Paying off a PCP early ( with funds from an HP )

[anonymous-user]

[redacted]

[Macneil]

What does your finance agreement say about early repayment? In any case cancel the finance altogether and settle with your loan. What you're doing sounds like a recipe for a debt problem

[Butter Face]

As long as you get approved for the loan now you’ve got the current agreement showing against you then, no, no bad idea. As long as te new payments are comfortable for you.

[The Cardinal]

This sort of thing is considered a recipe for a debt problem because sometimes the temptation of having the cash in hand from a loan is a temptation too far for some (i.e. they don't use it to pay back the loan, then fritter it on something else).

Otherwise, this course of action sounds very sensible to me. You should be able to withdraw from a PCP agreement within 14 days of its creation, during the cooling-off period. Even if you go beyond this time, the interest on the PCP won't be that much if it's within a short time.

One word of warning... be sure that the bank will definitely loan you the money. These are uncertain times and it wouldn't surprise me if things changed unexpectedly / quickly.

[Macneil]

anonymous said:

[redacted]

Because if you don't clear the PCP finance with one payment, you're paying off two loans. for every month that the PCP remains active you're paying 12 per cent on that and 2.9 on the loan. Uour post reads as if you've got the loan money coming through anyway, so why would you do anything else but immediately cancel the pcp and pay "cash" for the car with your loan funds, or if you can't cancel, clear with one payment Paying off in chunks just seems daft, at best you'll have your loan money sitting in the bank while you're paying interest on both sums.

Also, I'm not suggesting for a moment that your seller will not have been completely transparent, but what is in the small print will trump anything you've been told verbally.

[irc]

As above check small print but I did similar with a VW finance PCP loan of circa 14k. Paid it off with combination of 10k cash from savings and 4k on zero rate credit card. Actually the card had a 1.4% fee so approx 1% over the 20 month fee period. Saved a huge amount of interest compared to the PCP.

Still got my 2 free services as well.

[Sheepshanks]

The Cardinal said:

Otherwise, this course of action sounds very sensible to me. You should be able to withdraw from a PCP agreement within 14 days of its creation, during the cooling-off period. Even if you go beyond this time, the interest on the PCP won't be that much if it's within a short time.

This is correct, ideally Withdraw with 14 days - you'll be charged interest on a daily basis up until the point you tell them so it will be litererally few pounds. You then get a few days (although I've seen as many as 28) to pay the amount. Actually telling the finance company might not be straightforward at the moment though!

Beyond 14 days you're Settling. The law dictates the amount of interest that can be charged - basically it's max 2 months so it'll be a hundred quid or so.

[33q]

irc said:

As above check small print but I did similar with a VW finance PCP loan of circa 14k. Paid it off with combination of 10k cash from savings and 4k on zero rate credit card. Actually the card had a 1.4% fee so approx 1% over the 20 month fee period. Saved a huge amount of interest compared to the PCP.

Still got my 2 free services as well.

I've done this twice with VWFS and if we ever get the Arona I'm planning to do the same.