Kia pcp

David_wrigght

I'm looking at a fresh car, the salesman has suggested using kia's pcp to get the Kia £500 contribution. He says I can cancel after 6 months and swop to a loan with no cost. Has anyone done this I have looked at the pcp paper work but can't see anything about canceling early.

Grumpy_chap

If the contribution is only £500, and you manage to time this perfectly to cancel and repay at 6 months, how much will it have cost you by then in interest and charges?

I have seen threads where people do what you suggest, but usually with larger deposit contribution allowance.

DrEskimo

As above, there will be a cost. 6months worth of interest costs.

However there is no reason you have to wait 6months. You can cancel it the day after if you wish.

The issue will be whether you can secure a second loan for the cars value whilst you already have a PCP loan for the same amount.

David_wrigght

That's a good point, need to check that I would be able to get a loan as well.

Grumpy_chap

Some of the PCP agreements require two months interest as early settlement charge.  Plus the first months interest may be due, even if paid very quickly.  Plus there may be a 'documentation' charge, typically up to £50 to cover something or other. 
The OP should be careful to understand the terms of the Kia finance product to see what the charges are and how that compares to the £500 allowance that they gain through doing this.  There was a recent thread where someone had done exactly this with VW finance and from a £1,500 deposit contribution, £300 was 'eaten up' even though that poster had done everything as swiftly as possible.  If it is similar with Kia, it may be that the hassle and risk of ending up missing the optimum cancellation time makes it not worth it for a £500 contribution.

Obviously, before thinking about finance, the OP needs to
1. ensure that they got the best possible price for the car?
2. whether they need to have a car that requires them to get finance?

Regarding the second point, there are many people who may have always had a new car every few years, but with lockdown and "new normal" future motoring needs may mean that the car required is something entirely different.  I use myself as an example - up until the end of March I was driving 140 mile daily commute.  No work at all for lockdown but back working full time from 1st July - part at home and part on site, but in all of July I only did 500 miles total including going to work when needed and SDP use.  Whatever my future car needs settle out to, it could well be far different from what the past required.

lordmountararat

I took out  Kia PCP and saved nearly £2000 on the cash price, weirdly. The lovely sales lady asked me  to wait four months before paying it off, presumably so that she didn't lose her commission. I was happy to do that and only paid a minimal amount of interest.