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I thought it was Illegal to offer a discount in lieu of free finance?
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Basically, under the Consumer Credit Act, the cash price must (at least in theory) be the same as the finance price, so that the APR is clearly visible. That doesn't mean that certain firms won't give you a 'deposit allowance' if you don't go for interest free and I suspect that many times a discount is negotiable in lieu.
Of course, that doesn't stop the salesman selling two identical Puntos for maybe £2k difference, but with interest free credit available on the more expensive one only.
Interest free finance can sometimes be a good deal - especially if you have the cash waiting and can earn the interest on it yourself - but 9 times out of 10 interest free credit usually works out cheaper than shopping around only if you have a deposit of less than about 10% and would have to pay an APR of say, 14%...
Both sales people are therefore kind of right - an individual car with interest free credit may not be available cheaper without it, but if you look at the prices of (say) 52 plate Vectra 1.8 LSs across Vauxhall dealerships, all of which have been bought from similar sources (rental), with similar (10-15k) mileages and condition, you'll probably find a £2000 price variation, giving scope for a lot of part exchange allowances, free finance and so on, on the higher priced ones, if that's what it takes to do the deal.
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You've been robbed. I get 6 free eggs when I but 6 for a quid in our corner shop.
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The business manager or salesman (at least someone) will get commission on the finance (even tho its 0%) and so they flog it because its helps shift stock.
Dealer say it makes no difference with cash because theres extra profit in finance.
Best thing to is (and even tho it may be wrong they still do it) get a sizeable discount by agreeing to finance - regardless of the rate. Take the car, cancel the finance under the 14 cancellation right and pay for it out of the money you had for the car originally. Hey presto the dealer gives you a larger discount because they're making commission on the finance but you end up paying less for the car than if you paid cash.. ha ha......
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i always wondered why people expect a discount for cash. Assuming that they are not proposing some kind of VAT scam, it seems to me that if the dealer is getting a commission if he sells a finance package, then you should ak for (and get) a cheaper price if you finance, rather than pay cash.
What is the best negotiating tactic? Is it to haggle over the price of the car before you talk about how it is to be paid for?
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yes, negotiate over the base price and then when the finance is in place haggle the car further. If thats already gone as low as they can, haggle the finance. The finance always has room for commission in it so there is room to move. A common trick is to argue that the base rate is low, but the base rate is irrelevant. Its the apr and overall monthly cost that matters.
A fantastic story a friend of mine had was when he was buying an S3. He went on drive the deal and got a quote £2000 cheaper than a uk list. went to the audi dealer.
'can i have a discount'.
oh no sir, theres no such thing as discounts on the TT and the S3 as we've been instructed by Audi UK'.
'oh right, well drive the deal can get me it for £2000 less'
'Well thats imports for you'
'no thats from a uk dealer'
'oh, right, erm, ok. well we'll match any written quote IF you can get one'.
friends pulls out written quote. salesmans expression was a treat.
'i'll just go and see my sales manager' comes back 5 mins later. 'well i think we can do it'. Starts saying that it must be from a car in stock from a cancelled order, and that the offer only lasts today etc. in the end gave in when the matter of finance came up. friend got quote from audi - 10.9apr. 'no, thats too much'. well we will match any written quote', friends pulls marketing flyer from alliance and leicester out of pocket (you know, the one found in autotrader!) with 6.9% apr. salesman face drops - again.
And guess what. they honoured it all. saved £2200 from dealer. and £1800 in finance charges. job well done.
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Phoenicks - I know you know what you're about, but in case there's someone who's a little less experienced in here...
It's not the monthly cost that matters but the total credit price. For instance, you're buying a car with £7k of finance. You say that Northern Rock or whoever can do the loan for £212 per month. The salesman says "No problem, I can do it for £180" - over four years instead of three. So the total credit price goes up from £7600 to £8600...
Sounds obvious but I know people who've fallen for it.
Similarly, the APR might be low, but there can be things like arrangement and settlement fees, which personally I think should be included in the APR, but aren't. One particular manufacturer puts about 2% on its APRs in this way, so the subsidised finance is really only competitive, rather than unbeatable.
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Phoenicks - I know you know what you're about, but in case there's someone who's a little less experienced in here... ..... It's not the monthly cost that matters but the total credit price. Sounds obvious but I know people who've fallen for it.>>
Saturday's (23 Aug) Motoring Telegraph has a two-page article on haggling prices and finance.
Similarly, the APR might be low, but there can be things like arrangement and settlement fees, which personally I think should be included in the APR, but aren't. >>
DavidHM: You have access to official legal definitons and no doubt can check this out, but I understood that "The APR reflects the true cost of the loan, and includes all the interest together with any charges".
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{P} = advertising profile is ON. Backroom photos groups.msn.com/honestjohn/pictures
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When I bought my current Vauxhall, I got 8% discount and 0% finance. I wasn't offered any better discount for cash but I'll never know whether the salesman would have agreed if I'd negotiated harder.
With Vauxhall Finance, 0% means just that, no interest, no arrangement or settlement fees.
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I neg a good discount first then I pay with an introductory 0% credit card and pay an amount off each month equivalent to a normal loan monthly payment. 6 months later transfer the remainder to a new 0% deal etc etc. that way I truly pay 0%, and get extra consumer protection. And I do NOT pay a surcharge on my purchse.
Regards,
Regards
Alf
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I heard that the trick of taking advantage of 0% balance transfers by persistently moving from one CC to another can damage your credit rating.
But I know an accountant who does it all the time, with pretty large amounts, and he reckons he hasn't been affected.
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Just to complicate the question of interest-free credit v discount, in France there is a (fairly recent) law that says if an item is offered with interest-free credit and you don't take up the free credit offer you are actually entitled to a discount on the original price - and there's a sliding scale to calculate how much you are entitled to - the better (longer) the interest-free deal the more cash discount you can claim instead!
France seems to have enforceable laws to cover every little thing (even shops' summer sales have to conform to date and duration limits) - but try to get your head around the logic behind this one!
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Likewise smokie, I've never had a problem and I've taken out several mortgages on many proerties in the past two years, again no problems.
Regards,
Alf
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Any company is free to interpret your credit history any way you want. Some might not like rate tarts but by and large, if you're getting credit from one company, most others will like you.
Don't forget quite a lot of people pay their credit card balances in full every month but still make a lot of money for the card companies through transaction fees, and they still want their business.
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I heard that the trick of taking advantage of 0% balance transfers by persistently moving from one CC to another can damage your credit rating. But I know an accountant who does it all the time, with pretty large amounts, and he reckons he hasn't been affected.
Moving money about on cards isn't going to hurt your rating
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I was told by Barclaycard that vehicle purchases are not covered by any of the protection schemes that come with their card.
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>> 'can i have a discount'. oh no sir, theres no such thing as discounts on the TT and the S3 as we've been instructed by Audi UK'.
The best reply to a ruling by AN Other Manufacturer /Importer in the UK who say no discounts is:
"Can I have that in writing as Price Fixing by Manufacturers and collusion of dealers is illegal and "UK & EU Authorities would like to know of this rule"
At this point say nothing more
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Excellent post !
I did exactly the same thing when my father was buying a new Passat.
It boiled down to, "you either match this price and sell me the car, or I will just go with Plan A and buy from a dealer an hour nad a half drive away". I would prefer to buy locally, but I am not going to pay throught he nose to do it !
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The only flaw with this tactic is that if you signed the loan agreement on Trade Premises i.e the dealership you will have no cancellation period, and potentially an uncompetitive finance rate.
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I agree that all interest free finance is paid for in one way or another, but it is worth it if you can get the right deal. I recently bought a car from this site {alleged advertising removed. By all means contact me ( dave_moderator@honestjohn.co.uk ) if this is not the case and you have no connections whatsoever with the website you posted - DD} who have sold me my new Renault Megane F1 R26. I have got over £1000 off list and 4 years 0% finance with no deposit. Actually I put down some of my part exchange money to reduce my payments. They do lots of cars, mainly the big brands but worth a look I think.
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Brian...
I'm sorry if I'm raining on your parade but you paid £18,500 for the car (and I vaguely suspect that this might be an advert) but that means that your total credit price is £18,500.
I don't quite understand why you reduced the amount on finance by offering the part exchange - you've reduced the interest saving and could have put the money into a savings account with a standing order for the difference in monthly payment going into your current account, meaning that you could have kept that interest.
Still, even if you had no part exchange and had borrowed the full amount from a bank, you could have paid £16,155.84 over four years - around £1,700 of which is interest, admittedly - but which amounts to a saving of over £2,300.
People read this site for advice and the deal to which you have linked simply isn't a good deal for most people, which is why I am challenging your recommendation based on what has been said three years ago.
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I'm sorry if I'm raining on your parade but you paid £18,500 for the car (and I vaguely suspect ....
i can see why. dredging up a three year old thread sort of makes you wonder.
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Edit: you could have borrowed the full amount, buying from another broker I mean...
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