Car Hire Purchase Financing Dilemma

teuchter66

I've just done a deal on a new to me car.

Long story short I wanted to self finance and get a cash price which was nearer my valuation, however I've been persuaded to take a 48 month HP deal @ 12% interest to get some Finance/Dealer contributions etc and to get an early settlement figure after the first payment and pay off the balance.

I haven't seen or signed the Finance agreement yet but I am not sure of how this arrangement works.

If I go ahead an sign the agreement, how soon after the 14 day cooling off period can I ask the lender for a settlement figure and also will there be any penalties other than x days interest.

MikeJXE

Why did you take about a loan when you wanted to self finance, IMO you will be paying more for the privilege 

I can understand the dealer talking you into it because he likely gets a cut from the finance company 

born_again

teuchter66 said:

I've just done a deal on a new to me car.

Long story short I wanted to self finance and get a cash price which was nearer my valuation, however I've been persuaded to take a 48 month HP deal @ 12% interest to get some Finance/Dealer contributions etc and to get an early settlement figure after the first payment and pay off the balance.

I haven't seen or signed the Finance agreement yet but I am not sure of how this arrangement works.

If I go ahead an sign the agreement, how soon after the 14 day cooling off period can I ask the lender for a settlement figure and also will there be any penalties other than x days interest.

Pay it off in the 14 days..

teuchter66

Thanks, so do I ask for a settlement figure at that time or do I just say I want to cancel under the Consumer Credit Act.
Not sure how I pay it off within the cooling off period without getting a figure from lender.

MEM62

teuchter66 said:

Thanks, so do I ask for a settlement figure at that time or do I just say I want to cancel under the Consumer Credit Act.

You do neither.  You do not take the finance and self-finance as you originally intended.  The last person you want to put in charge of your financial decision making is a car salesman.  

400ixl

MEM62 said:

teuchter66 said:

Thanks, so do I ask for a settlement figure at that time or do I just say I want to cancel under the Consumer Credit Act.

You do neither.  You do not take the finance and self-finance as you originally intended.  The last person you want to put in charge of your financial decision making is a car salesman.  

You don't know that is good advice.

For example I was recently buying a car intending to pay it outright. However, if I paid £10k of it on finance, I got an extra years manufacturer extended warranty and 2 years Servicing & MOT with MOT cover.

I then just cancelled the finance under the right 14 day right to cancel and paid about £10 in interest, keeping the benefits. To do this I just contacted the finance company directly and said I wished to cancel the finance and asked for the figure and where to sent the payment.

Many new car purchases can come with deposit contributions or other benefits if taken on finance which are not available to a cash buyer. So in these cases it can make sense to do similar and get the benefits, cancelling the finance so you convert it to a cash purchase.

MEM62

MEM62 said:

teuchter66 said:

Thanks, so do I ask for a settlement figure at that time or do I just say I want to cancel under the Consumer Credit Act.

The last person you want to put in charge of your financial decision making is a car salesman.  

400ixl said:

MEM62 said:

teuchter66 said:

Thanks, so do I ask for a settlement figure at that time or do I just say I want to cancel under the Consumer Credit Act.

You do neither.  You do not take the finance and self-finance as you originally intended.  The last person you want to put in charge of your financial decision making is a car salesman.  

You don't know that is good advice.

My point is that you do not let the salesman make your financial decisions for you.  And that is absolutely good advice.  

MrFrugalFever

If you cancel within 14 day cooling off period the finance company are within their rights to rescind and ‘benefits’. I’d wait until just after and then request settlement. They’re entitled to retain up to 58 days interest.

teuchter66

Thanks Frugal, that is exactly my quandary: the only way I could get the price down was by taking the finance and therefore the contribution.
I also got the extended warranty etc which I need for peace of mind so all in all I'll end up paying 10% less than their first ask.

I'm quite happy to pay a few days' interest so I'd better read the small print thoroughly, just hoping that someone had done a similar transaction recently.

MrFrugalFever

Depending on who the lender is, by settling so early on you may find getting credit with them in the future trickier (not impossible though), whilst there’s no such thing as a black list as such, their internal records will provide a basis for decision as well as credit reports.

If this is the best deal you can get and you have the ‘cash’ in the bank to pay in full then you have benefited overall