Terminating PCP early?

don9999

Am about to buy a new car.
I 'could' buy it outright, but there appear to be better discounts for taking out a PCP.



I have never bought a car on PCP before, so have one question about it.


If I agreed to the PCP initially (to secure the larger discount), but seek to pay off the PCP early, are there any penalties?


'IF' there are no penalties (ie I just need to pay off the remaining monthly payments plus final payment) then it seems to make sense to go the PCP route, and then pay off within a month or so.
In this way, I secure the greatest discount, yet pay no interest (other than perhaps in the first month, before I exit the PCP).


I also then have the option of transferring the cost to a 0% credit card (so long as the initial fee is negligible) and still pay it off via monthly payments, similar to the PCP.


Am I making sense...?

LandyAndy

don9999 wrote: »

Am I making sense...?

Yes you are.

foxy-stoat

You can pay the whole PCP off within 14 days then you will pay minimal interest.

If you leave it longer you will pay at least 1 months interest, no more than 3 months interest.

If you have cash in the bank then you are ok, if you are planning on using credit cards then you either need a money transfer option with 0% and pay the 3-5 % fee - then if you cannot pay it off by the end of the introductory period you will pay another fee to balance transfer the rest and continuing paying...or see if the finance company accepts credit card payment with zero fee, then start the balance transfer process.

HoofeHearted

If you took out a 3 year contract and wanted to cancel after 2 years, you have to pay the remaining 12 months payments, plus an early cancellation fee.
This was what my son was told when he was considering PCP.

neilmcl

don9999 wrote: »

Am about to buy a new car.
I 'could' buy it outright, but there appear to be better discounts for taking out a PCP.



I have never bought a car on PCP before, so have one question about it.


If I agreed to the PCP initially (to secure the larger discount), but seek to pay off the PCP early, are there any penalties?


'IF' there are no penalties (ie I just need to pay off the remaining monthly payments plus final payment) then it seems to make sense to go the PCP route, and then pay off within a month or so.
In this way, I secure the greatest discount, yet pay no interest (other than perhaps in the first month, before I exit the PCP).


I also then have the option of transferring the cost to a 0% credit card (so long as the initial fee is negligible) and still pay it off via monthly payments, similar to the PCP.


Am I making sense...?

This is quite a common method to secure a good discount. As with any credit arrangement you have 14 days to cancel without penalty and there is little chance of any contribution being clawed back. However to be extra sure you can "settle" the finance at any time and all your discounts will be safe, obviously the longer you wait the more interest you will pay.

tonyh66

and of course you would have to get a credit card with a credit limit that covers the price of the car, not generally easy as they normally give you a low limit then increase it over time. unless the car your buying is less than £1200....

WaywardDriver

Easy with VW Financial Services. Took out PCP (period, mileage irrelevant), rang and cancelled within 14 days, paid in full with approx. £20 interest charge, retained perks, salesman retained bonus.

James2k

WaywardDriver wrote: »

Easy with VW Financial Services. Took out PCP (period, mileage irrelevant), rang and cancelled within 14 days, paid in full with approx. £20 interest charge, retained perks, salesman retained bonus.

if you withdrew from the finance, the finance guy at the dealership will lose the commission on the finance, the bonus for the car itself will be unaffected.

don9999

Thanks guys :-)


I DO have the money already, to buy the car outright.
But always moneysaving, and hence looking for the cheapest way to buy it.
(Please no comments about it not being moneysaving to buy a new car. Is a lifestyle choice, but I can still minimise the cost).


Is a Peugeot 5008. I 'think' their APR is around 6.8%, but wil l need to double-check.


Was a little worried about cancelling the PCP within an early period in case they claw back the extra discount . I will specifically ask what happens if I cancel the PCP early.


After that, I can understand that the monthly payments that I DO make will include a little interests, so appreciate that I WILL pay some interest.


I 'thought' with finance deals years ago (before PCPs etc) that if you cancelled early that you still had to pay x months interest (I 'think' it may have been 3) on top of the remaining payments.


Thanks for comments/advice :-)

James2k

lifestyle choice for a new car? how random and vague.

anyway if you ask them, 50/50 they will say that you lose the bonus, that's what they said to me, they don't want you to as they lose the commission.

If the car money is getting interest at the moment and you can get a balance transfer or such with a fee which is less than what you would earn on the interest then go for that, if not, just pay cash.

Penelopa.Pitstop

Just withdraw from the contract within 14 days and pay it in full. The easiest option. You don't have to discuss it with salesman or tell him.