[Closed] PCP immediate pay off

does if affect credit score ?

Not meaningfully. Some lenders might see it as a positive, some a negative but it will be so minor it's not worth worrying about.

As for the concept of using a PCP to get a free contribution, as long as you read the Ts and Cs very carefully for early settlement clauses and accept you will likely have to pay a months worth of interest, I can see no downside.

Are there any benefits to leaving the PCP running for a short period? Like if the car has an issue from new, that give you some leverage over someone providing the credit to ensure things get resolved?

boombang
Full Member

Are there any benefits to leaving the PCP running for a short period? Like if the car has an issue from new, that give you some leverage over someone providing the credit to ensure things get resolved?

No, really not! After the cooling off period you can't get out without taking a significant hit. You'd have to bide you're time until you could do a Voluntary Termination, but that doesn't come until you've paid of 50% of the total value - this includes the value of the balloon at the end though so is likely to come a long way down the line

Give it a couple of days to ensure the paperwork has been entered into the VW Finance system, give them a call and they'll give you a settlement figure which is valid for a short while (can't remember if it was 7 days or more), then pay that and you keep all the incentives they dangled for taking out the PCP.

@mashr makes sense - if it came to outright legal rejection that is with the supplier not the finance co, so they would have to buy back regardless?

Give it a couple of days to ensure the paperwork has been entered into the VW Finance system, give them a call and they’ll give you a settlement figure which is valid for a short while (can’t remember if it was 7 days or more), then pay that and you keep all the incentives they dangled for taking out the PCP.

You might have to wait the 14 day cooling off period, not certain on that, but they could unwind the deal which means losing the deposit contribution.

Any decent sales rep would likely tell you the most cost effective option when buying the car.

I know when my last boss bought his Audi, he told the sales rep he could buy cash, but the sales rep ran the figures to get the best deal. Worked out on some PCP deal with max deposit, 0%, and final balloon payment of a few thousand.
It all depends on what deals they have running at the time.

I done it a few years ago with vauxhall. Took pcp to get 1500 deposit contribution made a few payments then paid it off

You might have to wait the 14 day cooling off period, not certain on that

Did it a couple of years ago on a Skoda and had it all sorted within a week of getting the car, kept the discounts and service plan.

Are dealers likely to negotiate on pcp interest rates? I’m after a used Skoda demo but the rates on pcp on the used cars aren’t as good as the new ones and nowhere near 0%. Due to a model facelift coming up the spec I want isn’t available new and I’ll need to trade sooner than the facelift cars come in.

I did it recently on a used Golf R.

They weren't overly interested when i came as a 'cash buyer', but gave me all the time once i said ok to PCP. I knew i would pay it off instantly.

Taking PCP gave me two free services, so it was worth doing.

VW finance is all online these days. It appears hard to talk to a human. Having said that, it was easy. Once you log in, you ask for a settlement figure. You can then bank transfer this amount with a specific reference number to VW.

A few days later you will receive a letter confirming all of the above.

So basically, yup, its easy to do, there is a minimal admin fee (double check what it is) and there should be no negative affect on anything.

oh and by paying it off early, i saved over 5k in interest. VW tend to be fixed APR of just under 10%. AKA daylight robbery.

Yes I did OP. I had to make one monthly payment on my VW then I could clear the PCP in full. As you say, I did it to get the £1k deposit contribution. No subsequent issues.

Am I right in thinking that this cool off period and ability to cannel and pay it off only applies to <£25k. Above that the rules change a bit?

@shooterman - who indicated you had to make one months payment? Was that on a new vehicle?

I cant imagine its different between a new or used, but i paid mine off about 48hours after the car was collected.

@v7fmp my mileage is high so PCP doesn't work for me. I went to buy a Passat saloon and there was a lovely CC GT which was a bit beyond what I wanted to spend. It was 1 year old with low mileage.

The sales rep suggested to me to take the PCP to get the £1k deposit contribution which put the car within budget. The finance manager said I had to make one payment so I did and paid the balance off the next day.

@shooterman - ah ok. Interesting how different the info can be depending on the dealer. Not that it matters!

Yeah PCP doesnt work for me, i am a bit old school and want to own my vehicle. A buddy of mine has a merc A45S on PCP.... nearly £600 a months.... makes me feel a bit queasy! 😀

It also explains why there are so many flash cars around!

There's a thread about this on Pistonheads. IIRC finance companies can take a dim view insofar as they would much prefer you to pay interest since that's where most/all the profit is. E.g. they may be able to offer a reduced ticket price on the car because profit is built into the finance arrangement. Obviously if you pay it off immediately, they don't get their profit and may even make a loss overall.

So if they spot that you have history of taking out loans and immediately repaying them, they could plausibly decline finance on a car in future. Remember some financers (E.g. your mortgage provider) want you to be a reliable re-payer. Others (E.g. car finance) rely on high interest rates and rely on people not having the cash to repay easily. So whilst your 'credit score' may not be affected, you may be a less attractive lendee in future.

In reality, most salespeople are on commission and only care until the point the contract is signed. Beyond that, you're dealing with (VW) finance and by the time it reaches them the damage is done. It would only be an issue if lots of people started doing the same trick you're proposing. But since most people seem happy to live one paycheck from homelessness, I doubt that's a risk any time soon.

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I have done this twice in recent years. Once with Ford, managed to negotiate a good PCP deal on a nearly new car with the dealership, then also got them to take of a further £2k that Ford were advertising on their website as a manufacturer deposit contribution. The second was on a Kia, with a deposit contribution of £500. I settled both within the cooling off period and just had to pay a small amount of interest. Neither have affected my credit score, but as mentioned above I don't know if it affects my attractiveness for future PCP's.

One area it can affect is the sales person's commission. Hence some of the comments being made about having to make one or two monthly payments, at which point the commission would probably be paid out to the dealer - although this seems to vary from dealer to dealer. With the Kia the sales guy didn't seem bothered and has sent me several messages since buying the car to make sure I am happy with it.

Are dealers likely to negotiate on pcp interest rates? I’m after a used Skoda demo but the rates on pcp on the used cars aren’t as good as the new ones and nowhere near 0%. Due to a model facelift coming up the spec I want isn’t available new and I’ll need to trade sooner than the facelift cars come in.

Don't use a dealers/indys finance do it yourself with a 3rd party. I've always got a 2nd hand car PCP finance cheaper elsewhere than the garage I got the car from.

Last car they were wanting circa 8%, I got it with Halifax for 3%.

Think some of the main dealers bump up the 2nd hand PCP rate to make a new car PCP look like a bargain.

I checked, the dealer won't negotiate - the vw finance group commission is set apparently.

I just had an email from my bank re pcp deals. I guess I can still use my current vehicle to trade and use the banks finance?

my mileage is high so PCP doesn’t work for me.

It cost me £16 a month more to go from 10k pa to 20k pa on my BMW, plus an extra £99 to extend the Service Plan from 40k to 80k.

If you are intending on paying it off instantly, then surely the APR rate doesnt matter?

Plus you wont get any dealer based incentives if you use 3rd party PCP.

But if you want to run a PCP deal, then defo shop around, as the dealer rates are generally daylight robbery.