Do you don't you?
Discussion
Was thinking of a scenario earlier which I thought would make for an interesting discussion on here. I know that a number of members think that finance is something to be avoided at all costs, however I was wondering what the anti-finance group would say to this situation.
You are looking for a car at a large reputable dealership. The car in question is a [insert here] costing bang on £20,000. You have £20,000 of your own money sitting in a bank account and are willing to pay for the car at the price which the dealership are selling it. You start to strike a deal when the salesman (or woman) says to you "Rather than paying for the car outright would you be interested in taking our 0% APR hire purchase for 5 years?" (you plan on keeping the car for a longer period than that as it is your realistic dream car) The car is not going to cost you a penny more however rather than having the payment go from your bank account in one large payment, you will pay a deposit of £2000 and then 60 monthly payments of £300. So this means that although you won't fully own the car for 5 years you will have money left over from your savings to spend on other things.
If it were me and I knew I would be keeping the car for 5+ years then I would go for the 0% APR HP, however I was wondering what other PHers would say.
You are looking for a car at a large reputable dealership. The car in question is a [insert here] costing bang on £20,000. You have £20,000 of your own money sitting in a bank account and are willing to pay for the car at the price which the dealership are selling it. You start to strike a deal when the salesman (or woman) says to you "Rather than paying for the car outright would you be interested in taking our 0% APR hire purchase for 5 years?" (you plan on keeping the car for a longer period than that as it is your realistic dream car) The car is not going to cost you a penny more however rather than having the payment go from your bank account in one large payment, you will pay a deposit of £2000 and then 60 monthly payments of £300. So this means that although you won't fully own the car for 5 years you will have money left over from your savings to spend on other things.
If it were me and I knew I would be keeping the car for 5+ years then I would go for the 0% APR HP, however I was wondering what other PHers would say.
Bung the £20k into a high [sic] interest savings account or ISA finance away! Any fees at the end of the agreement will be gained back by interest on your savings.
It may not leave all of your other avenues of finance open so it really depends on your current situation ie mortage, credit cards etc.
It may not leave all of your other avenues of finance open so it really depends on your current situation ie mortage, credit cards etc.
You need to learn to negotiate harder.S. Gonzales Esq. said:
Free credit isn't free - someone's paying for it somewhere. If it's the dealer, I'd be looking for discount instead.
Anyway, what's with paying the full asking? Money to burn?
Full asking price, the car is quite cheap for what it is and it has no hidden history, its just a really well priced car.Anyway, what's with paying the full asking? Money to burn?
My Dad bought a Vauxhall Astra Sporthatch (I know!) for my Mum last year, we went in cash in hand they offered 0% Finance and if we did go for this they gave us £1300 off the purchase price so it went straight into a bank account earning some interest and a DD went to them each month, everyone was happy.
Why would that ever be a bad thing?
Why would that ever be a bad thing?
It's an obvious yes in that situation.
But, things are never that simple.
But, check the smallprint.
Does the 0 finance require me to bring the car back for service with them every year?
Are there any set up fees? Any bank charges?
If I miss a payment what are the penalty fees? (not that I would plan too)
Can I get the same car for £17500 somewhere else by paying cash up front.
Free finance is normally only available as some sort of carrot dangled in front of new car buyers as a way to get people to buy NEW rather than used.
But, things are never that simple.
But, check the smallprint.
Does the 0 finance require me to bring the car back for service with them every year?
Are there any set up fees? Any bank charges?
If I miss a payment what are the penalty fees? (not that I would plan too)
Can I get the same car for £17500 somewhere else by paying cash up front.
Free finance is normally only available as some sort of carrot dangled in front of new car buyers as a way to get people to buy NEW rather than used.
Most dealers will have a 'deal saver' usually 0% over a year with a hefty deposit or good PX.
Sales'persons' will also recieve commission on finance deals and on a £20k car the sales manager will get a decent chunk of bonnet profit at the end of the quarter.
Check the settlement fees at the end and any unreasonable 'admin' fees. As Snowboy said make sure there are no unreasonable stipulations with the deal and ask about standard dealer warranty. They should do one (3 or 6 months) and its worth checking
If you think you're getting a good deal then go for it, they dont come along often!
Sales'persons' will also recieve commission on finance deals and on a £20k car the sales manager will get a decent chunk of bonnet profit at the end of the quarter.
Check the settlement fees at the end and any unreasonable 'admin' fees. As Snowboy said make sure there are no unreasonable stipulations with the deal and ask about standard dealer warranty. They should do one (3 or 6 months) and its worth checking
If you think you're getting a good deal then go for it, they dont come along often!
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