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  • FIRST POST
    • mortgagenoob
    • By mortgagenoob 27th Sep 17, 10:20 AM
    • 9Posts
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    mortgagenoob
    Car finance cancelation question.
    • #1
    • 27th Sep 17, 10:20 AM
    Car finance cancelation question. 27th Sep 17 at 10:20 AM
    Hi,

    I have recently purchased a new car using Mercedes-Benz finance at the dealership with a 4.9% apr. I have checked online and I can borrow the same amount, as a personal loan, for 2.8% from M&S Bank which would be quite a saving over the course of the loan. I am within my 14 day cooling off period so I know canceling the agreement won't be a problem. My question is, does anybody know if I would have to pay back the £1950 dealer contribution which was dependent on taking out the finance. Because this would more than cancel out any savings made by the lower rate of interest. I have checked all through my paperwork and I can't find any mention of this scenario.

    Many thanks in advance for your advice
Page 1
    • zx81
    • By zx81 27th Sep 17, 10:27 AM
    • 14,397 Posts
    • 15,194 Thanks
    zx81
    • #2
    • 27th Sep 17, 10:27 AM
    • #2
    • 27th Sep 17, 10:27 AM
    No, you wouldn't.

    But be aware you may not be accepted, or get the headline rate, with your current recent loan.
    • sivs
    • By sivs 27th Sep 17, 1:46 PM
    • 226 Posts
    • 55 Thanks
    sivs
    • #3
    • 27th Sep 17, 1:46 PM
    • #3
    • 27th Sep 17, 1:46 PM
    I would first apply for the loan and check you get the headline rate and then if you do use this to cancel the agreement.

    Like the other poster has said you might not get this rate.
    • Tarambor
    • By Tarambor 27th Sep 17, 2:42 PM
    • 1,756 Posts
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    Tarambor
    • #4
    • 27th Sep 17, 2:42 PM
    • #4
    • 27th Sep 17, 2:42 PM
    With the caveats mentioned above, what you are wanting to do you'll find many people have done especially those who have the money to buy outright. It makes no sense to turn down free money off just for having to go through the additional step of taking out finance and paying it off.

    The only thing you will have to do is pay interest on the initial finance for the time you've had it until you clear it off with the new loan.
    • Hengus
    • By Hengus 27th Sep 17, 2:58 PM
    • 4,653 Posts
    • 2,827 Thanks
    Hengus
    • #5
    • 27th Sep 17, 2:58 PM
    • #5
    • 27th Sep 17, 2:58 PM
    Hi,

    I have recently purchased a new car using Mercedes-Benz finance at the dealership with a 4.9% apr. I have checked online and I can borrow the same amount, as a personal loan, for 2.8% from M&S Bank which would be quite a saving over the course of the loan. I am within my 14 day cooling off period so I know canceling the agreement won't be a problem. My question is, does anybody know if I would have to pay back the £1950 dealer contribution which was dependent on taking out the finance. Because this would more than cancel out any savings made by the lower rate of interest. I have checked all through my paperwork and I can't find any mention of this scenario.

    Many thanks in advance for your advice
    Originally posted by mortgagenoob
    If you cancel any contract during the ‘cooling off’ period, then the contract is revoked. Why would the Finance Company standby the £1950 contribution in such circumstances? In my view, paying off the contract once it is in place is an entirely different scenario. Have I misunderstood the exam question?
    • Tarambor
    • By Tarambor 27th Sep 17, 3:10 PM
    • 1,756 Posts
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    Tarambor
    • #6
    • 27th Sep 17, 3:10 PM
    • #6
    • 27th Sep 17, 3:10 PM
    The contract isn't being cancelled, it isn't being revoked. The finance is being paid off in full, that is not the same thing.
    • Nearlyold
    • By Nearlyold 27th Sep 17, 3:30 PM
    • 985 Posts
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    Nearlyold
    • #7
    • 27th Sep 17, 3:30 PM
    • #7
    • 27th Sep 17, 3:30 PM
    Just one point to add - once you have notified Mercedes Finance that you wish to withdraw from the finance agreement during the 14 day period you cannot change your mind, you will have 30 days to repay the loan (plus any accrued interest) - so do make sure you have the new loan in place at the more competitive rate (assuming it's available) beforehand.
    • Hengus
    • By Hengus 27th Sep 17, 4:02 PM
    • 4,653 Posts
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    Hengus
    • #8
    • 27th Sep 17, 4:02 PM
    • #8
    • 27th Sep 17, 4:02 PM
    The contract isn't being cancelled, it isn't being revoked. The finance is being paid off in full, that is not the same thing.
    Originally posted by Tarambor
    The OP states that cancelling the contract will not be a problem as they are still within the cooling off period. Why mention it if it is not relevant to the question posed? I agree that if the contract is paid off in full, then the deposit contribution isn’t an issue.
    • MataNui
    • By MataNui 27th Sep 17, 4:19 PM
    • 884 Posts
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    MataNui
    • #9
    • 27th Sep 17, 4:19 PM
    • #9
    • 27th Sep 17, 4:19 PM
    The contract isn't being cancelled, it isn't being revoked. The finance is being paid off in full, that is not the same thing.
    Originally posted by Tarambor
    Ah, Well it might be. It depends on exactly what the OP says to the finance company. He seems here to be talking about his 14 days cooling off period which is cancelling and would forfeit the contribution. What he needs to do is 'settle' which has nothing to do with the 14 days. I recently looked into exactly this and was told by the dealer to make one payment for the avoidance of any doubt with the finance company. Then it would basically only cost me the one moths interest plus the additional one month interest penalty.

    But. As you say. Its still free money if you do it right.
    • zx81
    • By zx81 27th Sep 17, 4:21 PM
    • 14,397 Posts
    • 15,194 Thanks
    zx81
    it would basically only cost me the one moths interest
    Originally posted by MataNui
    How much interest would one moth have? They're quite small and seem to have a short attention span.
    • Nearlyold
    • By Nearlyold 27th Sep 17, 5:00 PM
    • 985 Posts
    • 817 Thanks
    Nearlyold
    Ah, Well it might be. It depends on exactly what the OP says to the finance company. He seems here to be talking about his 14 days cooling off period which is cancelling and would forfeit the contribution. What he needs to do is 'settle' which has nothing to do with the 14 days. I recently looked into exactly this and was told by the dealer to make one payment for the avoidance of any doubt with the finance company. Then it would basically only cost me the one moths interest plus the additional one month interest penalty.

    But. As you say. Its still free money if you do it right.
    Originally posted by MataNui
    There is no mechanism to recover the deposit contribution from the customer, the finance company will have paid the dealer for the car and the customer will have paid the finance company the amount they borrowed - the dealer is telling you to pay for a month because the commission claw back they'll suffer won't be so immediate and they'll worry about next months targets when it comes to it. Settling would mean you will have paid the finance arrangement fee plus 1 months accrued interest, plus up to 58 days interest "penalty" plus the option to purchase fee (which can be circa £150+). If you exercise the right to withdraw you only pay the accrued interest - no other fees can be charged.
    Last edited by Nearlyold; 27-09-2017 at 5:06 PM.
    • mortgagenoob
    • By mortgagenoob 27th Sep 17, 11:43 PM
    • 9 Posts
    • 0 Thanks
    mortgagenoob
    So I have got a loan agreed with Rate Setter for 3%, (M&S charge an early repayment fee and I might sell the car before the 3 years is up). Should I wait and pay a months interest to Mercedes Finance or cancel my agreement with them and repay within my 14 day cooling off period? I'm still a little confused.

    Many thanks
    • elle may
    • By elle may 28th Sep 17, 4:11 PM
    • 185 Posts
    • 96 Thanks
    elle may
    Husband agreed a car finance of 12% 4yr's(could have killed him) I phoned up and asked for a settlement figure if we paid it off before the cooling off period. They emailed the amount and when to pay it by, a month.

    I applied to Sainsbury's and got 3% over 3yr's instead of 4. So when the money was in our account i paid by bac's to car finance and was charged only that month's interest. In all it was it a 14 day turn around and saved us over a grand in interest. So i would say to repay it as soon as you can and cancel the agreement. And don't forget to get this in writing as they. olso in our case. said they would inform Experian it was settled.
    • AnotherJoe
    • By AnotherJoe 29th Sep 17, 5:03 AM
    • 7,675 Posts
    • 8,288 Thanks
    AnotherJoe
    So I have got a loan agreed with Rate Setter for 3%, (M&S charge an early repayment fee and I might sell the car before the 3 years is up). Should I wait and pay a months interest to Mercedes Finance or cancel my agreement with them and repay within my 14 day cooling off period? I'm still a little confused.

    Many thanks
    Originally posted by mortgagenoob
    SETTLE !!!

    If you cancel, you are very likely to have to repay the £1950. If you settle, you arent.
    • Daveahare99
    • By Daveahare99 2nd Oct 17, 2:01 PM
    • 49 Posts
    • 20 Thanks
    Daveahare99
    Settle I would say.

    Depends on the loan amount but if its around 10k or something any saving on a personal loan rate would be cancelled out by having to likely pay the dealer contribution.

    Hope it works out.
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