Car Finance - Odd?

17lbp

We just purchased a nearly new car from our local ford dealership. We agreed a pcp deal, payments etc. Went to pick up the car today and the salesman (owner of garage) told us that ford wouldn't give us all the finance at the lower rate as quoted so what he has done is financed so much with ford at the agreed rate and then the remainder he has given us which we then pay back to him via a monthly standing order - ultimately the monthly payments are the same as originally agreed only with so much to Ford and so much to garage. The finance agreement shows us as having a larger deposit (the money leant to us by the garage.)
Now it all seems a bit odd to me, we've had car finance for years and never had any problems always paid etc. I would say we're probably classed as having a good credit rating, payments always met, don't have lots of loans etc etc We've had finance on more expensive cars than this one, I honestly don't think its a credit issue but I'm slightly baffled by it. Has anyone heard of anything like this before?

flashg67

Not something I've heard of. I'm trying to think of what the dealer can gain if his 'story' isn't true though!
Is the dealer loan a 'proper' loan with details of payments, total payable and whether it's secured on the car for example? AFAIK, you need to be licensed to lend money?

stator

You'll need to check the paperwork on this one thoroughly I'm afraid

17lbp

flashg67 wrote: »

Not something I've heard of. I'm trying to think of what the dealer can gain if his 'story' isn't true though!
Is the dealer loan a 'proper' loan with details of payments, total payable and whether it's secured on the car for example? AFAIK, you need to be licensed to lend money?

TBH its more like an arrangement between friends. We did get a typed letter pretty much A lending B £x.xx and payments of £x.xx per month for x months to put towards purchase of car. Its certainly not an official loan document. The official Ford paperwork certainly seems to be in order and just shows a larger deposit than what we actually gave.

SeanG79

Many car finance companies will only lend a certain %of trade/retail value of a vehicle, the rest must be by way of deposit.

The dealer seems to have gotten around this by putting in his own money (no doubt he hasn't actually put any in but will have taken it out of his margin in the vehicle).

How the FCA would view this is another story, but he has helped you get the vehicle you wanted, with the repayments you agreed. Where it would all go wrong is if for some reason you couldnt make the payments and also not sure how early settlement would work, should you want to sell the vehicle.