New Car Finance Deals

Piemaster

Hi all
I am going to buy a new car and the quotes that I am getting seem to vary wildly depending on how I will finance the purchase - specifically it seems the car is substantially cheaper if I take the finance package rather than paying cash or making my own loan arrangements.  The difference is quite significant (£18k for cash compared to £16k with finance).  I can afford to just pay cash, but I was wondering if it would be better to buy with finance and then just pay the finance off ASAP.  I assume there will be something in place to prevent this 'cheat', but details on the car website are a bit vague regarding early exit penalties etc.

Does anyone have any experience with this and know the best way forward?

macman

No, it's perfectly legit, you should have a 14 day cooling-off period on the finance contract.

neilmcl

It's not only legit but it's a very common practice to take out finance to get the various contributions then cancel or settle the finance straight away. As mentioned, by law you have 14 days to cancel the finance without penalty under the terms of the Consumer Credit Act, as you can do with any type of credit agreement. Have at it 😃

giraffe69

I've used finance and cancelled very soon into the deal for my last two cars so yes it is possible.

Piemaster

Cheers for the replies everyone.  So just to confirm, the way to proceed is to tell the car dealer I want the finance deal, proceed along those lines and sign all the paperwork.  Then once I have the car, within 14 days contact the finance company to cancel the deal and then bank transfer them the outstanding balance?

facade

There has been previous debate on here that if you cancel = reject the finance that it may also cancel contributions that were part of it.

The advice then was to settle the finance within the first month (there may be a more correct term to use than "settle") as this is paying off the finance rather than cancelling it.

This accrues a small amount of interest and a settlement fee, which are a lot less than £2000.

Piemaster

Cheers, that's a lot closer to what I was expecting, but as long as the amount to settle is a lot less than £2k it is probably still worth doing.

macman

Just bear in mind that this process is likely to result in your removal from the sales rep's Christmas card list...

neilmcl

macman said:

Just bear in mind that this process is likely to result in your removal from the sales rep's Christmas card list...

It won't. They couldn't care less as long as they've made the sale.

neilmcl

facade said:

There has been previous debate on here that if you cancel = reject the finance that it may also cancel contributions that were part of it.

The advice then was to settle the finance within the first month (there may be a more correct term to use than "settle") as this is paying off the finance rather than cancelling it.

This accrues a small amount of interest and a settlement fee, which are a lot less than £2000.

No debate, this simply doesn't happen. They would have to have some sort of clause in the sales contract to enable them to claw back any contribution and this is simply unheard of. And tbh, as mentioned, they really couldn't care less, all they're interested in is the car sale.

macman

neilmcl said:

macman said:

Just bear in mind that this process is likely to result in your removal from the sales rep's Christmas card list...

It won't. They couldn't care less as long as they've made the sale.

They would if the dealer were to lose their commission on the finance deal...