Paying off Ford credit immediately - cost?

SadGamerGeek

Hi,

I'm keen to buy a nearly new Ford (Focus ST estate) from our local dealer. I've struggled to get much movement on price but they did say they'd knock off £500 for taking a credit agreement (and suggested I could pay it off after the first month). They've sent a quote for this, it is with "Ford Acquire".

I'm trying to understand what I'll end up paying for this. There's a finance facility fee of £10 and a (credit?) purchase fee of £10. The interest rate is 7.3% and the term is 36 months. I'm hoping that I will just pay the £20 above plus one 36th of the "Charge for Credit" fee which I assume is the interest. Is that correct?

The dealer told me there was no early redemption fee but I can't see this specified anywhere. The Ford Credit FAQ says this:

Are there any penalties for settling my agreement fully or in part?
Ford Credit settlement figures are calculated according to the Consumer Credit Act for regulated agreements.

... which doesn't seem particularly helpful! Can anyone clarify please?

TadleyBaggie

1/36th is probably too low, you pay more interest at the start of the loan because the balance is at its highest. You may have to pay up to 2 months additional interest, this often happens when a loan is settled early. You would need to read the specific T&C's for the loan.

Willing2Learn

Hi,

I *believe* you can cancel the CCA during the 14 day cooling off period and can then pay by an alternative method if you want to keep the car. Maybe another member, with more knowledge than I, can confirm...

Your right to withdraw from a credit agreement
In addition to the five-day cooling off period, you have a 14 day cooling off period in which to change your mind and cancel a credit agreement.

You have to repay the amount borrowed along with any interest that!!!8217;s accrued up to the point at which you cancel.

There are some agreements that can't be cancelled, for example where the amount of credit exceeds £60,260 and for agreements secured on land.

The 14-day cooling-off period starts from the day the agreement is concluded or if later, from when you receive a copy of the agreement.
For credit card the 14-day cooling off period starts from when you receive notification of your credit limit.

While the credit agreement can be cancelled, the contract for the item or service itself won't be affected so if you used credit to finance the purchase of a car you would need to find some other way to pay for it unless you have some other right to cancel that contract.

Source: Which?

Craig1981

ditto to both comments above. early settlement on loans may require 2 months interest paid as their "fee" - standard practice, so may wipe out the £500 discount you receive. the 14 day cooling off period may be a little tricker if purchased against a car - may cancel purchase all together, then end up paying cash anyway, returning car and pay for 2 weeks used etc...

either way you go... try make sure you pay something for it on a credit card - get the added section 75 protection as well

Nearlyold

Using the 14 day cooling off period (the legislation calls it a right of withdrawal) has no effect on the purchase and will also be the cheapest option. Just contact the finance company within 14 days and tell them you wish to withdraw from the agreement, you won't have to pay either of the £10 fees, they won't add up to 2 months interest, you will only pay interest for the period you have had the loan going and the interest charge will 1/365 of 7.3% of the amount borrowed per day. If you borrowed £10,000 for example the interest would be £2 per day.

You have 30 days in which to repay the amount borrowed (it's the finance company you repay) and you can't change your mind once you have given notice you want to withdraw - so you must be sure you have the funds available to repay the loan.

BoGoF

You would need to ensure the dealer wouldn't attempt to claw back the £500 reduction if you cancel the actual finance...I'm sure any invoice will show the full price with a £500 dealer contribution. The only reason they are knocking £500 off is because they will get at least this in commission from the finance.

SadGamerGeek

Thanks everyone. Lots to think about there. I must confess even though the cancellation sounds the financially best option (assuming dealer doesn!!!8217;t attempt to recover money) it feels a little underhand so I!!!8217;m not sure I can bring myself to do that!

Penelopa.Pitstop

Dealer wouldn't feel underhand doing something similar. It's business. You get best option available for your and that's it. You use your right to cancel, there's nothing wrong with it. It's very popular method to get extra perks like discount or free service.