Finance or loan

[funbobby]

It seems most cars I've been to see recently have some finance against the car what are the benefits over a personnel loan for the car ? The rates don't seem any better !

[Lozw86]

A personal loan is not secured against the car

[DoctorX]

The car is yours from Day 1.

[funbobby]

But say just for example money becomes an issue and you have to sell the car I don't see why you would take out finance against the car either way it has to be paid back or am I missing something ??

[feef]

funbobby said:

But say just for example money becomes an issue and you have to sell the car I don't see why you would take out finance against the car either way it has to be paid back or am I missing something ??

The difference is, on finance, you sell the car and you MUST settle the finance. With a loan, you can sell the car and keep paying it if you want. Also, 'may' make it easier to sell the car if you do so privately, as with a personal loan, HPi checks and whatnot will not show as finance owing on it.

[funbobby]

thats what i mean, why would you use finance unless you couldnt get a loan?

[valiant]

Sometimes you can get a 'deposit contribution' if you go down the finance route, (basically a discount on the purchase price especially if you buy new) which won't be available if you are a cash (loan) purchaser.

[bozzy101]

funbobby said:

thats what i mean, why would you use finance unless you couldnt get a loan?

There's a little more buyer protection with car finance.

[funbobby]

What kind of protection ?

[anonymous-user]

The finance company have an interest in the car and will sometimes get involved in disputes with the dealer/manufacturer.

[Emubiker]

With finance being secured against the vehicle you have termination and repossesion rights.

This means that once you have paid half the total you can hand the car back to the finance company (subject to condition but irrespective of mileage) and not be at a loss. i.e car is worth £6000 but you owe £8000, but come out the other end not owing anything.

Once you have paid 1/3 of the total and lets say your circumstances change and you are unable to continue paying your agreed amount over the agreed term, the finance company cannot just come and re-poses the car - instead you re-enter a negotiation with them about financing it.

If all goes really belly up, then the only thing they can ever take from you is the car, not your tv/sofa/house etc.

Also if you buy from a dealer and within a short term there is something very wrong with it, as the finance company have a vested interest in the car (seeing as it belongs to them) they will also fight your cause to have issues rectified if you tell them about it.

my 2p

[bozzy101]

Emubiker said:

With finance being secured against the vehicle you have termination and repossesion rights.

This means that once you have paid half the total you can hand the car back to the finance company (subject to condition but irrespective of mileage) and not be at a loss. i.e car is worth £6000 but you owe £8000, but come out the other end not owing anything.

Once you have paid 1/3 of the total and lets say your circumstances change and you are unable to continue paying your agreed amount over the agreed term, the finance company cannot just come and re-poses the car - instead you re-enter a negotiation with them about financing it.

If all goes really belly up, then the only thing they can ever take from you is the car, not your tv/sofa/house etc.

Also if you buy from a dealer and within a short term there is something very wrong with it, as the finance company have a vested interest in the car (seeing as it belongs to them) they will also fight your cause to have issues rectified if you tell them about it.

my 2p

^^ This.