Car Finance - how does it work?

Blakey1982

Hello
might be a stupid question but how does finance work in relation to loans etc

i mean with a credit card or loan you apply, they check your credit rating and then you get a decision.

is it the same priciplle with Car finance from a dealership or broker for example??

Thanks
Paul

KeithP

Yes.................

flyingscotno1

Also unless you go for a PCP etc which is a different kettle of fish I've found straight dealer finance to be largely terrible rates bar offers.

They tend to quote you what the can offer, and you can tell them before credit checking. Even when I tried to negotiate a better rate it was mince. My bank was a 5% lower APR over a lesser time period. Saved me £50-100 a month, which was a deal maker.

Blakey1982

Thanks flying

can you explain PCP in idiots terms for me? ha-ha

isnt it where you get a guaranteed buy back amount for the car? what are the downfalls etc

thanks

wattywattwatt

I've just taken out a PCP on a 1 year old toyota auris. I paid a hefty deposit, over £3000 from a trade in, and then the repayments are calculated on the balance minus the guaranteed future value (around £4600). This left me with 36 monthly payments of around £145 a month on an APR of 9.9%. I'm pretty happy with the deal as I reckoned if I'd taken the car on straight finance over 5 years I would have owed more than this at the end of three years, when I would probably change the car anyway, and been paying a higher monthly payment in the meantime. At the end of the 36 months you can trade the car in or refinance the remainder, you can also just hand the car back but if you've gone over the mileage limit (36000 miles, in my case) you could be stung there. I'm quite happy to have cut my monthly outgoings considerably by downsizing to a smaller car but no doubt there will be those who will think I could have done better by selling privately and arranging my own finance.