Finance agreement for car - can you help?

mr_sharma

Hi there, just need some advice.

I purchased a new car from a Ford dealership who offered me six months interest free as a deal. To get this deal they told me they would arrange full finance on the vehicle.

So this is what they've done.

I've got through paperwork from Barclays Partner Finance which says the vehicle I've purchased (for £11291.92) has a finance agreement which, with interest, works out at £17,119.20 at a monthly repayment rate of £282.82.

The dealership has told me they will pay in £282.82 into my bank account each month for six months so the finance company can take this amount out, thus satisfying the finance agreement.

However, after six months, the dealership says I need to settle the full amount I owe on the car with them (£11,291.62) to retain an interest free deal.

They've said to me they'll be no admin fees or settlement fees or interest, thus affirming their 0% interest offer.

My problem with this is that the finance agreement I have with Barclays Partner Finance is technically between myself and them and although I may be able to settle up with the dealership, Barclays Partner Finance may still try to charge me additional fees (I phoned up and was told it would be £300.00 to close a finance account early - £150.00 in documentation fees and £150.00 as a completion fee). I told this to the dealership and they said I wouldn't have to pay these fees as they would deal with the finance company direct but I am not 100% convinced.

Has anyone else been in this situation?

masterlumps

not sure i really understand, what i read from that is that you have just got a car, the people you bought it from are planning to pay you every month for 6 months, but then you have to pay them back the full value of the car after the 6 months?

mr_sharma

Not quite the dealership set up a finance agreement with barclays partner finance and the dealership will cover the first six months of repayments to the finance company by paying into my bank account (that money will leave my account and be paid to barclays partner finance)

After six. months I plan to pay in full the amount owed (at 0 percent interest) to the dealership who say they will close the finance agreement for me. My worry is that the agreement with the finance company is in my name and I may be liable for additional fees. The dealership says I won't but I'm not convinced. Has anyone else been in this position? And does that make it clearer?

owitemisermusa

Too complicated IMHO. Why not pay the entire sum now as it seems you can afford to. Doesn't sound like a good arrangement at all. Not even sure how it works out as a 0% deal. I feel they're trying to trap you into a finance deal, gambling on the fact that you might not be able to pay it off in a few months. The total amount payable seems very high, that might be what they want out of you.

I don't trust dealers, if it isn't straight forward, RUN.

mr_sharma

I actually don't see what's in it for the dealership as they're paying me 282.82 to pay to the finance company for six months on the proviso that I pay in full in six months time, I suppose the complication comes with the involvement of a third party (the finance company) and whether they will charge me a closing fee (regardless of the dealership). It was the only offer the dealer was offering me and I figured I'd hang on to my savings for a little longer,just wondering if this is a common thing?

PNPSUKNET

dont think its 0% intrest, otherwise you would pay a figure less intrest...

Xbigman

That £282 monthly payment is made up of interest and some capital so they would be paying some of the loan back too. This makes no sense. I've been on the recieving end of this sort of 'dealerspeak' to explain why something is 'not what it says in the contract'. My experience is that you ignore what the dealer says because whats in writing will be what happens.
You are about to sign up for a relatively expensive long term loan. Don't do it.
Regards



X

david39

Got caught on a similar deal on 12 months' interest-free double glazing - don't do it!

Also (edit) the dg firm paid me the 12 month's payments up-front, which sounded like a great deal, but then left me to fight it out with the finance company afterwards and that cost me plenty.

standupguy

I think you should speak to the Finance Company and tell them the offer that the dealer has made and can they confirm that this is a genuine sales offer of which they are aware and will honour.

From the info given it seems that you are being charged a flat rate of over 10% on a 5 year term with an APR of 20%+ - perhaps you can confirm?

I suspect that this a bit of a scam on the part of the Business Manager at the dealership.

By charging such a high rate over a long term they will earn mountains of commission from the Finance Company. This income to them will be protected as long as you do not settle the agreement before six months - in which case the Finance company would claw the commission back from them.

Out of this huge commission their theory will be that even if you settle after 6 months and they have to settle your agreement they should still be quids in. So, in effect the Finance company loses big time if you settle after 6 months as they will have lost the high commission paid to the dealer

The Dealers hope will be that you do not settle exactly at the right time and they get to keep their commission and you end up tied into paying the excessive finance agreement.

mr_sharma

Thanks for all your replies, much appreciated.

I'll try to sum up as easy as I can:

Car dealership will cover my first six months of repayments of £282.82 by giving me the money to give to the finance company. All fine, all good. They have my bank account details. They'll put the money into my account before the finance company takes it out. I have this in writing as an agreement. So that's fine.

Here's the problem.

Car dealership says that if I pay the full amount of £11,291.62 in six months time TO THEM, the dealership will close up my finance agreement for me and I won't have to pay any additional fees/interest.

I've asked for this in writing and will get a letter tommorrow when I visit the dealership.

My concern is because the finance agreement is between myself and the finance company, the finance company - approximating their own words - doesn't care for any third party and will want their money.

And what's of concern is the £300.00 closing fees they've stated are applicable to me regardless of the dealership.

I've told this to the dealership and they've assured me I won't have to pay.

I'll get everything in writing and update the thread.....!

Silvafox

So, they've told you verbally it's all fine and you won't get charged extra with no ongoing problems AND are going to confirm it all in writing too... what more do you want?!!

Can't see the point of the thread to be honest as they've answered all of your questions - no offence!