Renault finance 2 year free servicing 4 payments then £500 after paying off early.

ws.7

hi, i was in a disscution about buying a pre-reg from a renault group salesman.

i`ve got the cash to pay it outright, but he suggested that i take out a finance deal.

he told me i could make 4 payments then pay the rest of the loan off,

this would give me £500 back and 2 years free servicing.

i`ve never dealt with financing on a car, so this seems too good to be true,

anyone have any experience with this??   thanks for your help.

Car_54

Yes, I've bought a SH car on PCP, got £1,500 "contribution" (£1k from manufacturer, £500 from dealer), and then paid the finance off within a few weeks. No problems.

Not sure what he means about 4 payments: AFAIK you should be able to pay it off immefiately.

k6chris

ws.7 said:

hi, i was in a disscution about buying a pre-reg from a renault group salesman.

i`ve got the cash to pay it outright, but he suggested that i take out a finance deal.

he told me i could make 4 payments then pay the rest of the loan off,

this would give me £500 back and 2 years free servicing.

i`ve never dealt with financing on a car, so this seems too good to be true,

anyone have any experience with this??   thanks for your help.

Sounds perfectly normal.  What he means is "I get paid my finance commission once you have made 4 payments so I don't care what happens after that."   You might want to check the tems and conditions of the contract you sign, in case you can cancel in 14 days and still keep the "free" servicing?  The salesman won't be happy but that's not your problem.

Goudy

It's pretty common, taking finance comes with incentives, both to you and the salesman.

So take the finance and the incentives then settle the finance as soon as.

I'm in the process of buying a new Renault myself and I'm doing the same thing.

As the salesman was good enough to put you on to this, it might be good manners to pay the first four payments so they get their kick back, I'm sure this deal is worth more to you than it is to them. Though I suspect you'll need to pay these payments to keep some or all of the incentives.

ws.7

i take it this sort of thing is the norm with most car financing deals?

Goudy

Yes.

This might be an over simplified example but:

You buy a £20,000 car for cash and you pay £20,000.

Buy it on say 0% HP finance and you will usually pay up to 50% deposit and the rest on 0%, so you pay £20,000.

Buy it on an interest rate HP deal and you'll pay £20,000 plus the interest.

Now if you buy it on PCP you will usually be offered a deposit contribution (say £1500) and other incentives and you finance the rest with interest. (though the last payment is the GFV which you have options on).

So now you pay back £18,500 plus the interest, likely to be £20,000 or more in total.

By settling the finance early, you can cut out completely or drastically reduce the interest as you are no longer borrowing it.

By law the finance company have to remove the interest from the loan, but they can charge you a small admin fee to settle early, though not all do.

So by taking the PCP deal and settling early, you buy a £20,000 car for £18500, or there about depending on how fast you can settle without losing the contribution/benefits.

Generally this works better when the deposit contributions a large, which usually means the interest rate is high as well.

I got a PCP deal through an NHS discount scheme on a new Renault. It worked out around 18% off and free metallic paint, but I also got 18% off all the other options as well.

If I pay over the 36 months, they'll claw this discount back in interest plus some more, but I can pay it off within the first month, so I end up paying £16,400 for a £20,000 car.

But you really need to understand how early you can settle and how much any admin free would be to settle early.

DrEskimo

Yes I did this on my Renault Zoe this time last year. There are no early repayment fees.

There is also no need to pay 4 months. You can settle next day. I cleared mine after a couple of weeks.

Nebulous2

I had a Dacia on renault finance. Part of the deal was an extended warranty (from 3 to 5 years) if I paid 3 payments. They emailed me the extended warranty certificate 2 days after the third payment was taken. So while they can’t make a difference to the dealer contribution if you pay immediately, I think it will make a difference to the perks, such as free servicing. 

DrEskimo

Nebulous2 said:

I had a Dacia on renault finance. Part of the deal was an extended warranty (from 3 to 5 years) if I paid 3 payments. They emailed me the extended warranty certificate 2 days after the third payment was taken. So while they can’t make a difference to the dealer contribution if you pay immediately, I think it will make a difference to the perks, such as free servicing. 

I had my service few weeks back. Was recorded on the system that I had the 2 yr service pack, so paying back early had no effect on my deposit contribution or free servicing.

It was on the central Renault database...something called a IME number (or some variation of those letters!).