Help! Have I Been A Fool?!?

moxy_999

Hi

I have just returned from a day out to try find my partner a new car (hers was only worth a few hundred and had a big problem that needed a few hundred throwing at it)

We saw a seat ibiza for sale for £3495 (02 plate, 78000 miles) we liked so took it for a good test drive, we were pleased with it so i asked what the best deal was they could do, they said nothing as it had mot included and service... they said they'd give me 100 for old car (out of sympathy i think, but was happy with it) and a minimum deposit of 100. so effectively be paying 200 off the amount leaving 3295. After some talking and trying to haggle i got it so if we paid 200 deposit instead of 100 minimum they'd meet us lower, and also got a further 100 off so it works out at... 200 deposit and 100 for the old car and then it'll be £3000 on finance, and they'll throw in 6 months tax. so i was happy with this, we completed all the details, but they said 5% interest and said repayments would be roughly £77.50 per month.

great i said...

then when they had filled everything out said... oh dont forget theres a admin charge of £295!!! for taking the finance?!? is this usual? is that not what the interest is for? i feel out done! and also feel like the company has got their money back on me (apparently the cost can be spread over the term but then this will incur interest!) i asked for a cost per month once this was included and they said they cannot tell until the finance has been processed!?! they arent doing that till monday so i'm trying to find out where i stand etc...

ive put down a deposit of £70 so far, they wanted 200 but said not till we exchange, have i lost that now?

advice please

sam.

custardy

you would be far better organising your own loan/finance
that £295 is probably the salesmans commision for selling the finance package

Financial_Novice_2

You would be better arranging a bank loan rather than use car financing as these are notoriously expensive. It sounds a bit suspicious that they couldn't give you all the repayment details there and then. Calculate how much you will be paying in total including deposit and compare aginst the car price to see just how expensive it is. Also check the value of the car via Parkers.co.uk to see if is is fair value. I'm afraid I don't know if you have lost the deposit however you should be able to get out of the deal if you decide this as long as you do it within the cooling off period

Crabman

Hi Sam, I'll move this to the Motoring Board.

Losing the £70 deposit wouldn't be a tragedy if you could save more by financing the purchase more effectively. Have you actually signed the agreement?

Take a look at the article and as others have said, look at financing it elsewhere:

New Car Buying and Financing Cost Cutting Plan

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moxy_999

I've been taking the comments so far, thank you, hoping more people can give me advice.

i've looked at how much loans are going to cost, would the garage be easily convinced to drop the finance for cold hard cash? or do they make money from the finance?

Pew_Pew_Pew_Lasers!

Forget the £70, cancel anything you can, tell them to foxtrot oscar, and buy a car from somewhere else that values it's customers.

custardy

moxy_999 wrote: »

I've been taking the comments so far, thank you, hoping more people can give me advice.

i've looked at how much loans are going to cost, would the garage be easily convinced to drop the finance for cold hard cash? or do they make money from the finance?

they make money on the finance.however theres more cars out there than people with cash

iolanthe07

And I bet the 5% interest rate they quoted you was flat, not APR.

photome

I would be very surprised if that 5% is the true interest rate especially on such a small loan, as the best you can get on the high st is around 6.8% on a bigger loan than that.

I think you may be in for a nasty surprise when you go back to them on mon, if so, it may be best to walk away and either lose the £70 or fight for it back if you payed it before they told you about the "admin" fee.

In the meantime find out what a loan would cost you online.

You havent said which model it is, have alook here for an idea of value
http://www.wisebuyers.co.uk/

Sidmon

Even the biggest scrap heaps are worth £50 for scrap value so they aren't doing you a "favour" giving you £200 for your old car, they'll propbably get most of that back! What is it by the way?

katyw

Hi.

My OH and I are having a similar problem at the moment. We're in the process of buying a car and a 'friend of the family' has arranged the finance for us at a rate of 5%. I wanted to know if this was the APR or if it was on HP, as I have learnt the lesson the hard way. I am the one with the poor credit history, but my OH is quite good. (I know we are now viewed together as we have a joint mortgage) However, my OH doesn't quite understand the difference between the two, so I asked him to bring the paperwork home before he signed it. Sure enough, its on HP and the APR is actually 11%. On top of that there is an arrangement fee of £200 and an option to buy fee of £100. There's also a hidden gem in the small print, that if we terminate the agreement, not only will they collect the car, but also half of total loan agreement, being £6k in this case!

I don't like the idea of the car company still owning the car, and us paying nearly £1,900 interest on a £9k loan. Therefore after a quick search on a well known comparison site, I found several loans well under 7% apr. Thus saving us over half the interest, and we also own the car!

I would strongly recommend you do the same, as I believe the finance companies make their money on these hidden extras. I understand that £70 is a lot of money to some of us, but in the long run you'll be saving a lot more.

Hope this helps a little bit.