Buying on finance for discount then paying full amount

tylerdurden

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I've read a few threads on here suggesting it's quite possible to negotiate a new car finance deal and once the car has been picked up, cancel, settle the full amount and effectively keep the discount.

A few q's about this

1. Is this correct?
2. Presumably if the finance is via another legal entity, this makes no odds to the dealer and would not result in a poisoning of the relationship?
3. Anyone actually done this?

Ta
 

CabrioDave

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I don't know whether that's possible, but it would involve the buyer finding the money to settle the full amount. That introduces a further question:
Is the discount (usually a "deposit contribution"?) significantly better than the buyer could have got for the cash?
 

HumberMart

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I've read a few threads on here suggesting it's quite possible to negotiate a new car finance deal and once the car has been picked up, cancel, settle the full amount and effectively keep the discount.

A few q's about this

1. Is this correct?
2. Presumably if the finance is via another legal entity, this makes no odds to the dealer and would not result in a poisoning of the relationship?
3. Anyone actually done this?

Ta

1. No, not if the discount comprises a manufacturers 'deposit contribution' as usual for MBFS, and as clearly advised if you visit sites like 'drivethedeal.com'.

You have to effect the agreement before the deposit contribution is secure. If you cancel within the 14 day rule, you will have to pay the price of the car before the deposit contribution is deducted.

You can 'settle' the finance after is is effective, and then you will pay maybe about £500 for the arrangement fee, settlement fee, and a small amount of interest. In most cases this will still be beneficial, since deposit contributions by Mercedes can exceed £10K.

2. No problem with alternative finance, but you will not get the manufacturers deposit contribution, hence usually the overall deal will be more expensive. Note that this is not always the case, for example JLR often try and charge 6.9% apr, with a low deposit contribution, thus a personal loan at 3.odd% could be cheaper.

3. Yes I've done pretty much all scenarios in my time; alternative finance, cancelled (due to rejection of the car), and also settled early.
 

markjay

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I don't know whether that's possible, but it would involve the buyer finding the money to settle the full amount. That introduces a further question:
Is the discount (usually a "deposit contribution"?) significantly better than the buyer could have got for the cash?

Yes. Through CarWow I had offers where the dealer contribution with finance reduced the price from £36k to £27k. In comparison, there was only a £3k discount off the retail price for cash buyers.
 
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markjay

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I've read a few threads on here suggesting it's quite possible to negotiate a new car finance deal and once the car has been picked up, cancel, settle the full amount and effectively keep the discount.

A few q's about this

1. Is this correct?
2. Presumably if the finance is via another legal entity, this makes no odds to the dealer and would not result in a poisoning of the relationship?
3. Anyone actually done this?

Ta

Some members on here reported to have successfully done just that.
 

markjay

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... If you cancel within the 14 day rule, you will have to pay the price of the car before the deposit contribution is deducted....

Not according to some members on here, who reported that they used the 14-day cooling-off period to cancel the finance and were only asked to pay the financed amount, i.e. they were able to keep the dealer contribution that came with the finance deal.

That was with MB Finance - other finance providers may have different arrangements.
 

HumberMart

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markjay said:
Not according to some members on here, who reported that they used the 14-day cooling-off period to cancel the finance and were only asked to pay the financed amount, i.e. they were able to keep the dealer contribution that came with the finance deal. That was with MB Finance - other finance providers may have different arrangements.

Yes, keeping the DEALER contribution is a given.

The contribution provided by MBFS however is conditional.

However that doesn't mean that the dealer won't match the MBFS deal if they are still keen for a sale.
 

markjay

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Yes. Through CarWow I had offers where the dealer contribution with finance reduced the price from £36k to £27k. In comparison, there was only a £3k discount off the retail price for cash buyers.

Or see for example this:
 

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HumberMart

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CRBXF

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Yes you can but obviously check the t&cs. My father in law did it with Ford. You may have to pay two or three months payments before cancelling


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markjay

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Yes you can but obviously check the t&cs. My father in law did it with Ford. You may have to pay two or three months payments before cancelling

Sent from my iPhone using Tapatalk

The option discussed here was immediate cancellation within the statuary 14-day cooling-off period, though you can obviously also wait longer and then request voluntary termination if the T&C allow it.
 

steve333

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I've read a few threads on here suggesting it's quite possible to negotiate a new car finance deal and once the car has been picked up, cancel, settle the full amount and effectively keep the discount.

A few q's about this

1. Is this correct?
2. Presumably if the finance is via another legal entity, this makes no odds to the dealer and would not result in a poisoning of the relationship?
3. Anyone actually done this?

Ta

I had a similar situation in 2012, was a cash buyer for a new E350cdi and the dealer paid a £3,000 deposit contribution for agreeing to finance the balance after paying a £15 k deposit,after cancelling the agreement after 3 months as per the t&c's it cost me about £250 from memory so saved sround £2,750 over paying cash at the time of purchase for the full amount-hope that helps.
 

knighterrant

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steve333 said:
I had a similar situation in 2012, was a cash buyer for a new E350cdi and the dealer paid a £3,000 deposit contribution for agreeing to finance the balance after paying a £15 k deposit,after cancelling the agreement after 3 months as per the t&c's it cost me about £250 from memory so saved sround £2,750 over paying cash at the time of purchase for the full amount-hope that helps.
I bought my C350 for cash in 2012 without any fiddling around with finance. I easily negotiated a discount of £4k (9%) from my local dealer. I could probably have got a little bit more off by going through one of the many discount places, but I felt more comfortable by keeping it all local and the right way to start a good rapport with the dealer - that's still going well five years later.
 

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Yes you can but obviously check the t&cs. My father in law did it with Ford. You may have to pay two or three months payments before cancelling

Be careful here - you're mixing two things.

You can Withdraw within 14 days OF SIGNING the agreement - this may be a few days before you get the car, so watch the timing. You don't pay any fees (although they've largely been done away with) and you pay a daily interest charge from the date of signing until the day you say you're withdrawing.

After 14 days you can only Settle the agreement. Then you have to pay any fees plus you're likely to have to pay 58 days interest.

In the second case you absolutely cannot lose any contribution. In the first case it seems you don't either (I didn't with VWFS recently) - to be honest, I've no idea why that happens. There must be some reason, as obviously they'd take it back if they could.
 

CRBXF

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Be careful here - you're mixing two things.

You can Withdraw within 14 days OF SIGNING the agreement - this may be a few days before you get the car, so watch the timing. You don't pay any fees (although they've largely been done away with) and you pay a daily interest charge from the date of signing until the day you say you're withdrawing.

After 14 days you can only Settle the agreement. Then you have to pay any fees plus you're likely to have to pay 58 days interest.

In the second case you absolutely cannot lose any contribution. In the first case it seems you don't either (I didn't with VWFS recently) - to be honest, I've no idea why that happens. There must be some reason, as obviously they'd take it back if they could.

I though the OP was referring to getting a car on finance and getting a discount and then paying off not cancelling the finance agreement?

Or have I misunderstood?
 
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Be careful here - you're mixing two things.

You can Withdraw within 14 days OF SIGNING the agreement - this may be a few days before you get the car, so watch the timing. You don't pay any fees (although they've largely been done away with) and you pay a daily interest charge from the date of signing until the day you say you're withdrawing.

After 14 days you can only Settle the agreement. Then you have to pay any fees plus you're likely to have to pay 58 days interest.

In the second case you absolutely cannot lose any contribution. In the first case it seems you don't either (I didn't with VWFS recently) - to be honest, I've no idea why that happens. There must be some reason, as obviously they'd take it back if they could.

I suspect strongly that the dealer has to pay a commission clawback but can see no way of legally pursuing the buyer for this. I suppose that they may decline to transact in future if the previous deal was less profitable than they had anticipated.
 

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I'm buying a new W213 in March. I'm going through one of the brokers. I told the dealer I wanted the finance because of the manufacturer's contribution, but that I would want to pay it off as soon as possible.

I thought this would involve PCP, but they have set me up with a deal where I am borrowing just enough on HP from Mercedes Finance to qualify for the contribution. By keeping this amount as low as possible, they have minimised the interest liability for me, and there's only an option to buy fee of £10.

I think dealers are very used to customers wanting finance to take advantage of the manufacturer contribution, and the good ones will help you find the best way round it. There are a lot of figures about the number of cars being bought on finance - it would be interesting to see just how many are still financed 3 months after the sale, but I suppose that info is categorised as commercially sensitive.

Incidentally, I ran the details of the deal past a friend who is the former MD of a car manufacturer's in-house finance company; he recommended it as the best way for me to go, and said that in my circumstances there were no disadvantages to going HP rather than PCP.
 

Giantvanman

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I bought my van on PCP with dealer and manufacturers contributions and then settled the finance in short order with no comeback at all through MB, MB finance or the dealership. The only question was to enquire if I was unhappy because I had settled very soon after taking the finance rather than paying the for the term hand handing it back.

Just applying some logic to this, if you are given a discount on proviso that you cannot settle the finance and keep the discount (contribution), would that not not mean the discount (contribution) isn't really a discount at all? And would that not have to be made clear in any credit agreement?

If you're that concerned, ask for a copy of the credit agreement you would be expected to sign, sit in one of their comfy settees with one of their coffees and read it through.
 
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