mestonian

About 3 years ago i bought a car on finance, basically i had an old banger and was desperate and naive and rushed into it because i desperately wanted it. Anyway, it was paid off and job done.

Been going through some paperwork recently, and i noticed the APR was almost 20%, i was shocked by this because i have a perfect credit score, never a single missed payment, default, nothing, 999/1000 report. Out of interest i phoned the finance company and asked why i was put on such a high APR with such a good credit rating, the girl was very helpful and told me actually looking at my score that came through with the application i should have been on between 3.99% and 7.9% but infact it's the DEALER who decides what level or APR to put the application in at.

Is this true? I never knew the dealers had the say on what APR/Rate to put your application in at? This just makes me think i was completely fleeced. The finance company told me they are a "prime lender" and therefore dont accept bad credit applications so it's all down to the dealer in terms of how much i ended up paying for the car.

Anyone know if this is true? I can only assume it's true and they do it to get a larger kickback from the finance company!?

If anyone is in the know it would be good to hear a definitive answer on it.

madscoob

iTrader: (3)

what they said is probably true , i know for a fact salesman/dealers get a kickback, it was explained to me in a interview at a renault dealer

Tidgy

doesnt surprise me thb, should have checked against other places before going with it basicly.

saints_forever

I was always under the impression that the dealers put through your application and the 'loan' company comes back with the apr.

Are you sure when you mention between 3.99% - 7.9% you're not talking about the flat rate of the investment? They may have been misleading when they sold it to you; the flat rate relates to the percentage length of the term, where as APR is the yearly %. So you APR will be higher. If that makes sense?

mestonian

Im aware it was my fault, i should have checked it out more but to me the monthly figure was more than affordable so i just said yeah lets go with that, stupid i know.

I also was under the impression that the dealer puts the application in and the finance company come back and say yes we will finance it at xx% , etc - apparently (after talking to the finance company) it doesnt work like that.

Apparently the dealer will run a credit check to get your score, they will then put in the application on a APR scale, i.e excellent credit/good credit/fair credit/bad credit/etc - and obviously the lower the APR scale the higher the payments (overall payment/interest).

So what it seems after speaking to the finance company is that they ran the check, saw i had immaculate credit, but still put the application in under "fair credit" or something along those lines.

Makes ya wonder for future though.... cant think the finance company would lie to me on what was a recorded call but you really never know nowadays.

Anyway on another note hopefully get my new WRX STI tomorrow (no finance thankfully) so im an excited chap.

Graz

Crafty bast*rds aren't they Typically they'll get the dough out of you somewhere, might give you a good price on the car you are buying but then claw it back through the finance deal.

I naively signed up to a deal on the wife's car a quite a few years back as I had assumed the rate they were quoting was APR, never come across flat rate before then though had never bought a car on finance before. Even told the salesman I could get the money from my own bank at 7.9% APR, their quote was around 6% flat rate that actually equated to an APR nearer 12%. If I had suitable evidence I'd say I was miss sold and should complain to the FSA but it would be my word against theirs and as I signed the paperwork on the premises you don't get any cooling off period.

Now, if I need finance, I'll sort it myself. You can get loans as low as 5.4% APR at the moment if you do have good history.

k9l3

iTrader: (1)

yes the dealer can put some apr on thats why dealers love people taking out finance. 20% is the rate some with bad credit would get like carcraft etc. if you got good credit you should pay no more then around 7.9% .
you have to always ask what the apr is and tell them if its high that your not interested they soon bring it down.

i just got done on my insurance they told me its 900 a year and didnt tell me apr was like 30%+ so i end up paying like 1200+ when normally you would pay about 1000 on 900

mestonian

Yeah Graz, that's the feedback i got when i pulled the dealer up about it. Oh, it's always flat rate never APR. Anyhow... fortunate enough to be in a position now where dont need their finance. I told them i'd never use them again though and the dealership manager called me to ask how they could change my mind so i go back in future ..... do one was my response.

Fonzey

iTrader: (5)

Dealers are a rip off. I got finance on my old car for about £14k.

After 6 months, I actually looked at my paperwork and worked out with a Nationwide bank loan I could keep my monthly payments the same, and reduce my term by 10 months...

Needless to say, I'll never get dealer finance again.

Orangio

I can confirm it's down to the dealer to select the APR.

I know this as a few years ago I worked for a well known car dealership and the higher the APR the more I'd get in commission, and of course the higher the dealership would get in commission from the finance company.

Financing through your bank is down to how good/bad your credit limit is, but some car delearships can offer good rates.

Just do your homework before signing any agreement