Is PCP early settlement really too complicated to explain?
I'd really appreciate some advice from anyone with more experience of PCP than me please.
I'm in the process of buying a second-hand car from an Audi dealership.
I was intending to pay cash, as I have always done before, but they suggested taking out a 2 year PCP for some incentives and "just get a settlement figure after 6 months".
The offer involves longer warranty, two extra services, MoTs, etc that amount to about £1500 at retail prices, so worth considering.
I had two questions Q1. "Why wait 6 months and not, say, 6 days?" The answer to this was at least honest: They would lose their commission and since the dealership are funding the incentives that would be underhand behaviour on my part. OK, fair enough.
Q2. "How do they calculate the settlement figure, so that I can check what this deal will actually cost me?"
Verbatim answer below:
"As per our conversation, I have called the finance company and unfortunately they cannot provide the formula for calculating the early settlement figure as it is something that is done by computer. They will also not give an estimated future settlement figure as they will only provide a settlement figure at the time of request."
I find this answer preposterous since it took me 5 minutes to knock up a spreadsheet to calculate a monthly balance by adding the interest and subtracting monthly payments. I just want to know how much extra they would add to that balance.
The finance company is linked to VW/Audi, but fortunately Santander have a much more helpful document on their website:
"The early settlement calculation contained in the Consumer Credit (Early
Settlement) Regulations 2004 means that we defer the proposed
settlement date by 28 days from the date of your request on an
agreement that had an original term of 12 months or less, and by 58
days on an agreement with an original term of greater than 12 months"
So effectively the settlement figure is legally regulated and it should cost an extra 2 months' interest to settle.
Do you think I am safe to assume that the Audi people are just a bit clueless and that they must apply the regulated method whether they know it or not?
Further down the rabbit hole, I also saw that the version of these regulations on legislation.gov.uk specifies 30 days and not 58 days:
Deferment of settlement date
6. Where the agreement provides for the credit to be repaid over, or at the end of, a period which is more than a year after the relevant date, the settlement date for calculation of the rebate may be deferred by—
(a)one month, or
(b)where the length of a month’s deferment would be more or less than 30 days and the creditor so elects, 30 days.
Is this a recent change perhaps? Maybe I am overthinking it, but I do like to know what I am getting myself into before signing things like this.
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