PCP deposit

beckstas-money

Would like to take out a car on PCP from VW. Can anyone advise if i can use my 0% credit card for the deposit?

Dave_5150

I imagine that will be down to the supplying dealer. They're unlikely to be keen though as they get charged a percentage of the transaction value for credit card payment whilst debit card payments are usually a small flat fee per transaction.

MrFrugalFever

Yes you can but bear in mind a couple of points;

1) You’re going to have 2 separate payments to maintain
2) The dealer will likely have an upper limit as to how much they are willing to take due to Merchant fees
3) You will get re assessed for credit after a period of time (hard search) and possibly soft search upon dealer funding - if over committed on CC there’s a slim chance the lender could pull the PCP deal
4) If you pay a lot on CC, then pay CC off then reject car and get refund back on CC you could end up with a large debit balance as the dealer will have to refund back on to your CC as part of AML, debit balances aren’t generally liked by CC companies 

beckstas-money

Noted thanks. Would be approx £3k leaving a available balance of £5k

Ebe_Scrooge

Even if the dealer will accept a credit card, it might be worth a quick call to your card issuer beforehand.  There's a chance that it may be classed as a cash advance, with associated fees and interest.

I will stress that I'm not 100% sure on this.  More often than not, you can't repay a loan with a credit card, and if you can then it's usually treated as a cash advance.  I realise this is a deposit - but would the card company treat it as a deposit for a car (in which case it'll be classed as an ordinary purchase), or will they treat it as a loan payment (therefore cash advance) since it's a PCP deposit?

I don't know the answer for sure - but a quick phone call to check can't hurt.

MrFrugalFever

Ebe_Scrooge said:

Even if the dealer will accept a credit card, it might be worth a quick call to your card issuer beforehand.  There's a chance that it may be classed as a cash advance, with associated fees and interest.

I will stress that I'm not 100% sure on this.  More often than not, you can't repay a loan with a credit card, and if you can then it's usually treated as a cash advance.  I realise this is a deposit - but would the card company treat it as a deposit for a car (in which case it'll be classed as an ordinary purchase), or will they treat it as a loan payment (therefore cash advance) since it's a PCP deposit?

I don't know the answer for sure - but a quick phone call to check can't hurt.

The payment is made direct to the dealer and therefore will not be paid to the finance company and as such will not be treated as cash advance. But it’s a great point if the OP was thinking of using the CC down the line to settle the PCP balance, in which case that would be a payment to finance company and most definitely treated as cash.

[Deleted User]

Dealer might accept a £500 deposit on the card but unless it was an expensive deal they're probably not going to be willing to take the fees hit

Herzlos

Will your credit card give you a money transfer? That'd essentially be balance transfer to your bank account, which you can then pay over to the dealer. It may not be on the same 0% deal as purchasing, though.

beckstas-money

I will check regarding money transfer.

VW have confirmed they can only accept £1k from a credit card so weighing up options to use just the cash i have at another dealer.

thanks 

Ebe_Scrooge

What is the actual reason why you want to pay by CC?  If it's for the Section 75 protection, then even if you pay 1p by card you'll be covered (provided the car is between £100 and £30,000).  Actually, I'm not sure whether a PCP agreement itself would give you the same protection - but that's a different discussion.

If it's because you can't really afford it and need to make use of the interest-free offer from your card, then the most prudent thing is not to buy the car.