Taking out PCP and then immediately paying it off?

The_Governor

I'm looking at a new car and it looks like there are incentives to take finance out with the dealer that reduce the cost through dealer contributions and the like.

I'm thinking, if I agreed a PCP and then paid it off after the 14 day cooling off period I'd be able to take advanatage of the (sometimes hefty) discounts but still clear the finance with cash.

I don't want or need fiannce so it's purely to take advantage of savings.

Has anyone got any experience of doing this? Any pitfalls or obstacles I should be aware of?

Goudy

Yes, I have done it once or twice or three or four times. There are two ways of doing this, cancelling and settling. So has my Mrs.

Cancelling is just that. Tell the finance company you are cancelling the agreement within the 14 days cooling off period.

You may or may not get to keep the benefits. By rights they can take them away but some have been known to keep them. I guess it depends on factors like if you are waiting for a new car to be built. Then they could just invoice you the RRP when you come to pick it up. On the other hand if you agree to a deal on a used car, drive it away a few days later (within the 14 days) with the benefits before ringing up and cancelling, I guess you might keep them.

Settling costs a couple of months interest. You let the finance agreement start then ask the finance company for a settlement figure. By law they can only charge you 56 days interest on the amount of capital outstanding.

You have taken out the finance agreement with the benefits and settled so they can't be removed.

I have always allowed the agreement to start and settled within the first month as I never wanted to risk the big deposit contributions I can access via an employment scheme, it's often £4k or £5k.

I know a couple of colleagues that tried to access the same sort of deals but cancelled within 14 days and had to pay full RRP before collection as the benefits were firmly linked to the finance agreement.

The_Governor

That makes sense, I was thinking I'd take delivery of the car (whether it's new or used) so the agreement had actually started and then pay it off in the first month

It's a good tip to not do it until you have the car as they can't vary the price then!

born_again

It's a good tip to not do it until you have the car as they can't vary the price then!

Finance will not start till you have the car…

Goudy

Where as the cooling off period of 14 days starts when you sign or receive a copy of the finance agreement and not when you collect the car.

If the benefits outweigh the cost of the 56 days interest, it's worth it. If they are just throwing a set of mats in with the deal, then probably not.

Frozen_up_north

While the end of February isn't a good time to haggle (new March reg plates), at the end of the month dealers sometimes have to shift cars to keep up their quota with the distributor, and may offer discounts without the potential pitfall of taking out finance. As many know, around 8 or 9 cars in every 10 bought are paid for via finance, I guess many of the finance deals are arranged with the dealer who will take a percentage. Don't be surprised if the dealer seems luke warm about buying a car without their finance… Keep your hands in your pockets, have a free coffee, then walk away.

As I've previously mentioned on this forum, at the end of November 2024 I bought a £32K new car that had £4K knocked off the windscreen price without haggling. The salesman simply said I could have it for £28K.

Given the number of potholes, and many cars having tyres that are the same width as the alloy wheel, making it all too easy to damage the wheel while parking next to a kerb, if you are offered alloy and tyre insurance it's probably worth taking if it sweetens the deal. Other offers worth considering are a couple of services thrown it, but not paintwork protection or GAP insurance…

Happy shopping!

jimjames

I'm thinking, if I agreed a PCP and then paid it off after the 14 day cooling off period I'd be able to take advanatage of the (sometimes hefty) discounts but still clear the finance with cash.

Definitely don't wait until after the 14 days. Phone to cancel (withdraw) from the finance as soon after you get the car. I left mine 3 days. With VW finance stops the clock on interest accruing as soon as you withdraw but you then get 30 days to pay off the balance with no further charges. Meant mine cost me a few pounds and I got 2 years warranty and servicing on an 8 year old car.

born_again

https://forums.moneysavingexpert.com/discussion/comment/81896076#Comment_81896076

Cancel in the 14 days cooling off. Means you have to find another way of paying off the car. As all you are doing is cancel the finance offer 🤷‍♀️

Bigwheels1111

My friend got his new merc delivered off the transporter onto his drive.

He signed the paperwork, went inside and settled the finance there and then, No charge as was day one.