Deposit Contribution

amyanderson2

I have always bought old run around cars so I'm pretty clueless so any help would be appreciated.

I am about to purchase  a brand new car and I am a cash buyer however the salesman informed me that I should apply for the finance (3k worth) and pay the rest off then I will receive the deposit contribution of £1000. I don't particularly want or need the finance but he informed me that I could pay the finance off with the cash I have days after it has been approved. So basically apply for 3k loan to get the 1k contribution then pay off 3k loan days later (no interest in first 14days apparently)🤔 Could this come back to bite me? Are they going to want the 1k back? Any drawbacks u can think of? 
Any help is appreciated 🙏👍

MalMonroe

The best advice I can give you, if you have a credit card, use that.  Then, if anything at all goes wrong and you hate the car or it breaks down, you can claim all your money back through Section 75. It's a brilliant thing, I bought an old banger that was useless and got all my money back, eventually, plus compensation.

Then you can use your money to just pay off your credit card. 

Do not get finance you do not want. The salesman probably gets commission from the finance company when he sends customers to them. And don't forget that some finance companies will charge you for repaying quickly. If you repay slowly, they'll charge you interest anyway. 

Do what feels best for you, go with your gut. It will never let you down. Don't be persuaded by that salesman's charm! That's what he's there for, to get the most money for himself, not to get a bargain for you.

I have to say that I do not understand that jiggery pokery with £1,000. Are you saying the car is really £2,000 because they're going to refund you £1,000?  Is the car £2k or £3k? It's all a bit confusing. 

And where on earth do you get a new car for that price anyway??? I'll have two at that price, please. 

MalMonroe

P.S. I forgot to say that if you have a credit card but the limit isn't up to the amount you need, put a deposit on the card of no less than £100. That way you can still claim under Section 75. Don't be rushed into buying, though. You're in charge!

marlot

amyanderson2 said:

I have always bought old run around cars so I'm pretty clueless so any help would be appreciated.

I am about to purchase  a brand new car and I am a cash buyer however the salesman informed me that I should apply for the finance (3k worth) and pay the rest off then I will receive the deposit contribution of £1000. I don't particularly want or need the finance but he informed me that I could pay the finance off with the cash I have days after it has been approved. So basically apply for 3k loan to get the 1k contribution then pay off 3k loan days later (no interest in first 14days apparently)🤔 Could this come back to bite me? Are they going to want the 1k back? Any drawbacks u can think of? 
Any help is appreciated 🙏👍

Yes, this is legal and safe.
If you search in this forum, you'll find that this question gets asked from time to time.  Lots of us have done this.  I've done it three times myself (always on brand new cars).
You have a legal right to withdraw from the finance product within the first 14 days.  The settlement figure will be net of the deposit contribution.
It feels 'wrong', but its a way of the car manufacturer giving short-term price reductions (eg. in quiet months) without altering the list price of a car.

Scrapit

the finance is a way of getting a discount. Of course go for it and pay it off shortly afterwards if you can. The salesman probably does get a commission from the finance but thats just win win, discount for you, commission for him.

The_Rainmaker

MalMonroe said:

The best advice I can give you, if you have a credit card, use that.  Then, if anything at all goes wrong and you hate the car or it breaks down, you can claim all your money back through Section 75. It's a brilliant thing, I bought an old banger that was useless and got all my money back, eventually, plus compensation.

Then you can use your money to just pay off your credit card. 

Do not get finance you do not want. The salesman probably gets commission from the finance company when he sends customers to them. And don't forget that some finance companies will charge you for repaying quickly. If you repay slowly, they'll charge you interest anyway. 

Do what feels best for you, go with your gut. It will never let you down. Don't be persuaded by that salesman's charm! That's what he's there for, to get the most money for himself, not to get a bargain for you.

I have to say that I do not understand that jiggery pokery with £1,000. Are you saying the car is really £2,000 because they're going to refund you £1,000?  Is the car £2k or £3k? It's all a bit confusing. 

And where on earth do you get a new car for that price anyway??? I'll have two at that price, please. 

It's a brand new car not an old banger.

amyanderson2

MalMonroe said:

The best advice I can give you, if you have a credit card, use that.  Then, if anything at all goes wrong and you hate the car or it breaks down, you can claim all your money back through Section 75. It's a brilliant thing, I bought an old banger that was useless and got all my money back, eventually, plus compensation.

Then you can use your money to just pay off your credit card. 

Do not get finance you do not want. The salesman probably gets commission from the finance company when he sends customers to them. And don't forget that some finance companies will charge you for repaying quickly. If you repay slowly, they'll charge you interest anyway. 

Do what feels best for you, go with your gut. It will never let you down. Don't be persuaded by that salesman's charm! That's what he's there for, to get the most money for himself, not to get a bargain for you.

I have to say that I do not understand that jiggery pokery with £1,000. Are you saying the car is really £2,000 because they're going to refund you £1,000?  Is the car £2k or £3k? It's all a bit confusing. 

And where on earth do you get a new car for that price anyway??? I'll have two at that price, please. 

Thanks for that, good advice.
It is a 20 plate however as I don't want the finance particularly he said he will put the lowest amount possible with shortest term which is why its only 3k. 
I had no idea this was a thing, true salesman patter tho to make me think he was letting me in on some massive secret and doing me a favour 😂🙈
Thanks again 👍

DrEskimo

It's a common way to get additional discount through the finance company.

I did it on the used car I bought last year. Tailored the finance to the lowest possible amount after negotiating a small discount off the sticker price and then used the finance to get a further £1000 and 2 free services. Cleared it soon after collecting it and had no early repayment fees.

Just make sure the price is good to begin with. Use CarWow and other online brokers to get the best possible price.

mobileron

Take the deal and pay it off in 7days,or if you have lots in the bank you wont need it.Its common now to see credit deals cheaper than cash,goggle your friend.

bigadaj

MalMonroe said:

The best advice I can give you, if you have a credit card, use that.  Then, if anything at all goes wrong and you hate the car or it breaks down, you can claim all your money back through Section 75. It's a brilliant thing, I bought an old banger that was useless and got all my money back, eventually, plus compensation.

Then you can use your money to just pay off your credit card. 

Do not get finance you do not want. The salesman probably gets commission from the finance company when he sends customers to them. And don't forget that some finance companies will charge you for repaying quickly. If you repay slowly, they'll charge you interest anyway. 

Do what feels best for you, go with your gut. It will never let you down. Don't be persuaded by that salesman's charm! That's what he's there for, to get the most money for himself, not to get a bargain for you.

I have to say that I do not understand that jiggery pokery with £1,000. Are you saying the car is really £2,000 because they're going to refund you £1,000?  Is the car £2k or £3k? It's all a bit confusing. 

And where on earth do you get a new car for that price anyway??? I'll have two at that price, please. 

This is utter rubbish.
Taking finance to get a discount is an acknowledged way of getting the best deal and the finance can be settled shortly after purchase at minimal or no cost. The salesman or his employer may well get commission but if it doesn't cost the OP anything why should that concern them.
Whilst it is a good idea to put a deposit onto a credit card then section 75 isn't a panacea. It is legislation that places the card issuer under the same obligations as the retailer so gives an alternative point of redress if things go wrong. 
It's a good thing for the OP to check before the purchase but posts like the above are  misleading and damaging, especialy as that poster hasn't even read the OP properly to understand the actual situation.

MinuteNoodles

amyanderson2 said:

I had no idea this was a thing, true salesman patter tho to make me think he was letting me in on some massive secret and doing me a favour 😂🙈
Thanks again 👍

Yes it's a thing. Yes it does sound too good to be true so definitely something you'd think a salesman would say to get a sale but in this case yes it is true. 

Basically it all boils down to the manufacturers who give incentives to people who buy cars on finance (which conveniently an identically named company to the vehicle manufacturer with the word "finance" after it provide) and the fact that in law there's a 14 day cooling off period. So you take the finance out, you get the deal, everyone gets paid so the deal is complete and no going back and then you then cancel the finance in the 14 day cooling off period and pay it off in full. Winner winner chicken dinner.