Quietlife

Paying off Lexus finace

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I’ve bought my car on a pcp in order to get the £2000 dealers contribution. I was totally upfront that I intended to pay it off and they seemed fine with that. I’ve previously withdrawn from an Audi PCP within the first 14 days to avoid any charges and there wasn’t a problem with that. However, the Lexus dealer is suggesting that I need to make a payment before paying it off (which will incur some charges). 

Has anybody had any issues with withdrawing from an agreement and was there a suggestion you’d need to pay the contribution back. 

 

 

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You’ll need to make 5 of your monthly payments before settling if you want to benefit from the £2000 dealer contribution. 

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I’ve done this twice now. First time before any monthly payment and the second time after only one. No issues with either. Just contact LFS and request a settlement figure. 

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As far as I know, the Lexus PCP is an agreement regulated under the Consumer Credit Act. Part of the legislative terms are that you can pay off all or part of the balance at any time. My current PCP agreement has this in the T&Cs.

There is no mention of forfeiting any deposit contribution (which is given by Lexus finance and not the dealer). The dealer may "encourage" you to wait for 5 or 6 months as there may be a clawback from them if you repay early.

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Dealer have said to make one payment then do it. I'd rather withdraw in the first 14 days and avoid any charges at all. I'll give the finance department a call once I've got the car. Thanks

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@malcolmw , maybe that was it - perhaps there would be a clawback against the dealer from the finance company. 

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I was told by the dealer to pay off after the 1st payment and you won't need to repay £2k deposit. LFS said they will charge 56 days interest after the first payment to settle the agreement and they don't see this £2k offer from :Lexus where the dealer said that it's 56 days in total including 1st payment. Let us know what will you find out as I am not keen either to pay interest nor repay£2k.

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I'm  thinking of doing this too. I've  mentioned to the dealer our intention to do so, absolutely no problem he said.

I would be grateful too for an update of what the finance department say.

 

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I've finally had a reply from Lexus finance. They have stated that if I withdraw, then I WILL have to pay the £2000 deposit contribution back. If I settle (which can be done immediately), there are charges amounting to £240. 

I've previously withdrawn from VW and never had any suggestion regarding the deposit condition having to be repaid. The dealer said charges would be 'about £100', so quite disappointed with the charges bring so high

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If you withdraw (i.e. cancel within the 14 days) then the contract is void and, logically, you will lose the £2K contribution which is part of the contract.

If you start the contract (which is under the CCA) you can repay it at any time but you must pay interest and charges incurred to date of repayment and hence the approx £240 charges. As the contract has started they cannot withdraw the deposit contribution which was part of the deal.

This seems correct to me and paying it off will save a lot of interest in the long term.  

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On 3/8/2019 at 12:01 PM, Quietlife said:

I've finally had a reply from Lexus finance. They have stated that if I withdraw, then I WILL have to pay the £2000 deposit contribution back. If I settle (which can be done immediately), there are charges amounting to £240. 

I've previously withdrawn from VW and never had any suggestion regarding the deposit condition having to be repaid. The dealer said charges would be 'about £100', so quite disappointed with the charges bring so high

So you're bothered about paying £240 to settle than the £1000's in interest and the £2000 deposit contribution? 🤨

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Never quite understand why people get so bolshy on car forums.

No, I'm not 'bothered'. I'm pointing out that 1. There is a question whether taking the deposit contribution back is entirely legit, particularly as other manufacturers do not do this. 2. The dealer said charges would be 'about £100', which is done way short of £240. 

I'm not losing any sleep over it, but as a few people asked me to let them know the result of my enquiry, I passed on what I was told.

 

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3 hours ago, Quietlife said:

Never quite understand why people get so bolshy on car forums.

No, I'm not 'bothered'. I'm pointing out that 1. There is a question whether taking the deposit contribution back is entirely legit, particularly as other manufacturers do not do this. 2. The dealer said charges would be 'about £100', which is done way short of £240. 

I'm not losing any sleep over it, but as a few people asked me to let them know the result of my enquiry, I passed on what I was told.

 

Well its fairly simple. 

Taking the deposit contribution back is legit if you're not in a contract. You're not in a contract if you cancel within 14 days. 

The dealer can say what they like, the fact of the matter is it wasn't in writing so you wouldn't be able to argue against them anyway.

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4 hours ago, Quietlife said:

Never quite understand why people get so bolshy on car forums.

With you on that. Generally that sort of thing is absent on LOC.

I understand your original point. I've a friend who has taken advantage of VAG finance inducements more than once and then paid off the PCP or whatever after one payment. No threat of having to pay anything back.

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9 minutes ago, rich1068 said:

...paid off the PCP or whatever after one payment. No threat of having to pay anything back.

You won't under these circumstances as the contract has come into force.

Say you have a balance on the PCP of £30,000. At 5.9% the interest is about £145 per month. If the penalty is 56 days then your £240 isn't a million miles out.

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I also took out the PCP to get the £2k contribution, made the first monthly payment and then contacted Lexus Finance for a settlement figure and made payment without claw-back of the initial contribution.

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