Paying off pcp early, will it be worth it.

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gord115
gord115 Posts: 1,063 Forumite
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I called in my local VW dealer today.
They have an offer on used cars that if purchased with PCP,you can have 2 years warranty and two free services,2 year breakdown cover and 2 year MOT cover.

I pointed out that I didn't want finance because I have the cash.

He said if I took out PCP I could still have the extras and I could pay it off after a few months and save myself all the remaining interest.

I forgot to ask about an early settlement fee,which even if it is a couple of hundred pounds would still be worth it.

Does this sound right?

Any help/advice appreciated.
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  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    Yes - if you settle early, you will save on interest. The sooner you do it, the better - within the cooling off period, you will avoid the early settlement fee entirely.
  • fromtheshires
    fromtheshires Posts: 310 Forumite
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    Is it 0% interst on the PCP?

    I purchased a car very recently and wanted to go cash, but as the PCP was 0%, I decided to keep the money in my account and pay silly low amounts back for the time period of the PCP and then will just pay the rest in full when they want it.
  • pimento
    pimento Posts: 6,242 Forumite
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    I cancelled mine within the 14 days they give you to change your mind and didn't have to pay a penny. Still got the discount offered for taking it out.
    "If you think it's expensive to hire a professional to do the job, wait until you hire an amateur." -- Red Adair
  • billn
    billn Posts: 318 Forumite
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    I have done this twice now, take the pcp deal and then pay it off the next day, both times (with VW Finance) I kept the discount or servicing etc. The only reason the dealer tells you to pay the first few months payment is that they then get the kick back from the finance.

    Before I get flamed for sugesting this, the first time I did this I was told to do it by the dealer as they had missold the car i.e. they had offered something they should not have.
    If at first you don't succeed, sky diving is not for you!
  • gord115
    gord115 Posts: 1,063 Forumite
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    Deleted_User wrote: »
    Yes - if you settle early, you will save on interest. The sooner you do it, the better - within the cooling off period, you will avoid the early settlement fee entirely.

    If I do this will I still get the Free servicing etc?
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    Yes, unless it is specified otherwise in the contract.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Yep, I've done this 2 or 3 times, first time, as with others here, the dealer advised me to do it.
  • AFK_Matrix
    AFK_Matrix Posts: 682 Forumite
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    Can I just ask then as I now have 2 years remaining of my PCP and am wondering if I paid it off with a 0% superbalance transfer card would this work?

    And I assume the amount to pay off the PCP is 24x monthly payments? Or do I have to also include the baloon payment as well?

    Thanks
  • john1002
    john1002 Posts: 984 Forumite
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    You have include the balloon payment as the finance company would include this in any settlement figure.

    John
  • Cornucopia
    Cornucopia Posts: 16,156 Forumite
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    In addition...
    AFK_Matrix wrote: »
    Can I just ask then as I now have 2 years remaining of my PCP and am wondering if I paid it off with a 0% superbalance transfer card would this work?
    Many finance companies do not accept credit card as a means of payment for large balances - so you'd need to look for a solution to this (current account transfer, for example). However, there may be fees associated with that which would offset any savings.
    And I assume the amount to pay off the PCP is 24x monthly payments? Or do I have to also include the baloon payment as well?
    You will need a settlement figure, which won't be 24x payments or 24x payments+balloon - unless your APR is 0%, in which case there's no point paying it off. The settlement figure will generally be the outstanding amount of all the payments less a rebate for interest saved.

    You also need to bear in mind that settling the PCP early almost certainly removes the option to hand back the car at the end of the term, which in some cases may be valuable.
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