Finance Guide
Dealer Finance
APRs vary and dealers earn commission on finance. Even with the base rate at 5.75%, the true APR could be 25% or more, especially if you are buying from a company which specialises in financing purchases by people with poor credit records where the rate can be as high as 50% APR.
All you have to do is follow the golden rule of comparing your total outlay on the deal with your total outlay on any other deal. Please be aware, however, that you will not own the car until the last payment has been made. You may find part way through the contract that you're in a position to clear the debt; it is worthwhile contacting the finance company and asking them for a settlement figure because this could be far less than the amount you would pay by making all the payments. Also, whatever you do, don't get caught out by the financed debt insurance trick. If you insure your ability to pay off the debt, you may be charged a one-off four-figure premium which is itself financed at a near-criminal rate of interest.
If you buy a car on finance, the law says that the supplier (i.e. the dealer) and the finance house are jointly liable for any defects. If the car proves to be faulty and you reject it under the Sale and Supply of Goods Act 1994, and the supplier accepts the rejection, don't take any heavy-handed treatment from the finance house. However, until the rejection is accepted by the supplier, you must keep up the payments or you could find yourself in serious financial trouble.
One final point: if you buy on finance, pay off half the total finance cost (including any deposit you have made or been allowed on a part exchange), then discover that you owe more than the car is worth, you are legally entitled to return it to the finance house and walk away debt-free. This can make straight finance at a sensible APR a much better deal than personal contract purchase which ties you into a fixed contract you can't get out of.