Buying a new car - what happens if the manufacturer go bust?

dabevan

I'm buying a new car (Caterham 7) and have paid £3k deposit on my credit card. I will be financing the car via a PCP (arranged by Caterham Cars) and will sign the paperwork for this in September, during which another £6k is payable.

Whilst I have no reason to suggest Caterham Cars aren't in good financial shape, this whole Covid thing has made the future very unpredictable for all companies, and I'm starting to become concerned about what would happen if Caterham Cars did go into administration before delivering my car (kit).

The car is just over £30k, so my first question is: Does this mean the credit card company (or the PCP company) would not accept a claim under section 75 (only covers purchases between £100 and £30k)?

If I sign the PCP at the same time as handing over the extra £6k, does this mean that the PCP provider becomes responsible for the supply of the car? (and does it protect either of my deposits?)

...is there any scenario whereby the PCP company might insist on me paying them the full £30k, but me not having a car, or would the PCP become null and void?

...would it be worth me respec'ing the car to bring it just below £30k and therefore qualify for Section 75? 

DrEskimo

The finance company providing the PCP finance and the manufacturer or dealership honouring the contractual obligation to provide you the car are separate. 

I suspect your £3k deposit will be covered under the Section 75 if the company went under and you didn't get the car.

I don't envision any scenario where you would be liable for the full settlement of the PCP finance if you didn't have the car, as you would not finalise the PCP finance arrangement until the day you took delivery.  In addition, you would be able to cancel the PCP finance agreement with the finance company under the 14-day cooling off period clause. This would start from the day you finalise the finance document and take delivery. Of course, if you do take the car and then cancel the finance, you still owe £30k+ to the manufacturer/dealership.

As an aside, have you explored all finance options? PCP finance is typically one of the most expensive forms of borrowing if the interest is above high street rates. You can save thousands in interest charges if you opt for a lower APR and pay the balance in full over the term, rather than deferring a final lump sum payment.

jonesMUFCforever

The CCA is specific limit is £30k not a penny more. I am not a lawyer but if the car is over £30k then you get no S75 cover - even for the deposit - again that is my opinion.

lordmountararat

Sorry I can't answer your specific point, but what a great car! I'm very envious; good luck with it.

chanz4

If over 30k, no not covered.