Car finance (option to purchase)

adviceforsta

Hi, first time posting sorry if it’s long winded.

in August I had a car on finance and needed rid of it and chose to part ex. I used trade centre… wish I hadn’t but it was desperate times. My grandfather was on end of life care at home, I was helping to care for him but I’m also a mum. I was taking my children to school and making the 40 minute drive every morning to get there hence why I needed a car. Anyway my car lit up like Blackpool illuminations and I was advised to get rid of it. 

I did, part exed and purchased the cheapest car they had but also put a deposit down. During this time emotions were running very high, my grandad was diagnosed with cancer only two weeks before and it was too progressive, unfortunately he passed four weeks after his diagnosis .

I literally rushed to source another car so I could be there for him and my grandmother. They both raised me and I wanted to be by their side. 

I know it’s a big no no but did not inspect all of the paper work. Now things have settled slightly, I have been focusing on myself a little more, try and prep for life in general.

I have noticed on the paper work, option to buy fee £1.00 but the interest £2,666.80. I have never heard of this before and it seems extremely expensive on top of my the cost of the car.

here is the breakdown,

Total Cash Price incl VAT: £8,848.00

Total Deposit: £2,921.60

You will have to pay 60 instalments of £143.22. An Option to Purchase Fee of £1.00 will be payable at the same time as the final instalment. If you do not exercise your option to purchase the Vehicle, then you do not have to pay the Option to Purchase Fee.

Consisting of:

Cash £4,000.00

Part Ex Allowance -£1,078.40

Amount of Credit: £5,926.40

Duration of Agreement: 60 months 

Total charge for credit: £2,667.80

Each instalment is due and payable on the same day each consecutive month commencing one month from the date of this Agreement.

months

Consisting of:

Option to purchase fee £1.00

The interest has been calculated at the fixed monthly rate of 1.40% on the balance of credit that is expected to be outstanding for each month of the duration of the Agreement upon the assumption that all the instalments are paid in full and on time. This results in an effective annual rate of 16.90%

Interest £2,666.80

Total Amount Payable: £11,515.80

APR:16.90%

Penguin_

You have to pay interest on the amount you are borrowing from the finance provider & you do this through your monthly payments.

DE_612183

you bought a car for £8,800 - you paid a deposit of £2900 ( presume that's the part ex )

on the balance you pay an extra £2600 in interest

The £1 option to buy is a nominal amount at the end of the deal.

Does it say what your apr is?

molerat

DE_612183 said:
Does it say what your apr is?

The interest has been calculated at the fixed monthly rate of 1.40% on the balance of credit that is expected to be outstanding for each month of the duration of the Agreement upon the assumption that all the instalments are paid in full and on time. This results in an effective annual rate of 16.90%

Not quite robbery but not cheap.  Buying a car over 5 years is always going to be expensive though.

retiredbanker1

The Option to buy is used commonly in the motor trade.

FedupBrit

Check the finance agreement for the option to get out once 50% of the total has been paid if you get into trouble. It should state it's under the consumer credit act. A family member's contract stated this at the start and at the very end in its own paragraph.

ManyWays

With an interest rate that high, it is very likely there was quite a lot of commission paid by the finance lender to the trade centre, so start the process of trying to get a refund by using this: https://www.moneysavingexpert.com/reclaim/car-finance-undeclared-commission/. This is unlikely to pay out before 20-26 and you may get nothing, but worth a go.