New car purchase plan

NigelO

I am buying a new car and can pay cash. The dealer wants -- insists -- that I take an arrangement where I pay about 40% of the price now and the rest in two or three years time. The salesman says that the dealership will pay be £750 to do this.


What's the catch? How does it work?

EssexExile

I've no idea how it works. They paid me £1000 to take out 3 years interest free credit, it seems quite common.

DrEskimo

You mean a finance agreement? Is this new or used, and where are you buying it from?

Have you got the terms and conditions?

It's not uncommon to get finance deposit contributions if you take out their finance product. Many (myself included) take this to get the additional contribution, then settle straight after. But you need to be clear on the terms and conditions of your example.

motorguy

NigelO wrote: »

I am buying a new car and can pay cash. The dealer wants -- insists -- that I take an arrangement where I pay about 40% of the price now and the rest in two or three years time. The salesman says that the dealership will pay be £750 to do this.


What's the catch? How does it work?

Its a finance contribution from the manufacturer.

You take out the finance, the manufacturer makes a contribution of £750 towards the finance.

You should be able to just clear the finance after a couple of weeks and pay little, if any interest.

parking_question_chap

NigelO wrote: »

I am buying a new car and can pay cash. The dealer wants -- insists -- that I take an arrangement where I pay about 40% of the price now and the rest in two or three years time. The salesman says that the dealership will pay be £750 to do this.


What's the catch? How does it work?

Not sure mate. Cant see the paperwork.

flashg67

The dealer will get a kickback, which presumably allows them to discount the car (or make more money), so if you do take the finance, check before you sign that it can be paid off without penalty, usually within the first 14 days. Small hassle if it gets you a better deal

dcweather

Yes, that is the case. "The catch" is that he doesn't seemed to have explained a PCP plan to you properly, which would in fact make it easier to settle the finance as you were effectively mis-sold. But of course you could legitimately buy your car this way if you wanted but beware the interest rate. If it is zero you will be getting a  £750 discount. (Providing the finance selling price is the same as the cash price). But most likely it will be about 5% interest so after your 40% deposit you will end up paying more than the £750 discount after three years. You will also pay the rest of the balance (balloon payment) if you want to keep the car. I'd go to another dealer who will explain it to you properly or take your cash.

Mercdriver

dcweather said:

Yes, that is the case. "The catch" is that he doesn't seemed to have explained a PCP plan to you properly, which would in fact make it easier to settle the finance as you were effectively mis-sold. But of course you could legitimately buy your car this way if you wanted but beware the interest rate. If it is zero you will be getting a  £750 discount. (Providing the finance selling price is the same as the cash price). But most likely it will be about 5% interest so after your 40% deposit you will end up paying more than the £750 discount after three years. You will also pay the rest of the balance (balloon payment) if you want to keep the car. I'd go to another dealer who will explain it to you properly or take your cash.

Or just do as others suggest - pay it off inside 14 days  or so and pay a small amount of interest nowhere near the £750

AdrianC

NigelO said:

I am buying a new car and can pay cash. The dealer wants -- insists -- that I take an arrangement where I pay about 40% of the price now and the rest in two or three years time. The salesman says that the dealership will pay be £750 to do this.

Sounds more like they're offering you a £750 discount to take the finance, rather than "insisting"... Ultimately, you can buy from a different dealer...