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Exiting PCP

Last post Wed, Aug 15 2007, 10:40 PM by cerezo. 2 replies.
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  •  Wed, Aug 15 2007, 10:40 PM

    Re: Exiting PCP

    thanks for that

    I am thinking of getting a settlement fee and taking out a loan to cover that at around 6.5 %, paid off over three years. the repayments would be 30 quid a month more, but over the three years would save 1200 pounds interest.

    • Post Points: 5
  •  Wed, Aug 15 2007, 11:28 AM

    Re: Exiting PCP

    PCP's are very good methods of funding cars providing that the APR is only a few percent more than that of a normal HP agreement.  This is because you have the option of returning the car should the residual value plummet.  Our own finance company Hartwell Finance experienced this during the Rover collapse.  The finance company takes the risk of the residual value and for that they expect to charge an element of interest.

    In your case you appear to have signed on trade premises so assuming the agreement has been properly executed then you need to ask the finance company for a settlement figure and pay this having obtained funding elsewhere.  Might be worth asking if they will improve on the rate or offer you another product as I am sure they would rather not lose valuable custom. 

     You will pay some interest and the finance company is entitled to charge up to a maximum of one month interest penalty but you will pay considerably less interest in total than if you run through the life of the agreement.  To be sure it is worth doing you may want to compare with the loan you are about to take out.  Compare like with like too as if you take your next loan over 60 months to keep the payments to somewhere near those of a PCP then you may pay a lower rate but the total sum of interest may be more than the 2000 you mention.  One benefit of PCP is that if you do keep the car at the end of the term you can refinance the final payment over say another two years and the total interest is often less than if you had financed over the 5 years from the start. Hope this helps.

    • Post Points: 20
  •  Mon, Aug 13 2007, 10:23 PM

    Exiting PCP

    I have just purchased a car on PCP owing 6,500. I am now regretting this as the interest is 14.9 apr resulting in nearly 2,000 in interest after 3 years.  I now regret not taking out a loan at a much lower interest rate to finance this

    Is there a specified time in which i can legally get out of the contract? or Can i settlement fee  after say a month and us the a loan to pay this  or would any interest/fees make it not worth my while.

     

    Thanks

    • Post Points: 20