Buying a new car on finance

mark5

For me it doesn’t really matter if you get a 40,000 car reduced to 35,000 or a 40,000 car with a 5000 gifted deposit, the two outcomes are the same.

In your case it’s basically you can have a 40000 car for 35500 cash or with a further discount of 700 on pcp, don’t worry about if its worded discount or dealer deposit, your not paying this yourself so its not important.

timwalker

daveyjp wrote: »

Correct. They are dual pricing depending on how the buyer is paying.

Pay cash and the price is £35.5k. Pay using PCP and the price increases to £40.3k.

FCA may be interested.

Tell the dealer you would like both these quotes in writing before making the final decision and see how they present the figures.

This. The dealer has nothing to do with the deposit contribution. The price of the car should be the same irrespective of how it is funded.

The contribution comes from the lender not the seller.

daveyjp

mark5 wrote: »

For me it doesn’t really matter if you get a 40,000 car reduced to 35,000 or a 40,000 car with a 5000 gifted deposit, the two outcomes are the same.

In your case it’s basically you can have a 40000 car for 35500 cash or with a further discount of 700 on pcp, don’t worry about if its worded discount or dealer deposit, your not paying this yourself so its not important.

It matters to me. £5.5k is a lot of cash and it is important as the dealer is pulling a fast one.

Look at a typical broker's wording for similar situations.

"The quoted prices on all models include a £1,000 deposit contribution which is conditional upon you taking out Ford finance arranged by the dealer. If you do not wish to take out this finance, then you will need to add £1,000 to the prices that we quote."

The list price of the car is reduced and offered to the buyer at that price.

If the buyer then takes a PCP agreement there is a further £1,000 off.

On a £35.5k discounted price the PCP should be:

Price of vehicle £35.5k
Manufacturer contribution £5.5k
Amount to finance £30k

For cash you would pay £35.5k

AdrianC

Seems straightforward to me.

The car is £40,300 list.

If you buy that car from the dealer, the dealer will give you a £4,800 discount, making it £35,500.
If you finance that car, then the manufacturer's finance house will give you a £5,500 discount, making it £34,800.

I'm really not sure what else you need to know.

You are not going to get that £40k list-price car for £30k, no matter how hard you try to deliberately misunderstand the figures.

I suspect the difference is that the "sale" is by the dealer (who then pay the manufacturer for the car) if you actually buy it, and by the manufacturer (who then give the dealer some commission) if you finance it. The manufacturer don't much care if you buy that particular car or a similar one. The dealer want that particular car off their showroom floor.

Snuggles

To those saying it doesn't matter, makes no difference, you're still getting an extra £700 off on PCP, I don't agree at all. What about the interest? If the OP buys on PCP and doesn't pay it off immediately, he will pay far more for the car than the cash price. If this was being calculated fairly, the large deposit contribution would offset some of the interest. But because the dealer is inflating the price if the OP buys on PCP, they and the finance company will make far more money out of him than if he purchased cash.

Obviously doesn't apply if he intends to pay it off immediately, but I would check carefully for any fees etc before signing up.

AdrianC

Snuggles wrote: »

If the OP buys on PCP and doesn't pay it off immediately, he will pay far more for the car than the cash price.

Yes, of course borrowing money is going to be more expensive than paying cash. Who ever said it wasn't?

But don't forget that "buying on PCP" isn't buying. The OP might or might not buy the car at the end of the PCP term. Until then, he's not buying it and doesn't own it. It belongs to the finance company.

jesteh

Thank you all, I get it now - the cash price includes cash incentive from manufacturer, the finance price includes deposit contribution from manufacturer finance arm, the difference between the two is small in favour of finance. So the plan is to go on PCP to get small discount and then obviously pay it off as early as possible. Appreciate all responses.

DrEskimo

If you haven't already, run a search on CarWow, orange wheels, coast2coast and broadspeed on the car and see what sort of price you can get for a discounted factory order.

I use that as my benchmark for determining what price is a good one for pre-reg, nearly new, used, etc.