Car purchase loan - Catch 22!!

Big_Den_2

Hi

Looking to upgrade current car - the dealer I use always gives me a good rate on loans but he is struggling this year to match some on offer.

In particular I was perhaps going to go the PCP route this time due to changing car every few years - dealer is offering around 7.9% and as I would be a repeat customer there is n oissue with the lender he uses.

Now the catch 22 - a high street lender are offering a Car purchase loan with the deferred amount (as with a PCP agreement) on a typical rate of 6.4% apr.

However, you have to go through the application (incl credit checks etc) to find out the actual rate & of course if you would get the amount required.

So the dilemma is, do I just go with the dealer offer or risk an application with the other lender where Imay not end up with a better rate or worse if declined would have had a credit search for nothing.

My credit rating is GOOD
Alternative lender offers 5.9%-13.9%apr typical 6.4% apr. They also do not secure against car or expect an agreed annual mileage

Any opinions?

Cheers

Den

Rafter

Den,

7.9% is not a bad rate in a market where bad debts and interest rates are rising together.

However, don't see why you shouldn't try to get the best rate possible and one search isn't going to hurt your record significantly.

The trick to secure the best rate is to accept the overpriced PPI when offered. The loan company will use the commission on this to subsidise the interest rate. Once you have secured the best rate, cancel the insurance either before the loan starts or within 14 days. Legally the loan company cannot change the interest rate as the insurance is for your protection not theirs and should be considered as a different product sold with the loan.

Good luck.

R.

Rafter

PS.

Also make sure that you don't lose any benefit from the lower interest rate through paying a higher price for the car or getting a lower trade in. It may be that the dealer is using the commission it receives on the loan to subsidise its margin on the new vehicle.

R.

Big_Den_2

Thanks for the replies Rafter

I've used the same dealer for a number of cars over the years. He looks after his repeat customers. Great deal plus best rate of finance he can realistically offer!!

Not many dealers around like that those days.

Den