Finance: what's your thoughts on this?

There may be an early repayment penalty.

My mate bought a car on finance, but they couldn't do him 0%, so they knocked off what the total interest would amount to on top off what he'd already haggled. Then he settled the finance straight away :-)

AIUI they can vary the finance rate, but I believe that legally they cannot sell you a car for one ticket price for cash and another ticket price if you want it on finance.

I'm sure it happens but that's my understanding of it - I might be wrong.

Paul

AIUI there is a legally mandated cooling off period for all loans and insurance.

I've got bigger discounts on white goods by agreeing to extended warranties and then cancelling as soon as I get home. :)

Unless it's changed you've been able to do this for a long time, the likes of Dixons, Comet etc will offer a discount, but when you look at the receipt the discount is usually applied on the goods rather than the warranty.

Paul

I believe that's because there's some legal technicality that prevents them from discounting a warranty (or 'service agreement' as they like to call them.....)

The best tactic (believe me, I was a store manager for them for 12 months) is to get a discount for taking the warranty, but ask to pay it by direct debit. If you do this, but waver a bit just as you're about to hand over the cash, they sales monkey will offer a further discount equivalent to the deposit on the warranty.

Give it a week, then cancel the DD.

You need to get yourself off to

You can buy a car for cash if you like, but as you say - sometimes the sales person will offer a small discount if you take finance from them. That is because they get paid a referral fee by the finance company. They can sell a car at whatever price they like to any customer but will always quote a figure below a recommended price for a new car to make you think you are getting one over on them. Once you learn sales people lie to get a sale and to get paid, you will look at them differently. You also have to watch out for further sales persons commissions such as "arrangement fee" - so they get a bung from the finance company and then charge you for setting up the deal. A figure you will pay interest on spread over the agreement term. Then you have late payment fees, cancellation fees and the best joke of all - the acceptance fee and completion fee.

So you see a car and ask to buy it on finance. The sales person says OK and gets £200 off the loan company, then you pay a further £150 to the sales person once accepted. Then you pay up to half of the car cost back in interest, then pay a completion fee of say £150. It's a total rip off. The other con is loan protection payment insurance. If you take a loan for a £15,000 car over 3 years you might find yourself paying back £25,000 or more. You're better setting up your own loan and saving on high interest and hidden charges etc.

I would also advise against going to loan company showrooms made to look like the product on offer is a car! It isn't, it's finance packages. A few car supermarkets charge horrific interest amounts and hidden charges, they are best avoided. You will spot them a mile off as they only advertise cars as "£25 or £35 a week" - no costs are given and no rates displayed.

If you can, ask the garage which finance company they use - then ask for a copy of an agreement to take away and read - you might get charged fees if you settle early, and you have paid hundreds extra in charges.

Choose loans carefully.

Not sure you're right about this.

This has always been the case, much of the motor trade makes as much (if not more) from car finance as they do from selling cars.

Because they do usually add the interest on up front and they won't give you it all back. It still *could* work I suppose.

This is more-or-less the same as this old trick which (if you can get away with it) is a lot less hassle:

You go to the dealer pleading poverty and saying you have to get a big discount on the car because you have no money. Not only that, you're so poor you have to borrow as near as possible the full value of the car on finance over 5 years.

Haggle like mad, repeating how little money you have and how you need to borrow over five years. The dealer will think "Okay, I'll give him a big discount on the car to make him buy but then stitch him up with a punitive finance deal over 5 years: £££££££££££!!!!"

Once you get the discount you want, order the car, get the loan approved but tell them you'll sign the HP agreement when you pick the car up. On the day you collect the car, bring a banker's draft for the full cost and tell them you've come into some money so don't need the finance!

Of course, in 90% of cases the dealer will then try and reverse out of the deal. It all depends on how much front you have and how big a fuss you're prepared to make in the dealer's!

Great idea, *if* there aren't any penalties for doing do, and if the car wasn't still massively overpriced even after all the "discounts".