PCP and paying back

Nuggy96

Hi,

I have recently received an offer acceptance for my mortgage to complete by May (new build house). I am wanting to get a new car in the meantime.

The car I am wanting gets £1750 dealer contribution if I get it on PCP and can scrap my car for £2500 (going for a Kia). If I get the PCP and then pay it off in the 14 day cooling period, would I have to pay back the £1750 dealer contribution/ would the dealer ask for it back. Secondly, if I did it this way would it affect my mortgage much? I am above the affordability for the mortgage even with the £300 pm finance per month, but obviously in this case I would pay it off straight away so would never have the monthly outgoings?

Thanks in advance

bazzyb

It’s unlikely they could/would ask for the contribution back, but check terms before signing.

If you use your right to withdraw within the 14 days then the agreement wouldn’t show on your credit file, so the only thing the lender would see would be the hard search for the application. This may affect your offer but generally would be unlikely to unless it was a ‘borderline’ acceptance.

DrEskimo

Ask to read all the T&C's, but I have never seen anything mention a minimum period when it comes to keeping the deposit contribution. Logistically, it would be near impossible to enforce.

You could settle instead of withdraw. There usually are no fees, so you will pay the minimal interest either way I think.

I would be more concerned with doing it so close to a house move though. Can you not wait?

Also have you made sure to get the best discount on the car? I've been finding that when I use CarWow and the like, a cash price is either cheaper or the same as PCP, meaning you don't even have to go through the finance hoops to get the best deal.

Of course, have you looked for pre-reg or nearly new? You could save a lot more by going used, with only minimal additional costs for the same warranty length.

Nuggy96

Hi Eskimo,

Thanks for your reply, I assume settle means paying it all off and owning the car which is what I want. What is the difference between this and withdrawing?

My car is faltering, so thinking of using the scrappage scheme which runs out end of March. If I were to get it new it would only be around £800 more than pre-reg which I think is worth it.

DrEskimo

Nuggy96 wrote: »

Hi Eskimo,

Thanks for your reply, I assume settle means paying it all off and owning the car which is what I want. What is the difference between this and withdrawing?

To be honest, I am not too sure. I believe withdrawing is cancellation of the finance product within the 14days, so that you do not incur penalties or fees for early settlement. However I think they will still charge you interest for the days you have the agreement in place.

Settlement is the same, but can incur fees. However, I have rarely seen fees or penalties on car finance, so essentially either route would result in the same. Again, check your T&C's to confirm.

Nuggy96 wrote: »

My car is faltering, so thinking of using the scrappage scheme which runs out end of March. If I were to get it new it would only be around £800 more than pre-reg which I think is worth it.

What is your car worth as trade from somewhere like WBAC?

Pre-Reg wont have a set price. It will vary massively across different dealers. Some will chance their arm and offer it more than discounted new, whilst others will price them well. The key is to shop around and keep an eye out for the well priced ones.

Have you run quotes on CarWow to see what the best discounted new is?

Nuggy96

hmm, ok thanks for that. I assume the one I would be going for would be settlement then, if I took the PCP out and then paid the remaining balance within 14 days.

Its a 2011 vauxhall corsa 1.3 cdti, with a management light on, so probs worthless. (£400 on WBAC)

Seen some pre reg for around 11k, can get brand new for 11.7k (15.4k - 2k scrappage - 1.75k contribution) might as well get brand new. Puchasing a Kia Rio 2 (1.25 petrol).

Although may try and wait out until March and get a 20 plate

chanz4

check kia recent reviews

bazzyb

Nuggy96 wrote: »

Thanks for your reply, I assume settle means paying it all off and owning the car which is what I want. What is the difference between this and withdrawing?

Within the first 14 days you would use your right to withdraw, you would repay the finance company and they would charge you a daily rate of interest between the date of inception and the date you gave your notice of withdrawal. No additional fees would be charged.

After 14 days your right to withdraw no longer applies and so you would be making an early settlement. You would still need to pay the daily interest that has accrued, plus you would need to pay fees (if there are any) which are applicable to the agreement, and they could also charge you up to 56 days worth of interest on top of this.

DrEskimo

Nuggy96 wrote: »

hmm, ok thanks for that. I assume the one I would be going for would be settlement then, if I took the PCP out and then paid the remaining balance within 14 days.

Its a 2011 vauxhall corsa 1.3 cdti, with a management light on, so probs worthless. (£400 on WBAC)

Seen some pre reg for around 11k, can get brand new for 11.7k (15.4k - 2k scrappage - 1.75k contribution) might as well get brand new. Puchasing a Kia Rio 2 (1.25 petrol).

Although may try and wait out until March and get a 20 plate

3yr old Kia Rio's are around £6k, so you are setting yourself up for over £6k in depreciation...I would much sooner just buy a 3yr old one for half the price and sell the Corsa. My OH has a 2010 Mini and it is far from scrap value! The Kia will still have 4yrs warranty left on it.

But it's your money. Good luck with whatever you decide to do

Nuggy96

Hi Bazzy,

Thanks for your reply, that is very helpful. Have you done this before, and did you have any issue with the dealer contributions, and them trying to take it back?

Also, I have seen elsewhere that if you withdraw the finance in that 14 day period, it goes on your credit record, any truth in this?

Thanks

bazzyb

Nuggy96 wrote: »

Hi Bazzy,

Thanks for your reply, that is very helpful. Have you done this before, and did you have any issue with the dealer contributions, and them trying to take it back?

Also, I have seen elsewhere that if you withdraw the finance in that 14 day period, it goes on your credit record, any truth in this?

Thanks

I’ve not done it personally but know firsthand of numerous people who have with no issues. However as I mentioned earlier, ensure you read all the T&Cs relating to deposit contribution before signing anything.

If you withdraw within the 14 days then the agreement shouldn’t show on your profile as you should be put back in to the position you were in before, additionally many lenders do their CAIS uploading monthly rather than daily/weekly so they might not have time to update it before you withdraw anyway.

If you settle early ie after the 14 days then it will remain on your file for 6 years but show as a settled agreement.