Paying off PCP very early - good idea?

bearcat16

The dealer is not lying, (and is actually doing you a favour by telling you that you can do this) this is exactly what I did with my car.

I got free servicing, £500 discount and a few other goodies for taking the PCP.

I then paid it off after making just 1 payment. By law, finance companies cannot charge more than 2 months worth of interest if you choose to settle, but there's an even better way that avoids even that fee.

The consumer credit act says that you can make additional payments to your finance at any time, of any amount, without any fees or penalties. So simply make an additional payment of the balance less £100 or so.

Then wait a week and ask to settle it. That way you will only be charged 2 months worth of interest on the £100 remaining, not the thousands.

And you'll have got all the freebies.

gzoom

bearcat16 wrote: »

The consumer credit act says that you can make additional payments to your finance at any time, of any amount, without any fees or penalties. So simply make an additional payment of the balance less £100 or so.

Then wait a week and ask to settle it. That way you will only be charged 2 months worth of interest on the £100 remaining, not the thousands.

And you'll have got all the freebies.

Great tip!! I'm planning on getting a Tesla Model S next. If you buy through Tesla finance (5.9% APR) Tesla will promise to buy the car back at 50% at year 3 - which helps reassure longterm value. I wonder if this trick will work, buy the car through their finance (Max 20% deposit), and than pay off all but £100, and than just pay 5.9% APR on £100 rather than £35,000 for the next 3 years, whilst still getting access to their buy back scheme??