Car Finance Vs Bank Finance on a Car?

savememoneyplease

Hi guys, i'm helping my daughter get a second hand car as her first car. Looking at the car garages, they're charging around 15% APR, but a bank loan for the same amount would be around 6%. What am I missing? Do they just assume people don't bother getting their own finance or are there other factors i'm not aware of?

bluelad1927

I've always assumed that car finance is easier to obtain than a personal loan and therefore more expensive as garages are more dependent on people being able to obtain finance. 

I've had bank loans for vehicles for as long as I can remember on the basis that they are considerably cheaper

DullGreyGuy

savememoneyplease said:

Hi guys, i'm helping my daughter get a second hand car as her first car. Looking at the car garages, they're charging around 15% APR, but a bank loan for the same amount would be around 6%. What am I missing? Do they just assume people don't bother getting their own finance or are there other factors i'm not aware of?

Because the person gets turned down for the 6% personal loan whereas the finance secured against the vehicle is accepted. 

You'll find more favourable APRs on new cars but then there is more margin involved so its effectively cross funded.