PCP deal to get discount then paying it off-any pitfalls?

smjxm09

Buying a new car where there is a manufacturers discount of £1500 for a PCP agreement. This will be added to the dealers discount price. The dealer knows I will be paying off the PCP after the first payment. The manufactures website says this is fine but is there any catch with the settlement figure?

I assume that if the car had a PCP loan of £10,000 and I make a first payment of £110 then I would pay £9,890 to settle plus a months interest?

bazzyb

You would have to check the contract, you may need to pay up to two months' worth of interest as a fee. And keep in mind that the interest may be front loaded so there is no way you will have paid anywhere near £110 worth of capital. The settlement figure could be higher than the advance. (Even more so if there are any admin fees associated with the agreement)

The best thing to do would be to use your right to withdraw within the first 14 days and simply repay the £10k - however before doing so I would check that the £1500 contribution would not need to be repaid before doing so.

marlot

I paid it off within the 14 days, and kept the contribution. I had to pay a few days of interest, but no other charges.

Iceweasel

marlot wrote: »

I paid it off within the 14 days, and kept the contribution. I had to pay a few days of interest, but no other charges.

Me too - a very handy amount off.

I achieved 22% reduction in the list price with the dealer contribution, the manufacturer's incentive and the finance contribution.