ONE DAY LEFT to add your questions before the Forum 'Ask An Expert: Energy' event ends. Our expert MSE Andrew will answer some from Wed afternoon

Vehicle finance overpayments and early settlement

mcplumb Forumite Posts: 51
Second Anniversary 10 Posts
Do all vehicle finance/HP products have the same rules regarding overpayments and early settlements? 

I want to buy on finance over 36 months then overpay at double the monthly rate, then pay balance at around 1 year possibly less. No one offering the finance can give me a solid answer on how payments work.




  • Aran76
    Aran76 Forumite Posts: 35
    Sixth Anniversary 10 Posts
    In most cases yes, you should always check the terms & conditions of any finance product so that you know from the outset what you can do.

    If you are looking to make larger monthly payments then HP will be the best option as you will have higher monthly payments anyway than a PCP and will pay less interest overall.

    Also, compare the rate you are being offered on a HP to bank loans that you qualify for.
  • mcplumb
    mcplumb Forumite Posts: 51
    Second Anniversary 10 Posts
    I have asked for the t's &c's prior to applying as I see no point applying unless the product suits. Trying to get the information is proving difficult and the dealers really don't know much about the finance they "sell". Noted on the bank loan and yes its a better rate, however I've be advised vehicle finance is better for my SA tax. 

    The vehicle I'm potentially buying is a distance sale from an unknown (to me) dealer so the thought of transferring 40k two days before delivery is unnerving with finance giving me more confidence. The additional costs are easily covered by the pricing offered by these companies V's Main dealers    
  • MrFrugalFever
    MrFrugalFever Forumite Posts: 999
    500 Posts Second Anniversary Photogenic Name Dropper
    In short NO is the answer to your question.

    Depending on the finance type you are intending to apply for.

    Generally speaking, Personal Contract Purchase and Hire Purchase finance via a Car Dealership (broker) on a personal basis is covered under the CCA 1974 and therefore the over-payments and ability to settle early clauses apply.

    You may need to be proposed to the finance company and incur a Hard Credit Check before you can be provided with the PCCI and Sales Agency Agreement which will outline the terms and conditions.

    PCP can be granted in several forms such as PCP Fixed Sum Loan, PCP Personal Loan and PCP Conditional Sale.

    Hire Purchase is often with an option to purchase fee (£1-10 typically) and Hire Purchase Conditional Sale does not normally have an 'option to purchase fee'.

    Both of the above, when purchasing as a personal customer and not a business will be covered by the CCA 1974.

    It gets a little more complex when funding via Personal Contract Hire, Lease Hire, Lease Purchase, Credit Sale and Finance Lease.
    Save £12k in 2023 challenge

    Jan = £715 / £1,000 - Feb = £1,275 / £1,000 - Mar = £400 / £1,000  (fallen behind will make up in April)
    Apr = £ May = £ Jun = £
    Jul = £ Aug = £ Sept = £
    Oct = £ Nov = £ Dec = £

    Saved Total = £2,390 / £12,000
  • Herzlos
    Herzlos Forumite Posts: 14,365
    Part of the Furniture 10,000 Posts Name Dropper
    Any HP product I've had has allowed overpayments - they've offered the option of reducing the payments or term.

    With a PCP you'd probably need to put the money into a savings account until you can afford to settle the finance entirely.
Meet your Ambassadors


  • All Categories
  • 338.8K Banking & Borrowing
  • 248.6K Reduce Debt & Boost Income
  • 447.6K Spending & Discounts
  • 230.7K Work, Benefits & Business
  • 600.8K Mortgages, Homes & Bills
  • 171K Life & Family
  • 244K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards