Save with "Minimum Part Exchange" trick

used_car_manager

Cornucopia wrote: »

D'you know when you are looking for a car, and they ask you: how much do you want to pay per month? How annoying is that? No consideration of part-ex value, discount, APR or loan duration, just a meaningless monthly figure.

the reason this is done is to make sure you are on the right car, new salesman get giddy and present a deal to a customer who wants to spend £120 a month x 4 years with £100 deposit but is looking at a £10k car..

hes wasting the salesmans time. he's never going to buy unless he's lying about his budget... old saying in the car trade "byers are liars"

if you play hardball with the sales guy not giving info etc they switch off and bin you, they are only paid if they sell, so play along have a laugh and you might just get what you want, if you dont theres usually 3 exit doors that you can leave at anytime

Cornucopia

It'd be a naive salesman who didn't understand that the vehicle the punter came in with could be worth £6000 or could be someone else's.

Reg_Vardy wrote: »

old saying in the car trade "buyers are liars"

Yes - I've heard that before. Unfortunately most businesses are nothing without their customers. So to an extent, it's too bad if some of them are difficult to please.

forgotmyname

Slight, Well more of a serious flaw in the original post.

Im taking a £100 car in and getting £1000 minimum part exchange value for it.
But im paying cash so the dealer cannot load the finance.

So where are they making the money back here?

Also you take the loan the early termination fee maybee £900 so saving you nothing.

So why not buy the car with the personal loan in the 1st place?

Taking out finance for a car then a personal loan at the same time may appear like a poor credit risk and push up your interest rate.

There is a good reason why they can give you £1000 for your old banger. So take cash and no part exchange and haggle that £1000 off.

Its because the car is £1000 overpriced. Simple as. Whether your car is good enough for auction or straight to the scrap metal dealer its worth £100+

flashg67

Most/a lot of car finance is front loaded, so you walk out of the dealer owing the finance amount + 3 years 9or whatever) interest. Even if you settle early, you won't lose all of that front loaded interest.

used_car_manager

flashg67 wrote: »

Most/a lot of car finance is front loaded, so you walk out of the dealer owing the finance amount + 3 years 9or whatever) interest. Even if you settle early, you won't lose all of that front loaded interest.

total rubbish... no car finance that i know of or have used in 12 years is front loaded, its the same as a repayment mortage without the early repayment penalty

forgotmyname

Except the setup fees etc.

So much easier to get a personal loan and pay cash if its cheaper.

You sound like you got your fingers burnt. I bet it doesnt save as much money as you think.

Setup fees and early termination fee or admin fee to pay it off early may take a chunk of your savings.

Seems like a silly idea to me. They dont force you to take a loan from their finance, Pay cash and still get £1000 for your clapped out banger.

motorguy

forgotmyname wrote: »

Its because the car is £1000 overpriced. Simple as. Whether your car is good enough for auction or straight to the scrap metal dealer its worth £100+

^^^^^

This

Thats what we always did anyway. Gets the sub primes in and lets the finance company think they've got a half reasonable deposit.

motorguy

Reg_Vardy wrote: »

hi

we have all seen the £1000 minimum part exchange offers, heres how they work.

They are to entice people with old bangers to buy a car hoping that the owner knows his car is worth £100 but thinks he is going to get £1000.

So a customer turns up with car worth £100 and wants to buy a £7000 car.. without this offer he will borrow £6900 but as he is getting £1000 he will borrow £6000.. so he thinks its a good deal..

His PX hasnt just become worth more money its still only worth £100 and at auction it will fetch around £100..

so where does the other £900 come from?

it comes from the dealer lifting the finance rate to get back the £900 over allowance on the PX. The dealer is not going just give £900 away. This will only be on finance deals not cash deals as they cannot get back the over allowance if there is no rate to lift.

Deal 1:
customer borrowed £6900 at 7.82% over 5 years
(7.82 x 5= 39.1%) - £6900 x 39.1% = £2697.90 interest + £6910 borrowed = £9607.9 total amount payable. Divide by 60mths = £160.13 per month

Deal 2:
customer borrowed £6000 with the £1000 min PX deal at 12% over 5 years
(12 x 5= 60%) - £6000 x 60% = £3600 interest + £6000 borrowed = £9600 total amount payable. Divide £9600 by 60mths = £160 per month

so now you see that both deals are the same even though the customer is borrowing less... the customer has gained nothing apart from a lower starting balance...

Now heres the trick that the dealer doesnt want you to know

1. if you are happy with the car sign the order form, leave a small deposit as normal, leave your finance details and let them process the application and get you accepted.. acceptances are valid for 30 -90 days, they are not live aggreemenst yet so dont worry.. dont let them keep you there to sign the finance docs.

2. go straight home and look at personal loans for the amount that the finance company are going to lend, in this case £6000.
In our example i used MSE loan finder and as of today Yorkshire Bank are doing £6000 at £118.33... thats £41.60 less per month (multiply this by 60 months and you are saving £2500 in interest)

3. apply for the loan and get accepted and get then money in your account . you are going to use this money to buy the car. You cant give it to the dealer as it would be classed a cash sale so the min PX would be withdrawn.

4. Got to the dealer on sign your finance docs and collect your new car. The dealer will get the the deal paid out and teh aggreement will go live

5. So now you have a live agreement for £6000 and have £6000 in your account.

6. call the finance company within 30 days and ask for a settlement figure..it will be £6000..simply pay off the outstanding balance which is at a high rate with the same amount borrowed from Yorkshire Bank at the lower rate.

7. so now you have just got £900 discount off your new car.

same rules apply to a cash customer if you already have the funds saved, settle off in 30 days and save the Min PX value.

if you settle after 1st payment you will get stung for the doc fee of around £160

what if your car is worth 3k so its more than the min PX of £1000, dosent matter point out to the salesman that you are not daft and if you brought a banger in worth £100 you would get £900 extra, so just ask for the £900 extra, teh dealer will still lift the fiance rate .. get the finance manager out and propose this deal to him, he will love it as he knows he's going to lift the rate.

dont use this method on new cars as it is usually off the list price and dealers never charge list price.

try and find dealers doing £1300 and £1500 min PX so you get more off your car

also dont forget to ask for normal discounts in the haggling process around £300 to £400

beware if they offer this deal on cash deals as the car screen price will be inflated so no real saving will be gained

most important part, get along with the salesman and manager, have a laugh... if you are abrupt and make things hard they will switch off and get rid of you so they can get another customer who isnt wasting their time

Sorry, but these deals invariably come with over inflated prices in the first place.

I think you're encouraging people to play with fire to be honest.

I challenge you to find a dealer doing this for any particular car, that cant be bought for £1,000 cheaper elsewhere from another dealer.

used_car_manager

Slight, Well more of a serious flaw in the original post.

Im taking a £100 car in and getting £1000 minimum part exchange value for it.
But im paying cash so the dealer cannot load the finance.

So where are they making the money back here?[/QUOTE]

they cant thats why you wont get the min px deal as it will be part of a 4 or 5 year finance deal. If you have cash in the bank, get the min px deal then settle off before the first payment where the doc fees start. Your balance to settle will be £1000 less than it would if you gave the dealer staright cash.

Also you take the loan the early termination fee maybee £900 so saving you nothing.

no early termination fees in HP

So why not buy the car with the personal loan in the 1st place?

because its a cash deal to the customer and you wont benefit from the potential £1000 off the balance

Taking out finance for a car then a personal loan at the same time may appear like a poor credit risk and push up your interest rate.

it wont push up the interest as the HP rate is fixed and not variable. When you get accepted with HP its only an acceptance and not a live agreement so doesnt show anything other than a footprint on your record.

There is a good reason why they can give you £1000 for your old banger. So take cash and no part exchange and haggle that £1000 off.

a grand off a car in a cash deal????? wont happen

Its because the car is £1000 overpriced. Simple as. Whether your car is good enough for auction or straight to the scrap metal dealer its worth £100+

it would be a crazy dealer that had his cars a £1000 more expensive thans his local rivals in the hope that a min px customer would walk in.

in 12 years of being Business Manager, Finance Manager and Sales Manager and worked for a number of high volume companies i have never known the min px deal done by lifting car prices higher than your competitor

used_car_manager

Except the setup fees etc.

So much easier to get a personal loan and pay cash if its cheaper.

no set up fees until first payment is made usually, settle before then.

You sound like you got your fingers burnt. I bet it doesnt save as much money as you think.

not really, was in the trade 12 years and now out, and it does save that much.. dealers dread it when customer asks about settling off as they will lose commission and volume bonus from that particular deal if its within the debit back period.

Setup fees and early termination fee or admin fee to pay it off early may take a chunk of your savings.

judging by this comment i am confident that you dont know how HP and motor loans work.. no penalties, its not a mortgage

Seems like a silly idea to me. They dont force you to take a loan from their finance, Pay cash and still get £1000 for your clapped out banger.

well done if you can do that but i've never seen it..

its not a silly idea, its an easy way to get a chunk off a deal, i have seen people on this forum prepared to do a lot more work for £20

if you dont think what i am saying is correct thats ok but please try not to pull my advice to bits by using incorrect facts and old wives tales.