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  • FIRST POST
    • jimmy cricket
    • By jimmy cricket 30th Sep 17, 6:53 PM
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    jimmy cricket
    Paying off car loan in cooling off period
    • #1
    • 30th Sep 17, 6:53 PM
    Paying off car loan in cooling off period 30th Sep 17 at 6:53 PM
    Hi all,
    If someone could point me to a sticky, or advise, I would be grateful.

    Just ordered a new car. If I take out a finance agreement, I can get 1,500 off the price. Agreed verbally to rake out a straightforward repayment load with the dealer rather than a complicated lease or pcp arrangement.

    I have the cash to pay for the car so the plan is to pay as big as deposit as allowed and then pay off the loan within the 14 days.
    Just looking for a bit of guidance on how to do this and if there is specific language I need to use to protect the discount.

    Thanks
Page 1
    • DCFC79
    • By DCFC79 30th Sep 17, 8:34 PM
    • 30,399 Posts
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    DCFC79
    • #2
    • 30th Sep 17, 8:34 PM
    • #2
    • 30th Sep 17, 8:34 PM
    Does your contract not mention this ?
    Can people stop loaning money/being a guarator to family/friends, it rarely ends well and you lose out as your money is gone or you get shafted with being a guarantor.
    • jimmy cricket
    • By jimmy cricket 30th Sep 17, 9:28 PM
    • 343 Posts
    • 218 Thanks
    jimmy cricket
    • #3
    • 30th Sep 17, 9:28 PM
    • #3
    • 30th Sep 17, 9:28 PM
    Haven't got the contract yet, just ordered it with a 2k deposit down. Not signed any loan agreement.
    • WillyWonga
    • By WillyWonga 30th Sep 17, 9:35 PM
    • 276 Posts
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    WillyWonga
    • #4
    • 30th Sep 17, 9:35 PM
    • #4
    • 30th Sep 17, 9:35 PM
    The discount given will usually be the "kickback" the dealership will given by the finance company. The finance company will pay the dealership direct - if you cancel in the cooling off period then the dealership will pay back the "loan amount" + the kickback they received to the finance company to cancel the agreement. The dealership will then ask for full payment of the car as if you not not taken out the finance.

    Unfortunately you cant get the discount and keep it.
    • bazzyb
    • By bazzyb 30th Sep 17, 9:54 PM
    • 1,055 Posts
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    bazzyb
    • #5
    • 30th Sep 17, 9:54 PM
    • #5
    • 30th Sep 17, 9:54 PM
    The discount given will usually be the "kickback" the dealership will given by the finance company. The finance company will pay the dealership direct - if you cancel in the cooling off period then the dealership will pay back the "loan amount" + the kickback they received to the finance company to cancel the agreement. The dealership will then ask for full payment of the car as if you not not taken out the finance.

    Unfortunately you cant get the discount and keep it.
    Originally posted by WillyWonga
    The OP will be able to use their right to withdraw directly with the lender to cancel the agreement within the 14 days and repay the funds directly to them (plus daily interest charge), there would be no need to involve the dealer and it wouldn't be the dealer who is repaying the funds to the lender.

    Yes, the finance company would claw back their commission from the dealer but this shouldn't affect the OP in any way as by then they will already have the car. However, the OP should carefully check the paperwork with the dealership before signing in case there is some clause saying the discount needs to be repaid of the finance agreement is cancelled - but there is unlikely to be such a clause.
    • iolanthe07
    • By iolanthe07 1st Oct 17, 2:44 PM
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    iolanthe07
    • #6
    • 1st Oct 17, 2:44 PM
    • #6
    • 1st Oct 17, 2:44 PM
    Alternatively, just pay the loan for a couple of months and then settle it. There may be a small penalty, and you've paid a couple of months interest, but it won't come to £1500 and should be hassle free. This is what I'm going to do, anyway.
    I used to think that good grammar is important, but now I know that good wine is importanter.
    • noh
    • By noh 1st Oct 17, 3:02 PM
    • 5,134 Posts
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    noh
    • #7
    • 1st Oct 17, 3:02 PM
    • #7
    • 1st Oct 17, 3:02 PM
    Pay the loan off after the 14 day cooling off period. The interest will be minimal and there will be no issue with claw back of deposit contribution.
    • jimmy cricket
    • By jimmy cricket 1st Oct 17, 3:38 PM
    • 343 Posts
    • 218 Thanks
    jimmy cricket
    • #8
    • 1st Oct 17, 3:38 PM
    • #8
    • 1st Oct 17, 3:38 PM
    Alternatively, just pay the loan for a couple of months and then settle it. There may be a small penalty, and you've paid a couple of months interest, but it won't come to £1500 and should be hassle free. This is what I'm going to do, anyway.
    Originally posted by iolanthe07
    My understanding is that the interest is front loaded, I.e. It is added to the loan at the beginning so even if paid off early, you would still pay the same interest as if you let it run to the end.

    I'm guess slightly here as it is not something I've done before. I always pay cash or if needs must, get a bank loan.
    • Nebulous2
    • By Nebulous2 1st Oct 17, 4:43 PM
    • 1,648 Posts
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    Nebulous2
    • #9
    • 1st Oct 17, 4:43 PM
    • #9
    • 1st Oct 17, 4:43 PM
    My understanding is that the interest is front loaded, I.e. It is added to the loan at the beginning so even if paid off early, you would still pay the same interest as if you let it run to the end.

    I'm guess slightly here as it is not something I've done before. I always pay cash or if needs must, get a bank loan.
    Originally posted by jimmy cricket
    Interest on consumer finance isn't front-loaded. Even if it is added to give a total payable in the figures you are given it will then be discounted if you pay early.
    • bazzyb
    • By bazzyb 1st Oct 17, 5:10 PM
    • 1,055 Posts
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    bazzyb
    My understanding is that the interest is front loaded, I.e. It is added to the loan at the beginning so even if paid off early, you would still pay the same interest as if you let it run to the end.
    Originally posted by jimmy cricket
    Are you borrowing more than £25k?
    • jimmy cricket
    • By jimmy cricket 1st Oct 17, 7:37 PM
    • 343 Posts
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    jimmy cricket
    Are you borrowing more than £25k?
    Originally posted by bazzyb
    No minimum I can to get the contribution, around 5k
    • noh
    • By noh 1st Oct 17, 8:33 PM
    • 5,134 Posts
    • 3,452 Thanks
    noh
    My understanding is that the interest is front loaded, I.e. It is added to the loan at the beginning so even if paid off early, you would still pay the same interest as if you let it run to the end.

    I'm guess slightly here as it is not something I've done before. I always pay cash or if needs must, get a bank loan.
    Originally posted by jimmy cricket
    You are guessing incorrectly.
    The last time I did what you are proposing I purchased a Ford Fiesta ST took out the minimum loan possible, £2500, was given £750 deposit contribution and paid the loan off after making the first monthly payment. I paid less than £10 interest if I remember correctly.
    Ask the dealer for a copy of the loan agreement and read it thoroughly before you sign it to satisfy yourself.

    Is it manufacturers finance? If so which one?
    Last edited by noh; 01-10-2017 at 8:48 PM.
    • bazzyb
    • By bazzyb 1st Oct 17, 8:53 PM
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    bazzyb
    No minimum I can to get the contribution, around 5k
    Originally posted by jimmy cricket
    Interest will not be front loaded.

    If you use your right to withdraw within the first 14 days then you will simply pay a daily rate of interest plus whatever you borrowed. If you settle after the 14 days have passed you will usually pay whatever is outstanding plus around two months of interest on top, additionally all fees will need to be paid in full (arrangement fee, option to purchase fee, etc. - if applicable).
    • Nearlyold
    • By Nearlyold 1st Oct 17, 8:57 PM
    • 984 Posts
    • 817 Thanks
    Nearlyold
    Interest on consumer finance isn't front-loaded. Even if it is added to give a total payable in the figures you are given it will then be discounted if you pay early.
    Originally posted by Nebulous2
    Quite right - on early settlement lenders can only charge interest for the time the loan has been running calculated on the declining balance with a maximum additional charge of up to 58 days interest plus any option to purchase fee (if its HP there is always an option to purchase fee though the fee can be £0). Its all covered in the Early Settlement Regulations 2004 as amended to incorporate the European Consumer Credit Directive.

    If you withdraw from the finance agreement during the 14 day cooling off period you can only be charged interest for the time the loan is outstanding and you do not have to pay any extra interest, lenders arrangement fee, or option to purchase fee. You have 30 days to repay the loan after giving notice of withdrawal and you cannot change your mind. It is the customer that repays the finance company the money borrowed, not the car dealer, furniture retailer etc.
    • jimmy cricket
    • By jimmy cricket 1st Oct 17, 9:03 PM
    • 343 Posts
    • 218 Thanks
    jimmy cricket
    Thanks folks, incredibly helpful.
    For clarity, the finance is with mini the manufacturer, not the dealer
    • Nearlyold
    • By Nearlyold 1st Oct 17, 9:18 PM
    • 984 Posts
    • 817 Thanks
    Nearlyold
    Thanks folks, incredibly helpful.
    For clarity, the finance is with mini the manufacturer, not the dealer
    Originally posted by jimmy cricket
    The lender will be Alphera Finance a finance house which is a subsidiary of BMW Group. Its still classed as dealer finance as the dealer arranged it and gets paid for it.
    • Herzlos
    • By Herzlos 2nd Oct 17, 10:14 AM
    • 6,066 Posts
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    Herzlos
    The thing you're looking to do here is to "settle" the finance, not cancel it. So you sign up, drive the car away, phone up to 14 days later to settle, pay the pro-rata interest on those days, and you're sorted.

    Any issues with kickbacks is dealt with between the finance company and dealer, and has nothing to do with you.
    • bazzyb
    • By bazzyb 2nd Oct 17, 8:22 PM
    • 1,055 Posts
    • 3,201 Thanks
    bazzyb
    The thing you're looking to do here is to "settle" the finance, not cancel it. So you sign up, drive the car away, phone up to 14 days later to settle, pay the pro-rata interest on those days, and you're sorted.

    Any issues with kickbacks is dealt with between the finance company and dealer, and has nothing to do with you.
    Originally posted by Herzlos
    They would arguably be better off financially if they used their right to withdraw, ie "cancel", within the 14 days rather than settle in full after the 14 days.

    If they cancel on day 15 it doesn't stop the dealer getting their commission clawed back, but it will cost the OP more money. The agreement will have an arrangement with the finance company as to what circumstances commission can be clawed back, this agreement with typically include: cancelling by using right to withdraw; early settlement within X period of agreement; voluntary termination at any point during the agreement; if the agreement is defaulted at any period; fraud which is discovered during the agreement.
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