Paying off car loan in cooling off period

noh

jimmy_cricket wrote: »

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.

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?

bazzyb

jimmy_cricket wrote: »

No minimum I can to get the contribution, around 5k

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

Nebulous2 wrote: »

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.

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

Thanks folks, incredibly helpful.
For clarity, the finance is with mini the manufacturer, not the dealer

Nearlyold

jimmy_cricket wrote: »

Thanks folks, incredibly helpful.
For clarity, the finance is with mini the manufacturer, not the dealer

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

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

Herzlos wrote: »

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.

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.