Pcp paying off early?

[jc74]

When we bought our 2nd hand car (6 months old) a couple of weeks ago, we took the smallest amount of finance possible to get an included Service plan. We didn't really want finance, but given it gave us the equivalent of two services, it seemed worth it. We were told that providing we made three payments before settling, we would be able to retain the service plan, thus effectively getting the plan for the cost of three months interest.

Has anyone else had experience of this? It seems strange to have to make "three" payments before you can settle and retain the service plan. The Finance T&C's don't seem to make any reference to it, nor does the service plan.

I had considered making an initial overpayment to further reduce the interest, but leaving just enough finance for the three payment requirement.

Three payments is the point at which the salesman gets his commission on selling the finance and unrelated to the offer..

From what I've read they cannot take the service plan (or other incentives) away from you if you withdraw. Read the thread I linked to earlier for more information (or google around for other threads on the matter). Note I've not personally done the service plan thing but am.confident from the experiences of others online.

 

[Glarh]

Interesting read!

I had left the forums for a few years having sold my MK1 LCR, but having just got a MK3 FR a couple of weeks ago I have been watching from a far. Saw this thread and signed up again!

When we bought our 2nd hand car (6 months old) a couple of weeks ago, we took the smallest amount of finance possible to get an included Service plan. We didn't really want finance, but given it gave us the equivalent of two services, it seemed worth it. We were told that providing we made three payments before settling, we would be able to retain the service plan, thus effectively getting the plan for the cost of three months interest.

Has anyone else had experience of this? It seems strange to have to make "three" payments before you can settle and retain the service plan. The Finance T&C's don't seem to make any reference to it, nor does the service plan.

I had considered making an initial overpayment to further reduce the interest, but leaving just enough finance for the three payment requirement.

Also the three payments is so the dealer gets their commission otherwise it's claw back on their side.

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[Glarh]

Three payments is the point at which the salesman gets his commission on selling the finance and unrelated to the offer..

From what I've read they cannot take the service plan (or other incentives) away from you if you withdraw. Read the thread I linked to earlier for more information (or google around for other threads on the matter). Note I've not personally done the service plan thing but am.confident from the experiences of others online.

Must have just posted at the same time. Lol. Again cheers mate for your help earlier.

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[jc74]

Must have just posted at the same time. Lol. Again cheers mate for your help earlier.

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No problem. And now you've got your reassurance direct from the horse's mouth, I hope you're happy to go through with it. Personally I sort of hope most people don't go down this route since I'm sure they'd find some way to try and stop it if too many people do this!
One salesman pointed out that my deposit contribution would have to be paid back if I settled within 3 months since they didn't give away money for nothing... I withdrew and heard nothing since...

 

[Madmcs]

Three payments is the point at which the salesman gets his commission on selling the finance and unrelated to the offer..

From what I've read they cannot take the service plan (or other incentives) away from you if you withdraw. Read the thread I linked to earlier for more information (or google around for other threads on the matter). Note I've not personally done the service plan thing but am.confident from the experiences of others online.

I knew that would be the case as I couldn't find anything about making three payments; hence the quoting of the number three.

Thank you (Glarh too), I'm now going to look into withdrawing before it is too late.

 

[ActionScript]

So if I'm understanding this correct, you guys are going into a PCP agreement, then withdrawing from the agreement within the first 14 days. This then means:

- You get your deposit back.
- You keep any contributions i.e. they put £1000 towards the vehicle deposit for you and you then keep that
- All servicing and other extras you're also allowed to keep.
- You pay back a charge based on the amount of days you'd had the car until you withdrew - which from what I'm reading is a minimal amount.
- You then pay the remaining value of the car i.e. £17k - which I guess you use your original deposit for plus their contribution.

Am I along the right lines here? I'm not in the running for a new car as recently got mine, but its interesting to know for the future

 

[Curtly]

So if I'm understanding this correct, you guys are going into a PCP agreement, then withdrawing from the agreement within the first 14 days. This then means:

- You get your deposit back.
- You keep any contributions i.e. they put £1000 towards the vehicle deposit for you and you then keep that
- All servicing and other extras you're also allowed to keep.
- You pay back a charge based on the amount of days you'd had the car until you withdrew - which from what I'm reading is a minimal amount.
- You then pay the remaining value of the car i.e. £17k - which I guess you use your original deposit for plus their contribution.

Am I along the right lines here? I'm not in the running for a new car as recently got mine, but its interesting to know for the future

That's my understanding aswell, seems to good to be true lol. No doubt they'll close this loop home by the time I want my next car

 

[jc74]

So if I'm understanding this correct, you guys are going into a PCP agreement, then withdrawing from the agreement within the first 14 days. This then means:

- You get your deposit back.
- You keep any contributions i.e. they put £1000 towards the vehicle deposit for you and you then keep that
- All servicing and other extras you're also allowed to keep.
- You pay back a charge based on the amount of days you'd had the car until you withdrew - which from what I'm reading is a minimal amount.
- You then pay the remaining value of the car i.e. £17k - which I guess you use your original deposit for plus their contribution.

Am I along the right lines here? I'm not in the running for a new car as recently got mine, but its interesting to know for the future

Almost. You don't get your deposit back.

In summary...
- your deposit, and their deposit contributions etc are all thrown into the pot and stay there.
- you get to keep any other incentives (free service etc)
- you have to then pay the original remaining amount on finance (after deposit and contributions etc) plus a few days interest.

Extreme example...

£20k car
£5k deposit contribution
£5k deposit from customer
£10k amount to finance (£20k - 5k - 5k)
Finance deal is let's say £500 per month over 1 year
£9k lump sum at end (or walk away from car)
So you borrow £10k
Over the term you pay £500×12 = £6k + 9k = £15k
So charges for finance = £5k (Apr 50%)

So if you walk in take the deal on the 20k car.
You pay £5k + £15k =£20k (5k contribution effectively negated by interest)

If you buy and withdraw
You pay £5k + £10k = £15k (your deposit plus remaining balance minus contribution and no interest payments)

Financing is deliberately made as complicated as possible to minimise people trying to see through it!

 

[ActionScript]

Thanks for that jc74, so your deposit and all contributions go towards the value remaining of the car.

I'm assuming you must then pay off this remaining value immediately? So the question is where to get that £10k from.

This is really interesting stuff and something I wish I knew before I got my car, but as Curtly above said, by the time we need a new car they'll likely close this loophole as more and more will start to use it to save money and get an amazing deal.

Edit: £10k, not £10

 

[jc74]

Thanks for that jc74, so your deposit and all contributions go towards the value remaining of the car.

I'm assuming you must then pay off this remaining value immediately? So the question is where to get that £10 from.

This is really interesting stuff and something I wish I knew before I got my car, but as Curtly above said, by the time we need a new car they'll likely close this loophole as more and more will start to use it to save money and get an amazing deal.

You get 30 days. Assuming it's not sat in your mattress, you could potentially get the £10k from mortgage or a bank loan (HSBC are advertising 'from' 3.3% at the moment) or any other source less than what Seat are offering. But yes in general if you don't have access to the funds for less, then it's a no go.

Being an EU rule, then they can't really close this off, unless we decide we don't want to be part of the EU anymore... So let's hope your next car is due before 2019!

T&Cs from Seat's own website...
-------------
https://www.seatfinance.co.uk/en/pr...ur_agreement/ending_your_agreement_early.html

Right of Withdrawal

Under the Consumer Credit Directive you are within your right to withdraw from your finance agreement but not the vehicle purchase without giving us any reason if:

the credit that you take out is for £60,260 or less
you have a regulated Hire Purchase, Lease Purchase or Solutions finance agreement and,
you notify us verbally or in writing, that you wish to withdraw within 14 days of setting up your credit agreement.

Please note, once notification to withdraw has been requested, you cannot then change your mind and reverse the contract, as it will be processed immediately.

For more information, please see our FAQ section.

https://www.seatfinance.co.uk/en/pr..._agreement/ending_your_agreement_early.html#1

What is a ‘Right of Withdrawal’?

Customers whose finance Agreements are covered by the Consumer Credit Directive have the right of withdraw from their finance Agreement. They have 14 days, starting from the day after they sign their finance Agreement to withdraw from the finance Agreement (but not the vehicle purchase). They simply inform their finance provider, who is entitled to charge a daily rate of interest as detailed on the finance Agreement until such time as the loan advanced has been settled. The customer must do this without undue delay and within 30 days of giving their notice of withdrawal.

 

[Madmcs]

Just wanted to come back and say thanks to everyone who has contributed on this thread. Spoke to SEAT finance tonight and they have confirmed in our case that I can withdraw and the service plan is completely separate and will not b affected. Seems silly that it doesn't affect it, but I'm not going to complain. They have recommended that we cross check that there are no issues with the gap insurance if withdraw, but it's a back to invoice + finance settle so not expecting any issues there.
You guys have saved me about £100 in interest, so thanks!!

 

[Glarh]

Just wanted to come back and say thanks to everyone who has contributed on this thread. Spoke to SEAT finance tonight and they have confirmed in our case that I can withdraw and the service plan is completely separate and will not b affected. Seems silly that it doesn't affect it, but I'm not going to complain. They have recommended that we cross check that there are no issues with the gap insurance if withdraw, but it's a back to invoice + finance settle so not expecting any issues there.
You guys have saved me about £100 in interest, so thanks!!

Brilliant stuff mate. Glad you got it all sorted and the result you want. It's amazing to think that people don't really know about this. I always say question everything. Lol.

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[DANFR180]

is the deposit contribution not just part of the discount available off the RRP in the first place ? it seem a complicated way to negotiate a price you are happy to pay if you have the funds, or perhaps i'm missing something ?

 

[DragonQ]

is the deposit contribution not just part of the discount available off the RRP in the first place ? it seem a complicated way to negotiate a price you are happy to pay if you have the funds, or perhaps i'm missing something ?

You only get the deposit contribution if you take the finance package. I used online brokers to get £5k off the RRP, although I went used in the end.

 

[jc74]

is the deposit contribution not just part of the discount available off the RRP in the first place ? it seem a complicated way to negotiate a price you are happy to pay if you have the funds, or perhaps i'm missing something ?

The deposit contributions are usually manufacturer funded and subject to you taking the finance, so the dealer cannot just give that part to you.
For example Audi recently did £5000 deposit contribution on a new TT. This consisted of £2500 contribution from Audi and £2500 from the dealer (which they are forced to give).
So the dealer would in theory only be able to give you £2500 of that discount if you paid cash.

So people would be haggling say £7000 off (incuding the contribution), of which £2500 contribution from Audi, £2500 contribution from dealer, plus a further £2000 discount, with the best discount on a cash deal only being around the £4500 level...

http://www.ttforum.co.uk/forum/viewtopic.php?f=98&t=1219874

 

[andrew_ww]

Hi,

Not sure how much truth there is in this, but when I researched this approach there was suggestions it can have negative effects on your credit rating.

For me it cost me about £11 in interest and was entirely unpainful.

 

[Seastormer]

Hi,

Not sure how much truth there is in this, but when I researched this approach there was suggestions it can have negative effects on your credit rating.

For me it cost me about £11 in interest and was entirely unpainful.

It will affect your credit rating, and I hope no one who did this needs a loan/mortgage anytime soon.

 

[Stegor]

It will affect your credit rating, and I hope no one who did this needs a loan/mortgage anytime soon.

Didn't affect mine at all.

 

[jc74]

It will affect your credit rating, and I hope no one who did this needs a loan/mortgage anytime soon.

Didn't affect mine at all.

http://www.which.co.uk/consumer-rights/regulation/consumer-credit-act

"The effect of cancelling a credit agreement within the cooling off period is that the agreement and any linked transactions are treated as if they had never been entered into."

So when you withdraw (don't confuse with VT or early settlement) within the cooling off period, they have to treat it as though you never took up the finance in the first place, so other than the initial pre-finance credit check which would have taken place, I can't see how it can affect your credit rating.