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    settle hire purchase early

    looking at a used BMW on HP and want to pay it off in full after few months but was told i need to wait a year

    is this restriction lega

    16 Comments

    The amount that the lender can charge you for repaying an HP agreement early is capped by law.

    This rule is part of the Consumer Credit Act and is on pages 6 and 7 of the Financial and Leasing Association
    fla.org.uk/mai…pdf

    in new window on repaying your loan early. The Financial Leasing Association are the leading trade body for the asset, consumer and motor finance sector in the UK.

    The most you can be expected to pay is the outstanding capital on what you borrowed (but not the interest) plus whichever is the lowest of these three amounts:

    1% of the amount repaid early – for example £100 if you have an outstanding debt of £10,000
    0.5% of the amount repaid early if there are less than 12 months remaining – for example, £50 if you have a debt of £10,000
    the remaining interest
    Bear in mind that that if you’re repaying less than £8,000 early, you shouldn’t be charged any extra fees.

    Told to wait by the dealer that sold you the car? They might not get the commission if you pay it off too soon

    Original Poster

    thanks thats all good and i get that but its the favy they said i cant do early settlement until im a year in

    Kazaam

    thanks thats all good and i get that but its the favy they said i cant do … thanks thats all good and i get that but its the favy they said i cant do early settlement until im a year in



    ​no, thats not correct. as mentioned previously, it might be something to do with commission received by the dealer.

    Original Poster

    yeah i havent bought the car yet... but i said i wanna take it on HP but may be able to pay it off in full within the first year and they said i need to wait until after the first year before i am allowed to settle it early...i find this bizzarre.

    It's definitely the commision, don't tell the dealer you intend to do it. Lenders don't pay them until after a certain period to stop the forging loans to get commission

    Original Poster

    ok i only asked if i can settle early but didnt say when i would want to. but they did clarify that finance would be with blackhorse and dealings would be with them witb regards to early settlement...so i take it that blackhorse would allow me to settle within 12 months but it's just that BMW are being well... typical sneaky car salesmen
    Edited by: "Kazaam" 3rd Dec 2016

    Kazaam

    ok i only asked if i can settle early but didnt say when i would want to. … ok i only asked if i can settle early but didnt say when i would want to. but they did clarify that finance would be with blackhorse and dealings would be with them witb regards to early settlement...so i take it that blackhorse would allow me to settle within 12 months but it's just that BMW are being well... typical sneaky car salesmen



    ​Phone up Blackhorse finance tomorrow and ask them, they don't make the financial rules up per user.

    Kazaam

    ok i only asked if i can settle early but didnt say when i would want to. … ok i only asked if i can settle early but didnt say when i would want to. but they did clarify that finance would be with blackhorse and dealings would be with them witb regards to early settlement...so i take it that blackhorse would allow me to settle within 12 months but it's just that BMW are being well... typical sneaky car salesmen



    You should be able to settle any time on the finance, the amount they charge you to settle would be set out as Roasskinkaid said the only exceptions to this could be if there was a dealer/manufacturer discount upon the deposit for taking the fiance they may have rules about early settlement penalties due to that discount. More or less they have caught on now that most of the time when they offer a discount (normally shown as dealer/manufacturer contribution) and you pay off straight away that it works out cheaper than paying full cash for the vehicle and they lose out on the commission of the package along with the contribution.
    Only other "rule" that should be would be that you have to be mid term to be able to "dissolve" the contract and hand the car back on a PCP deal.
    Edited by: "cecilmcroberts" 3rd Dec 2016

    You can settle BMW finance anytime, or pay some off to reduce payments, all available after the first month.

    Same with Mercedes as I checked this week.

    There may be a fee involved for settling it early but a fiancé company can't and won't refuse to allow you to pay it off early.

    Kazaam

    ok i only asked if i can settle early but didnt say when i would want to. … ok i only asked if i can settle early but didnt say when i would want to. but they did clarify that finance would be with blackhorse and dealings would be with them witb regards to early settlement...so i take it that blackhorse would allow me to settle within 12 months but it's just that BMW are being well... typical sneaky car salesmen



    ​i'm with blackhorse and i did a partial early settlement 8 months into my PCP. they offer to let me settle in full early and ive been in with less than 12 months so it sounds like a dealer issue tbh.

    Original Poster

    ok it must be the dealer then.

    note that i am speaking about hire purchase as opposed to PCP but i dont see why one would allow settlement after a month and the other wouldn't

    Original Poster

    either way i may go with BoS car finance on fixed term...where the bank pays the dealer and i then pay the bank monthly. cheaper APR too

    Kazaam

    either way i may go with BoS car finance on fixed term...where the bank … either way i may go with BoS car finance on fixed term...where the bank pays the dealer and i then pay the bank monthly. cheaper APR too



    ​if youve got the credit score for it, an unsecured personal loan might be better. there are rates of around 3.5% which is better than most car finance rates

    Kazaam

    ok it must be the dealer then. note that i am speaking about hire … ok it must be the dealer then. note that i am speaking about hire purchase as opposed to PCP but i dont see why one would allow settlement after a month and the other wouldn't



    ​PCP is a form of hire purchase so i presume the rules governing them are the same.
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