Should I take PCP for a car and pay it off within 14 days to get the benefits?

Mrmarc

Hi,

In process of purchasing a used car for roughly £11,000 from a car dealership. I don’t need a loan, but the salesperson recommended taking PCP because it offers free MOT and servicing for two years, and an additional year’s warranty . He said I can pay it off within 14 days and only have to pay the interest (which at approximately 7% APR should be far less than the cost of 2 MOTs and 2 services) - there will be no early termination fees.
This seems a bit too good to be true, so I just wanted to sound out. What do people think?

Mobeer

You can settle the PCP deal at any time (assuming you have the cash). Contact the finance company and ask for a settlement, then pay up. Lots of people do this (as both BMW & Toyota dealers have said, and myself and other friends have done).

YorkshireBoy

Mobeer wrote: »

You can settle the PCP deal at any time (assuming you have the cash). Contact the finance company and ask for a settlement, then pay up. Lots of people do this (as both BMW & Toyota dealers have said, and myself and other friends have done).

As you say, that's a settlement, and will incur around 2 months interest. OP is talking about a withdrawal from the credit agreement for which a simple daily interest charge is payable.

OP, you need to read the small print to see if you forfeit the free MOTs and services by withdrawing from the agreement. I did exactly what you're proposing a few months ago on an approved used Jaguar, but without the freebies...I got a simple £1,500 contribution which I kept upon withdrawing.

And finally, do check the APR as that's low for used, mine was 10.9%APR. 7% may be the flat rate, meaning an APR of around 14%.

Mobeer

My settlement involved no extra interest at all (and was after 14 days). Plus there's no argument whether I ever withdrew from the agreement.

dano17439

I also got advised to do this on a car forum where one of the members was a salesman. I would leave it more than 14 days though just to be on the safe said

iolanthe07

I left it for a couple of months before I paid off the PCP, so I did incur a little interest, but I saved myself nearly £3K by taking the promotions offered to PCP buyers. These were not available to cash buyers. Cash used to be king; it's a funny old world.