Right to withdraw Car Finance

Instability

Hi there.

We're looking at buying a used car from a dealership in the coming weeks. And as such have been looking around for the best way to do so.

Ideally we'd just pay cash & get it done with, but I gather there's not going to be much haggle room when paying cash nowadays. And that you'll get offered a cheaper price on finance.

Of course that finance price will end up being more than what you'd pay in cash if you pay it back with the deal they give you.

So my question is, having read about the 14 day Right to Withdraw; can I simply haggle a finance deal with them, sign the contract and pick up the car, then immediately inform them of my desire to withdraw. Leaving me the requirement to pay back the loan, plus the few days interest it takes to process everything? And I wouldn't be expected to pay back the total price that the finance deal would've cost had I paid it back over the full course?

Worked example:
£5500 car in cash
They offer me it for £5000 on finance
I accept the £5000 finance deal, then inform them I want to withdraw, leaving me owing just the £5000 loan plus a few days interest
And I wouldn't be needing to pay back the full price that the finance would've cost (>£6000 or what have you).

Is my understanding correct, and if so what pitfalls are there in this method?

[Deleted User]

Yes, you can do that.

Cornucopia

Yes... though if that's the budget you are working with, I can't see that the prices will be that different for Finance over Cash.

The reason why people consider the 14-day cancellation clause is for new car deals where the Manufacturers often offer £1000s in fixed incentives for buying cars on Finance.

Instability

Great, thanks.

Are there any downsides to doing this? And are there any finance options that this doesn't apply to, or are HP/PCP both covered by this?

Instability

Cornucopia wrote: »

Yes... though if that's the budget you are working with, I can't see that the prices will be that different for Finance over Cash.

The reason why people consider the 14-day cancellation clause is for new car deals where the Manufacturers often offer £1000s in fixed incentives for buying cars on Finance.

Yeah, like I said it they offer close enough similar prices for cash/finance then it'd be easier for everyone if we could just pay cash.

However if I'd get 10% off whatever price/any other incentives on finance then I don't see why I wouldn't consider this.

Cornucopia

Instability wrote: »

Are there any downsides to doing this? And are there any finance options that this doesn't apply to, or are HP/PCP both covered by this?

I think if it's a small independent dealer, they will be a bit miffed to lose their commission on the finance. Otherwise the only downsides are the obvious - effort to go through cancellation and make sure that you aren't out of pocket, and having to find the cash.

Yes, either HP or PCP will work, but you will be cancelling all the end of term options of PCP, too.

Instability

Cornucopia wrote: »

I think if it's a small independent dealer, they will be a bit miffed to lose their commission on the finance. Otherwise the only downsides are the obvious - effort to go through cancellation and make sure that you aren't out of pocket, and having to find the cash.

Yes, either HP or PCP will work, but you will be cancelling all the end of term options of PCP, too.

Great thanks for the information.

Yeh seems a little arsey to do & make them lose the commission and go through the effort of cancelling, but if they'd just offer a similar price in cash then it'd be easier on both. Maybe if I mention I know this is an option they'll be more lenient in their haggling for a cash offer.

Cornucopia

Instability wrote: »

Great thanks for the information.

Yeh seems a little arsey to do & make them lose the commission and go through the effort of cancelling, but if they'd just offer a similar price in cash then it'd be easier on both. Maybe if I mention I know this is an option they'll be more lenient in their haggling for a cash offer.

What kind of car/dealer are you dealing with?

DrEskimo

If you settle within the 14days then you don't incur any interest. If you feel inclined to help the dealer, then you could always let it run a couple of months then clear it. It will mean paying a bit of interest, but the commission for the dealer would be safe. Worth checking with them.

Usually you can get some sort of deposit contribution and servicing by taking out finance with them, so I agree it's worth doing. Funnily enough I have just bought a car and it was actually cheaper to pay with cash than get it on PCP. Only about £100, but still odd....!

Nearlyold

DrEskimo wrote: »

If you settle within the 14days then you don't incur any interest. If you feel inclined to help the dealer, then you could always let it run a couple of months then clear it. It will mean paying a bit of interest, but the commission for the dealer would be safe. Worth checking with them.

Usually you can get some sort of deposit contribution and servicing by taking out finance with them, so I agree it's worth doing. Funnily enough I have just bought a car and it was actually cheaper to pay with cash than get it on PCP. Only about £100, but still odd....!

Just to clarify the process and the fact that interest is usually charged :- The 14 day period begins the day after the date the agreement is made (signed by both parties) or the day on which the consumer receives either a copy of the executed agreement (or confirmation of execution in some cases) whichever is the later. Notice of withdrawal can be given in any way and, if the consumer does withdraw, he must repay the credit and any interest that has accrued for the time that he has had the credit within 30 days.

For there to be no commission clawback for the dealer it'll be more like 6 months the customer would have to keep the finance in place. As an aside Finance companies also monitor the number of early settlements by dealer and where they suspect collusion between the dealer and the customer on the "I'll give you £X off if you take finance and keep it going for X months" basis its not unknown for them to start threatening legal action against the dealer.

DrEskimo

Nearlyold wrote: »

Just to clarify the process and the fact that interest is usually charged :- The 14 day period begins the day after the date the agreement is made (signed by both parties) or the day on which the consumer receives either a copy of the executed agreement (or confirmation of execution in some cases) whichever is the later. Notice of withdrawal can be given in any way and, if the consumer does withdraw, he must repay the credit and any interest that has accrued for the time that he has had the credit within 30 days.

For there to be no commission clawback for the dealer it'll be more like 6 months the customer would have to keep the finance in place. As an aside Finance companies also monitor the number of early settlements by dealer and where they suspect collusion between the dealer and the customer on the "I'll give you £X off if you take finance and keep it going for X months" basis its not unknown for them to start threatening legal action against the dealer.

I see, so it's just that no fees or charges can be applied within the first 14days if the finance is withdrawn, but if settling interest will still be payable based on a daily amount?

I get different answers regarding the 'grace period' before their commission is 'safe'. Some dealers I spoke to recently suggested it was just 2-months, but I guess it may vary?