To cancel car finance

[ItsTheSmallThings]

Went to view a car last week and loved it, went to see it again today and test drive, decided I wanted it, paid deposited and signed the paperwork for finance through the dealership, will collect car next weekend. Got home and saw a well known bank advertising loans on social media, checked eligibility and it says I'm 95% chance of getting accepted. Loan will be £25 a month cheaper over 5 years.
AIBU to call dealership tomorrow and ask them to cancel finance? Can I even do that now I've signed the paper work and of I can will the garage be really annoyed at me, I hate awkward conversations and annoying people.

You should have a 14 day cooling off period under the Consumer Credit Act.

I've just seen this online, do I just call the dealership tomorrow and tell them?

Yes you can, cooling off period.

A potential problem is you've signed up to one form of finance which will impact your credit file and probably reduce the chance of you being accepted for another form of finance so quickly. I wouldn't cancel the dealership finance until you know you can definitely get the loan.

Will the dealership be really annoyed at me??

Tell the dealership you've got a better rate from bank and they might match or beat it

What moostermum said. Good luck.

No idea about the financial side but it's just business - you have the right to cancel - explain why if you like but they shouldn't be annoyed . Give them chance to match the other offer.

You should be able to cancel, but if anything happens that you can't, you could just overpay the finance and pay off the balance in a month or so with the money you get from the new loan

Does it matter if the dealership is annoyed with you if you’re within your rights and £25 a month better off? 🤷‍♀️

This. And even if you do get a loan it might not be a such a good rate because of this.

You need to be wary that you are 95% approved. You may not get the rate that's advertised and it may be the same price as the other or more.

Did you sign finance documents or just agree and sign an order? If you've signed docs you can still cancel under 14 day period. If you haven't signed docs then will be easy as they will just switch it to a cash deal. They shouldn't be pissed, may even offer a better rate as they get more commission if you take finance (depends on their lender) but they will try and talk you back into their finance by advising it's fixed against the car not the person.

Sold cars for 10 years, been out of it for 5 years now though so things may have changed but not that I'm aware of and I still have friends in the motor trade 🙂

A good point, from memory an acceptance on car finance is valid for 30 days, so even if you cancelled and then didn't get the loan you could then say you wanted to go with their finance again however if you have signed finance documents and use the "cooling off period" you will then need to get reaccepted if you cancel that.

Just check that the finance from the dealership doesn't include Gap insurance and other extras like warranty package, because that might be worth the extra £25 a month. If you take the bank loan, you'd have to sort your own gap insurance out - which I highly recommend after recently having had a car written off (not my fault) - I had their help getting the max value for my car and they paid the difference between what was left on the finance.
Without Gap insurance I would have been left paying finance for a vehicle I didn't own anymore.

@ItsTheSmallThings

I would be VERY careful if I were you because

a) You haven't got the loan for the rate being quoted online. Credit checks will be run and if the Dealer's finance is showing up when you actually apply for the loan they will probably turn you down - or charge you a much higher interest rate - you really need to be sure you have the loan at the right interest rate before you cancel the dealer

b) When dealers sell a car, there are all sorts of ways that they calculate what profit they will get. The price you have signed to pay may not be the same if you cancel the Finance ( i.e. it may be that even if they let you cancel the Finance of the car you will have to cancel the whole sale and start again - and the car may end up costing you more upfront?)

This happened to me. Arranged the car on finance, then decided to pay for it from savings. The dealership were making money on the finance deal so had offset this against the purchase price so that I could have the car at a lower price. The price of the car would have gone up had I not taken out their finance. In the end, I took out the finance, but the rang up the finance company the day after I’d bought the car and paid it off in full. If you decide to do this, Just check the terms and conditions though to find out how they calculate and charge interest. Mine was on a daily basis so I paid interest for one day.

@PurpleNebula84 raises a great point. Make sure you get gap insurance if you have finance. Ideally return to invoice. I've worked in insurance and can't tell you how many people were in negative equity to the tune of thousands when their car was written off.

I’ve worked at dealerships and they won’t be, things like this happens, people change their minds. The sales person will be annoyed to loose their sale

I doubt it. They still want you to buy the car. If they are salty you can walk away from the car too.

Finance aside, don’t take a car loan out that you need 5 years to repay, you’ll be in negative equity on the car shortly. Buy a cheaper car.

We have cancelled an order before for a car (which we were told would be absolutely fine when we weren’t keen to sign in the first place as we hadn’t driven it yet). We got a better price elsewhere. My god did the lovely sales man turn. I had to get very firm with them to get the money back.

Oh man, the finance thing again. Car companies (or I guess all companies) love people to constantly milk for payments on depreciating assets.

Yes, yes, "but I want a fancy car" and such. Fine. Finance is still literally the only way car companies can turn a profit now. When I got my last car, I absolutely loved shutting down the salesman by saying I was paying cash and nothing he could say would change my mind. It was well worth the scrimping and saving and avoiding their bullshit.

Anyway, 84 month autoloans exist now in the USA because our species be stupid.

Yes do it, although you should probably apply for the loan first.

I've just done similar. Was offered 19% on HP car finance - so I got a loan at 6%. No brainer really.

@Liebig guessing you're in the US from your comment. That's not true in the UK. Car dealers and second hand sellers make loadsa cash. Loads.