Car loan early payment.

Deputy_Dog

Hello. This is my first post and would be grateful of any advice you can offer.

My question is. My farther is looking to buy a car and has decided on a new Ford Mondeo. He has always paid for cars in the past up front and has never had a loan on finance. However these days its pretty much the only way they sell cars and Ford are offering £1500 deposit contribution on their finance with a new Mondeo. The saleman at the dealership asured us that you can take out the ford finance and get the £1500 and still pay the loan within a month without occurring any interest on the loan. My father would only therefore be paying the agreed price of the car less the £1500 deposit. He said there may be a £50 admin fee but nothing more and we would then own the car outright.

Is this advice from the salesman correct? I've no reason not to believe it but car salesmen are not exactly known for their honesty.

Thank you in advance.

TadleyBaggie

First rule of car dealers: They lie
Second rule of car dealers: See rule 1

Read the paperwork very carefully, I'd be surprised if even if the loan was paid back immediately, there would be no interest owed.

molerat

There would likely be a small interest payment for the few days the loan is open plus there is usually an option to purchase fee at the end of the loan but they will add up to way less than the £1500 discount. IIRC he only needs to finance £2500 to get the discount and take the 2 year 4.3% option which will reduce any interest payment.

thebritishbloke

The paperwork is what matters.

Most major finance companies (this is manufacturer finance, i.e. Ford Finance etc), don't charge much (if anything at all) to settle early. He'll only be charged interest for however long he had the finance (sometimes there may be a clause allowing them to charge you two months interest as a settlement fee).

Remember, he can probably negotiate an even larger discount on the car. Get competing offers from different dealerships and they'll budge down on the price. Even if they won't lower the price, you'll probably be able to get them to put on some extras for free/cheap.

Deputy_Dog

Thanks to you all for the very prompt reply. It's exactly the answer I was hoping for. The £2500 minimum loan to get the finance makes sense as they dealer mentioned having to pay that much for the loan, he just didn't say that was the minimum at the time and we got a little confused. My father is 75 and never been part of the borrowing culture that is around today other than a mortgage so wants to make sure he doesn't get caught out. Thanks thebritishbloke that's the reassurance I was looking for as he wants to go up Monday to buy the car.

We've been to quite a few dealers over the last month some better than others and some just don't seem able to say one sentence without lying about something. Toyota gave us a good deal on a Hybrid Auris but when we drove it it was a rough ride. We've got £850 off the list price of the Ford plus the £1500 deposite and £325 more than any other dealer offered for our old car trade plus getting the seats and bodywork protected.

Thank you all again for you advice.

chanz4

100% bull about only finance try another dealer, salesman get a lot of bonus for finance agreement setups

noh

I did exactly that when I purchased a new Fiesta in January.
I borrowed £2500 from Ford Credit.
They made a finance contribution of £750.
I repaid the loan about a week after taking delivery of the car total cost was around £16,made up of a finance fee of £10 and around £6 interest.
It is easy to make the repayment over the phone via debit card.

jonesMUFCforever

I agree with NOH - even if you want to pay monthly the APR is only 4% or so.

RDG

You will save a lot more by buying a nearly new Mondeo rather than brand new. I know that there are cars less than a year old available with at least£10000 off the list price and under 4k miles.

aphill24

As noh says this is what a lot of workmates do when they buy their new ford cars. I work for ford motor company and if you dm me I can give you some more advice that will save you money on a new car.

Deputy_Dog

Thanks for the reassurance. He's bought the car and took the finance for the minimum which was as noh said at £2500 and still got the £1500 from Ford. So at around 4.5% even if he didn't pay it off for some reason he'd still pay only about £120 interest. As for buying second hand it's something he doesn't consider as he's always bought new and run them for about 10 years or so. At 75 he's got enough cash to buy what he wants and it'll only end up with the tax man if he doesn't spend enough of it.