Buying a car - finance etiquette?!

cblackett

Hi there MSEs

Yesterday my husband and I provisionally bought a new-ish car from a dealership. All we've signed so far is an agreement of sale, and they've gone away to draw up the finance papers. They've asked my husband to call in on Wednesday to sign these.

When I went home last night and did my sums, I worked out that with the monthly repayments they've proposed, they'll be charging us 22% interest, which seems a bit excessive. I think I can get a better deal with a personal loan from my bank.

But I'm not sure whether signing the agreement of sale binds us in any way to the finance option that they've proposed? I can't see how it would, as it literally just sets out the price and details of the car we're trading in and the price and details of the car we're buying.

I personally can't see any issue with approaching the dealership and telling them we'd like to cancel the finance and buy the car outright. I know they'll lose out on some money because we won't be paying interest, but this shouldn't be a problem, should it?

Does anyone have any experience of this, and if so, how did it work out?

Thanks for any help / advice you can give me!
Claire :-)

JasX

Simple answer is there is no ettiquite, YOU are the customer accessing a service of a purey transactional nature and should do whatever you can to get the best deal from your perspective. Including walking away if you're not happy at any point.

Always read for yourself what you are signing and keep a copy, don't rely on what you're told verbally you are agreeing to as you leave yourself open to losing out.

Be clear what you have agreed and if you can get finance elsewhere (and haven't signed tha toption away already) go for it. Of course the garage will be slightly miffed you're not handing them over a few extra thousand pounds in interest for no particular reason but thats the way its supposed to work.

cblackett

Thanks JasX. I'll have another careful read through the receipt tonight. I'm 99% sure there's nothing on there about finance, but I'd rather be 100%.

paulmcerlean

Thats quite a big APR for a car finance proposal, definitely not a mainstream rate, more a rate for someone with poor credit. For example I bought my 12 month old car from a main dealer who financed it through Santander at around 9% APR / 4.2% Flat rate.

BackOnTrack

Is the 22% an APR or is it the total interest payable? As an apr it's high but if it's the total interest payable over say a 3 year period it's good, if it's over a 5 year period it's even better.

CLAPTON

BackOnTrack wrote: »

Is the 22% an APR or is it the total interest payable? As an apr it's high but if it's the total interest payable over say a 3 year period it's good, if it's over a 5 year period it's even better.

22% interest over 36 month is an APR of over 14%....
not as good as actually saving up for things and avoiding the interest altogether

BackOnTrack

CLAPTON wrote: »

22% interest over 36 month is an APR of over 14%....
not as good as actually saving up for things and avoiding the interest altogether

Guess I should have done the maths

cblackett

22% is the total interest we will have paid over 3 years. So you reckon that's actually a good interest rate?

BackOnTrack

cblackett wrote: »

22% is the total interest we will have paid over 3 years. So you reckon that's actually a good interest rate?

14% APR, as someone kindly calculated above, is an OK rate, not sure I would describe it as "good". Many people would be delighted with that rate but if you have a excellent credit rating then you may well be able to get a rate around 8 or 9 % from your bank.

cblackett

Ah ok. Thanks for clarifying that. As far as I'm aware I have a pretty decent credit rating, so I think I'll go with my gut instinct and see whether my bank can do a better deal for me.

Thanks for the help, folks. Much appreciated

standupguy

You will probably find that the Dealership will say - ok fine no problems.

There are some however that may try and put pressure to take the finance on the basis, they will say, that they quoted you a value of your p/x that took into account you taking their finance and if you made your own finance arrangements a lower p/x value may be offered.

However there is a new rule that has recently been introduced which lets you settle the Finance company within 14 days of the agreement without penalty other than interest for the days the money has been out so even if you took it initially you could settle with your loan