Paying off a PCP early - Any penalties ?

[MarkVw2017]

Dear Cali Gurus,

Excuse me if i come across like a proper finance amatuer , please bear with me.

If I go with a PCP via VWFS over 49 months with a ballon payment of £20k, and say i come across £10k in a year or two and pay it off the Cali, does the intrest come down or once i sign the dotted line for a PCP deal, is the total interest then part of the whole cali price so i have to pay that as well, even i pay it off larger payments earlier.

I know you can pay it all off within 14 days due to the cooling off period, but that wont be an option for me.

Ive never had a pcp deal before so any wisdom would be great as its all a bit confusing

 

[Brian’s Dad]

As far as I'm aware you only pay interest on the money you owe. You're allowed to increase monthly payments, decrease the term, pay the whole thing off early, pay a lump sum. There will be an admin fee.

I'm about to pay off my BMW early to sell it and buy a Cali. I just rang BMW they tell me what's outstanding and give me a time frame to pay it by.

 

[Stoneybroke]

You can ask for a settlement figure at any time, and that is what you pay. The interest is only paid whilst the money outstanding. Remember though, that the balloon payment will be part of the settlement figure.

 

[andyinluton]

I've not come across a PPC where you can reduce the payments by paying off a chunk of the capital.

When I paid off a BMW PCP early, the rebate I got for early repayment was a pittance & I would have been better off carrying on the payments & keeping the settlement money in the bank.

 

[Brian’s Dad]

I've not come across a PPC where you can reduce the payments by paying off a chunk of the capital.

When I paid off a BMW PCP early, the rebate I got for early repayment was a pittance & I would have been better off carrying on the payments & keeping the settlement money in the bank.

BMW allow it as they quoted me for paying in a lump sum. Note you can never reduce the balloon size other than pay it all off.

 

[Elmo3]

Ask for a copy of the contract for review. This will state the method of interest calculation and application used. I’d be surprised if it was calculated and applied daily under a fixed rate agreement. If it is ambiguous as to lump sum payments during the agreement, seek clarification in writing from VWFS before you sign anything. Ignore what the dealer says, they won’t know the detail.

PCP is the devil’s work for the customer and a dripping roast for manufacturers, dealers and banks. If you can come up with another method of funding, you should (I was in the leasing industry for 20 years).

 

[RetroRed5]

We ordered our new CaliO a couple of months back; we were initially planning on just buying outright but the dealer convinced us that buying on PCP would be better because of the deposit contribution and free services; the dealer suggested we can just settle the finance a few days/weeks after taking delivery and he said there will be no "early settlement" penalties and so the only thing we would pay would be the sum outstanding plus a little interest that has accrued from the start date of the agreement to the date of settlement plus a £10 "right to buy" fee. He said he has had lots of customers do exactly this because VW offer no incentives for buying outright, the only incentives they offer is when taken on some sort of finance deal.

We plan on taking delivery and then settling up a few days later.

Now it may be different when choosing to pay "chunks" off the balance as appose to settling in full so I'd check with the dealer and paperwork.

You can find more info about VW Commercial Vehicles Finance on their website here...

https://www.vwcvfinance.co.uk/en/private_customers.html

 

[Elmo3]

We ordered our new CaliO a couple of months back; we were initially planning on just buying outright but the dealer convinced us that buying on PCP would be better because of the deposit contribution and free services; the dealer suggested we can just settle the finance a few days/weeks after taking delivery and he said there will be no "early settlement" penalties and so the only thing we would pay would be the sum outstanding plus a little interest that has accrued from the start date of the agreement to the date of settlement plus a £10 "right to buy" fee. He said he has had lots of customers do exactly this because VW offer no incentives for buying outright, the only incentives they offer is when taken on some sort of finance deal.

We plan on taking delivery and then settling up a few days later.

Now it may be different when choosing to pay "chunks" off the balance as appose to settling in full so I'd check with the dealer and paperwork.

You can find more info about VW Commercial Vehicles Finance on their website here...

https://www.vwcvfinance.co.uk/en/private_customers.html

Sounds like you are playing it right, as long as you settle within the right to withdrawal period of 14 days. Also, it may differ if the agreement is unregulated (depends how much you borrow). Beyond that period, the contract rules...

 

[Stoneybroke]

I paid one PCP installment, got the settlement figure, then paid it off.
Very little overhead but I believe this hgav me protection under section 75a of the consumer credit act (up to £60,260 with finance arranged for the specific goods). Using the cooling off period may have invalidated my ability to claim joint liability off the finance provider in case of major issues.

 

[Tom Downie]

Dear Cali Gurus,

Excuse me if i come across like a proper finance amatuer , please bear with me.

If I go with a PCP via VWFS over 49 months with a ballon payment of £20k, and say i come across £10k in a year or two and pay it off the Cali, does the intrest come down or once i sign the dotted line for a PCP deal, is the total interest then part of the whole cali price so i have to pay that as well, even i pay it off larger payments earlier.

I know you can pay it all off within 14 days due to the cooling off period, but that wont be an option for me.

Ive never had a pcp deal before so any wisdom would be great as its all a bit confusing

We paid it off after 2 months on our Golf without a penalty and recently have done the same with our Ocean.with the same result.

 

[PeteS]

A friend at work has settled the pcp twice on two audis both times it was to get the contribution from Audi of some £2000. Once he collected the car he phones vwfs to get the settlement figure. on a pcp you have a very limited time to settle otherwise it will be set for the full to run for the full duration. You can settle early but there will be a penalty for doing this. You may be able to reduce this penalty if you are buying another Cali.
If you have a straight HP agreement then you can repay lump sums to reduce the term or the cost. HP is the more flexible way but you do not always get a deposit contribution but you may get the free services. Hope this helps.