PCP loan disadvantages?

DrEskimo

whitejohn wrote: »

Not exactly what sure what you mean about it doing no one any favours. I would be more than happy to pay it off in 14 days but they asked me to leave it at least a few months which is why I picked 3 months. I thought they would have received their commission by that time but if I paid it off in less than 14 days they would not get it. Plus I find it a lot of hassle doing all of this when I just want to buy and have the cash. Surely the manufacturer could still give the same discount really. I'm very fair and would not want them to miss collecting their commission however. Are you saying that 14 days would be better? Thanks

Someone will correct me if I'm mistaken, but I think the discount comes from the finance company buying the car from the dealership. So the dealership still sell the car for the same money. If the dealership applied this as a discount, they would be taking the hit, hence why they can't just offer it to you at the same price.

If you want to minimise the interest, but still keep it for a few months to help the dealer, then take the finance using the maximum deposit possible, over the shortest term possible. Could even ask the dealership to reduce the GFV to as low as possible too, as this is likely to determine the maximum deposit allowable (can't borrow less than the GFV). When you get the finance, make an overpayment to lower the loan as much as possible. Then just let it run for a few months before you settle in full.

This was my plan, but I got bored after a month and just ended up settling...!

YorkshireBoy

whitejohn wrote: »

Not exactly what sure what you mean about it doing no one any favours. I would be more than happy to pay it off in 14 days but they asked me to leave it at least a few months which is why I picked 3 months.

The dealership knew full well what I was intending to do. However, 3 different people there told me 3 different timescales to ensure they got their kickback. I did get good service from the salesman, and a good price, but if I'd run it to the 6 or 7 months two of the dealership staff suggested (to ensure they got their kickback) then I'd have incurred 8-9 months interest at circa £100 per month, meaning I'd only benefit to the tune of £6-700 of the £1,500 available...and I wasn't having that!

DrEskimo wrote:

Someone will correct me if I'm mistaken, but I think the discount comes from the finance company buying the car from the dealership.

In my case it was £750 each from the dealership (or Jaguar themselves, I can't remember) and Black Horse Finance, with neither set of T&Cs penalising early withdrawal.

whitejohn

DrEskimo wrote: »

Someone will correct me if I'm mistaken, but I think the discount comes from the finance company buying the car from the dealership. So the dealership still sell the car for the same money. If the dealership applied this as a discount, they would be taking the hit, hence why they can't just offer it to you at the same price.

If you want to minimise the interest, but still keep it for a few months to help the dealer, then take the finance using the maximum deposit possible, over the shortest term possible. Could even ask the dealership to reduce the GFV to as low as possible too, as this is likely to determine the maximum deposit allowable (can't borrow less than the GFV). When you get the finance, make an overpayment to lower the loan as much as possible. Then just let it run for a few months before you settle in full.

This was my plan, but I got bored after a month and just ended up settling...!

sounds like a good plan but what's GFV mean?

DrEskimo

whitejohn wrote: »

sounds like a good plan but what's GFV mean?

Sorry, Guaranteed Future Value (GFV). It's also called a 'balloon' payment, but it's the deferred payment on a PCP loan, which is the finance companies predicted trade-in value of the car after X-years and XX thousand miles.

Not something you need to worry about, as you will be settling in full anyway!

whitejohn

YorkshireBoy wrote: »

I was told the max I could pay as a deposit was around a third.

The best way is to 'withdraw' from the agreement within the first 14 days. From memory, the £13K or so on my used Jag PCP deal cost me less than £4/day at 10.9% APR. Well worth it for the £1,500 deposit contribution gained.

Settling after 2-3 months does no-one any favours really. You'll incur 4-5 months of unnecessary interest and the dealer probably won't get their commission from the finance house (if indeed you wanted them and the salesman to get any).

Regarding comment

The best way is to 'withdraw' from the agreement

Is there a technical difference between "withdrawing from agreement" as opposed to just paying it off early?

YorkshireBoy

whitejohn wrote: »

Regarding comment

The best way is to 'withdraw' from the agreement

Is there a technical difference between "withdrawing from agreement" as opposed to just paying it off early?

You can't 'withdraw' after 14 days, you have to 'settle', which allows them to charge 2 months interest.

whitejohn

YorkshireBoy wrote: »

You can't 'withdraw' after 14 days, you have to 'settle', which allows them to charge 2 months interest.

How do I ensure I get the timing right to withdraw within 14 days and avoid, for example

sign contract now and vehicle arrives 3 weeks later. or there is some kind of delay with delivery.

does the contract start from date signed, or agreed delivery date, or actual delivery date as this car is not in stock at present?

DrEskimo

whitejohn wrote: »

How do I ensure I get the timing right to withdraw within 14 days and avoid, for example

sign contract now and vehicle arrives 3 weeks later. or there is some kind of delay with delivery.

does the contract start from date signed, or agreed delivery date, or actual delivery date as this car is not in stock at present?

The finance starts when you collect the car after it's been delivered. You will finalise the paperwork before you drive away.

oscarward

Have you checked the cost of buying with cash from somewhere like drivethedeal.com.


When I did it I paid £250 deposit which was web site commision and then paid dealer direct and car was delivered to my door. I could have collected from the dealer but as they were 150 miles away was a bit of a faff.



There are other web similar web sites which I can't comment on as I haven't used them.