I like what Avant did there, I agree entirely with his comments too.
I would like to clarify though that whilst a personal loan can be on many occasions a cheaper way of borrowing to buy outright this is not always suited to customer needs.
As an FCA authorised broker we know the different options available and can explain the pro's and con's.
Not everyone wants to take a loan for £20k+, thus a PCP, PCH or HP with a balloon is a better option.
Discount wise, cash isn't king anymore, volume is. Jo(anna) bloggs coming in off the street will command a lesser discount buying only 1 car compared to a broker like us doing a fair few per month. Plus, as was rightly pointed out, there can be background money coming from the manufacturer/dealer/funder to drop prices further.
Of course there are less savoury brokers out there, same with estate agents/lawyers/banks... you name it, but there are also some that are very good and focus on the customer.
I'm here, as Avant knows, to give free advise. Only he knows by virtue of my email address my company, and it shall remain that way so people can rest assured what I say has no agenda at all other than to impart free balanced and qualified advice from an FCA regulated industry insider.
Someone making blanket statements that a personal loan is always cheaper and engaging a broker is only adding to costs clearly doesn't understand what we can do and how we do it to save customers time, effort, stress and money plus give them more choice from a far more independent standing than a local dealer pushing to sell a certain product on a certain car neither of which may be suitable.
All the best,
TheBroker
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Someone making blanket statements that a personal loan is always cheaper and engaging a broker is only adding to costs clearly doesn't understand what we can do and how we do it to save customers time, effort, stress and money plus give them more choice from a far more independent standing than a local dealer pushing to sell a certain product on a certain car neither of which may be suitable.
My point was that a broker needs paying for his work, (no disrespect to you personally)
For many people a personal loan buying a used car will usually be cheaper, but PCP's and by other deals where the ownership of the vehicle is not directly with the customer are debt and a millstone. Once a broker has sold his product will he help out if jo(anna) loses their job through unfortunate circumstances and can't pay....
Answers on a postage stamp...
While i am sure that "The Broker " may well be a perfectly nice chap, he is doing it to make a living.
The current mania for buying cars on credit of various sorts is now such a danger that HMG is looking at it to prevent another "credit bubble" and yes look at the figures.
Edited by oldroverboy. on 25/04/2017 at 07:53
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Over-extending personal credit was a major factor in the 2008 global banking crisis that we're all still suffering from.
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Someone making blanket statements that a personal loan is always cheaper and engaging a broker is only adding to costs clearly doesn't understand what we can do and how we do it to save customers time, effort, stress and money plus give them more choice from a far more independent standing than a local dealer pushing to sell a certain product on a certain car neither of which may be suitable.
My point was that a broker needs paying for his work, (no disrespect to you personally). Correct and we usually get paid a referral fee which can often be irrelevant of the funding option. If tied to the funding, it will still work out cheaper than if the Bloggs family come in off the street for the same funding option (economies of scale/buying power being on our side)
For many people a personal loan buying a used car will usually be cheaper, but PCP's and by other deals where the ownership of the vehicle is not directly with the customer are debt and a millstone. Once a broker has sold his product will he help out if jo(anna) loses their job through unfortunate circumstances and can't pay.... If a customer wants a new car they may not be able to get a loan for the full amount, so the funding options we have give them choice, rather than being stuck with buying a used vehicle they don't necessarily want. As reposnsible FCA authorised brokers, we always ensure our customers can truely afford what they want and are aware of all possible negatives. We have to do this otherwise it could bite us in the long run as well as us just being responsible.
Answers on a postage stamp... - We had a customer who had issues after a serious riding accident left her temporarily (6+ months) unable to drive. We worked on her behalf to get the matter sorted out to her satisfaction so yes a broker will work for you (if they are good at what they do), as this is how we get positive referrals
While i am sure that "The Broker " may well be a perfectly nice chap, he is doing it to make a living. Fair comment, but we ensure we are cheaper than doing it yourself, plus there is the time element for our busier customers whereby we are saving them many hours/days sourcing the right deal, sourcing the car(s) etc.
The current mania for buying cars on credit of various sorts is now such a danger that HMG is looking at it to prevent another "credit bubble" and yes look at the figures. I am aware of this also and as per earlier comment we ensure customer affordabiity.
Regards,
The Broker
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No offence, and I respect your advice on here TheBroker but a personal loan is always the cheapest way to finance a car outside of savings. Regarding a PCP where there's a balloon payment at the end of say 3yrs why not simply take a personal loan over 5yrs at a much lower interest rate then settle the outstanding balance after 3yrs if you wish to do so? It'll save on interest and you have option of keeping the car or selling privately without a time clock ticking away. It only makes sense when a manufacturer is subsising with a cheap rate.
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"It only makes sense when a manufacturer is subsidising with a cheap rate."
Indeed, SLO, and that's why a lot of us have used PCPs. From the point of view of Arthur Punter (and his wife Jo, nee Bloggs), all that matters is how much the monthly payments are. If at the end of the PCP he PXs his car for a new one, he won't actually have to pay the balloon payment that he can't afford. Rightly or wrongly, that's the way a lot of people make their calculations.
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"It only makes sense when a manufacturer is subsidising with a cheap rate."
Indeed, SLO, and that's why a lot of us have used PCPs. From the point of view of Arthur Punter (and his wife Jo, nee Bloggs), all that matters is how much the monthly payments are. If at the end of the PCP he PXs his car for a new one, he won't actually have to pay the balloon payment that he can't afford. Rightly or wrongly, that's the way a lot of people make their calculations.
Agree totally Avant. It always amazes me that people don't shop around or negotiate on finance as well as the purchase price. They focus only on the monthly payment or the headline figures yet end up paying hundreds if not more via higher interest rates over the full term.
Point on the PCP v personal loan is that after 3yrs you have a balloon to pay or hand the car back but a 5yr loan would be exactly the same with an outstanding balance you can either continue to repay or you can settle early by selling the car or extending the loan again to buy another. You will however be getting a much lower APR than on most PCP deals.
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"It only makes sense when a manufacturer is subsidising with a cheap rate."
Indeed, SLO, and that's why a lot of us have used PCPs. From the point of view of Arthur Punter (and his wife Jo, nee Bloggs), all that matters is how much the monthly payments are. If at the end of the PCP he PXs his car for a new one, he won't actually have to pay the balloon payment that he can't afford. Rightly or wrongly, that's the way a lot of people make their calculations.
Precisely my thinking Avant. I chose lease as opposed to PCP because I will probably change vehicle type and manufacturer in 3 years time. I also calculated that my monthly lease payments including the initial rental is actually cheaper than 3 years depreciation on the vehicle. On that basis I am ahead of the game for outright purchase and paying for a decent MFV balloon payment. The main attraction for the dealer/supplier is they will have a nicely kept and very low mileage example to have on the forecourt. For this they can ask and probably get top book for it. I think the way that dealers and manufacturers combine to move their stock will drive many down this particular avenue. It does make a lot of financial sense for most. Cheers Concrete
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Not always the case SLO if you look at whole life cost as if we can get a stronger discount this can on many occasions off set the interest charged. For example we get up to 38% discount on Vauxhalls. That can easily cover the interest, against full retail price of a cash purchase or low int rate personal loan.
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we can get a stronger discount this can on many occasions off set the interest charged. For example we get up to 38% discount on Vauxhalls.
WOW!........ 38% off a Vehicle that loses 40-50% of its value the moment it is driven off the forecourt.
Edited by oldroverboy. on 25/04/2017 at 13:22
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It's well known vehicles lose money the moment it's taken off the forecourt. But by carving 38% off before you turn the key that means the depreciation against full retail value is far less painful
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I recently bought a new Corsa 1.4 SRi on behalf of my sister in law with over £3,000 off list price without much effort and I managed to get £1,300 for her knackered Fiat Punto that was worth nothing like. But this discount wasn't dependent on her taking the dealer finance which was substantially dearer than the personal loan deals I pointed her towards. I did use the trick of letting the dealer believe there was a nice juicy finance commission in it for him while negotiating but at the end she financed it herself.
Vauxhall routinely give 30-40% discounts and a small broker really doesn't do anything that an informed and determined Punter couldn't. I totally accept however that the bulk of buyers aren't keen on haggling and a good broker like yourself is a sensible option. However, there's no need to whittle a big chunk of that saving off by not shopping around for finance, I'm sure you'd still take their money even without the finance commission.
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Our ethos, which makes our customers feel comfortable is that we don't care how they find a vehicle as long as they are working with us. They then know they get truely impartial advice. This includes stating personal loan rates are cheaper but also pointing out the extra discounts due to finance offers etc do they can calculate the whole cost savings, and if they cannot get a personal loan for £xx,xxx they have options.
We come across many 'informed' customers who think they know it all and we are happy for them to ignore our advice etc, but most don't when we show it to them in black and white that money can be saved going against what they think they know is best.
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