Cooling off period

Grumpy_chap

the_lunatic_is_in_my_head said:

Hi 

It's covered under S34

You are not able to make any deduction for diminishing the value of the goods if you have not provided consumers with the information about their right to cancel (information item 'l' above).

No other deductions, such as cancellation or restocking fees, can be made when a consumer exercises their legal right to cancel.

That's what I wondered which is why I think OP should very carefully check over all paperwork. I see the word "dealership" and think of a prestigious car showroom, perhaps OP means it as just some yard with cars to sell, I don't know. 

Thanks.
I deleted most of your reply for the sake of brevity.
It does seem an excessive (punitive) penalty for failing on some paperwork.  The extension to the timescale seems reasonable enough.  To suffer a year's worth of product devaluation is painful - whether a car, fridge or tyres.  


In this case, the OP stated they have purchased a brand new £37k from the manufacturer's franchised Dealership.  That would seem to rule out being "just some yard with cars to sell".  It also makes it seem highly unlikely that the necessary information was not provided.

the_lunatic_is_in_my_head

Grumpy_chap said:the OP stated they have purchased a brand new £37k from the manufacturer's franchised Dealership.  That would seem to rule out being "just some yard with cars to sell".  It also makes it seem highly unlikely that the necessary information was not provided.

Thanks I missed that bit

Yes I agree, you'd have thought that kind of "dealership" would be doing everything correctly.

Not sure OP is coming back so I guess we'll never know what happens sadly. 

Grumpy_chap said:

Thanks.
I deleted most of your reply for the sake of brevity.
It does seem an excessive (punitive) penalty for failing on some paperwork.  The extension to the timescale seems reasonable enough.  To suffer a year's worth of product devaluation is painful - whether a car, fridge or tyres.  

I guess the thinking could be if the value could be reduced any time within the extended cancellation period the trader doesn't particularly lose out (whilst noting of course there's costs in dealing with all returns so they'd in theory get more due to the extra time) but either way it seems to be the direction they've gone in.

Personally I don't return much stuff buy and on the rare occasion get it back as fast as, in as perfect as condition as possible, often when the topic of diminished value comes up here it's a good point to assist someone perhaps getting poor service from a trader when a problem has arisen. 

OP's case is purely change of mind and if the regs allow, the regs allow, but that doesn't necessarily equal my moral view (which either way doesn't really have any bearing)   

MeteredOut

<snip>

MeteredOut said:

It's the finance company that takes the hit here when the finance is paid off early.

So, for the OP I suspect the dealership got somewhere between £37K and £41K from the finance company, the finance company got £37K from the OP (via their friend). So, I don't think the OP is keeping (or trying to keep) any incentive.

The finance company took that hit when the OP paid of the finance early - that was going to happen whether the OP keeps the car or not, so is probably moot in the overall discussion. It's an accepted cost of business for car financing companies.

This is assuming the incentive the OP referred to as the as I have described, and not some sort of cashback.

eg, In my case, I agreed a price £x for the car with the dealership. The incentive (Financial Deposit Contribution) was £2K. My finance was £x-2K. I then cancelled and repaid that finance within a few weeks (as was my right).

There's a thread about it here: https://forums.moneysavingexpert.com/discussion/6462339/any-reason-not-to-pay-off-pcp-early

Bit confusing for my tired brain but 

"The incentive (Financial Deposit Contribution) was £2K"

Does that mean the dealership gave £2k to the finance co?

No, i think its the other way around. The finance company pays the dealer the £2K (or £4K for OP), which they take off the price of the car, leaving the customer to finance the remainder. The finance company would then recoup that via the interest charged over the 3-5 years of the loan.

But, if the customer then invokes their right to cancel (as the OP did and as I did), I'm pretty sure its the finance company that takes the hit. They could feasibly have clawback from the dealer, but I've read a number of accounts where the dealer is letting customers know that they can get the incentive and then cancel (mine did) so I can't see why they'd do that if the finance company did claw back the incentive. Of course, it could be the individual salesman would still get their commission, but the dealership as a whole could get a clawback against them. 

But, my main point is, I don't think the OP has attempted to gain financially from the exchange, though I share others thoughts around whether we've been told the full story.

Grumpy_chap

MeteredOut said:

But, my main point is, I don't think the OP has attempted to gain financially from the exchange, though I share others thoughts around whether we've been told the full story.

However the mechanics of "incentives" linked to the finance work, it is really a way of disguising a discount.  In this case, the £37k car becomes less than £37k.  I understand often with the incentive originating from the manufacturer, though what behind the scenes transactions then occur is all smoke and mirrors.

It is quite a common suggestion to take the finance to secure the discount and settling the finance early does not sacrifice the discount.
I think that has only ever been said in the context of actually keeping the car.

The OP's intentions in this regard are unclear.
Early in the thread the OP said:

Cheechee said:

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If you cancel the contract and return the car, you will also have to return whatever "incentive" was attached to the finance part of the deal. 

I have no problem paying back if I owe anything.
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Then later referenced keeping the incentive by the early settlement of the finance:

Cheechee said:

I am thinking of buying a new car. I have the cash to buy it, but the salesman says that if I agree to PCP the dealer contributes £4,000 so I should opt for that and then exercise my right to withdraw and pay the finance company off.

Are there any issues with that? What should I check?

Since declining to provide any clarity or context to that comment and the apparent intention it suggests.

Oddly, in this case, settling the finance so quickly may have worked against the OP.  Had the finance remained in place and the Dealer failed to act as CCR requires and accept the cancellation, the OP would potentially have been able to pursue the finance company under S75a.  

born_again

Normally it's the manufacture that pays any finance contributions.

MeteredOut

born_again said:

Normally it's the manufacture that pays any finance contributions.

That makes sense. I still maintain they are not benefitting from an incentive even if they hand the car back and get the full £37K. I suspect the comments above are simply misunderstanding/ignorance of what was actually being signed up for.

the_lunatic_is_in_my_head

MeteredOut said:

<snip>

MeteredOut said:

It's the finance company that takes the hit here when the finance is paid off early.

So, for the OP I suspect the dealership got somewhere between £37K and £41K from the finance company, the finance company got £37K from the OP (via their friend). So, I don't think the OP is keeping (or trying to keep) any incentive.

The finance company took that hit when the OP paid of the finance early - that was going to happen whether the OP keeps the car or not, so is probably moot in the overall discussion. It's an accepted cost of business for car financing companies.

This is assuming the incentive the OP referred to as the as I have described, and not some sort of cashback.

eg, In my case, I agreed a price £x for the car with the dealership. The incentive (Financial Deposit Contribution) was £2K. My finance was £x-2K. I then cancelled and repaid that finance within a few weeks (as was my right).

There's a thread about it here: https://forums.moneysavingexpert.com/discussion/6462339/any-reason-not-to-pay-off-pcp-early

Bit confusing for my tired brain but 

"The incentive (Financial Deposit Contribution) was £2K"

Does that mean the dealership gave £2k to the finance co?

No, i think its the other way around. The finance company pays the dealer the £2K (or £4K for OP), which they take off the price of the car, leaving the customer to finance the remainder. The finance company would then recoup that via the interest charged over the 3-5 years of the loan.

But, if the customer then invokes their right to cancel (as the OP did and as I did), I'm pretty sure its the finance company that takes the hit. They could feasibly have clawback from the dealer, but I've read a number of accounts where the dealer is letting customers know that they can get the incentive and then cancel (mine did) so I can't see why they'd do that if the finance company did claw back the incentive. Of course, it could be the individual salesman would still get their commission, but the dealership as a whole could get a clawback against them. 

But, my main point is, I don't think the OP has attempted to gain financially from the exchange, though I share others thoughts around whether we've been told the full story.

I thought it was basically a referral scheme.

Dealer gets £3k for signing someone up to finance, gives the customer £2k, keeps £1k and basically gets an extra £1k out of the sale.

I guess they could give the customer the whole referral if they wished but when you say they take it off the price of the car does that the paperwork is for £37k instead of £39k?

If so I agree someone cancelling can’t benefit as they’d only get a refund of 37.

Unless I’m misunderstanding, which is good possibility! 

Okell

the_lunatic_is_in_my_head said:

Cheechee said:

So, I've been googling and found a lot of interesting facts that lead me to believe I can reject (this terminology has been used) this car. Furthermore, I believe they can't make any deductions because I haven't been given any cancellation policy details nor can I find any on their website or in their terms and conditions.  

I've copied bits I think are relevant from the sites I've been viewing but also given you the link if you want a longer read (sorry it's long).

Just a note about me test driving a different car at a different premises (both dealerships are not connected) doesn't seem to be an issue because I didn't actually see my car and the transaction was all done via email.

https://www.specialistautomotivefinance.org.uk/resources/distance-selling-dealerships.html/

Distance selling in dealerships

The Consumer Contracts Regulations give customers who buy goods from a dealer outright the right to change their mind and cancel an order within 14 days of receiving the vehicle. 

Cancellations and refunds

The time limits for sales contracts and order cancellations are as follows:

• The contract must be cancelled within 14 days after delivery of the vehicle.  The vehicle must then (depending on the dealer's terms) be made available for collection.
• A customer who decides to return the vehicle within these time limits is entitled to expect the full amount to be refunded within 14 days.

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https://autowebdesign.co.uk/blog/distance-selling-regulations-for-car-dealers#:~:text=In%20short%2C%20if%20a%20contract,the%20customer%20commits%20to%20buy.

 

“The legal definition of a distance sale means that if a customer commits to a purchase before physically seeing a vehicle, it is almost certainly a distance sale

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https://www.lawgistics.co.uk/blog/legal_updates/distance-selling-regulations-a-thing-of-the-past/#:~:text=under%20the%20regulations.-,The%20regulations%20only%20apply%20to%20consumer%20contracts%2C%20not%20business%2Dto,other%20than%20at%20your%20premises.

 

 The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 came into effect in June 2014.

The regulations only apply to consumer contracts, not business-to-business sales, and only apply to sales conducted at a distance, meaning those where the consumer has not been to your premises or payment to conclude the sale is made anywhere other than at your premises.

The regulations permit a consumer to cancel the sale for a full refund within 14 days, without the need for a fault to be present.

If, however, the correct paperwork regarding the cancellation rights is not given in writing before a sale, the consumer will be entitled to cancel the sale for any reason within one year and 14 days of the sale. Further, in the absence of the correct paperwork, there is no right for the dealer to charge for deductions and they will be liable to collect the vehicle. Essentially, a consumer could have free use of a vehicle for over a year, and the dealer would be obliged to take back the vehicle and provide a refund.

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https://www.lawgistics.co.uk/blog/legal_updates/distance-sales-getting-the-paperwork-right/

 

Whether you are offering Click & Collect or Click & Deliver, you need to know what paperwork to give in regard to distance sales.

Failure to give the correct paperwork will mean you give the consumer the right to return a vehicle for a refund (for no particular reason – there doesn’t have to be a fault) anytime in the next year. It will mean you may not be able to make a deduction for usage or damage, and worse, you may end up with a bigger loss if you have not made it clear that the consumer is liable for insuring the vehicle right up to the point of return. It will also mean that you find yourself having to collect the vehicle rather than being able to insist the consumer returns it to you.

In short, you fall foul of the law and make your life harder and more expensive if you fail to provide the correct paperwork and set out the terms of the distance sale.

 

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https://www.thecarexpert.co.uk/forums/topic/pcp/

 

·        I am thinking of buying a new car. I have the cash to buy it, but the salesman says that if I agree to PCP the dealer contributes £4,000 so I should opt for that and then exercise my right to withdraw and pay the finance company off.

Are there any issues with that? What should I check?

Thanks

Yes, this can be done – depending on what your vehicle contract says.

Any PCP agreement comes with a 14-day right to cancel with no penalty. The finance company will then invoice you for the value of what was originally financed (not the value of the car), so you have to pay up straight away.

As the deposit contribution (which is basically a discount, although it’s preferable for the manufacturer to arrange it as a deposit contribution) is money you don’t have to pay before delivery, there’s no realistic way they can make you pay it afterwards. The only way they can try is if the vehicle contract specifically says that the deposit contribution is subject to maintaining the PCP for a period of time. In practical terms, this doesn’t usually happen.

Essentially, they are banking on most customers preferring to keep their money in the bank and not cancel the finance.

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https://www.autotraderinsight-blog.co.uk/auto-trader-insight-blog/distance-selling-guide

 

 

The Ultimate Guide to Distance Selling

The two methods of operating distance selling are click & collect, whereby a buyer purchases the vehicle and then travels to the retailer to pick up the vehicle, and home delivery where the vehicle is purchased and delivered to the buyer by the retailer.

In both instances the purchase has to made away from the retail premises, in accordance with current restrictions in England, and buyers will legally be entitled to a 14 day return period from when they take ownership of the vehicle. This is a legal obligation and must be explained to the buyer during the buying process.

 Trading standards expert Peter Stonely explained that these rights cannot be removed by a disclaimer and failure to communicate the 14 day right to cancel period, to a buyer through contract or on your website, will mean that they automatically have 12 months to cancel. He suggests that retailers should highlight the 14 day right to cancel on your website as well as sent to the buyer via email and/or post.

 

Overcoming the Fear of Returns

One of the risks of distance selling that concerned retailers the most was the likelihood of a customer rejecting the car. But both Nona and Sean revealed that, in their experience, this happens in very few cases. Having confidence in the vehicle you are selling, the transaction experience you are giving the customer, having a rudimentary understanding of distance selling and making consumers aware of their rights was key to successfully operating a remote selling process both now, at a time when it’s the only model available, and in the future when consumers will see buying this way as the normal.

Dissecting the Details of Distance Selling regulations

A third of retailers we polled that do not offer remote services did so because they were concerned about government guidelines and unsure of distance selling legislation. The full regulations can be found by clicking here but main thing retailers must abide by when it comes to distance selling is the 14 day cancellation period which, as previously stated, is a legal obligation and must me made clear to the buyer. So long as you abide by this you have the main element covered.

But whilst retailers cannot change the 14 day return period, they can include certain terms to make the return process easier for both the retailer and buyer. Nona Bowkis recommends that retailers create a robust set of returns terms and conditions to ensure an easy returns process for both the buyer and retailer. Within these terms Nona suggests that retailers set out how many miles can be covered within this period and what charges will apply should the vehicle be returned with excess mileage e.g. charging £1 a mile if a vehicle is returned with mileage exceeding the figure in the contract. The number of miles permitted to be covered will need to be considered reasonable but there is no pre-defined number. The condition that the vehicle must be in upon return must also be stipulated and Nona also suggests adding a clause as to who’s responsibility it is to deliver the returned vehicle to the forecourt i.e. the buyer must return the vehicle in the event they initiate a return. 

If a vehicle is returned you will be required to refund the buyer in full, if they have adhered to your returns policy. However, if the vehicle was purchased on finance then the retailer will need to liaise with the finance company to enable the refund of funds paid. Most finance companies will already have a facility for returns in such instances.

 

 

 

That's pretty much what I said back on page 3  

"Furthermore, I believe they can't make any deductions because I haven't been given any cancellation policy details "

This is the key point for you really, where the consumer says the trader didn't give the information it is for the trader to show they did, if they can't do this and it's a distance sale then I don't see they have any defence against a full refund.  

Quite!  

@Cheechee could have saved themself a lot of time researching and typing if they'd just read your post properly...

Grumpy_chap

the_lunatic_is_in_my_head said:

I guess they could give the customer the whole referral if they wished but when you say they take it off the price of the car does that the paperwork is for £37k instead of £39k?

The way I understand it normally works is that the car is purchased for the full list price, say £37k
The "incentive" (say £2k) is then linked to taking the PCP, so no equivalent discount for a cash purchase.
The invoice still shows £37k as the sales value / turnover.  This is important for the manufacturer / dealership as they can show higher turnover (good for raising business finance / share price) and the manufacturer can say they have not discounted the cars, they sell for list price (good for marketing).
The "incentive" then goes into the finance deal as "manufacturer's deposit contribution" so reduces the amount borrowed.  It may even allow the customer to get into the PCP without an upfront deposit in some cases.  Seemingly good for the customer, assuming they needed credit, as the total repayable is less.
Good for the manufacturer / dealership as the "incentive" (discount) is funded through the interest and finance fees / introduction commission.
The amount paid (via finance) is £37k.
The customer can settle the finance early and retain the benefit of the "incentive", so it becomes basically a discount off the list price, so effectively paid £35k for the £37k car. 
The invoice has still shown that the car was paid for at £37k, so good for RTI GAP.

I say "normally" as, obviously, different manufacturers may operate different schemes that function in different ways.

There is another offer in a totally different sector right now.  
If you order a specific smart phone for £1k, they will give you a free smart watch worth, say £100.  
They could simply sell the phone for £900, but they don't.  (Maybe so history price-trackers still show the £1k price.)
If you order the phone and then return it under CCR 14-day change of mind, you don't get to keep the watch.  The watch also has to be returned.

I don't see why the finance incentive would be any different in the case of a car.
Otherwise, people would be buying cars, return for refund and keeping the £2k or £4k finance incentive as a regular thing.  Obviously not sustainable.
It is quite different to buy a car, secure the discount and settle the finance early but still keep the car than buy car, secure discount, settle finance, return car for refund.

Ironically, in this case, had the OP not settled the finance, and the dealership continued to fail to respond, the OP may have been able to pursue the finance company under S75a for the rights under CCR 14-day change of mind.  I think that ship has sailed by the early settlement of the finance.

Cheechee

An update because no-one likes an unfinished story and also I hope I can help someone else going through a similar thing.

Car was finally rejected under my right to reject within 14 days and refund issued.  New car on order (not from the same dealership).

Right, where to start, there is so much misinformation on this thread as well as some posters who genuinely were talking sense and wanted to help. (thanks to the_lunatic_is_in_my_head)

If you've stumbled across this post please be very careful about taking advice from some members on this forum.  No doubt, most people want to help but some are very accusing.

Make sure you read up about your rights and don't give up if you know you are in the right.  Of course the dealership didn't want to take the car back, why would they? But I didn't give up and got the result that was fair and my statutory right.

I can't remember all of the thread but a few things stand out.  A poster said that even tho I test drove a different car from a different dealership, this may jeopardize my rejection because the dealership would be checking records, utter nonsense!!!  I was well within my rights to test drive a different car from a different dealership.  I'm sure my dealership would have found this 'loophole' otherwise.  Others were insinuating I was out to make money from the incentive, again utter nonsense!!!  The refund I received was no more or less than my original payment.  There was no money deducted for excess mileage or depreciation.  Also, paying off the finance didn't jeopardize my rejection either and it was most definitely the dealership and not the finance company I had to reject the car with.

At the end of the day, the law is the law.  I researched as much as I could and stood my ground.  Good luck to anyone else going through this.