Car finance cancellation?

bigheadtodd

Hello,
I'm in the market for a used car and found one over the weekend which is of course priced higher than what we are willing to pay. The car dealer is refusing to budge unless, of course we take out finance with him. Both me and the wife are uncomfortable:eek: taking out a loan, but the dealer says : take out the loan, cancel it whenever you want, there is no minimum period, you'll need to pay an admin charge of roughly 2 months interest.

I haven't seen any paperwork, and my first instinct is to run a mile, but thought I should check here first to see if anyone else has experienced this kind of an approach, and what the advice would be.

Thanks.

emmell

I would leave well alone. It's obvious he's making money from the finance deal, what interest rate are they charging?
I bought a new Fiesta last year and to get an extra £500 off from Ford I had to take Ford Finace at 4.9% APR. We took the minimum possible £2500 finance on a car that cost £11500. The £2500 was deferred for 12 months but all the interest was paid upfront and it actually worked out that I got about £300 from Ford, but I wouldn't have done it if I'd have had to finance the full £11500.
Is it a rare car that you can't find anywhere else?
ML.

Kilty_2

Go somewhere else.

This is exactly the kind of irresponsible selling of financial product the regulator needs a swift kick up the @rse about.

daveyjp

Sounds like he's basing a price on how you intend to pay and could well be against FSA regs - avoid like the plague.

Flyboy152

Or take the finance, drive the car away and cancel straightaway. You will be in the fourteen day cooling off period, so therefore no interest penalty.

How much is he offering as a discount? What is the car and what price is he asking you to pay?

bigheadtodd

Thanks all. Looks like I'm right to trust my instinct and walk away from this one.

It's not a rare car or anything, and I'm not in a hurry, so it would be best for me to wait. Never having bought from a main dealer before, I'm worried that this is standard practice (i.e. offering discounts only if I take out finance with them) - hope this is not the case.

Flyboy152

bigheadtodd wrote: »

Thanks all. Looks like I'm right to trust my instinct and walk away from this one.

It's not a rare car or anything, and I'm not in a hurry, so it would be best for me to wait. Never having bought from a main dealer before, I'm worried that this is standard practice (i.e. offering discounts only if I take out finance with them) - hope this is not the case.

Very often the manufacturer offers special deals for cars sold with finance, for example, a contribution towards the deposit (which is what I suspect is the case here). There is nothing wrong with this and is generally quite lucrative for you. This is not some dodgy back street dealer who is trying to get you to pay thirty per cent APR and lock you into a finance product for the rest of your life. If it is a manufacturer based offer, you really shouldn't have much to worry about.

If you cancel the finance within fourteen days, you lose beggar all (bar possibly a small admin fee). You shouldn't ignore the possibility of a good deal, just because the mechanics of the offer is unfamiliar to you.

Go back to the business manager of the dealership and ask him to show you the terms and conditions of the offer and the consequences of cancelling early. Even if you have to pay two months interest, as he put it, you may still be better off.

bigheadtodd

Flyboy152 wrote: »

Very often the manufacturer offers special deals for cars sold with finance, for example, a contribution towards the deposit (which is what I suspect is the case here). There is nothing wrong with this and is generally quite lucrative for you. This is not some dodgy back street dealer who is trying to get you to pay thirty per cent APR and lock you into a finance product for the rest of your life. If it is a manufacturer based offer, you really shouldn't have much to worry about.

If you cancel the finance within fourteen days, you lose beggar all (bar possibly a small admin fee). You shouldn't ignore the possibility of a good deal, just because the mechanics of the offer is unfamiliar to you.

Go back to the business manager of the dealership and ask him to show you the terms and conditions of the offer and the consequences of cancelling early. Even if you have to pay two months interest, as he put it, you may still be better off.

Hmm, that is a good suggestion, thanks. I'll take it up.

bigheadtodd

Quick update.

The Ts and Cs clearly said if I pay off the remaining balance anytime during the contract (outside the 14-day cooling off period), I'm liable for the entire interest. Not quite what I was told earlier. When I asked them about this discrepancy, they said well the contract is a bit loosely worded but I would only be liable for borrowed amount + a couple of months' interest i.e. they were sticking with their original story.

I firmly said I would not sign anything which did not explicitly state repayment penalties and terms, and at this stage, would only want to go ahead with the deal at the reduced price, paid upfront.

A couple of days later, I got a call back agreeing to this, and I picked my car up yesterday!

Thanks for your advice, all.

Kilty_2

Flyboy152 wrote: »

Very often the manufacturer offers special deals for cars sold with finance, .

On used cars?

Flyboy152

Kilty wrote: »

On used cars?

Sometimes, yes.