Paying off car loan in cooling off period

Options
jimmy_cricket
jimmy_cricket Posts: 382 Forumite
First Anniversary Combo Breaker
in Loans
Hi all,
If someone could point me to a sticky, or advise, I would be grateful.

Just ordered a new car. If I take out a finance agreement, I can get 1,500 off the price. Agreed verbally to rake out a straightforward repayment load with the dealer rather than a complicated lease or pcp arrangement.

I have the cash to pay for the car so the plan is to pay as big as deposit as allowed and then pay off the loan within the 14 days.
Just looking for a bit of guidance on how to do this and if there is specific language I need to use to protect the discount.

Thanks
«1

Comments

  • DCFC79
    DCFC79 Posts: 40,598 Forumite
    Name Dropper First Anniversary First Post
    Options
    Does your contract not mention this ?
  • jimmy_cricket
    jimmy_cricket Posts: 382 Forumite
    First Anniversary Combo Breaker
    Options
    Haven't got the contract yet, just ordered it with a 2k deposit down. Not signed any loan agreement.
  • WillyWonga
    WillyWonga Posts: 324 Forumite
    Options
    The discount given will usually be the "kickback" the dealership will given by the finance company. The finance company will pay the dealership direct - if you cancel in the cooling off period then the dealership will pay back the "loan amount" + the kickback they received to the finance company to cancel the agreement. The dealership will then ask for full payment of the car as if you not not taken out the finance.

    Unfortunately you cant get the discount and keep it.
  • bazzyb
    bazzyb Posts: 1,584 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    WillyWonga wrote: »
    The discount given will usually be the "kickback" the dealership will given by the finance company. The finance company will pay the dealership direct - if you cancel in the cooling off period then the dealership will pay back the "loan amount" + the kickback they received to the finance company to cancel the agreement. The dealership will then ask for full payment of the car as if you not not taken out the finance.

    Unfortunately you cant get the discount and keep it.

    The OP will be able to use their right to withdraw directly with the lender to cancel the agreement within the 14 days and repay the funds directly to them (plus daily interest charge), there would be no need to involve the dealer and it wouldn't be the dealer who is repaying the funds to the lender.

    Yes, the finance company would claw back their commission from the dealer but this shouldn't affect the OP in any way as by then they will already have the car. However, the OP should carefully check the paperwork with the dealership before signing in case there is some clause saying the discount needs to be repaid of the finance agreement is cancelled - but there is unlikely to be such a clause.
  • iolanthe07
    iolanthe07 Posts: 5,493 Forumite
    Options
    Alternatively, just pay the loan for a couple of months and then settle it. There may be a small penalty, and you've paid a couple of months interest, but it won't come to £1500 and should be hassle free. This is what I'm going to do, anyway.
    I used to think that good grammar is important, but now I know that good wine is importanter.
  • noh
    noh Posts: 5,800 Forumite
    Name Dropper First Post First Anniversary
    Options
    Pay the loan off after the 14 day cooling off period. The interest will be minimal and there will be no issue with claw back of deposit contribution.
  • jimmy_cricket
    jimmy_cricket Posts: 382 Forumite
    First Anniversary Combo Breaker
    Options
    iolanthe07 wrote: »
    Alternatively, just pay the loan for a couple of months and then settle it. There may be a small penalty, and you've paid a couple of months interest, but it won't come to £1500 and should be hassle free. This is what I'm going to do, anyway.

    My understanding is that the interest is front loaded, I.e. It is added to the loan at the beginning so even if paid off early, you would still pay the same interest as if you let it run to the end.

    I'm guess slightly here as it is not something I've done before. I always pay cash or if needs must, get a bank loan.
  • Nebulous2
    Nebulous2 Posts: 5,128 Forumite
    First Anniversary Name Dropper First Post
    Options
    jimmy_cricket wrote: »
    My understanding is that the interest is front loaded, I.e. It is added to the loan at the beginning so even if paid off early, you would still pay the same interest as if you let it run to the end.

    I'm guess slightly here as it is not something I've done before. I always pay cash or if needs must, get a bank loan.

    Interest on consumer finance isn't front-loaded. Even if it is added to give a total payable in the figures you are given it will then be discounted if you pay early.
  • bazzyb
    bazzyb Posts: 1,584 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    jimmy_cricket wrote: »
    My understanding is that the interest is front loaded, I.e. It is added to the loan at the beginning so even if paid off early, you would still pay the same interest as if you let it run to the end.

    Are you borrowing more than £25k?
  • jimmy_cricket
    jimmy_cricket Posts: 382 Forumite
    First Anniversary Combo Breaker
    Options
    bazzyb wrote: »
    Are you borrowing more than £25k?

    No minimum I can to get the contribution, around 5k
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.4K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 449.8K Spending & Discounts
  • 235.6K Work, Benefits & Business
  • 608.5K Mortgages, Homes & Bills
  • 173.2K Life & Family
  • 248.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards