Car PCP Agreement - cancellation?

sunnypopsta

I have signed to buy a car today on PCP - does anyone know if there is a cooling off period for PCP's - don't know if I will cancel just want to know if it possible (freaking out a bit here as I can't believe I have done it without loads of investigation first!!)

Thanks

DrEskimo

Yes there is, although it will require you to find alternative ways of paying for the car.

Do you have the car, or are you waiting for it to be built?

Feel free to post the exact details of the car and the finance terms and I'll be happy to look over it for you if you like? I spend an inordinate amount of time researching cars and finance so might be able to help...!

sunnypopsta

So I can't cancel the actual buying of the car as well? I put down £100 and signed a used vehicle order

Car is £9811,I have paid £100 deposit
10.9% - over 4 years
£ 185.58 per month
Guaranteed value at the end £3596
8k miles per year (we run less miles)
Part exchange of a car £4700 - this is the amount they are going to give us in a cheque.
price also includes gap insurance and autoglym life shine
Obviously this is not a brand new car!
I haven't picked up the car yet - just agreed this today

DrEskimo

That's a hell of a lot of interest you will be paying...it amounts to £3668.84 to borrow £9,700.

My advice is to use some of the part exchange money and get a personal loan from your bank. Depending on the rate you get offered you could slash those interest charges to <£1000, saving you thousands. Alternatively, you could use all of the Part ex money (£4700) and then use a 0% credit card over 27months for similar monthly payment and pay no interest. The car will be fully paid off and yours by the end too.

Also cancel the autoglym protection. It's borderline scam and not even worth it even for free. If you are paying for GAP, then cancel that too. I would bet my mortgage on it being overpriced and offering poor protection. You can use companies like ALA or totallossgap (who I use) to eat much cheaper and much more comprehensive cover.

sunnypopsta

Are we honoured to still buy the car? - Or would we just lose the deposit and they would leave us alone?

DrEskimo

Not too sure to be honest. It's a question to ask. You should be able to get the deposit back, but it's possible they might withhold it.

Do you think the car is not worth the price?

sunnypopsta

we like the car, but have done this all so fast and are struggling to understand the PCP. We might just cancel and take the old one to 'we buy any car' to get the deposit and try to buy again.

sunnypopsta

Just having a discussion with hubby now - he says the guaranteed value at the end of the 4 years would be used as a deposit for another car - I say it would only be any value over and above the guaranteed value which would be used as a deposit - does that make sense? can you tell us who is right? Thanks for all your knowledge by the way and taking the time to answer us

DrEskimo

sunnypopsta wrote: »

Just having a discussion with hubby now - he says the guaranteed value at the end of the 4 years would be used as a deposit for another car - I say it would only be any value over and above the guaranteed value which would be used as a deposit - does that make sense? can you tell us who is right? Thanks for all your knowledge by the way and taking the time to answer us

Pleasure.

Whilst I would hate to create a domestic and take sides, I'm afraid you are correct and your husband is mistaken....!

PCP is just a loan. Rather than pay the entire amount off over the 48months, a portion of is deferred to the end as a final payment. This is a predicted value of what the finance company think the car will be worth in 4yrs time with an additional 32k miles on it. If the finance company is right, then you have a final payment of £3,596 to make, and you have a car that has a value of £3,596. You can either pay the final payment and keep the car, or hand the car back to the finance company and pay/get nothing more. If the finance company were wrong and it's worth more (say £4,000), then you could, exactly as you say, trade the car in and get a cheque for the difference (£404).

The whole premise of deferring some of the payment to the end is to reduce the monthly cost. That's it. But in doing so, you incur more interest. which is why your PCP will end up costing you the same as though you were to borrow £9,711 over 48months at a rather eye-watering 16.5% APR....It's very expensive way to buy a car...consider that you can get a loan from the bank at 3% APR, which for £9,711 over 48months would cost just £306 in interest! Less than 10% of the cost of that PCP loan! Of course, the monthly amounts are higher, but it's important to look beyond the monthly cost. It's why the dealer wants you to focus on it, as you lose sight of the actual cost overall.


If you are happy with the car, I would decline the PCP finance and decline the autoglym protection and GAP, and seek finance and GAP elsewhere. I pay £249 for 5yr cover for mine (and it's a very comprehensive protect). The autoglym amounts to nothing more than a fancy carwash. I'm guessing they were charging in the hundreds for it? If you want, you can find a local 'detailer' and get a very nice job for similar money. Just don't pay a dealer. They simply don't have the time or expertise to do anything worth that sort of money.

Hope that helps!

sunnypopsta

We have a lot to talk about tonight and its a relief to think we can stop the PCP. Thanks for all your advice it has helped tremendously.

Terry_Towelling

What Dr Eskimo says about things such as paintwork and upholstery protection are worth taking on board and you always need to check dealer paperwork because they often add these things on without telling you and try to distract you with the monthly repayment figures.

Many's the time I've enquired about buying a car and found the paperwork they prepare includes these things (that I've never asked for) and I have to get them to redo it all. Now when I approach a dealer for figures, I always tell them up front not to add these things and never to try and sell me GAP insurance, or I will simply walk away.