Credit Card to buy a car?

Grumpy_chap

DullGreyGuy said:

No, the dealer will like you having S75 rights as it means if you have a problem you go after your bank rather than them and it comes from your bank's pocket 

Is that correct?
I ask as I genuinely do not know. 

I understand that S75 means the lender is jointly liable to the consumer, along with the provider. 
This does seem rather unfair on the lender to be honest. 
The protection can be up to £30k yet the lender may only have received low fees on a nominal deposit amount, plus any interest over a short-term period.  In that case, the income associated with the transaction is virtually nil for the lender.
The lender has no control over the quality of the goods or services provided (except, I suppose, if there is a repeat offender business, the lender can withdraw facility - but this would be at VISA / MASTERCARD level, rather than in the direct control of the individual lenders).

Would it not be the case that, while the consumer can pursue the supplier or the lender equally, the lender would recover the losses from the supplier?
It would not then, ultimately, come from the bank's pocket.

Brie

The last several car purchases have all been on credit cards.  One place would accept it for a deposit but wanted the rest by bank transfer.  It was a place I knew so I was fine with this.  

Generally what I have done is purchased on one card and then BTd the amount to the zero % card.  The small fee that was being charged at the time made this well worth the effort.  Fees have of course gone up over the last year so do be sure to take that into account.

gizz_10

I bought a new car in September - I wanted to pay with my Mastercard Reward credit card so that I would get airmiles for the full 18k amount. The dealer would only take £1k deposit on a credit card, so I put the rest on PCP finance with intention to pay it off via credit card within the 14 days cooling off period for the PCP.  The PCP rate was not that great but it didn't matter as I was only going to pay a few days interest. The car I bought was a Kia which is managed by Santander consumer finance.  Santander allowed me to pay off the outstanding amount with my reward credit card and I got a tidy amount of airmiles for doing so.  Additionally it went through as a purchase on the credit card and so there were no cash advance fees either.
I would recommend this method as long as you cancel the finance within the 14 days cooling off period, and the finance company does accept credit cards.  There are a few listed on Head for points in the forums so you can see which car finance firms accept credit cards as payment without any fees.  If you know which cars you are interested in, check out the finance companies they use since you have plenty of time ahead of your purchase.

I then Balance transferred the entire amount to 2 no-fee 0% cards for 22 months. (Natwest and Santander) - ironic that some of the balance went from 7.8% PCP with Santander to Santander credit card at 0%....LOL

Before this I was also very against PCP - but this allowed me to max my credit card benefits and get enough airmiles and and a flight upgrade voucher so well worth it, and the entire cost of the car on 0% for almost 2 years.  I do have the cash ringfenced sitting in a 4.75% savings account so will also earn interest in the meantime and then pay it all off after the 22 months are up.

MrFrugalFever

Some CC providers will treat the transaction with Santander as a ‘cash-like transaction’, such as Virgin CC.

Just to be aware.

gizz_10

MrFrugalFever said:

Some CC providers will treat the transaction with Santander as a ‘cash-like transaction’, such as Virgin CC.

Just to be aware.

Mine is Virgin and it was not treated as a cash transaction

DullGreyGuy

Grumpy_chap said:

DullGreyGuy said:

No, the dealer will like you having S75 rights as it means if you have a problem you go after your bank rather than them and it comes from your bank's pocket 

Is that correct?
I ask as I genuinely do not know. 

I understand that S75 means the lender is jointly liable to the consumer, along with the provider. 
This does seem rather unfair on the lender to be honest. 
The protection can be up to £30k yet the lender may only have received low fees on a nominal deposit amount, plus any interest over a short-term period.  In that case, the income associated with the transaction is virtually nil for the lender.
The lender has no control over the quality of the goods or services provided (except, I suppose, if there is a repeat offender business, the lender can withdraw facility - but this would be at VISA / MASTERCARD level, rather than in the direct control of the individual lenders).

Would it not be the case that, while the consumer can pursue the supplier or the lender equally, the lender would recover the losses from the supplier?
It would not then, ultimately, come from the bank's pocket.

Its correct to the best of my knowledge @grumpy_chap, there is no subjugation type wording in the CRA which would automatically mean that they can step in your shoes like a car insurer can when you are involved in a non-fault claim. According to @born_again the cases of banks pursuing the merchant after settling is exceptionally rare and deemed "not cost effective" - despite the fact insurers find it very much cost effective to do the same.  

If it was pursued I think there is a reasonable chance of any claim being deemed too remote... if you are injured in a car accident and your employer pays you sick pay your employer cannot sue the driver that caused the crash to recover their sick pay payments... again too remote from the cause.  Credit Hire companies have had to put very convoluted wordings into their contracts to avoid the same issue.

You have to remember when the CCA was drafted credit cards were exceptionally rare and companies that accepted them were equally rare. The majority of consumer lending where S75 of the CCA applied was in store lending, like getting a Black Horse loan on your new Sofa arranged by the furniture shop. In those cases the lender and the merchant were very much related and the lender should have done their due diligence on the furniture shop before agreeing to allow them to sell their finance. So at that time there was more logic to the section... make banks think twice before allowing cowboys sell their loans.

The whole S75 really needs rethink as it doesnt make sense in todays world - lenders however clearly are making enough margin in the round to cover the cost of S75 and other operations else we'd see them pulling out the market

born_again

Very well worded post ^

The cost of a bank taking a retailer to court would be massive, due to legal costs, with no guarantee of getting anything back. There are cases where someone will try and talk to retailer & try to reach a agreement. But they are so rare they are in the single figures each year. Even if they try, retailer can just do the same as they do to customers & ignore them.

Some people will remember the PIP breast implant issue with them rupturing. The cost to one card co was over £10 Million. No attempt was made to claim any back due to the cost. sadly the no win, no fee would not touch a bank 🤣

ManyWays

You can also say you have cash but ask what PCP deals are. If the PCP rate is lower than the interest rate you can get on the cash, go for it. 

MrFrugalFever

gizz_10 said:

MrFrugalFever said:

Some CC providers will treat the transaction with Santander as a ‘cash-like transaction’, such as Virgin CC.

Just to be aware.

Mine is Virgin and it was not treated as a cash transaction

Interesting, my colleague incurred a fee when using hers.