Car finance and cancelling for better deal?

[Deep]

Hi
I remember reading on PH a few times that as the main dealers make a cut from finance they are more likely to negotiate a good deal if you sign up for their finance. And apparently there is a grace period within which you can pay down the debt in full without any interest charges.

Is this true or am I talking rubbish? Lol

I'm looking at a lightly used BMW from a main dealer btw.

Thanks

[Challo]

Deep said:

Hi
I remember reading on PH a few times that as the main dealers make a cut from finance they are more likely to negotiate a good deal if you sign up for their finance. And apparently there is a grace period within which you can pay down the debt in full without any interest charges.

Is this true or am I talking rubbish? Lol

I'm looking at a lightly used BMW from a main dealer btw.

Thanks

I’m sure my friend did something similar. I would suspect you would need to check the small print for any charges for settling early.

[robsco]

FCA regulations now state that the deal cannot be differentiated between cash and finance. That’s not to say it won’t happen, of course.

[hersh]

Six years ago when I bought the honda brand new, honda was offering a £2,000 discount for taking finance

Took the offer and paid it off a few weeks later, think it cost me something like £50

[RoVoFob]

robsco said:

FCA regulations now state that the deal cannot be differentiated between cash and finance. That’s not to say it won’t happen, of course.

This isn’t new. The FCA has said for years that manufacturers can’t charge different prices for cars purchased with cash or finance. It’s completely meaningless.

The FCA is too toothless/inept/corrupt (delete as applicable) to do anything about the fact that manufacturers use deposit contribution discounts - only available for those taking finance - to coerce drivers into signing up for finance…

[ukpolak]

Really find this puzzling - I work in FS and the regulator are crawling all over us and our competitors (just generic FS and nothing fancy) and it’s par for the course.

Maybe car finance houses evade the scrutiny but from reading PH, culture / conduct at car finance houses appears worse than mainstream financial services.

[Deep]

In my situation it would be easy for the dealer to give an incentive for finance. It's a second hand car and there will be one price advertised whether it be for finance or cash.
However if the dealer makes a cut from finance then they are more likely to negotiate the price down a bit if I take finance.
They won't be allowed to say that, but if I know that to be the case I can use that to my advantage.

But I'm only interested if I have a window to pay the debt off in full with a small admin charge at most.


Hope that makes sense.

[Jamescrs]

Deep said:

In my situation it would be easy for the dealer to give an incentive for finance. It's a second hand car and there will be one price advertised whether it be for finance or cash.
However if the dealer makes a cut from finance then they are more likely to negotiate the price down a bit if I take finance.
They won't be allowed to say that, but if I know that to be the case I can use that to my advantage.

But I'm only interested if I have a window to pay the debt off in full with a small admin charge at most.


Hope that makes sense.

14 day cooling off period for the finance deal therefore after purchase if you contact the finance company within 14 days and advise them you wish to cancel the finance you should be allowed with no penalty, other than paying them back the money they lent on the car.

[Deep]

Jamescrs said:

14 day cooling off period for the finance deal therefore after purchase if you contact the finance company within 14 days and advise them you wish to cancel the finance you should be allowed with no penalty, other than paying them back the money they lent on the car.

Brilliant, thanks mate

[BlueJ]

I did exactly what you suggest OP earlier in the year. AUC from BMW, dealer incentive to take finance, obtained a balance to clear and paid off in full within the 14 day window.

There was some interest, but only for the days up to repayment so not much. You can also settle at any point beyond the initial 14 day 'cooling off' period, but I THINK the interest element goes up as there can be an element of notice period e.g. 1 month (not sure on this last point).

[Deep]

BlueJ said:

I did exactly what you suggest OP earlier in the year. AUC from BMW, dealer incentive to take finance, obtained a balance to clear and paid off in full within the 14 day window.

There was some interest, but only for the days up to repayment so not much. You can also settle at any point beyond the initial 14 day 'cooling off' period, but I THINK the interest element goes up as there can be an element of notice period e.g. 1 month (not sure on this last point).

Thanks. Yes, the cars I'm looking at are AUC from BMW as well.
I'll take the finance and hopefully get some kind of discount/incentive.

[BlueJ]

As a guide, on £20K of HP I got free gap insurance, paint protection, plus about £1,600 dealer contribution to the finance (which they would have more than made up in interest if finance went full term).

I cleared the finance of c. £18,400 plus a bit of interest for the few days borrowed.

[Deep]

BlueJ said:

As a guide, on 20K of HP I got free gap insurance, paint protection, plus about 1,600 dealer contribution to the finance (which they would have more than made up in interest if finance went full term).

I cleared the finance of c. 18,400 plus a bit of interest for the few days borrowed.

Thanks. Was that a new car or second hand?

[Deep]

I've found the car I like but the dealer says there is no dealer contribution for taking finance on used cars anymore due to high demand.

[BlueJ]

Deep said:

I've found the car I like but the dealer says there is no dealer contribution for taking finance on used cars anymore due to high demand.

My purchase was secondhand back in January.

[highet]

done it with both volvo and vw finance - £3000 deposit contribution from volvo and free servicing/mot cover/extra warranty etc from vw - phoned finance company within a few days stating i wished to withdraw from agreement and they give you settlement figure over the phone which you have 30 days to pay with no interest charges !!! and, as an added bonus, the finance agreement is wiped from your history on the credit reference agencies

[g40steve]

highet said:

done it with both volvo and vw finance - 3000 deposit contribution from volvo and free servicing/mot cover/extra warranty etc from vw - phoned finance company within a few days stating i wished to withdraw from agreement and they give you settlement figure over the phone which you have 30 days to pay with no interest charges !!! and, as an added bonus, the finance agreement is wiped from your history on the credit reference agencies

I understand you did this when you took delivery of the car, 14 days from this point?