return any of the incentive money to either Audi or the dealer.

Can't comment for other makes but for VAG group cars its a no-brainer

Edited by Zooks on Tuesday 21st January 17:29

Wow some deal that is! What car was that for ?

[anonymous-user]

I would check broadspeed for cash price first.

The amount of people that settle early will be tiny against those that don't.

[mcg_]

pre reg golf r. bought on pcp to get 2 free services (already a good price so no haggling on that).

Paid off within 14 days. Had it's first free service 6 months ago.

[Stefan05]

Just to be clear...

When I agree a finance deal this weekend with BMW for approx £22k (depending on discount). I can agree finance to hopefully agree a discount say 1k and then I will just have to pay deposit for deal at time (say 2k) and then just pay remaining 19k within 14 days ?

Thanks