Why are main dealers still misleading consumers?

[Fastlane]

I am just in the process of sorting out a second (electric) car for my wife. As always I have been looking on the leasing sites to get the best deal and then trawling around the dealers to sort out test drives and see if they can match the figures (for 36 month contract hire).

As usual, they quote me a monthly figure, and then the initial payment as an afterthought. In every case they can't get their head around the fact that I then work out the total cost and divide this by the number of months to give me a true monthly cost. It's the same with PCP.

Given a car is the second largest purchase most of us will make, why are so many people so easily fooled into paying way over the odds because the dealers focus on the monthlies?

Don't get me started on the value of service plans for electric cars...

[zedstar]

It's the way the world works now, focus on the smallest regular outgoing to make a deal look good. Lots and lots of people, even clever ones, refer to their cars with a £xxx per month.

Sometimes they wont even know what their deposit is, cos they didnt know what equity they had in their last car and don't know what the manufacturer deposit finance contribution was, or even their term.

I've even heard of people who felt they had to go back to the garage they bought the car from for their next deal, as they were in negative equity, and didn't appear to know they could VT by themselves.

Real minefield out there and deliberately confusing.

[Dohnut]

I have also found recently that when requesting finance quotes all the upsell stuff (GAP, wheel insurance etc.) is always included. So you end up having to subtract all of that.

It's always massively over priced too, almost to the point that maybe it needs regulating.

It has become a real game of smoke and mirrors!

[Salmonofdoubt]

The easy explanation is that they're trying to simplify things for the customer. Especially if you're returning a PCP car all you're interested in is what can you have for a similar monthly to the one you're used to.

I agree it's often massively misleading. I sat with a former gf as a mini salesgirl went through deposit, monthlies, add ons. At the end up quickly worked out we'd have been asked to pay far less than the list price, she looked shocked when I asked about the final payment because at no point until then had it been mentioned we were being quoted for PCP and not HP.

[brightmotiv]

Purchase in March: after agreed sale, emailed paperwork had a) old sale price pre reduction b) £700 autoglym added (£1200 increment/ c 5%). Absolute joke. No apology when I pointed this out.

Edited by brightmotiv on Friday 17th July 14:04

[DoubleD]

Fastlane said:

I am just in the process of sorting out a second (electric) car for my wife. As always I have been looking on the leasing sites to get the best deal and then trawling around the dealers to sort out test drives and see if they can match the figures (for 36 month contract hire).

As usual, they quote me a monthly figure, and then the initial payment as an afterthought. In every case they can't get their head around the fact that I then work out the total cost and divide this by the number of months to give me a true monthly cost. It's the same with PCP.

Given a car is the second largest purchase most of us will make, why are so many people so easily fooled into paying way over the odds because the dealers focus on the monthlies?

Don't get me started on the value of service plans for electric cars...

Are people so easily fooled? You obviously weren't.

[NewUsername]

They talk that way to normalise the idea that you'll be returning the car at the end of pcp with some equity as a deposit and going again, hence only the monthlies matter in their world, once they've got your deposit on the first car they've got you hooked in. For this reason i've only ever PCP'd my wifes cars and have done deals with no more than a months contribution from me so that i'm always free to walk away and swap manufacturers at the end of the deal without 'regretting' leaving my deposit.

[Sheepshanks]

Fastlane said:

As usual, they quote me a monthly figure, and then the initial payment as an afterthought. In every case they can't get their head around the fact that I then work out the total cost and divide this by the number of months to give me a true monthly cost. It's the same with PCP.

I had an issue with a dealer who genuinely seemed to be completely baffled why I insisted on knowing the GFV - he said absolutely no-one keeps their car to the end of the term so the GFV is irrelevant. Which is odd, because I know quite a few people who've made the final payment and kept the car.

Fastlane said:

Given a car is the second largest purchase most of us will make, why are so many people so easily fooled into paying way over the odds because the dealers focus on the monthlies?

I find my SE colleagues all talk in tems of the monthly cost. Ask them about deposit etc and they either go extremely vague or they'll say there wasn't one. Ask what happened to their previous car and they'll say the p/x'd it. Then they act shocked when they get to 3yrs and they've got nothing.

[Rick101]

Shocking how many people struggle with fairly basic maths.

I've never got close to a PCP or any kind of dealer finance really. It's always at least double what's quoted elsewhere and if you start asking questions they soon decide you're probably not their target customer.

I'm not averse to finance. I've just taken a fairly hefty loan. 2.9% and I'm pretty clear on my exit strategy. Having a grasp on the maths is pretty important when you're dealing with for many younger folk, may be the biggest purchase of their lives.

[Wooda80]

DoubleD said:

Are people so easily fooled? You obviously weren't.

Not everyone is as astute and as good with numbers as the OP though, and that's what he needs us to know. He has a spreadsheet with columns headed 'Aggregate' and 'Amortised' for god's sake.

"Leave this to me, Marjorie, I know how to deal with these kind of people"

Would love to know how he behaves in a restaurant.

[Rick101]

Wooda80 said:

"Leave this to me, Marjorie, I know how to deal with these kind of people"

Would love to know how he behaves in a restaurant.

There is always one clever chap with a derogatory and snide remark.
One day you may realise it says more about you, than the person you are trying to belittle.

[Mandat]

NewUsername said:

For this reason i've only ever PCP'd my wifes cars and have done deals with no more than a months contribution from me so that i'm always free to walk away and swap manufacturers at the end of the deal without 'regretting' leaving my deposit.

Your comments above seems to suggest the perhaps you're not quite up to speed on how PCP works.

It's perfectly fine to put down a small initial payment / deposit if you don't want to or can't afford to pay a larger amount, but by doing so you are just increasing the amount borrowed and thus increasing the interest that you have to pay back, so you're actually doing the finance company a favour with that approach.

On your other point, you are perfectly able to walk away and swap manufacturers at any time with a PCP, and that is irrespective of what amount of initial payment / deposit was put in a the beginning.

For my part, I'm a regular car finance user but I prefer regular HP to PCP, since you avoid paying extra-over interest on the non-diminishing GFV over the term.

[Fastlane]

Wooda80 said:

Would love to know how he behaves in a restaurant.

I tend to walk in, sit down, order some food, eat it, pay for it and leave. Seems a rather random question on a car enthusiast's site...

[DoubleD]

Rick101 said:

Wooda80 said:

"Leave this to me, Marjorie, I know how to deal with these kind of people"

Would love to know how he behaves in a restaurant.

There is always one clever chap with a derogatory and snide remark.
One day you may realise it says more about you, than the person you are trying to belittle.

Its funny how its so often claimed on here that most people are easily fooled, or easily led or what ever, but the OP never is and everyone on here is also easily able to figure it out, but we still like to claim that most are fooled by it all.

[Terminator X]

NewUsername said:

They talk that way to normalise the idea that you'll be returning the car at the end of pcp with some equity as a deposit and going again, hence only the monthlies matter in their world, once they've got your deposit on the first car they've got you hooked in. For this reason i've only ever PCP'd my wifes cars and have done deals with no more than a months contribution from me so that i'm always free to walk away and swap manufacturers at the end of the deal without 'regretting' leaving my deposit.

You aren't hooked in though are you - return car at end, VT it or sell privately. If you are in neg equity for the duration of the loan period then yes not much you can do I suppose however it does seem to balance out as you approach the end of the loan period.

TX.

[iphonedyou]

DoubleD said:

Its funny how its so often claimed on here that most people are easily fooled, or easily led or what ever, but the OP never is and everyone on here is also easily able to figure it out, but we still like to claim that most are fooled by it all.

Indeed.

[NewUsername]

Mandat said:

NewUsername said:

For this reason i've only ever PCP'd my wifes cars and have done deals with no more than a months contribution from me so that i'm always free to walk away and swap manufacturers at the end of the deal without 'regretting' leaving my deposit.

Your comments above seems to suggest the perhaps you're not quite up to speed on how PCP works.

It's perfectly fine to put down a small initial payment / deposit if you don't want to or can't afford to pay a larger amount, but by doing so you are just increasing the amount borrowed and thus increasing the interest that you have to pay back, so you're actually doing the finance company a favour with that approach.

On your other point, you are perfectly able to walk away and swap manufacturers at any time with a PCP, and that is irrespective of what amount of initial payment / deposit was put in a the beginning.

For my part, I'm a regular car finance user but I prefer regular HP to PCP, since you avoid paying extra-over interest on the non-diminishing GFV over the term.

I understand it fine thanks and can work through the numbers just dandy. I’ve worked with financial instruments for over 20 years and have professional accreditation. It’s much better to get the dealer to make the deposit not you

Irrespective of my own purchasing methods some people will feel ‘trapped’ if they think their gfv will Leave them with ‘equity’ for a deposit on the next one....whether legally they can walk away or not

[nickfrog]

Bloody debt junkies.

[DiamondLights]

People aren't taugth personal finance in this country at school and we're a nation who therefore rely heavily on credit.

I've lost count of the number of people who say "it only costs me £XXX per month" and i ask what the APR is and then you realise they're paying thousands more than what a car is worth.

[DoubleD]

DiamondLights said:

People aren't taugth personal finance in this country at school and we're a nation who therefore rely heavily on credit.

I've lost count of the number of people who say "it only costs me £XXX per month" and i ask what the APR is and then you realise they're paying thousands more than what a car is worth.

Lots and lots of people are telling how much they spend on a car every month?!

We are taught maths at school, that allows us to work it all out.