Swopping car finance within cooling off period

panvulcon

Hi, I’ve taken out a pcp car finance arrangement and am now in receipt of the vehicle, however after looking closely at the financing figures and comparing these to what’s available for me (with an excellent credit rating), I believe I am paying more than I perhaps could be - 8.9 % instead of 5.9%.

I’ve ready the policy and it states that I can cancel within the 14 day cooling off period as long as my dept is paid in full within 30 days.

My question is, will finance companies offering these lower rates be willing to help me switch finance? I’m assuming they call my existing finance provider and pay them in full, leaving me with a new finance deal - has anybody had success with this before?

DCFC79

panvulcon said:

Hi, I’ve taken out a pcp car finance arrangement and am now in receipt of the vehicle, however after looking closely at the financing figures and comparing these to what’s available for me (with an excellent credit rating), I believe I am paying more than I perhaps could be - 8.9 % instead of 5.9%.

I’ve ready the policy and it states that I can cancel within the 14 day cooling off period as long as my dept is paid in full within 30 days.

My question is, will finance companies offering these lower rates be willing to help me switch finance? I’m assuming they call my existing finance provider and pay them in full, leaving me with a new finance deal - has anybody had success with this before?

I can tell you with 100% certainty that your excellent rating wont be taken into account for the finance, your history is whats taken into account.

It all depends on whether you can get a cheaper apr, if not then pointless moving.

As for swapping the finance from 1 lender to another I don't know how it works or if possible but other posters with more knowledge will advise.

DrEskimo

I'm not sure about switching PCP finance to another provider, but if the goal is to save on interest, then look at the actual amount of interest you will be charged in £. Compare that with an unsecured personal loan at either the same or lower APR and you will see it can save you thousands in interest.

If you can afford the higher payments, this would be my advice. Whilst applying for a personal soon after PCP will likely impact your chances/rate offered, if would be pretty easy to make the switch since it would not be secured on the car (loan paid into your account, settle PCP finance in full the next day). 

MinuteNoodles

REMEMBER THAT YOU WILL NEED TO FINANCE THE FULL PURCHASE PRICE OF THE VEHICLE INCLUDING THE BALLOON PAYMENT, NOT JUST THE AMOUNT YOU PAY ON THE PCP.
I've put that in big for a reason because most people fail to understand this and think they just need to cover the portion that was financed on the monthly payments. If for example you bought a £20k car on say a £12k PCP deal over 4 years with a balloon payment of £8k you need to get a £20k loan, not a £12k one as you need to refinance the full purchase price.
However be aware that the existence of the PCP deal will likely have an impact on any affordability checks done so you may need to speak to a human and explain what you're intending to do.

panvulcon

You do right pointing that out noodles but yes PCP is the right choice for me. I run my cars like a lease (with no intention of keeping them longer than 48 months); allowing me to buy nearly new and let somebody else pay the vat and first few years depreciation. 

I’ll call around some finance companies tomorrow and report back

Edi81

its highly unlikely that any finance company will take on the guarantee future residual value from a PCP in the current climate.

DrEskimo

panvulcon said:

You do right pointing that out noodles but yes PCP is the right choice for me. I run my cars like a lease (with no intention of keeping them longer than 48 months); allowing me to buy nearly new and let somebody else pay the vat and first few years depreciation. 

I’ll call around some finance companies tomorrow and report back

PCP is nothing like a lease though, particularly on a used car. The GFV is so low that it is pointless, so if you calculate the cost of buying then trading the car in Vs using PCP you realise the only difference is that with PCP you pay £1,000s more in interest. Otherwise it's exactly the same experience.

Even if the car is worth less than the GFV, any 'saving' you make is completely negated by the much higher interest you have paid.