Any - Buying Out Of A PCP - joegrundy

Contemplating buying a new car, specifically a Dacia Sandero 1.0 Ambience with met paint, cost about £8,000. Very little discount available (understandably). Or possibly a Suzuki Baleno 1.2 (available at about £8,800 with 265 discount via Drive the Deal.

On the Dacia, on PCP, there's a £400 'dealer contribution' and an upgraded 5 year warranty. I know that dealers get commission on PCP etc. deals.

I'm not really keen on PCP and have borrowed £10,000 at 3.6% from my bank to finance my purchase.

Questions:

1. Are there any problems in buying a car on PCP to take advantage of extended warranty, dealer contribution, etc., then settling it (paying it off) a month or so later? (I believe that there are consumer credit regulations about discouns on whole deal, etc.)

2. When buying a car via a broker are the same PCP deals available - and the same early settlements available?

On the Dacia, for example, it seems that I could benefit from the extended warranty and the dealer contribution but walk away a month later with the benefit of my low rate bank loan.

Thoughts and info would be appreciated.

Any - Buying Out Of A PCP - RT

Buy it on a PCP to get the dealer contribution and 5 year warranty - cancel the PCP within 14 days "cooling off" and pay the full cost less the dealer contribution and the upfront payment and just a small amount of interest to cover those few days - you'll retain the dealer contribution and 5-year warranty.

You have to be quick as they'll probably try to delay beyond 14 days which will then add initial and termination payments as defined in the agreement.

The dealer won't get their PCP commision so may not be happy which may affect ongoing service.

Any - Buying Out Of A PCP - RobJP

Yes, you can ... kinda, sort-of.

Basically, you have the legal RIGHT to cancel the PCP and pay off all sums owing within the first 14 days - NOT a month !

If the dealer has made a 'deposit contribution' as part of the deal then ... tough on the dealer, basically. They have no right to it back. No idea on the upgraded warranty, however.

Now, depending on the interest rate on the PCP, it might make more sense to actually use the PCP rather than the bank loan. Whlst you list the interest rate on the bank loan, you don't list the rate on the PCP.

Yes, dealers get commission on PCP and other finance. But you can't begrudge that, after all the bank is going to be making a profit out of your loan too. Make sure you don't throw away a decent deal, just to avoid the evil car salesman making some profit.

An advantage of a PCP over a bank loan is you don't HAVE to buy the car at the end of the PCP agreement. You also get what are called 'VT' or Voluntary Termination Rights - basically, once you have paid off 50% of the total of the agreement finance, you can hand back the car and walk away without any penalty or other sums owing. (This right, along with the sums and VT date, should be included in your finance paperwork).

NOTE : I do not claim that this next bit is correct. My understanding or reading of it might be wrong.

In particular, I'm not entirely sure that both sections of the deposit (yours and the dealers) is calculated out of the VT 50% figure.

CHECK with a professional !

Had a look at the Dacia site. Assuming it's the representative example (£1604 customer deposit, £400 dealer deposit, £99 per month for 49 months, etc ...) then I think this is your calculation (roughly)

Total amount payable is £9356. Therefore the 50% mark is at £4678.

Your deposit was £1604. Dealer deposit was £400. That is all taken off the £4678 (50%), leaving £2674.

Your payments are £99 per month.

2674 divided by 99 = 27. So anytime after the 27th month, you could VT if you wanted to, and just hand back the keys and walk way.

--------------------------------------------

Basically, VT can be useful - lets say a change in circumstances, or you find that, after a couple of years the padding on the seats really digs into your back in a few places, and you've decided it isn't for you.

Any - Buying Out Of A PCP - skidpan

Done it twice now on a Seat and Nissan

The Seat came with a £1000 contribution. Simply paid settlement figure (tiny amount of interest) and kept remainder, thanks very much. never went back to the selling garage since they were idiots so no idea if they would have been upset about loosing thier commision.

The Nissan came with a £2000 contribution and 3 years servicing at £99 instead of the usual £299. Took a bit longer to get a figure than with Seat but it was exacly as expected so no problem. I suspect they were busy if a large proportion of buyers were doing the same. Dealer has always been 100% at service time. I suspect they don't even know we cancelled the PCP sincve they ring me a couple of times a year to see if we want to change the car and get a new one with no additional montly payment amount. Don't have the heart to tell them that would mean paying £0 a month since its been settled.

Any - Buying Out Of A PCP - Manatee

That (the VT part) is correct if the PCP is written as a regulated HP or Conditional Sale agreement. The payments must be up to date at the time of surrender, and the borrower/hirer will also be liable for any damage to the goods.

Worth knowing about. I think PCPs are typically HP agreements but you'd need to see the form to know. It is possible some are written as unsecured fixed sum loans, which means the lender would have no security but the borrower would have no voluntary surrender rights.

Any - Buying Out Of A PCP - joegrundy

Thanks for the replies.

Having started into this field of PCPs etc., I have widened my field of interest.

Having no dependents or a SWMBO/senior management to consider I am now thinking of a car I'd like to buy, run for 4 years or so (or much longer if it suits) and I'm considering a Dacia Duster 1.2 petrol 4x4, about 16,000.

Some deals are available, and I think it may be useful to enter into a PCP knowing that I can pull out of it, pay off the balance, and reevrt to full ownership if/when needed.

Any - Buying Out Of A PCP - Terry W

PCP deals may be suitable for some but you are potentially buying into a world of financial complexity and small print.

Other have written that there are ways out if you want them - voluntary termination, cancel within 15 days etc. But you need to be very clear about what is in the agreements you sign and how the consumer credit acts work.

Particularly as you are able to finance the car through a simple bank loan, unless there are very material savings to be made, I would personally go for the KISS approach (keep it simple, stupid)

 

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