Best finance for new car?

ipri

Hi....I'm looking at changing to another car...I normally accept the dealers financial package,but wonder if I'd be better off looking elsewhere for this?I presume If I did this,I just take a cheque into the dealer to purchase the car?

Any info appreciated, Ian

Shaztastic

I would steer well clear of dealer financing as it is normally an expensive way to buy a car (unless they have a special offer on e.g. 0% finance of course). Also be aware of the interest rate they quote you and make sure it is an APR . Last time I bought a car they quoted me a low rate but by the time I actually converted it to an APR it was much higher than the APR available on a loan from one of the banks.

Instead I would find the cheapest loan I can get from a bank etc (also means the loan is not secured on the car so if for some reason you miss a payment they don't have a right to take the car). Alternatively if you can pay the money off within a year you might be able to make use of a credit card with 0% on purchases.

If you do get the money from somewhere else then you could pay by personal cheque but you would have to wait a few days for the cheque to clear before you could drive the car away. Alternative would be a banker's draft (might have to pay a few to arrange it though).

I actually bought both my last 2 cars using my debit card which is probably the easiest way if the loan money is in your current account.

standupguy

If you go the Dealer Finance route you are protected under section 75 of the Consumer Credit Act where the Finance Company has joint liability with the dealer for the quality of the goods - so if things go wrong .....

But, if it is Hire Purchase the car is not yours until you make the final payment and the Finance company has rights to repossess under certain conditions.

Also you will find you have to pay a number of fees, could be named as acceptance fee, vehicle protection fee, option to purchase fee, arrangement fee etc - - different companies use different terms but it is the same principle which is charging fees to enhance their profits - you may find you are paying £300 extra - some will spread these fees over the term of the agreement so you also pay interest charges on the fees.

If you go the loan route with a direct lender there is usually no fees to pay and you own the car from day 1.

Whichever route the APR is what is important not the "flat rate" that dealers may and try and confuse with - the lower the APR the cheaper the loan

If it is a new car - the section 75 protection is not as important as you will get a 3 year warranty - so if it were me I would go with a loan from a direct lender every time

ipri

thanks..just to be clear..."A direct lender"....do you mean the car dealership finance co? ta ian

standupguy

No - I mean a personal loan from a bank or Building Society at a low APR

AdrianHi

What value and is it new / nearly new?
Do you have a mortgage and if so what rate is it?
I ask because in certain circumstances and for certain cars leasing makes sense and in other cases "balanced lease purchase" also can make sense. It depends on what it costs you to sink a load of cash into a car when you might be better off clearing other debts like a mortgage.
Lombard Direct are frequently one of the best for loan and balanced leased purchase deals with 6.9% APR.
(If someone quotes a flat rate, double it and you are very close to the APR).
It is rare that the dealers finance works out best, even if it is 0%. For example Vauxhall dealers are offering 0% finance with 20% deposit over 4 years on some models, seems like a no brainer.... but.... leasing is much cheaper because the lease companies get big discounts and pass the saving on to customers and you don't have to pay for the whole value of the care. This can work out better than buying nearly new.