PCP - when to cancel?

[Jonny86]

9 hours ago, bone_tone said:

This means you can end the agreement, by returning the car, in which case you will have to pay half of the total amount payable (if you haven't already). This is not the same as repaying the loan, which you can do at any time, at which point you will own the car completely.

Thanks. This is how I interpreted it too and I assume you this is the case, but it seems to me that if I withdraw then I am also terminating the agreement and so purely based on this wording they could still ask for half the money and the car back.

[Lady Elanore]

The 'half amount thing' is the trigger point for being able to bale out without penalty.  There is also a 'thirds thing' that is once you've paid a third off, the fiance company can't repossess the car without taking you to court and getting a CCJ.  PCP is just an HP agreement, it happens to look a bit different, but basically that's all it is. You can settle it if you want to. If you do it within a short period (say 3 months or so) then the finance company 'claw back' the incentive they gave to the dealer for selling the policy in the first place. Makes the dealer a bit grumpy sometimes, but the law is on your side  

[SizzlingPotato]

I've never done PCP before but the option of paying off within 14 days sounds appealing and I'm considering a new car at the moment. Sorry these are really basic questions.

 

1) I assume I would first find the dealer that offers the best price for the car.

 

2) When they ask for the term of contract, mileage and deposit amount - does what you choose matter here if you're going to pay it off immediately? Does it influence the price of the car that the dealer would quote? Advice anyone? Thanks.

 

 

[womanofkent]

@SizzlingPotato no neither had we, we always bought our cars outright but dealer pushed PCP so husband got him to explain it, then when we found out we could get £1500 + 2 free services we went for it.

 

1) negotiate the best price first, you could ask the question is there a better price for PCP or cash? (don't let on you're thinking of paying off quickly)

2) so our dealer knew husband could buy car outright but suggested the PCP and said we should keep it for 6 months (you don't have to) so the quotes he gave us meant we paid the highest deposit possible, with high mileage per year (reduces long term value) and shortest contract length, this meant monthly payments were high.

 

Have looked at our payments for an idea for you; first payment 2/3/18 £1171.92 final payment 2/8/19 £1525.40 (18 month contract)

with Skoda's deposit included the max deposit was £8758.50 on our car which was a little over £29000.  This meant we were borrowing the lowest figure so not paying much interest, but of course with this scenario you have to be able to pass the credit check for the larger payments.

 

Hope this helps

 

[Doogle69]

37 minutes ago, womanofkent said:

@SizzlingPotato no neither had we, we always bought our cars outright but dealer pushed PCP so husband got him to explain it, then when we found out we could get £1500 + 2 free services we went for it.

 

1) negotiate the best price first, you could ask the question is there a better price for PCP or cash? (don't let on you're thinking of paying off quickly)

2) so our dealer knew husband could buy car outright but suggested the PCP and said we should keep it for 6 months (you don't have to) so the quotes he gave us meant we paid the highest deposit possible, with high mileage per year (reduces long term value) and shortest contract length, this meant monthly payments were high.

 

Have looked at our payments for an idea for you; first payment 2/3/18 £1171.92 final payment 2/8/19 £1525.40 (18 month contract)

with Skoda's deposit included the max deposit was £8758.50 on our car which was a little over £29000.  This meant we were borrowing the lowest figure so not paying much interest, but of course with this scenario you have to be able to pass the credit check for the larger payments.

 

Hope this helps

 

Hi Both 

I followed Woman of Kents advice when I came to do the deal on my Karoq. I also got the £1500 finance contribution and the 2 free services. I paid 10000 towards the total price of 26500 including the accessories before contribution over 30 months. 

On delivery I signed all the paperwork and then waited 14 days before calling Skoda finance and asked for a settlement. This I paid direct to them by bank transfer. I had no contact with the dealer who had suggested a minimum of 6 months before I could settle. 

I paid £44 in interest for 2 weeks borrowing £15k. Because of the high interest rate charged this is understandable but in reality adds £90 a month to the running costs of the car. 

It was all very painless and the 2 free services are still valid. 

Hope this helps 

 

 

[33q]

I paid my Karoq off after 4 days. Cost about £15. 

 

No deposit claw back, still have my free services. 

 

I did similar on my Wife’s Polo 2 years ago.....I did wait about a month and it cost about £100

 

My salesman was aware of my plans to pay off but said many people say they will clear the finance but few actually do

 

I’d do the same again if that was cheaper than cash deal

 

 

[SizzlingPotato]

Thanks @womanofkent @Doogle69 @33q

 

Do they tell you what the max deposit that you can put down is or is that upto you?

[Jonny86]

The max deposit was 30% i believe and the shortest term is 18 months. This is what I did in order to get the £2k contribution, but I cancelled it after a couple of days anyway so the interest was just a few quid. I think the salesman may lose some commission from vw finance if you withdraw early, but they should still be making some on the sale so everyone should be happy (except vw finance).

[Doogle69]

5 minutes ago, SizzlingPotato said:

Thanks @womanofkent @Doogle69 @33q

 

Do they tell you what the max deposit that you can put down is or is that upto you?

They tell you. I believe it cannot be more than 30% of the vehicle price. 

 

[TheRobinK]

Yes, 30% is the max on a PCP.

[Gingola10]

Skoda are currently offering a Deposit Contribution, this will form part of the 30% maximum deposit figure. 

[A6TDH]

Be careful you don't go past the 14 days. I was charged 2 mths penalty interest.

[SizzlingPotato]

I'll make sure to cancel it the next working day to incur minimal charges. Thanks!

[Lady Elanore]

I know there is no love for the dealers bottom line, but early settlement means they lose their bonus from the finance company and if you haggled hard on your deal, they will have used that money to prop it up. i.e. they may have ended up selling the car for more or less zero profit or even worse. 

[TonyTonic]

1 minute ago, Lady Elanore said:

I know there is no love for the dealers bottom line, but early settlement means they lose their bonus from the finance company and if you haggled hard on your deal, they will have used that money to prop it up. i.e. they may have ended up selling the car for more or less zero profit or even worse. 

OK so how much do they actually get per sale? £300? That's the real number we need.

[Lady Elanore]

It will vary on the dealership/manufacturer/finance house 

 

In the 'good old days' when PCP was starting to really take off (around 15 years ago) a Nissan Primera attracted around £2,300 bonus and a standard £500 for selling a new car on a PCP. Those days have gone to a large degree sadly 

[Hairball]

1 hour ago, Lady Elanore said:

I know there is no love for the dealers bottom line, but early settlement means they lose their bonus from the finance company and if you haggled hard on your deal, they will have used that money to prop it up. i.e. they may have ended up selling the car for more or less zero profit or even worse. 

 

My dealer took a lot of time and effort to win the order of my car, my 4th Skoda from the same dealership and from the same sales person. I will let my PCP run for a few months before I clear it. The dealer has treated me very well over the years from my Yeti back in 2012 to Octavia VRS and Fabia. In my humble opinion they have helped me a lot so I'm OK with returning the favour on this one. I for one want this dealer and the level of service to be around should I change my car and consider another Skoda in the future.

Edited 28 May, 2019 by Hairball

[Lady Elanore]

27 minutes ago, Hairball said:

 

My dealer took a lot of time and effort to win the order of my car, my 4th Skoda from the same dealership and from the same sales person. I will let my PCP run for a few months before I clear it. The dealer has treated me very well over the years from my Yeti back in 2012 to Octavia VRS and Fabia. In my humble opinion they have helped me a lot so I'm OK with returning the favour on this one. I for one want this dealer and the level of service to be around should I change my car and consider another Skoda in the future.

 

A very decent thing to do sir  

[Defenderben]

9 minutes ago, Lady Elanore said:

 

A very decent thing to do sir  

For me it’s business, not there to make personal friendships; money is money. It has never effected the level of service I have had, in fact my local VW dealership is amazing in my book, always gone the extra mile, even with me terminating all my PCP’s immediately

 

Me cancelling within a day or so saving lots of interest and keeping all the incentives is a drop in the ocean to the proportion of people that may be in no way able to pay off PCP’s in full.

 

Every single one of my VAG cars (6) in the past 6/7 years or so, I have openly told the dealer I’m only taking the PCP to get the incentives and will terminate ASAP, they never moan, just happy to shift another car.

[Lady Elanore]

Each to their own, but it was always nice when a customer didn't invoke claw-back after we had explained that the best deal we could do involved using the back-end money from the PCP. We had to trust the customer when they said they would not immediately settle off the finance, but wait 3 months. 

[SurreyJohn]

There is a very narrow window for paying off in full without penalty 

 

Need to wait minimum one full weekday (a banking day, not weekend or bank holiday) to allow finance to fully set up and funds to go to selling dealer.

 

Ideally call finance company days 7-8 

 

Absolute maximum is 14th day, but don’t leave it beyond day 12 as you might not be able to transfer money quick enough (your debit card may have a cap, say £10,000 for anti fraud if stolen) and bank transfers of big amounts could be subject to checking if flagged as not a routine payment (which may delay them day or two)

 

If finance company have not received by 14th day, (that is recipient received funds, not when you set up payment), then normal cancellation penalty regime kicks in.

 

So pay off middle week of the 14 days (and don’t expect to be able to pay off during a weekend)

 

 

 

 

Edited 29 May, 2019 by SurreyJohn

[33q]

I expected to clear my finance on the phone there and then by debit card.   No can do....

 

Maximum of £5000 by debit card.

 

They (VWFS) send you a letter stating how much you owe and when it is to be paid by. You can pay by cheque or internet banking.

 

I think i had up to one month to pay....I did pay it earlier....and I did it by internet banking

 

May have since changed but this was October 2018. As I recall it was the same with my wife's Polo in February 2017.

[Berisford]

Yep, £5k limit.....but they do give you 30 days to send ‘em the funds.

[TonyTonic]

If you go over 14 days it is no longer the right to withdraw but an early settlement request and they charge a minimum of 30+28 (58) days worth of interest.