Which car dealerships offer the best APR?

[R5_BOY]

Hi all

I'm in the market for a new vehicle, well when I say new I mean used,

I understand APR on used is typically higher than a new vehicle. The difference between dealers is astonishing, some 10% or more.

I particularly want to do everything through the dealership, I understand I could apply for a loan at a lower apr or going to a finance broker however I'm still in the hunting process for the right vehicle. With a broker you need to be specific on what your looking for.

So far I've discovered Hartwell 4.9% and also Steven Eagle 5.9%. Is this as good as it gets? Any other large dealerships to look at? I understand that the rates tend to be fixed due to the FCA

Thank you

[LightningBlue]

You might be able to get the best of both worlds if you take the dealer finance and cancel it within 30 days replacing it with a cheaper loan. Need to check the T&Cs though

[23.7]

Like everything apr is negotiable.

Focus on what matters.

[ZX10R NIN]

LightningBlue said:

You might be able to get the best of both worlds if you take the dealer finance and cancel it within 30 days replacing it with a cheaper loan. Need to check the T&Cs though

This, focus on getting a good deal then clear the finance once you've got the car.

[RoVoFob]

R5_BOY said:

Hi all

I'm in the market for a new vehicle, well when I say new I mean used,

I understand APR on used is typically higher than a new vehicle. The difference between dealers is astonishing, some 10% or more.

I particularly want to do everything through the dealership, I understand I could apply for a loan at a lower apr or going to a finance broker however I'm still in the hunting process for the right vehicle. With a broker you need to be specific on what your looking for.

So far I've discovered Hartwell 4.9% and also Steven Eagle 5.9%. Is this as good as it gets? Any other large dealerships to look at? I understand that the rates tend to be fixed due to the FCA

Thank you

In theory the lower the APR, the better. However, if the same place is supplying the car and the finance, they may offer low rate finance on cars with inflated cash prices - so you could still be paying over the odds.

This is more complex with PCP finance, as sneaky finance providers could advertise a low APR, but use an artificially low optional final payment, which means that your monthly payments cover a higher proportion of the car’s value than with a higher APR alternative with a higher optional final payment.

If you know which type of finance you want and the type of car you want, the best thing to do is to get like-for-like quotes (using identical finance types, contract lengths, deposit amounts and mileage allowances).

Then you can compare the monthly payments and the overall cost to access the car for the duration of the contract (the total of the deposit and all the monthly payments with PCP finance, assuming you return the car at the end of the contract) or the total cost to purchase the car (the total of the deposit and all the monthly payments with Hire Purchase, or the total of the deposit, all the monthly payments and the optional final payment with PCP).

FYI APR figures also don’t take into account deposit contribution discounts, so they don’t show the actual premium you’re paying to finance a car where a deposit contribution is available (this is more often the case with new car finance than used car finance).

[RoVoFob]

23.7 said:

Like everything apr is negotiable.

Focus on what matters.

This often isn’t true - especially with new car finance, where finance providers dictate the terms to dealers. It’s typically easier for dealers to discount the price of the car than altering the APR available.

[Roger Irrelevant]

RoVoFob said:

This is more complex with PCP finance, as sneaky finance providers could advertise a low APR, but use an artificially low optional final payment, which means that your monthly payments cover a higher proportion of the car’s value than with a higher APR alternative with a higher optional final payment.

I don't get it - what's sneaky about that? If the final payment is 'artificially low' then you've got a golden opportunity to buy the car for a knockdown price and sell it on for a higher price. If the final payment is higher you may not be able to do that, so if you've paid the same amount for the car over the course of the PCP due to a higher interest rate you are worse off.

I agree re not getting too hung up on APRs though. IMO people make this needlessly complicated - all that matters is how much you pay over the course of the arrangement and (if you think you might want to keep it thereafter), what the final payment is. How the former is arrived at (i.e. how much is due to the sticker price and how much is due to interest), is irrelevant.

[RoVoFob]

Roger Irrelevant said:

I don't get it - what's sneaky about that? If the final payment is 'artificially low' then you've got a golden opportunity to buy the car for a knockdown price and sell it on for a higher price. If the final payment is higher you may not be able to do that, so if you've paid the same amount for the car over the course of the PCP due to a higher interest rate you are worse off.

I agree re not getting too hung up on APRs though. IMO people make this needlessly complicated - all that matters is how much you pay over the course of the arrangement and (if you think you might want to keep it thereafter), what the final payment is. How the former is arrived at (i.e. how much is due to the sticker price and how much is due to interest), is irrelevant.

A vast majority of people who opt for PCP don’t make the optional final payment to buy the car; they use it to access the car for a low monthly payment. Therefore for that 80% of people, they would be paying artificially high monthly payments over the contract if the optional final payment is artificially low.

They will have been overcharged during their contract, effectively, and have the chance to recoup what they’ve been overcharged…if they can access the funds to buy it and then sell it at the end, or part exchange it if they can find a dealer happy to settle the finance who agrees with their valuation of the car.

The higher the optional final payment is, the slower you’re paying off the finance, so the more interest is being charged - as you owe more money for longer.

Finally, if you want to own the car, you’d pay much more interest overall by going for PCP than HP, because much of the debt isn’t paid until the very end with PCP, so why not go for HP and pay less overall to buy the car, without a large optional final payment that you may or may not be able to afford? Alternatively you can refinance the optional final payment at the end with PCP, but you’ll be paying interest on that balance again, if you do that.

The appeal of PCP is that it offers low monthly payments, but that doesn’t necessarily make it a good value way to buy a car.

[Dan W.]

R5_BOY said:

Hi all

I'm in the market for a new vehicle, well when I say new I mean used,

I understand APR on used is typically higher than a new vehicle. The difference between dealers is astonishing, some 10% or more.

I particularly want to do everything through the dealership, I understand I could apply for a loan at a lower apr or going to a finance broker however I'm still in the hunting process for the right vehicle. With a broker you need to be specific on what your looking for.

So far I've discovered Hartwell 4.9% and also Steven Eagle 5.9%. Is this as good as it gets? Any other large dealerships to look at? I understand that the rates tend to be fixed due to the FCA

Thank you

Chapel house offer 0% on pretty much all their used cars...... but all their cars are expensive to combat the 0% so you dont really gain anything

[Dan W.]

RoVoFob said:

23.7 said:

Like everything apr is negotiable.

Focus on what matters.

This often isn’t true - especially with new car finance, where finance providers dictate the terms to dealers. It’s typically easier for dealers to discount the price of the car than altering the APR available.

Also not really true for used cars, FCA have put a stop to being able to reduce / up the apr price, its usually fixed now for all customers.

Unless you get accepted buy subprime finance companies kneecappers r us

[Dingu]

RoVoFob said:

Roger Irrelevant said:

I don't get it - what's sneaky about that? If the final payment is 'artificially low' then you've got a golden opportunity to buy the car for a knockdown price and sell it on for a higher price. If the final payment is higher you may not be able to do that, so if you've paid the same amount for the car over the course of the PCP due to a higher interest rate you are worse off.

I agree re not getting too hung up on APRs though. IMO people make this needlessly complicated - all that matters is how much you pay over the course of the arrangement and (if you think you might want to keep it thereafter), what the final payment is. How the former is arrived at (i.e. how much is due to the sticker price and how much is due to interest), is irrelevant.

A vast majority of people who opt for PCP don’t make the optional final payment to buy the car; they use it to access the car for a low monthly payment. Therefore for that 80% of people, they would be paying artificially high monthly payments over the contract if the optional final payment is artificially low.

They will have been overcharged during their contract, effectively, and have the chance to recoup what they’ve been overcharged…if they can access the funds to buy it and then sell it at the end, or part exchange it if they can find a dealer happy to settle the finance who agrees with their valuation of the car.

The higher the optional final payment is, the slower you’re paying off the finance, so the more interest is being charged - as you owe more money for longer.

Finally, if you want to own the car, you’d pay much more interest overall by going for PCP than HP, because much of the debt isn’t paid until the very end with PCP, so why not go for HP and pay less overall to buy the car, without a large optional final payment that you may or may not be able to afford? Alternatively you can refinance the optional final payment at the end with PCP, but you’ll be paying interest on that balance again, if you do that.

The appeal of PCP is that it offers low monthly payments, but that doesn’t necessarily make it a good value way to buy a car.

You’ll likely find the overwhelming majority of PCP purchasers don’t care what the APR is and compare on deposit down and monthly cost so a sneaky dealer as you put it wouldn’t sell many cars like that. I.e. the market itself would disincentivise such tactics.

[RoVoFob]

Dingu said:

You’ll likely find the overwhelming majority of PCP purchasers don’t care what the APR is and compare on deposit down and monthly cost so a sneaky dealer as you put it wouldn’t sell many cars like that. I.e. the market itself would disincentivise such tactics.

I disagree. Long contracts, low mileage allowances and admin fees are just three examples of tactics finance companies/dealers can use to pass off bad value finance with shiny low monthly payments.

Many drivers aren’t savvy enough to compare like-for-like deals and realise what they’re getting/not getting. The lack of transparency - with finance deals varying dramatically in terms of deposits, contract lengths, mileage allowances etc. etc. - means that there’s less to disincentivise such behaviour, as many people don’t realise they’re paying over the odds with one deal compared with another.

[lornemalvo]

Get a bank loan, it's not linked to the car, you have more flexibility when buying and selling and can be reworked if necessary during the loan period