Car finance/purchasing

Bigwheels1111

My friend had his Mercedes delivered by car transporter, we inspected the car.
He went inside and cancelled the finance under 14 cooling off period.
As was day one no interest or fees were payable.

Dave_5150

GrassSnakeUK said:

So, I would take delhvery/pick the car up and then ring up and pay the balance direct. Allowing me to haggle for a "finance deal" letting the seller gain his commission perks from the deal and then I get the best deal for a small interest payment... I like it.

As an addition to the story, I called into aVolvo garage today and asked to have a look round a V60... the 1st words out if the salesmanship mouth before he even went for the keys were "is it cash or finance or lease???

Yes except the seller may not get their commission perks.

Bigwheels1111

cash or finance or lease, we can get round to that after we work on the out the door price.

GrassSnakeUK

Bigwheels1111 said:

cash or finance or lease, we can get round to that after we work on the out the door price.

Ah, the final figure, the hand shake amount. How do I go about getting to this mythical figure?

Bigwheels1111

GrassSnakeUK said:

Bigwheels1111 said:

cash or finance or lease, we can get round to that after we work on the out the door price.

Ah, the final figure, the hand shake amount. How do I go about getting to this mythical figure?

The last 2 times I used two options.

I got quotes from online brokers, prrinted them out and showed the dealer the best price.

I also said that there was even more discount if I took out finance.

The other way was I rang 3 local dealers and got them to give me their best price.

Then while in the dealership I called the other dealers to beat each other again.

An extra £650 off, front and rear rubber mats, Bootliner and a full tank of diesel.

Goudy

Dealers like to sell cars on finance by dangling the monthies in front of you.
So if you are asking about cars on finance, expect to be asked what you can afford each month.

They'll then work the deal by adjusting the length of the contract to meet your target.
Unfortunately, this can mask a high interest rates over a longer period than you perhaps planned for.

Lots fall for this even though it's simple enough to work out the total payable and it's this that you need to stick in your head and work out on any deal, cash or finance.

If you are taking finance, the shorter the better really.

As you could pay cash, this total payable is key to you.
What is the cheapest way to buy.

Generally interest rates on used cars are higher (and high still for PCP deals on used cars) than deals on new cars and as already explained, incentives like deposit contributions tend to be non existent.
If you are offered a small contribution, it will often come at the cost of higher interest.

Once you worked out the total payable, paying cash would probably be the cheapest way 999 times out of a 1000.
Ok, you might not get money off haggling, but you will still be saving ALL the interest of a finance deal.
So you've won unless your cash was making more in the bank than the interest charged on the deal (which is very very unlikely).

You might be able to haggle a few hundred off a used car, but do this (and get a trade in price if needed) before you move on how you are going to pay.
The dealer won't like it, but you're the customer, ask for them first.


New car finance interest rates tend to be lower and deals on PCP finance products tend to come with incentives like deposit contributions.
This could be thousands but they tend to scrape that back in interest.

Again it's all about the total payable over the contract.

As already explained, you can pay any finance off at any time or cancel it in the cooling off period.
This means you can sign a PCP finance agreement and cancel it within 14 days or settle it at any time.

If you cancel it within 14 days, they can stop the incentives/contribution.
They basically rewrite the invoice without the finance incentives so you pay full whack.

If you settle it after the car has been delivered but before your first payment is due, you will only pay 56 days interest as that is the total amount they can charge by law, but you will keep the incentives/contribution.

56 days interest is usually far far lower than the inventive/contribution so you're still quids in, but you can help yourself a bit more.

If you are taking a PCP and settling, make the contract length as short as possible and make the deposit the maximum you can pay.

56 days of interest of a large 4 year loan will be more than 56 days interest on a smaller 12 month loan, so the 56 days interest reduces considerably.

GrassSnakeUK

Goudy said:

Dealers like to sell cars on finance by dangling the monthies in front of you.
So if you are asking about cars on finance, expect to be asked what you can afford each month.

They'll then work the deal by adjusting the length of the contract to meet your target.
Unfortunately, this can mask a high interest rates over a longer period than you perhaps planned for.

Lots fall for this even though it's simple enough to work out the total payable and it's this that you need to stick in your head and work out on any deal, cash or finance.

If you are taking finance, the shorter the better really.

As you could pay cash, this total payable is key to you.
What is the cheapest way to buy.

Generally interest rates on used cars are higher (and high still for PCP deals on used cars) than deals on new cars and as already explained, incentives like deposit contributions tend to be non existent.
If you are offered a small contribution, it will often come at the cost of higher interest.

Once you worked out the total payable, paying cash would probably be the cheapest way 999 times out of a 1000.
Ok, you might not get money off haggling, but you will still be saving ALL the interest of a finance deal.
So you've won unless your cash was making more in the bank than the interest charged on the deal (which is very very unlikely).

You might be able to haggle a few hundred off a used car, but do this (and get a trade in price if needed) before you move on how you are going to pay.
The dealer won't like it, but you're the customer, ask for them first.


New car finance interest rates tend to be lower and deals on PCP finance products tend to come with incentives like deposit contributions.
This could be thousands but they tend to scrape that back in interest.

Again it's all about the total payable over the contract.

As already explained, you can pay any finance off at any time or cancel it in the cooling off period.
This means you can sign a PCP finance agreement and cancel it within 14 days or settle it at any time.

If you cancel it within 14 days, they can stop the incentives/contribution.
They basically rewrite the invoice without the finance incentives so you pay full whack.

If you settle it after the car has been delivered but before your first payment is due, you will only pay 56 days interest as that is the total amount they can charge by law, but you will keep the incentives/contribution.

56 days interest is usually far far lower than the inventive/contribution so you're still quids in, but you can help yourself a bit more.

If you are taking a PCP and settling, make the contract length as short as possible and make the deposit the maximum you can pay.

56 days of interest of a large 4 year loan will be more than 56 days interest on a smaller 12 month loan, so the 56 days interest reduces considerably.

I'm sorry, I'm a little confused. I am a dopey Sparky after all. 
I always thought that PCP is for new cars only? It's almost certainly going to be a used car purchase.

I was speaking with a salesman the other day and he was saying you can go HP or PCP which left me a little confused as it was a used car. But the PCP figures   (and by that i mean rates)were a lot lower??   

My hypothetical options:.
I have a budget including my trade in of 25k.
 I buy a car for 25k.
I can:
Tell them I'm paying cash, just agree a price and pay it. Job done.

Tell them I will take out a HP loan with them to secure  better deal/discount, take delivery of car and immediately ring for a settlement figure and pay of "loan".

Agree a pcp deal, Take delivery of car and as with the HP ring up and cancel the PCP agreement but expect to get charged a maximum of 56 days interest  (so the bigger the deposit, the smaller the loan amount and therefore the lower the 56 days worth of interest is??

Thanks again for everyone's help! I really do appreciate it...

If I can repay the kindness in anyway an electrical query would be up my street.

G.S.

Goudy

Yes, they offer PCP on used cars, though it's generally a more expensive way to buy one.

You need to work out the cheapest way and that means working out what you will pay in total.
Forget APR's and monthly payments and concentrate on the total.

If it was me with your hypothetical options I would test the water first with the trade in value of me current car.
I would compare a couple of online car buying services to what a couple of different dealers would offer trade in to try and get the best price for it.


I would see if any of these dealers were prepared to haggle on screen price of the replacement car for cash.
As a general rule, we don't tend to do this very well and most people's attempts are easily fended off by the salesperson, but you can read up on trips on how to go about this online.
The same goes for trade in values.
You can't haggle with the online buying services, quite often they will attempt to knock you down, but you can haggle with the dealers on this.

I find asking for "something off" or "a bit more" isn't a great way to go about things.
Telling them you want "£X off" or "£Y amount for my trade in" works better (if it's not totally unreasonable), usually with an additional "or as close as possible" thrown in can work better at times.
Give them something to work too, they might not get there but it does tend to help.


I would then see if these same dealers were offering anything off/contribution to take a finance deal, both HP and PCP.
Generally these are few and far between on a used car, but it's free to ask, so be straight up and ask.
Quite often if the salesperson knows you are thinking of taking a finance deal for a contribution and settling in the first month rather than cancelling, they might actually help you with this.
As long as they get their kickback from arranging the finance, they won't really care.
I've done it, more than once and they more than understand the loops and hoops to jump through.


If the finance option comes with more money off/contribution than the haggling for cash, take the finance but try and arrange it so there's less overall interest, ie the smallest loan you can arrange (biggest deposit) for the shortest period (usually 12 months), as this will influence how big a payment the 56 days interest is to settle.

Obviously all these things can take up your time, so you have to put the effort in.
It will also take up the salesperson's time, though don't rush but be ready and noticeably eager to commit when it's right.

GrassSnakeUK

Before I say anything else, a massive thank you to all who have replied. There is some great advice and help offered!!!

I have been discussing a new plan with the Mrs, as she isn't over the moon with using a large lump of our savings.....
Borrow some of the money from a bank at the lowest APR possible and use the interest gained on the money in the savings as an "offset to the payments" for the loan.. tmThis allows us to have capital in the bank and asset in the car to sell if we absolutely had to .
Is this feasible?

Eg 
30k car.
10k cash deposit
4k trade in

Borrow 16k at 6.1%
48 months @ £ 400 
Interest paid £ 2139
Interest per year =  £534 

My savings are in accounts getting 5.2% so essentially borrowing at 0.9%

Does this make sense??

Goudy

That sounds like a plan.
Not everyone would be comfortable using all their savings, but how about some more.
Say a few more grand deposit, that will cut the interest down as you borrow less and might be able to drop the term to 36 months which will help with reducing the interest payable.

Shop around and see if you can get a lower rate loan.

Work on the trade in value, see where will give you the most, dealer or car buying service, the more you get, the less you borrow 

Haggle on the purchase price, anything off no matter how small means you borrow less.

As mentioned above, give the dealer a target rather than just asking for something.
They might not meet it but you give them something to work to