Car Finance

Honest John Back Room » Legal matters
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Sun 26 Feb 2017 09:55
Car Finance - RichH400
I recently went to a large Car Supermarket with the intention of buying a previously identified car. All went well until we came to look at finance.

To cut a long strory short, I had arranged external finance which was far cheaper than the Supermarket could offer. The Supermarket salesman told me it was either a cash purchase or their finance deal and they they would not accept third party finance packages. I was surprised by this approach and walked away given it would work out over £1500 more than I had arranged. Is their approach legal? My very basic understanding is that under FCA rules, they should accept all properly sourced finance packages? Any advice appreciated!
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Sun 26 Feb 2017 10:25
Car Finance - SLO76
The cheapest way to finance your purchase is via a personal loan from one of the high street or supermarket banks who offer loans above £7.5k from as low as 2.9% APR. They'll pay the money into your account so it'll be effectively a cash purchase as far as the dealer is concerned plus you have the added bonus of being able to sell the car on privately without settling the loan if you decide you can't afford it or don't like it. You can't do this with car finance plus your finance will be a higher APR no doubt.

I would have thought the dealer would want to match the offer you've had from the other finance co, we certainly did even if we made zero commission. If you don't want to take a personal loan for some reason then ask them to match the rate you've been offered by the other firm. If the salesperson says an immediate no then ask to speak to the manager. It would be daft for them to lose a sale for this and it's likely the salespeople is fixated on the finance commission he/she would make on the origional deal.

Edited by SLO76 on 26/02/2017 at 10:32

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Sun 26 Feb 2017 10:58
Car Finance - RT

Isn't the finance one of the ways big car supermarkets make their money, through their commission, often quoting a higher price for cash ?

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Sun 26 Feb 2017 11:11
Car Finance - SLO76
They're not allowed to quote a higher price for cash but you may find dealers are more likely to offer a discount if they believe there's a nice juicy finance commission involved so it makes sense to allow them to quote one before asking for a discount then once you have said discount in writing go source your own finance or lift money you already have to pay for the motor, they can't refuse to honour the price based on how you pay.

Always amazes me that people will shop around for the car and barter hard to get a discount then throw every penny they're saved and more by not shopping around for the finance.

My sister in law did this a few weeks ago. Came to me to help find a new car and I negotiated a deal on a new unregistered Vauxhall Corsa 1.4 SRi, £3,000 off list price and £1,300 for her knackered Fiat Punto in part ex. A fantastic deal but she wouldn't listen to me on financing it and threw away at least £1,500 by going back to the small local finance firm they always use with a double figure APR instead of the sub 3% rate she could have had... utter madness.
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Sun 26 Feb 2017 12:00
Car Finance - Falkirk Bairn

Large car supermerkets attract business with 6/12 month day rent cars for say £7,500 off the list price of say £25K.

Their APR might be say 13%

PCP

It would be cheaper to walk in a BMW showroom and a brand new car on BMW Finance at say 5% than a 2nd hand day rent car on an APR of 13%

Fortunately for many people Money management, APR, shopping around is a black art that they do not understand!

Neighbour bought a 320d estate 4wd, brand new @ £420/mth over 4 yrs with £420 deposit. The 2nd hand route was more per month with a £2,500 up front.

Edited by Falkirk Bairn on 26/02/2017 at 12:07

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Mon 27 Feb 2017 14:33
Car Finance - TheBroker

Car Supermarkets are, put simply, shark infested waters. As a young lad I went to one, but had the wherewithall to walk away when they tried it on. Whilst it may feel like your going to Tescos to pick a new car, you are certainly not getting good value for money or a good quality product on many occasions.

With regards to their refusal to accept your 3rd party finance, I don't find this surprising as the salesman on peanuts of a wage will be wanting to earn big commission off the finance. That does not make it fair tough and I'm sure the FC would show more than a passing interest in such activities.

We, a finance broker, offer finance to customers who either source their own cars or want us to do it for them. Our take on it is, as long as they are happy to do business with us, we're happy.

The point about personal loans vs. car finance is very accurate, however I would like to qualify this a little. At the low end, there is no arguning with this, however higher up in value there are different things that come into play, especially on new cars where our suppliers, the manufacturer and even the funder will chip in to the car to bring the value down to make their higher APR less of an issue when you work it all out (i.e. How much it costs over 3 years). This is not a ploy in any way, nor is the price of the car artificially increased, it is just that we can include a greated discount on a finance deal compared to a cash sale. (Cash is no longer King).

My advice, determine the monthly budget and then look at how much you could borrow as a personal loan, then look at used cars up to a value with the budget fro your finance company, but also look at new as it is not uncommon that you can contract hire a new car for less than a used one.

If you want any more help or advice specific to you, ask admin (Avant) to put you in touch with me directly and I am happy to give you as much free advice and help as you need.

Good Luck,

TheBroker

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Tue 28 Feb 2017 19:44
Car Finance - Palcouk

You either pay cash or take our their finance product. They are not required or obligated to except finance via a third party.

Its the same with an dealership

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Tue 28 Feb 2017 20:23
Car Finance - RT

You either pay cash or take our their finance product. They are not required or obligated to except finance via a third party.

Its the same with an dealership

But most dealers will accept third-party finance even if there's no obligation - just as some dealers sell cars even though there's no obligation.

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Wed 1 Mar 2017 11:21
Car Finance - jc2

The advice in the past was to tell the dealer that you want finance and when they come up with a "final" price,pay cash.

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