Best way of dealing with this.....??

losgiganteskid

My neighbour has an oldish car and wishes to update. She has seen the car she would like to buy and it's advertised at £4,499 - BUT this price has a built in and applied minimum part exchange allowance of £1,000.

Now given that her car is unlikely to have a value of £1,000 (more like £500) this deal appeals to her. She wants to merely take her car in and swop it and pay cash for the newer car ie pay £4,499. The catch is that the garage are saying that if you want us to allow a min £1,000 part exchange we will not accept this amount in cash but she must take out a loan for a minimum of 3 yrs via the garage (to earn some comm !)

Question, if she takes out the loan then after a couple of months decides to pay off the loan would this be possible.

As I see it if she offers her car up in a normal part ex they will give her £500 against the "real" price of their car of £5,499, then she pays the balance of £4,999 in cash - end of story. Alternatively, she takes the offer of £1,000 allowance and takes a loan for 3 years and the figuers are straightforward at 36 x £xxx and pays of the loan on a purchase price of £4,499 - this way she already is £500 to the good ie the difference between the true value of her trade in and the against accepting only £500 for her car.

Any thoughts..

Premier_2

If they are prepared to offer 0% finance, take the easy option and agree to the finance.

Otherwise walk away.

MrSmartprice

Yep! Walk away. They sound like one of those cowboy outfits like Carcraft, who sell junkpiles and make a packet on credit agreements with extortionate interest rates. Why not shop around further, there are plenty of good second hand cars at decent prices at reputable dealers who don't operate this scam.

Is the trade-in eligible for scrappage, or can they not run to a new car? Whatever the situation, haggle like hell, it's a buyer's market.

losgiganteskid

Its not eligible for the £2000 scrappage as her car is 51 reg !!

losgiganteskid

New car is Peugeot 307 1.6 s 2006 auto and she has a rover 25 51 reg

Lemonade_Pockets

These types of deals used be reasonably common and can be good value for the buyer if they are smart.

The £1000 basically comes from the money the dealership earns in commission for selling the finance package. The commission increases the longer the term of the loan, hence why they have stipulated a minimum of three years.

Now your friend can take advantage of this offer, take out the finance, then pay it off the very next day if they wish.
She will be charged a nominal amount of interest and will probably have to pay some sort of documentation fee (Dependant on the finance co.). This is the tripping point, with some companies this might amount to £400 thus negating any benefit gained in £1000 px incentive. So she must check!!!!

The best/worst bit about the above scenario if she goes through with it, is that the finance company will claw back the commission paid to the dealership if she does this within three months.

If it all seems a bit risky walk away there are plenty more fish in the sea or ask the dealership what the cash price to change would be and if its competitive buy it at that.

Lemonade_Pockets

I went through it with another user in a bit more detail:

http://forums.moneysavingexpert.com/showthread.html?t=1635565&highlight=astra+vxr

Its basically the same as your scenario but because he was borrowing more on finance the incentive was £2000. As far as i know it all worked out fine and he had a few extra quid in his pocket!

Sidmon

What car is it that she part exchanging?

MrSmartprice

losgiganteskid wrote: »

Its not eligible for the £2000 scrappage as her car is 51 reg !!

All Rovers should be eligible for scrappage.:D

In fact, it should be made compulsory......:rotfl:

Inactive

Likewise all Peugeot's..