Voluntary termination of car finance

[Gebhardt11]

Can anyone advise the following
1. When calculating if 50% has been paid do you use the dealers contribution as part of the calculation

[R0b]

Hello

Yes it should do, but you need to check your agreement to be sure. Dealer contributions are usually a form of deposit added to any deposit you make and tend to be used where you are buying a car from a manufacturer dealership and you use the manufacturers finance arm

[Gebhardt11]

Thanks for that, my finance is with Mercedes finance, they appear to be saying they are using the total cost of the deal is including the £7000 dealership contribution but not taking that amount off what has been paid towards the 50%

[R0b]

Again, without seeing the paperwork I am only speculating. A dealer contribution that I have seen is added as a 'deposit' so if you add £1,500 deposit of your own cash then Mercedes would add £1,000 dealer contribution that would be a total of £2,500 deposit which reduces how much you owe overall (but is usually made up with a higher interest rate)

[R0b]

.Deleted

[R0b]

If you post up your agreement with any personal info removed I can give you my view but there is only really two ways this works unless Mercedes have been fiddling the figures: Either the £7,000 is discounted against the list price of the car or it is added as a deposit towards the list price - The former tends to hit the dealer's profit margins whereas the latter option allows the dealer to try and make a profit. Examples are below.

Scenario A: Discount against list price
List price = £20,000
Discount = £7,000
New list price = £13,000

Scenario B: Dealer Deposit Contribution (DDC)
List price = £20,000
Deposit = £7,000
New list price = £20,000 remains

Now you'll see in terms of exercising your right to VT, you have to pay 50% of the total price payable. Scenario A means you will only pay £6,500 before you can VT whereas under scenario B you have to pay £13,500 (because the total price payable also includes any advance payment put down). So the DDC is likely to be Scenario B because the dealer is able to recoup more money from you, even more if there is interest added.

Does that make sense? I suspect Mercedes are going to be trying to fob you off here, but cant say for certain until I've seen the paperwork. I can't think of the any other way a DDC is used other than the above examples.

[Gebhardt11]

If you post up your agreement with any personal info removed I can give you my view but there is only really two ways this works unless Mercedes have been fiddling the figures: Either the £7,000 is discounted against the list price of the car or it is added as a deposit towards the list price - The former tends to hit the dealer's profit margins whereas the latter option allows the dealer to try and make a profit. Examples are below.

Scenario A: Discount against list price
List price = £20,000
Discount = £7,000
New list price = £13,000

Scenario B: Dealer Deposit Contribution (DDC)
List price = £20,000
Deposit = £7,000
New list price = £20,000 remains

Now you'll see in terms of exercising your right to VT, you have to pay 50% of the total price payable. Scenario A means you will only pay £6,500 before you can VT whereas under scenario B you have to pay £13,500 (because the total price payable also includes any advance payment put down). So the DDC is likely to be Scenario B because the dealer is able to recoup more money from you, even more if there is interest added.

Does that make sense? I suspect Mercedes are going to be trying to fob you off here, but cant say for certain until I've seen the paperwork. I can't think of the any other way a DDC is used other than the above examples.

Thank you for your reply, can I just confirm if using scenario B if I have to pay £13500 would the £7000 come off this amount