Car finance refused after dealership said it was approved

MrSteve101

Good morning all (sorry it's long winded),

Last week (Wednesday) I went to London West Used Cars interested in purchasing one of the used Nissan's they had in stock, as our 1.2 Vauxhall Corsa is just too small for the 5 of us nowadays. The sales guy went through everything, I test drove it and everything was good. We then went through the finance application (PCP at £245 p/m, part exchanging the current car for £4000) and the sales guy said the the application had been approved right away and that all was fine.

Honestly, I was a little surprised it came back fine so quickly, as I had been worried about this bit. Our credit took a hit a few years ago which we are steadily resolving now.

I even double checked with him to say "so that's all gone through, they've approved the finance?" to which he said "yes, all is fine".

We wrap everything else up , I pay a £500 deposit and sign the Used Vehicle Order which he had printed. We discussed next steps - he'd be in touch on Tuesday with progress on the car being ready (service and a clean) and arrange collection. I left, ecstatic that I'd got the nice, family car I went there for.

This morning (Monday 22/06, 0900) I get a call from him, I answer excitedly thinking it was ready early... He says that the finance people have declined/rejected my application. I mentioned to him, a number of times, that he had said that the finance was "fine" and that the only next steps where arranging the drop off of my current car and collection of the new one. After going back and forth with him saying it's "their decision" (I don't dispute this), he finally understood the point I was trying to make; he said everything was fine (is this a verbal contract?) and good to go on behalf of the dealership. To this he responded that 90% of these applications go through fine so he doesn't worry about saying it's under review (which obviously this was).

The only thing he could say was another lender has offered to give a hire purchase agreement for £410 p/m.

Do I have any rights here? Do they have an obligation to fulfil their agreement? Any advice appreciated.

Thank you for your time

(Attached docs too if that helps)

Caz3121

MrSteve101 said:

The only thing he could say was another lender has offered to give a hire purchase agreement for £410 p/m.

did they say / did you ask if withdrawing from the agreement to purchase the car is an option?

[Deleted User]

You have the right to arrange alternative finance for the car.  You can't force anyone to lend you money at any given rate.

You might be able to get a small goodwill gesture from the dealer if you push it.

MrSteve101

Caz3121 said:

MrSteve101 said:

The only thing he could say was another lender has offered to give a hire purchase agreement for £410 p/m.

did they say / did you ask if withdrawing from the agreement to purchase the car is an option?

Not said or asked explicitly but presumed to be the only other option.

MrSteve101

Deleted_User said:

You have the right to arrange alternative finance for the car.  You can't force anyone to lend you money at any given rate.

You might be able to get a small goodwill gesture from the dealer if you push it.

You're right on both counts though I'm not trying to force anyone to lend me money - just honour an agreement.

Goodwill might be a softener but is not where I'd prefer to be!

DrEskimo

I would look at getting a personal loan instead of a PCP anyway. At £245/month you could borrow ~£8,000 at 5% APR from a high street bank and it would cost you about £645 in interest, instead of paying nearly £3,000 in interest on this PCP at 9.9% APR.

Look to get a range of valuations for your Corsa to see if you can get a better trade price, and then sell it to a local dealer/garage to settle the £2,800 you have left outstanding. If you can get closer to £5,000 then you are looking at a budget of ~£11k, which is more than enough.

I would actually advise buying something much much cheaper, perhaps around £5-6k then using a 0% Credit Card to fund the difference?

Also do not buy GAP insurance from a dealer. Get it online as it will be half the price.

MrSteve101

DrEskimo said:

I would look at getting a personal loan instead of a PCP anyway. At £245/month you could borrow ~£8,000 at 5% APR from a high street bank and it would cost you about £645 in interest, instead of paying nearly £3,000 in interest on this PCP at 9.9% APR.

Look to get a range of valuations for your Corsa to see if you can get a better trade price, and then sell it to a local dealer/garage to settle the £2,800 you have left outstanding. If you can get closer to £5,000 then you are looking at a budget of ~£11k, which is more than enough.

I would actually advise buying something much much cheaper, perhaps around £5-6k then using a 0% Credit Card to fund the difference?

Also do not buy GAP insurance from a dealer. Get it online as it will be half the price.

Thank you very much for this, good advice!

Ditzy_Mitzy

Well you've avoided paying the best part of £19,000, including trade-in, for a £12 or £13,000 odd car.  Assuming the offer was a 5 year finance deal.  In 5 years time, the same X-Trail is going to be worth, say, £5,000.  Discounting the utility offered by the car, that's £14,000 in lost value.  Could you really have afforded that anyway?

MrSteve101

Ditzy_Mitzy said:

Well you've avoided paying the best part of £19,000, including trade-in, for a £12 or £13,000 odd car.  Assuming the offer was a 5 year finance deal.  In 5 years time, the same X-Trail is going to be worth, say, £5,000.  Discounting the utility offered by the car, that's £14,000 in lost value.  Could you really have afforded that anyway?

Hey, thanks for your input. It was a 4 year deal with just under £5k final payment/re-finance at the end.

Overall, yes it's expensive - but with the intention of keeping until it died, it felt to be worthwhile investment. The Corsa is only really being replaced due to size.

MinuteNoodles

MrSteve101 said:

Overall, yes it's expensive - but with the intention of keeping until it died, it felt to be worthwhile investment. The Corsa is only really being replaced due to size.

If the intention is to keep it until it dies then PCP is absolutely the wrong route to take. PCP is for people who want to jump into a newer car every 3-4 years. A personal loan is a better and cheaper way for you to do it. You were going to end up most likely getting a personal loan for the balloon payment anyway so the main difference is you'll be paying back the total cost of the car over 5 years and not 9-10 years as you would with a 4 year PCP followed by a 5 year personal loan for the balloon. Ultimately this will save you a bucket load in interest.

Grumpy_chap

I can't see anything that really covers this situation in the T's&C's, but are you within a cooling off period?  Either way, the price offered has increased from 245 to 410 per month, which I'd imagine the garage are half expecting you to just walk away from anyhow.  If you ask then for time to look for alternative finance, they'll probably be agreeable as they won't want to lose the sale.