0% finance deal and cashback, what's the catch?

Bobio

Our Toyota dealer is offering a £900 saving if we take their finance deal for a new Auris instead of paying cash difference on trade-in. Seems like a good offer but what's the catch, is there one? The strange thing is the "cash back" or final balance payment that is also funded through the finance deal at 0%. I hate being in debt and can't get my head around this one! Why do they do it? Any comments please?

Ebe_Scrooge

Dealers usually earn a fair chunk of commission on selling finance. And there's no such thing as 0% - it has to be paid for somewhere along the line !


If you have the money available to buy the car anyway, then what to do is take the finance, get the discount, then cancel it within the statutory 30 days cooling off period and pay cash instead :-)

jase1

Ebe_Scrooge wrote: »

If you have the money available to buy the car anyway, then what to do is take the finance, get the discount, then cancel it within the statutory 30 days cooling off period and pay cash instead :-)

Or just put the money in savings and trouser the (admittedly not massive) interest yourself Just pay back the installments as normal from the savings you put away.

Shouldn't be too difficult to get 2% -- and assuming £15,000 for the Auris that's a decent extra bit of cash over a three year (say) term). Effectively just stooze it.

Quentin

Ebe_Scrooge wrote: »

..... then what to do is take the finance, get the discount, then cancel it within the statutory 30 days cooling off period and pay cash instead :-)

Looks like they have stopped this wheeze.


It's "cashback" (which will have ts + cs to stop this type of abuse) not a straight discount.

bazster

Yup, commission. My mate tried to buy a new Ford and they flatly refused to take his cash. It was finance or no deal. He walked away.

jimjames

jase1 wrote: »

Shouldn't be too difficult to get 2% -- and assuming £15,000 for the Auris that's a decent extra bit of cash over a three year (say) term). Effectively just stooze it.

You should be able to get between 3 and 5% on all that £15k using current accounts. Makes it even more worthwhile if it's being offered at 0%

motorguy

bazster wrote: »

Yup, commission. My mate tried to buy a new Ford and they flatly refused to take his cash. It was finance or no deal. He walked away.

Doesnt surprise me. Theres that little profit in new cars these days if someone comes in with cash looking a new car, no trade in, no finance, not payment protection, no tyre insurance, no service pack, its frankly not worth their while.

They'll simply wait on another customer to walk in

jase1

motorguy wrote: »

Doesnt surprise me. Theres that little profit in new cars these days if someone comes in with cash looking a new car, no trade in, no finance, not payment protection, no tyre insurance, no service pack, its frankly not worth their while.

They'll simply wait on another customer to walk in

... and then at the end of the month/season the manufacturer ends up selling a load of cars at 40% off just to make the numbers look respectable (Vauxhall I'm looking at you here).

Bit silly really. But then wasn't it the case that the only thing keeping GM in the US going for a long time was the finance component of the business -- they were essentially a bank with a (failing) car manufacturing business on the side.

ChumLee

motorguy wrote: »

Doesnt surprise me. Theres that little profit in new cars these days if someone comes in with cash looking a new car, no trade in, no finance, not payment protection, no tyre insurance, no service pack, its frankly not worth their while.

They'll simply wait on another customer to walk in

Quite right, they'll even sell it for less at the end of the month to someone who's buying on finance.

Bobio

Thanks guys, its a strange world, finance! I'll take the deal if they accept me with no credit history and put the cash back into premium bonds, got to be worth a free punt! The t's and c's allow full repayment after six months with no penalty, so I get the discount. Thanks again for your replies, it's much appreciated.

jase1

Yup, when they're the ones effectively giving you free money you grab with both hands You have nothing whatever to lose by taking their 0% finance, assuming you can't get a better deal on the car elsewhere.

If someone were to effectively offer me £10k+ of cash to put in savings for a few years and earn interest on, I'd rip it out of their hands faster than you could blink.