Financing a car query. Advice required
04 July 2022, 08:54 AM
#1
Scooby Regular
Thread Starter
Financing a car query. Advice required
We are in the fortunate position of being able to spend between £25K to £40k on a replacement car.
I am long time retired so no work options, a personal purchase and I tend to keep my car for a long time (10 yrs plus not unusual) so not at all familiar with modern purchase methods.
In the past it was a straightforward bank loan to fund the cash purchase.
I believe that at the moment a cash purchase (trade in £13k-15k plus cash balance) is not at all likely to get me much of a discount on the dealers price as the dealer make nothing extra from a cash sale.
I have never bought with a personal purchase plan but understand that the dealer will get a commission from the ppp and so the chance of a discount is more likely ?
Let's say that I can get a £1000 discount from a dealer if I take out finance but then after signing on the dotted line I immediately cancel the plan. The dealer still gets his commission but what are the likely charges to be from the ppp company for an early settlement. I realise this figure will be variable company to company but what is a possible outcome ? Is this scenario even possible, I am totally new to this. Is it even ethical ?
Any advice would be appreciated.
Thanks
Brian.
I am long time retired so no work options, a personal purchase and I tend to keep my car for a long time (10 yrs plus not unusual) so not at all familiar with modern purchase methods.
In the past it was a straightforward bank loan to fund the cash purchase.
I believe that at the moment a cash purchase (trade in £13k-15k plus cash balance) is not at all likely to get me much of a discount on the dealers price as the dealer make nothing extra from a cash sale.
I have never bought with a personal purchase plan but understand that the dealer will get a commission from the ppp and so the chance of a discount is more likely ?
Let's say that I can get a £1000 discount from a dealer if I take out finance but then after signing on the dotted line I immediately cancel the plan. The dealer still gets his commission but what are the likely charges to be from the ppp company for an early settlement. I realise this figure will be variable company to company but what is a possible outcome ? Is this scenario even possible, I am totally new to this. Is it even ethical ?
Any advice would be appreciated.
Thanks
Brian.
04 July 2022, 10:37 AM
#2
I have worked for Jaguar main dealers for over 20 years, so have a good understanding of car finance.
In theory, a dealer cannot legally differentiate between someone paying 'cash' and using some form of finance.
They should be aware of this, I doubt that anyone will give you a better deal by taking out finance ?
Most finance companies 'claw back' the dealer commission if the agreement is settled in less than six months anyway.
The exception is on new cars, where there is sometimes a 'finance deposit contribution'
This may be funded by the manufacturer (in which case it costs the dealer nothing) or jointly funded by the dealer and the manufacturer.
If you take out finance with a deposit contribution, you need to make at least one payment (so that the agreement is deemed to have come into effect), otherwise they can legitimately recover the deposit contribution from you.
At this point you can settle without penalty, all it will cost you is the interest on the first months payment.
In theory, a dealer cannot legally differentiate between someone paying 'cash' and using some form of finance.
They should be aware of this, I doubt that anyone will give you a better deal by taking out finance ?
Most finance companies 'claw back' the dealer commission if the agreement is settled in less than six months anyway.
The exception is on new cars, where there is sometimes a 'finance deposit contribution'
This may be funded by the manufacturer (in which case it costs the dealer nothing) or jointly funded by the dealer and the manufacturer.
If you take out finance with a deposit contribution, you need to make at least one payment (so that the agreement is deemed to have come into effect), otherwise they can legitimately recover the deposit contribution from you.
At this point you can settle without penalty, all it will cost you is the interest on the first months payment.
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