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Paying off PCP early, is there a catch?

  • 04-06-2021 7:05am
    #1
    swoofer
    Registered Users, Registered Users 2 Posts: 5,678 ✭✭✭


    Looked at a few cars recently, new offering PCP at 0% but no information on what happens if I want to pay off early. They seem very keen. Is there a catch if I opt to pay off early ie after about 3 or 6 months?
    Tagged:


Comments

  • #2
    Water2626262
    Registered Users, Registered Users 2 Posts: 234 ✭✭Water2626262


    Interest might front loaded so you’ll pay a premium to pay it off early.


  • #3
    Del2005
    Registered Users, Registered Users 2 Posts: 19,102 ✭✭✭✭Del2005


    If you can afford to pay off the PCP why don't you buy the car with the cash instead of a loan?


  • #4
    Smee_Again
    Registered Users, Registered Users 2 Posts: 2,148 ✭✭✭Smee_Again


    Del2005 wrote: »
    If you can afford to pay off the PCP why don't you buy the car with the cash instead of a loan?

    Presumably because some are at 0%, may as well use the bank's money as his own.


  • #5
    dar83
    Registered Users, Registered Users 2 Posts: 7,106 ✭✭✭dar83


    If you get a 0% PCP deal then i don't see why you would even want to pay it off earlier. As above, let the issuing bank take the hit on the funds and invest your own into something that will give you a return over the three years, rather than dropping it all onto a depreciating asset.

    0% is basically a free loan, take advantage of it to the full!

    Also on your original question, if it's a 0% deal then paying it off early won't generally result in any additional costs for you, but make sure you read the fine print on your PCP agreement just to be sure.


  • #6
    grogi
    Registered Users, Registered Users 2 Posts: 8,616 ✭✭✭grogi


    dar83 wrote: »
    If you get a 0% PCP deal then i don't see why you would even want to pay it off earlier.

    Because one wants to sell the car earlier for whatever reason.


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  • #7
    JoeA3
    Registered Users, Registered Users 2 Posts: 7,470 ✭✭✭JoeA3


    I've paid off a couple of PCP's early (sold the cars before the term was up) and its no different to any other variable-rate loan. In my case, neither of them were 0% so I saved a few hundred in interest payments by paying them off early. In the case of a 0% deal, you won't save anything.

    I wasn't charged any penalties for paying early.


  • #8
    dar83
    Registered Users, Registered Users 2 Posts: 7,106 ✭✭✭dar83


    grogi wrote: »
    Because one wants to sell the car earlier for whatever reason.

    That's probably the only reason alright...


  • #9
    lcstress2012
    Registered Users, Registered Users 2 Posts: 598 ✭✭✭lcstress2012


    My pcp is coming to two years, I have the cash to pay off early which I’m going to do. I just ask the finance company for a settlement figure is that right?


  • #10
    dmigsy
    Registered Users, Registered Users 2 Posts: 1,844 ✭✭✭dmigsy


    lcstress2012 wrote: »
    My pcp is coming to two years, I have the cash to pay off early which I’m going to do. I just ask the finance company for a settlement figure is that right?

    Yeah just call them to inform them and get the settlement figure and the bank details to transfer the payment to. You might run into daily transfer limits depending on your bank and the sum outstanding. I did the same earlier in the year as I was selling my car a few months before the PCP was up. I had to split the full repayment into two payments over a couple of days due to the transfer limits. Think the limit was 10k per day with my bank.


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