Financing a New Car

[cgiuk]

I was wondering if someone on here could give me some advice. I'm about to buy a new car (all in, just over £18,000) and the guy at the dealership has started discussing finance.

My situation is that I have saved the cash to pay for the car right now but the dealer is trying to get me to borrow the money from him at a low rate. Can anyone tell me, is this is a good idea? I just read on Martin's car buying page about preloading a cash back credit card. Could someone please explain?

Thanks in advance

[anewman]

Well done on you going the right way by saving up. He's trying to sell you the finance as he gets a bonus if he sells it so it's more in his interest than yours, and I'd be looking at making them lose a sale and letting them know it's for high pressure finance sales and take the £18k elsewhere. Unless the loan rate is 3% or less (which it won't be) there will be no benefit.

Cash back credit card thing is if you spend on the credit card you get the cash back, but make sure you pay it off and don't get charged any interest otherwise the cashback isn't worth talking about.

[Hintza]

Just to play devils advocate. Is the dealership the cheapest place to get a deal?

I agree with anewman he istrying to make some extra cash and if its like Arnold Clark ...they "Don't work on APR's" and are hardly ever that competitive.

[Hemel]

agree with pp, he'll then try to sell protection on the back of it £££££

[cgiuk]

Thanks for the replies guys.

I'm sure that i'm getting the best deal. I took a quote from drivethedeal.com into an official VW dealer and asked if they could match it or I'd go elsewhere. They matched it there on the spot and threw in a few extras (after a haggle or two).

The dealer is being ok..not too pushy at all but I've gotta go in on Wednesday and sort out the payment and I just know that he's going to try to flog me finance and gap insurance etc. I'm sure that i'm not going to take the finance now but I'm still not entirely sure whether or not to have a go at the cashback card idea. What does everyone think?

Thanks again to everyone. You've really solved a headache for me :beer:

[anewman]

Suppose it would work assuming you had a cashback card, had a suitable credit limit (to be able to slap the £18k on it), and paid the lot straight off. Might be a question for the credit card forum section if there is one :) Guess they'd be able to give an idea how much you'd stand to gain as well.

[cgiuk]

Thanks anewman,

I may have a look around and see what kind of cards are available, maybe ask some questions in other parts of the forum too. Last thing before I go and do all my homework...

Can you think of anything else "clever" I can do to make my money go further? Just trying to think what Martin would do. :money:

[goldspanners]

Thanks anewman,

I may have a look around and see what kind of cards are available, maybe ask some questions in other parts of the forum too. Last thing before I go and do all my homework...

Can you think of anything else "clever" I can do to make my money go further? Just trying to think what Martin would do. :money:

ask for a full tank of fuel,mudflaps mats, from the salesman.

[AdrianHi]

Firstly I don't rate GAP insurance, which you don't need and cannot benefit from if you are paying cash or a big deposit as it only covers the negative equity (shortfall) between outstanding loan amount and current market value of car. RTI (return to invoice) insurance is not a bad idea in the first 3 years even if you don't take finance, though your regular insurance should pay back invoice value inside first year if the car is written off.

Car dealers usually quote flat rate, double it is approximately APR. I would definitely take any car finance I could get that was a lower rate (cost) than my mortgage rate as I could offset my say £18K lump sum off the mortgage and save money. A PCP or balanced lease purchase deal on the right rate (i.e. lower than mortgage) would work for me. 0% introductory rate on a credit card even better :cool:
PCP deals are front loaded with interest payments, so 18 months in the settlement figure could still be the original amount borrowed. Watch out for this, balanced lease purchase is equal interest and capital repayments over the period, Lombard Direct were doing these at 6.9% APR.
I used to think paying cash for a car was always the best bet, but not so, it really depends on the rate you can get. I do still believe in having the option of paying cash for it, i.e. saving up for what you want, even if you do have good reason to take finance in the end.