Car Finance

Woby_Tide

ianm41 wrote:

not being funny here but anyone who buys a car brand new need their head examined.. yes I know you will be able to specify your exact requirements ect...but..does it really matter if it does not have the alloy wheels you wanted or the exact colour you were thinking of... do yourself a favour and by an ex-demo car...

We bought a Vauxhall a couple of months back, by taking out the dealers 'finance' agreement they put in a deposit allowance that effectively made our new car £1k cheaper than the 6-12 month old secondhand ones they had outside that were similar but not quite what we wanted. The APR(as we had a quite a big trade in so only took out the minimum amount necessary to get the deposit allowance) was relatively high i.e. c.25%, but we paid it off after one months payment subject to a repayment penalty of c. £50 straight onto a 0% CC. Effectively the new car was £8.3k as opposed to 'list price' of £12.7k. I don't want my head examined, I thought we played the game quite well. Every situation is different but if a dealers finance arrangement can be played, play it.

mattrgee

What are some of the main 'gotchas' to look out for when checking the dealers finance option? Is it just the APR I should be checking?

mrcow

Well to start with, the percentage that they will quote you will probably not be an APR, but a flat interest rate (if it's about 4-6% then this is probably the case). You need to ask to see the actual APR figure.

Are there any arrangement fees?
What are the early repayment penalties? (I got screwed on this years ago)
Who is the finance actually with (find this out and then go away and do some homework on them).
Are you being forced to take out payment protection insurance? How much is it and is it overpriced? (as many of these policies are).

Most of all, multiply out the monthly repayment by the number of months that the agreement is over and so you can see exactly how much this car is going to cost you!

Whatever you do - get the deal in writing, and then WALK AWAY and have a good look at it. Compare it to what you could get by going to your bank or another financial organisation. If you like, post the details on here and you'll get plenty of opinions on what you're being offered!!

You are obviously giving this a lot of thought - which is great. Just don't go and let them push you into a deal. It's all part of negotiation.....I've been in sales for years and it's a real trick to get them to put all their cards on the table so you know you're getting the very best deal possible.

As Woby-Tide has stated, the best outcome that you can hope for is to get the car that YOU want for the BEST price possible, paid for in the most EFFICIENT way for you.

If you're going back to the garage again today, see if you can also get some more money knocked off the car too. Salespeople love a challenge you'll be making his day

mattrgee

mrcow wrote:

Well to start with, the percentage that they will quote you will probably not be an APR, but a flat interest rate (if it's about 4-6% then this is probably the case).

What is the difference between a flat interest rate and APR, how do they compare?

Is it possible to work out the actual APR based on the monthly repayment value and the length of time you have it over?

mrcow

Take a look at Rafter's post in this thread

The lender has to quote you an APR, just ask them what it is.

If you want ideas on where to look for cheaper loans try here

As previously stated, you would probably be wasting your money going with the dealer's finance. Even a 0% offer will probably be compensated by inflating the price of the car. You are best to look elsewhere.