Car Finance - which way to go? - Alf
I'm looking at buying a new car for my GLW,(Citroen C3 Hdi 16v) I bought mine on Credit card using 0% interest and switching to a new deal every 6 months. I am not in a position to do the same for her purchase.

I was considering going for a regulated HP car loan over 5 yrs which gives you the option of returning the car when it has reached 50% depreciation. Then I would just get another new car and continue with the monthly payments. I'm not a 'must have a new car fanatic' It's just for the peace of mind aspect.

Cars are getting too clever fot their own good and once the guarantees run out any garage bill will be in the hundreds thats for sure. So I'm thinking this way you'll have trouble free motoring and no big bills.

I would welcome any comments and suggestions or experiences on other alternatives. I would never buy any car using cash as you have far less consumer protection.

Regards,

Alf
Car Finance - which way to go? - Fat Bald Man
Oh someone thinks that they have a knowledge of your statutory rights and The Consumer Credit Act 1974.
You buy a car lets say a Ford.You get a one year pan european warranty and then you take it back to any Ford main agent in Europe and then they fix it.For years two and three it is a back to dealer gurantee.If your dealer goes bust take it to another one.If it is an import you get one year only but with the money saved it costs £400 ish for a Focus to purchase but you will still be on the right side.
Your protection under the Act would only kick in in real life if the dealer had gone bust but there is a joint liability.You can get the joint liability by using your VISA card for the deposit and put a decent amount down and then if you pay cash you still have this joint protection under section 75 of the Act.
If you are buying an older car with no manufacturers warranty from a garage that could disapear this is a piece of legislation that is well worth knowing
To get the best deal find your new car and negotiate a price and state that you want to think about it but lean towards one of their finance deals.They will want to sell you finance as they get a kick back from the finance people and will give you a good deal.Then return and state that you want to pay cash or that you have financed it through your bank.They say that for cash its a different deal.You say the Act states that you cannot diferentiate between credit and cash>if they will not honour it just remind them that a simple phone call to the local Trading Standards would be made.They will not want any problems that may result in their credit licence taken away and will honour it.If not it is a criminal offence
Car Finance - which way to go? - DavidHM
FBM - s.99 (1) of the Consumer Credit Act states:

At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.

s.100 limits liability to

...unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.

www.leicester.gov.uk/departments/page.asp?pgid=3994 is an example of this in practice.

In practical terms, I wouldn't recommend it because it only really becomes viable when you're in negative equity, and if you've got a good deal on the car you shouldn't be in that situation except possibly very early on when you won't have paid 50%. I'm also unsure what such an arangement would do for your credit rating as you have no contract with the reference agencies.
Car Finance - which way to go? - DavidHM
Also, if you\'re buying new and want protection, why not change every three years and buy with a bank loan if the HP company won\'t match the APR.

If it\'s because of the payments, look at a PCP. I did a worked example on a Corsa (look at my \'deal of the month\' thread a couple of pages down) and taking into account depreciation and interest it worked out about £1000 more over three than five years, but that could be offset at least in part by things such as free insurance, not needing the cam belt, etc., replaced.

Alliance and Leicster ( www.smartermotoring.com) do a particularly good deal. You can finance as much as you like of the purchase price, with 40% of the loan still outstanding after three years. I don\'t know what kind of car you\'re thinking of for SWMBO but £7k can be had for £144.86 per month that way, with £2800 still outstanding. The APR is 6.9% and even if you don\'t go for it in a big way, you can still use that as a bargaining chip to reduce the APR the dealer is charging you.
Car Finance - which way to go? - DavidHM
www.smartermotoring.com should be a link this time.

Mark?

[I\'ve also corrected it in your main note, although I can\'t remove this one since it has been replied to.. M.]
Car Finance - which way to go? - Alf
Thanks all, David, I'm looking to buy a C3 Hdi 16v SX £8995 OTR.
BTW who is Mark?

Regards,

Alf


Car Finance - which way to go? - DavidHM
Mark is the moderator who does things like that (inserting a link) and stops us from being libellous or offensive.

£8995 is a very good deal. A&L wants £186 per month over three years on a Car Purchase Plan (£3600 outstanding) or £177 over five (£0 outstanding).

That's with no deposit, of course. I'm not sure if a Car Purchase Plan counts is a regulated purpose loan under the Consumer Credit Act, but in any case it would take a while before you've handed over 50% of the total price. If, rather than pay the £3600 in three years, you'd prefer to keep the car A&L will, IIRC, refinance the £3600 for you at the same monthly payment (not sure about the interest rate though).

Of course, if you do a big mileage (20k+ per year) a classic HP deal might be more appropriate because you will be able to hand back sooner and won't get a full three year warranty anyway.
Car Finance - which way to go? - Alf
David, what I'm thinking of doing is:

Buy the car using A&L with no deposit. and borrow £4500 over 4 years with the other £4500 on deferment.
The car may be worth £3500 by then (rough guess)
At the 4 yr pt. sell the car to fund the deferment and then take out a new loan with them for a new car.

£8995(black) is good espec. from my local dealer. Just flash up the internet prices and ask them if you should give your £8995 to the company on the internet or whether they would prefer it?
Its nice after all these years to finally have the ball in your court!

Its just which way to go with the finance is what is torturing me!

Regards,

Alf
Car Finance - which way to go? - DavidHM
Definitely don't do it that way as you'll be looked at much less favourably in terms of your credit application (two loans so close together, not good) and you'll pay a higher rate of interest (11.9% instead of 6.9%), at least on the deferred half.

If you did it all that way, your total payment with A&L would only be £2 a month lower than with a normal loan. Essentially you'd be giving away the deferred amount (£1350) for nothing. My position would be to use the deal with A&L as a bargaining chip for a three year PCP with the dealer, or just put it all on one A&L deal if you can't afford the payments on a straightforward loan/HP.
Car Finance - which way to go? - MarkyMarkD
Definitely don't do it that way as you'll be looked at
much less favourably in terms of your credit application (two loans
so close together, not good) and you'll pay a higher rate
of interest (11.9% instead of 6.9%), at least on the deferred
half.
If you did it all that way, your total payment with
A&L would only be £2 a month lower than with a
normal loan. Essentially you'd be giving away the deferred amount
(£1350) for nothing. My position would be to use the
deal with A&L as a bargaining chip for a three year
PCP with the dealer, or just put it all on one
A&L deal if you can't afford the payments on a straightforward
loan/HP.

David, where do you get the strange idea that the interest rate on the deferred element of an A&L Car Purchase Plan differs from the rate on the standard element. IT DOESN'T. The APR is the APR and it is the same for the CPP product as the standard Personal Loan product.

And two loans four years apart is scarcely a bad indicator of your credit status - how many people replace their car every two or three years and take out new loans each time? MANY!

On a £9,000 loan with a £2,700 balloon payment after 4 years, the CPP repayments are £49 a month cheaper. £2 a month lower ... NO!

I think you just misread what was being proposed.
Car Finance - which way to go? - DavidHM
The APR is the same either way. However, I think Alf is proposing two loans of £4500 each, thus halving the deferred amount at the end. This increases the APR of each loan to 11.9%; you can shop around on the classic loan but the CPP is unique as far as I can tell.

Increasing the APR to 11.9% does bring the total repayments (half classic; half deferred) to within £2 of the all classic scheme.

Two loans 4 years apart would be no problem; to do it this way would either require paying a higher rate of interest (i.e., two applications at once through A&L) or two applications no more than a few days apart.
 

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