Toyota Rate Breaker

querom44

Help! I'm buying a new car - probably inadvisable in itself, but hey. I have the cash to pay for this - currently in Cahoot at 5.25%. Toyota have offered me their "Rate Breaker" finance deal - they say a flat rate of 4.9% fixed for term of loan, 3 yrs, a rebate if I decided to settle early, full flexibility. Is this a good deal or not? Does anyone have experience of this? It sounds sensible to keep my nest egg earning more interest than I'm paying out - but does it amount to that much? Are there cheaper options out there? Any advice from old hands much appreciated!

grumbler

See APR vs Flat Rate Calculations. The APR is in fact more than 10% :eek: . Rate breaker indeed :rolleyes:

P.S. And don't forget that if you are a taxpayer you probably have 4.2% in Cahoot, but not 5.25%...

tempuscat

No-oo-oo-oo!!!!

Buying a new car only makes sense in two or three exceptional cases:

(1) If you've an unsaleable, clapped-out wreck you can't get rid of. For example, a friend of ours owned her Vauxhall Astra for 14 years. It failed its MoT. Needed an estimated £500 to make it roadworthy. Our local Suzuki dealer offered her a minimum £1,000PX against a new Suzuki Jimmy, or Jiminy, forget which. Additionally, she got three years' free servicing as well as warranty & breakdown assistance. She took it -- for the convenience of getting rid of the old Astra as much as anything else.

(2) If the vehicle you're buying is in high demand on the used car market. (Like, for instance, a BMW-made Mini). But even then, you're only making the best of the worst, you're only partially minimising the losses arising from depreciation. Rather than getting 'a good deal'.

(3) If the vehicle you're buying is in high demand on the used car market. And you intend to keep it for at least six years.

Every new car has so much 'headroom' built into its selling price that a punter who forks out anything remotely like the asking price is an idiot. Our friend didn't 'get' £1,000 for her Astra. She just got a £1,000 discount on the Suzuki. The discount came out of the dealer's room-to-manoeuvre. And still left the dealer with a good profit.

The trade knows damn well what a new car is actually, rather than notionally, worth. Which is why every new car drops 1,000s and 1,000s in its first three years.

We've bought cars privately for years, and years, and though we could have, on paper, 'afforded' a new car, we've never been rich enough to use £10 notes as fire lighter.

That, however, is exactly what you're being invited to do by Toyota.