Gear Head

iTrader: (2)

Looked at a Peugeot 107 yesterday for the Mrs. It's less than a year old, 4500 miles on the clock and is up for only £6290. Just asked about their finance and they are competitive at a 4% flat rate (although my credit card has 0% on purchases for 24 months so we will more likely go with this).

They rang me back to today to see if we were still interested. They have now agreed to put right a couple of small scratches which they sore blind that they couldn't do yesterday as they were already selling it at a loss (i must be in the wrong job!) but to my shock, the salesman said that on top of the monthly payments, there was also an admin charge of £199 due with the first payment and then a 'right to purchase' charge for £240 on top of the last payment.

These charges were not on the print out summary that they have us yesterday.

Now, we won't be finacing the car through them anyway, but I was shocked out how they have now increased the overall cost of the car by around 7% with these charges on their finance.

This was a Peugeot dealer and an experienced salesman. Is this normal practice to sting with the charges later on?

tarquin crispin

most finance companys are adding these fees, remember there is 2-3% credit card charge this would be the better option IMHO then after 2 years you can swap over to another card by the time you pay these charges it will still be cheaper than the 4% overall

lordharding

iTrader: (1)

Yes standard through motor industry
I worked for a month at a dealership after my redundancy amd learned a lot


Our admin fee / document fee as we called it was £240 amd could be added at a tenner a month which made more interst over a five year repayment rather then pay it in a lump sum
Purchase fee was about the same as well which was made into the end payment
We got a tenne r for every finance deal signed and 80% of customers took finance on car purchases where I worked

It was dead easy to sell a car at £150-£200 per month to buyers as most had the dream of a new car on their drive and weren't too concerned about price just monthly payments

Supaguard was either £199 or £249 depending on price of car and size
Cost to dealer was £68 aprox we got £50 commission on every one sold and was an easy sale

Gap insurance was £199 and was another easy sale when you pointed out the advantages of it ( was Availabke for £89 in the Internet ) and we got a tenner for it again easy add on as it was only a few quid a month sir !

Extended warrentys were sold for £250 again another £50 commission again as you were selling on finance another fiver a month +% over 60 months

Used to get £25 a new car minimum but an extra £120 with the above extras and some second cars fetched in £50-£150 depending on mark up or spivs to get rid of them

Mark up on second cars was Aproximate £2500

Dealers hate you of you order a brand new one with no extras and pay cash !!

It wasn't for me car sales although I would of made a lot of money out if I had stayed but hated every minute of the month I was there

billythekid

"selling at a loss"... yep heard that one a few time. Total BS.

As above car dealers make money on all their added products.

I was recently offered a new car to replace my daily drive with £8000 off RRP. Seemed like a really nice deal.. but to get the £8k off I had to take it with finance at 9%... yeah I don't think so..

Discount they were willing to offer without finance. £1500.

For me, the only extras worth anything from main dealers are service plans. If you are careful and you keep the car throughout the term then a 3/4/5 year service plan can sometimes be worth it. Mini do a good one.

Also, been reading more on PH about people taking out the finance to get major discounts and then cancelling the finance within the 7 day cooling off period and paying the balance - meaning they still get the discount - which no doubt the dealers will pick up on!!!

Also if they try and scam you for 2.5% on your credit card then I would argue it. Very, very few businesses pay more than 1.5% these days. Most are on between 1 and 1.4%.

Your only issue is the used car market is fairly good at the moment and they might just drop you and wait for the next customer. Depends how badly you want the car!

CharlySkunkWeed

iTrader: (7)

I just bought through a dealer and battled for ages for him to knock a few quid off the value . . . not a chance. Not even a tenner. They were selling them at what they were buying them at (yeah right) and all they were doing for me was offering me extras at "dicounted" prices. I was already spending 1k over what I had said I would and wasn't paying anything more , so all they did for me was 2 years 0% finance on 3k of the money. They were pushing gap insurance , servicing plans , them stupid superguard cleaning things where u "just hose your car" and if u spill anything inside "it just wipes off".

They didn't like the fact I had the money to pay for the car up front , they want finance and all the add-ons as it doesn't sound expensive when they say "we can add that on for £5 a month" .

LSherratt

iTrader: (1)

Bought all my cars privately, full cash in hand. Going through a dealership is a mugs game.

Maz

iTrader: (34)

I know money makes the world go round but I fully agree with you. Mind you the number of new cars I see around means there's an awful lot of mugs about. I very much doubt they've all been bought with cash outright.

andy.downes

iTrader: (1)

Only if you are confident of buying a good one privately. Many people, especially women, have to go to dealership because they are the 'least likely' to rip you off. Clearly there are bad apples amongst them, however if it's a reputable (or big enough business) you have some recourse, if a little.

hodgy0_2

I think if you are canny deals can be had at dealers

It involves understanding their particular sales cycle and the manufacturers incentive/rebate schemes given to the dealers

I work colleague got a pretty good deal on an S3 using the above method

Butkus

I don't think you should make judgements about people with new cars. We bought a new diesel Polo last year on finance and it is literally beer money to own and run. Free insurance, 70mpg, service plan, £0 road tax.

I have a hobby/sideline that makes better use of the £14k that it would have cost to buy the car outright, and the car repayments are just over half what we pay for council tax every month!

pimmo2000

iTrader: (6)

Sounds like the dealer got you good and you're thanking him for it

Graz

It's worse than you think because that cunning 4% "flat rate" interest figure they quoted you may sound like a good deal but actually equates to around 8% APR. Add on the fees as well and it's probably getting towards 10% APR.

urban

iTrader: (1)

Which is fine, but what kind of value are you talking?
A few grand is ok, but >10K and it becomes a hard task

LSherratt

iTrader: (1)

I paid £8.5k for my old car but only a few for my classic Subaru . I'm not sure I'd ever buy a new car from a dealer unless I was minted and if it was something I'd really want...

Gear Head

iTrader: (2)

Well the dealer came back yesterday on the phone to say they will do the repairs that we wanted ( 4 scratches ) for the asking price and we don't have to go with their finance. So the Mrs went for it.

Financed through a 0% purchase on my credit card for 24 months.

No lender can beat that rate.

lordharding

iTrader: (1)

That's a good deal in the end then for you and you could keep on extending the % free loan by swapping cars and just paying the transfer rate if required

Dealers will continue to try to get you as the sales managers get grumpy as the month goes on and they need TI book enough cars for their monthly targets

Norman Dog

iTrader: (1)

Even if you don't pay it within the 24 months, there are load of 0% balance transfers which vary from 2.5 to 3.5% fee.

I would never again take a garage's finance package.

The crap they try and tack on makes for rich pickings from the mug punter.

Bought a car many moons ago and they'd slyly added GAP insurance to the agreement, bloody good job I read it.

Matteeboy

We buy ours new for cash.

It's called "saving up" and seems to have been forgotten...

CharlySkunkWeed

iTrader: (7)

Thats what I did. I only did 3k over 2years at 0% just so I didn't empty the savings completely, but still had the dough

Maz

iTrader: (34)

I was give some sage advice a long time ago. 'Dont buy something once unless you can afford to buy it twice'. House purchase excepted I think that's good advice.
As you say, saving up and living within one's means is a thing of the past.

ditchmyster

iTrader: (7)

Yep same here cash is king, I'd sooner drive a 10yr old car and own it than a new one on finance. There are 4 vehicles in my household, not one newer than 10yrs old, all of them have made the round trip of 3000 miles to Croatia and back several times inside 24hrs one way trouble free, which is more than can be said for the plethora of much newer vehicles I see on the hard shoulder along the way.

LSherratt

iTrader: (1)

That is good advice but I think that depending on the price of a car, it may be excluded from this like a house. Anything else though I defiantly agree.