And here's why you shouldn't take dealer finance

Hades

Hades

Hades

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I'm in the market for a new car and for the first time in my life I'll be paying for some of it on finance.

Amount and term: £10k over 3 years

Dealer quote: £410 per month, 19% APR <-- major "WTF!" moment from me in the showroom :D
High street bank: £308 per month, 7.1% APR

When I pointed out the dealer simply wasn't anywhere in the ballpark for competitiveness they explained that the extra cost is to cover the "free" 2 year service plan which is included.

The two year service plan from VW is £379 and individual dealers are at liberty to sell it at a discount. So I'm currently phoning around dealers to get it cheaper :) All of this is fairly obvious stuff of course but it highlights just how massively silly it is to go with dealer finance.
 
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So, they wanted to charge you another £1229 a year, to cover the £379 service plan.

Wait a minute... something fishy is going on here...
 
Hades said:
I'm in the market for a new car and for the first time in my life I'll be paying for some of it on finance.
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Given your findings why are you still looking to pay for it on some sort of finance rather than just get a loan?

The only point of taking finance is when they can offer you a better deal then you can get from a bank for a loan.
 
Yep. Well sort of. The issue is that their APR is not competitive and they just used the "free" service plan as a reason why it's more expensive than elsewhere. The root of the issue isn't the service plan, it's the huge profit they make on the loan.

Something else I noticed from the two dealers I have had finance discussion with is that they are reluctant to show the actual APR unless specifically asked. The first dealer wrote everything down and didn't include the APR until I asked for it. The second dealer had the APR on a second page which I then turned over.
 
Syla5 said:
Given your findings why are you still looking to pay for it on some sort of finance rather than just get a loan?

The only point of taking finance is when they can offer you a better deal then you can get from a bank for a loan.
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That's exactly what I'm doing. I'll be getting a bank loan for it and then accelerating the payments to clear it as soon as possible (I hate buying debt and always clear asap).
 
Hades said:
Something else I noticed from the two dealers I have had finance discussion with is that they are reluctant to show the actual APR unless specifically asked. The first dealer wrote everything down and didn't include the APR until I asked for it. The second dealer had the APR on a second page which I then turned over.
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Let me guess, they happily show you the flat rate, right?
 
Yes showed me just about everything except the APR. It wasn't actually hidden from me and was shown when asked but wasn't highlighted in the same way that the monthly figure was. Which I still consider dubious practice. I'm sure most dealers are like this so it's not a complaint at any specific dealership or even any particular brand.

I was almost certainly not going to take dealer finance even when I asked for the quote but I did it simply to see if they could be competitive. At least it got a laugh from me :)

I'm madly trying to get the 2 year service plan cost down too which I was told is set by VW and they have no influence over (which is contrary to the statement on the VW website).
 
Just for those who don't know, dealers get commission on finance and the higher the APR the higher the percentage the dealer gets.

Black horse for example the dealer can actually forfeit any commission or even pay black horse themselves for a lower finance rate. I think I coiled get finance through my dad at 6% Apr at the moment without any subsidy paid and he gets 0 commission for example.
 
Hades said:
I'm in the market for a new car and for the first time in my life I'll be paying for some of it on finance.

Amount and term: £10k over 3 years

Dealer quote: £410 per month, 19% APR <-- major "WTF!" moment from me in the showroom :D
High street bank: £308 per month, 7.1% APR

When I pointed out the dealer simply wasn't anywhere in the ballpark for competitiveness they explained that the extra cost is to cover the "free" 2 year service plan which is included.

The two year service plan from VW is £379 and individual dealers are at liberty to sell it at a discount. So I'm currently phoning around dealers to get it cheaper :) All of this is fairly obvious stuff of course but it highlights just how massively silly it is to go with dealer finance.
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lol Not free then is it.

The things some people say :rolleyes:
 
Think they were trying to pull the wool over your eyes big time!

I always find dealer finance deals can be had for very similar if not slightly better than the bank rates.

Remember banks may advertise a 7.1% APR but this is variable...have you actually applied and been accepted at this level? 99% of the time the rate you get is usually higher (depending on the value of loan of course!)
 
GinG said:
Remember banks may advertise a 7.1% APR but this is variable...have you actually applied and been accepted at this level? 99% of the time the rate you get is usually higher (depending on the value of loan of course!)
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IIRC the advertised rate must be achievable for 51% of the expected applicants
 
Bad dealer. We bought a VW Golf from the main dealer earlier this year and got 6.5% APR and 2 years servicing.
 
I've just got the wife a Fiat 500 twin air. Don't usually agree with buying new cars but residuals look strong on the 500 compared to most new cars. Probably would have been better off going nearly new but the plan is to keep it for a number of years so not too fussed. 1.3% Apr
 
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Hades said:
I'm madly trying to get the 2 year service plan cost down too which I was told is set by VW and they have no influence over (which is contrary to the statement on the VW website).
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Dealers have discretion to discount the Service Plan cost, for example the Dealer I bought my VW from wanted £379, and the dealer closest to me charged £369. Only a tenner difference, but a tenner is a tenner..they also chuck in free MOTs for the term of the service plan but I don't know whether that is standard at every dealership or just Heritage VAG. I thought £369 was pretty reasonable to begin with tbh.

I don't know about dealer/bank car finance as I've not used it.
 
I usually use my Barclaycard for Bike/Car purchases @ 6.9% fixed until paid off:D

Works a treat and cheap enough for me.

Buy it on one Credit Card then transfer to your Barclaycard done - miss a payment and game over mind DD setup a must!
 
If you want to play rate tart bingo.. Barclaycard Platinum are offering 23 months at 0% - 3% fee to transfer. Tesco are offering 22 months at 0% - 2.8% (IIRC) to transfer.

There's very easy money out there if people are prepared to take a few minutes to actually look for it.
 
Skynet-T800 said:
I usually use my Barclaycard for Bike/Car purchases @ 6.9% fixed until paid off:D

Works a treat and cheap enough for me.

Buy it on one Credit Card then transfer to your Barclaycard done - miss a payment and game over mind DD setup a must!
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Your Barclaycard has more than a 10 grand limit?

Plus many dealers will also charge you a CC handling fee...

What really matters is the cost to change. The figures can be juggled whatever way they want, increase/decrease your p/x if you have one etc.

Partially financed our Hyundai, the rate was 4% better than the bank with the option of overpaying it also.
 
Skynet-T800 said:
I usually use my Barclaycard for Bike/Car purchases @ 6.9% fixed until paid off:D

Works a treat and cheap enough for me.
Click to expand...

How do you get around the fact that most dealers wont let you pay with CC without a large loading and that in order to buy a car AND then balance transfer it to a Barclaycard you'd need massive credit limits on both cards?
 
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