Main Dealer Finance advice?

[mac456]

Hi all,
Just looking for some advice.
I went to view a car today with the intention of buying it for cash (13k) however they told me about a deal they are doing that if I was to take their finance I would be able to get their extended warranty included in the price. The APR was 12.5%!!!

They explained that I could take the finance and pay off 10k straight away (so a small amount of daily interest) and then pay the rest off after 10months (costing me again a small amount of interest compared to the cost of the extended warranty)
I would have to sign a declaration which meant I could not withdraw within 14 days otherwise I would lose the warranty.
I ended up leaving it due to the fact they stated they didn't have any t&c's in writing explaining the details of the finance which I found strange..
Has anyone got any experience with this? Is what they are saying correct?
I do like the car but it feels abit annoying not being able to get this "extra" because I am a cash buyer.
Thanks

[Firestick]

I imagine their finance commission is greater than the cost of the warranty.

I'd wave your thirteen grand and advise you'll part with it if the deal includes a warranty.

[VAGLover]

mac456 said:

Hi all,
Just looking for some advice.
I went to view a car today with the intention of buying it for cash (13k) however they told me about a deal they are doing that if I was to take their finance I would be able to get their extended warranty included in the price. The APR was 12.5%!!!

They explained that I could take the finance and pay off 10k straight away (so a small amount of daily interest) and then pay the rest off after 10months (costing me again a small amount of interest compared to the cost of the extended warranty)
I would have to sign a declaration which meant I could not withdraw within 14 days otherwise I would lose the warranty.
I ended up leaving it due to the fact they stated they didn't have any t&c's in writing explaining the details of the finance which I found strange..
Has anyone got any experience with this? Is what they are saying correct?
I do like the car but it feels abit annoying not being able to get this "extra" because I am a cash buyer.
Thanks

Simple.
Get the finance package. Get the warranty, sign the form.
Day 15, phone the finance house and settle outstanding balance.

The whole 10 months thing is BS. That’s them trying to get their finance back end kickers.

[mac456]

Firestick said:

I imagine their finance commission is greater than the cost of the warranty.

I'd wave your thirteen grand and advise you'll part with it if the deal includes a warranty.

Yes it does seem that way

[mac456]

VAGLover said:

mac456 said:

Hi all,
Just looking for some advice.
I went to view a car today with the intention of buying it for cash (13k) however they told me about a deal they are doing that if I was to take their finance I would be able to get their extended warranty included in the price. The APR was 12.5%!!!

They explained that I could take the finance and pay off 10k straight away (so a small amount of daily interest) and then pay the rest off after 10months (costing me again a small amount of interest compared to the cost of the extended warranty)
I would have to sign a declaration which meant I could not withdraw within 14 days otherwise I would lose the warranty.
I ended up leaving it due to the fact they stated they didn't have any t&c's in writing explaining the details of the finance which I found strange..
Has anyone got any experience with this? Is what they are saying correct?
I do like the car but it feels abit annoying not being able to get this "extra" because I am a cash buyer.
Thanks

Simple.
Get the finance package. Get the warranty, sign the form.
Day 15, phone the finance house and settle outstanding balance.

The whole 10 months thing is BS. That’s them trying to get their finance back end kickers.

Sorry I missed the bit which the declaration also states I have to keep the small balance for 10months.

I dont know much about finance and I'm worried about being stung when trying pay it all of early.

So my goal would be to pay 10k off from day 1. I assume minimal charges doing this?

And the the further 3k at 10months in.
I assume this will be charged at 12.5% over the year but for only 10months?

Is that right?

Thanks

[Raino144]

3k at 12.5% for 10 months is £300 in interest. How much is the warranty, and could you get a similar one online for less?

[Wooda80]

Raino144 said:

3k at 12.5% for 10 months is £300 in interest. How much is the warranty, and could you get a similar one online for less?

In hair splitting mode, if the APR is 12.5 then the flat rate will be nearer 7% and the cost nearer £200 but your point is exactly right.

There are ways around it.

Is the warranty through a third party provider?

You could withdraw from the finance agreement after 14 days at no cost and the dealer would be unlikely to be able to cancel the warranty.

Cancellation could arise if the dealer is able to refuse to pay the warranty company ( some dealer accounts are paid to the warranty company automatically on a self billing invoice to avoid this possibility ) so maybe leave it 3 months before paying off the finance in full.

But both of those actions stiff the dealer who is trying to offer something mutually benefical. Leaving aside the perceived sins of the industry as a whole, does this dealer deserved to be stiffed for making an offer with very clear terms and expectations on both sides.

If you decide it's not worth it then don't take it rather than trying to have one over on teh dealer. If you want the warranty then it would be much cleaner and more transparent to ask for it to be included anyway but be prepared to pay up to £2-300 for it.

[quinny100]

Report the dealer to the FCA. Coercing customers to take overpriced finance products they don’t need is exactly the sort of behaviour they are there to prevent and stop.

[Firestick]

quinny100 said:

Report the dealer to the FCA. Coercing customers to take overpriced finance products they don’t need is exactly the sort of behaviour they are there to prevent and stop.

Have to agree.

Add the coercion to refusing to produce terms and conditions and the dealer isn't presenting themselves too well here.

Not the type of dealer I'd want to go back to with car issues, so, if you do buy the car, another point would be to ensure the warranty allows repair elsewhere.

[mac456]

Thanks guys, good points.

I dont want to stiff the dealer, I just want to make sure I exit the finance in 10 months without any hidden interest charges.

The extended warranty is from the main dealer franchise.

I'll see if this can be bought separately

[loskie]

they are acting illegally by asking you to sign away your statutory rights

[Firestick]

loskie said:

they are acting illegally by asking you to sign away your statutory rights

This.

You're not stiffing the dealer, you're looking out for yourself.

I'd just front them with it and depending on the response, go from there.

[valiant]

What manufacturer is it?

Some will let you buy a manufacturer backed extended warranty direct from them and bypass the dealer completely (terms and conditions obviously apply )

[Wooda80]

quinny100 said:

Report the dealer to the FCA. Coercing customers to take overpriced finance products they don’t need is exactly the sort of behaviour they are there to prevent and stop.

I don't believe it is, actually.

The FCA aren't interested in whether the cost of credit is under or over priced as long as the terms and conditions are fair and clearly displayed.

There's nothing to say that you can't buy the car if you don't take the finance.
There's nothing to say that you can't buy the warranty if you don't take the finance.
The interest and charges appear to have been clearly disclosed.
There's no compulsion for the customer to take the offer if they feel it doesn't suit them
So there's no coercing.

This particular offer is weak from the dealer's perspective as once the warranty is paid for by the dealer there probably isn't any sensible action that the dealer can take if the customer reneges on his side of the agreement.

[Firestick]

Wooda80 said:

quinny100 said:

Report the dealer to the FCA. Coercing customers to take overpriced finance products they don’t need is exactly the sort of behaviour they are there to prevent and stop.

I don't believe it is, actually.

The FCA aren't interested in whether the cost of credit is under or over priced as long as the terms and conditions are fair and clearly displayed.

There's nothing to say that you can't buy the car if you don't take the finance.
There's nothing to say that you can't buy the warranty if you don't take the finance.
The interest and charges appear to have been clearly disclosed.
There's no compulsion for the customer to take the offer if they feel it doesn't suit them
So there's no coercing.

This particular offer is weak from the dealer's perspective as once the warranty is paid for by the dealer there probably isn't any sensible action that the dealer can take if the customer reneges on his side of the agreement.

I'm fairly sure, if they receive a benefit from selling a product, it should be disclosed, prior to commitment.

Your 4th point - how can the customer decide if it suits them or not without the facts in front of them?

[93DW]

Firestick said:

I'm fairly sure, if they receive a benefit from selling a product, it should be disclosed, prior to commitment.

That's not the case at the moment but the FCA are bringing it in within the next few months.

[Firestick]

93DW said:

Firestick said:

I'm fairly sure, if they receive a benefit from selling a product, it should be disclosed, prior to commitment.

That's not the case at the moment but the FCA are bringing it in within the next few months.

Thanks for clarifying

[quinny100]

Wooda80 said:

I don't believe it is, actually.

The FCA aren't interested in whether the cost of credit is under or over priced as long as the terms and conditions are fair and clearly displayed.

There's nothing to say that you can't buy the car if you don't take the finance.
There's nothing to say that you can't buy the warranty if you don't take the finance.
The interest and charges appear to have been clearly disclosed.
There's no compulsion for the customer to take the offer if they feel it doesn't suit them
So there's no coercing.

Offering inducements to customers in order to get them to sign up for finance agreements is a very grey area if the customer can afford to buy the product outright in my view. I suspect the FCA view is that customers are protected from this with their rights to withdraw or early termination under a regulated agreement.

Requiring the customer to sign away their right to withdraw and right to settle the agreement early in order to benefit from an inducement to protect your commission is plain wrong. That’s coercing a customer into an action that may not be financially beneficial to them and is hardly treating customers fairly. The agreement wouldn’t actually be worth the paper it’s written on in reality, but it’s sharp practice that I’m very surprised a franchised dealer is engaging in.