best way to finance a car over 3 years?

[Ash333]

Been looking at possibly getting a new Smart car, and I've been quoted at 5.7% APR by the dealer over 3 years.
Surely its possible to get cheaper finance. I;ve never done anything like this before, so I'd like a little advice from experienced PHer's.
It's tempting to get a 0% credit card, and stick it on that for the time of the the 0%, then shift to another cheap deal.
I have a good credit rating.

[anonymous-user]

does the beneficial rate finance offered on the new car beat the savings to be made on a very nearly new one?

[fergywales]

How much is the car? New credit card account with a new car sized credit limit?

In all seriousness, if you feel that your credit rating is good enough to qualify you for new credit card account that could finance a new car, you would have the cash in the bank to not even be asking in todays market. Not to mention that you could probably knock a fair few quid off the asking price if paying cash.

[Ash333]

fergywales said:

How much is the car? New credit card account with a new car sized credit limit?

In all seriousness, if you feel that your credit rating is good enough to qualify you for new credit card account that could finance a new car, you would have the cash in the bank to not even be asking in todays market. Not to mention that you could probably knock a fair few quid off the asking price if paying cash.

£10k ish

[J500ANT]

They were doing 0% on used (inc prereg) smarts recently, cos I bought a 1yr old Pulse cabrio for half new list, £500 deposit contribution and 0% - a bit of a bargain!

[audidoody]

Lease it for £200 a month and then give it back.

[fergywales]

I would still argue that if you were in a position to apply and receive a new credit card with a £10k+ credit limit and 0% on new purchases, you would be in the position of either having the cash in the bank, or not having to worry about the interest rate you will be paying.

[cuprabob]

Even if you have the money in the bank and you can get 0% it still makes sense to take the credit as you will still earn some interest in your savings over the period, all be it pretty low at the moment

[iphonedyou]

fergywales said:

Not to mention that you could probably knock a fair few quid off the asking price if paying cash.

Probably not. Why would they knock money off the asking price for cash, when they can have you pay the full price plus the interest? Doesn't make any sense.

Girlfriends dad bought her a new Clio a few years back; the salesman wasn't particularly excited about taking the cash upfront, and tried his hardest to get her dad to take on finance.

Edit: and what cuprabob said. If it's 0% you may as well make interest on the capital, even if it's only a little. That's just common sense. I'd be looking to use an ISA allowance, and for the cash portion, get a 2.5-3.5% introductory rate.

Edited by iphonedyou on Monday 4th April 13:44

[fergywales]

iphonedyou said:

a few years back

We live in a different world nowadays, especially when it comes to vehicle sales.

[Kudos]

I think the point is being missed here - a SMART car! You're on the wrong site chap

[iphonedyou]

fergywales said:

We live in a different world nowadays, especially when it comes to vehicle sales.

We live in a different world, yes, but very little has changed with regards to this aspect of vehicle sales. Dealerships like money; they get this by having you over a barrel with regards to negotiating when using finance, and by the interest rate charged.

Edited by iphonedyou on Monday 4th April 20:23

[fergywales]

iphonedyou said:

fergywales said:

We live in a different world nowadays, especially when it comes to vehicle sales.

We live in a different world, yes, but very little has changed with regards to this aspect of vehicle sales. Dealerships like money; they get this by having you over a barrel with regards to negotiating when using finance, and by the interest rate charged.

Finance acceptance rates not changed then?

Edited by fergywales on Monday 4th April 20:57

[iphonedyou]

fergywales said:

Finance acceptance rates not changed then?

Edited by fergywales on Monday 4th April 20:57

To the extent you can 'knock a fair few quid off' because you're paying by cash, in preference to finance? Honestly, I can't see finance acceptance rates having had so detrimental an impact to most brands that they'd need to offset by encouraging cash sales.

Perhaps for the 'cheaper' end of the market that could in theory be a necessary step, if they're finding a lot of customers aren't meeting their finance acceptance criteria and need to make up the shortfall somehow...

Edited by iphonedyou for bloody awful formatting

Edited by iphonedyou on Monday 4th April 22:44

[fergywales]

Agree to disagree then.

[cuprabob]

More incentives for sale people to sell add ons like finance, gap insurance etc...

Some major brands like Audi are selling more cars than ever despite the state of the economy

[Deva Link]

fergywales said:

Not to mention that you could probably knock a fair few quid off the asking price if paying cash.

I bought a new VW the other day and about 85% of the conversation was them trying to sell me finance.

Even after we'd shaken on the deal, the business manager appeared and said he could knock another £300 off it we took the (heavily subsidised) finance.

When I bought my Merc, I had 3 people in the dealership almost shouting at me to take finance. They eventually offered a rate that was lower than we get on savings (in my wife's name for tax reasons). When I still said no they nearly exploded.

I'm told the reason is that they get hefty commission on finance as the finance company will then badger you to buy payment protection, GAP etc.

[sidicks]

Deva Link said:

When I bought my Merc, I had 3 people in the dealership almost shouting at me to take finance. They eventually offered a rate that was lower than we get on savings (in my wife's name for tax reasons). When I still said no they nearly exploded.

Why would you turn down a rate that is lower than the (after tax) rate you can get on savings??

Sidicks

[RenesisEvo]

Deva Link said:

I'm told the reason is that they get hefty commission on finance as the finance company will then badger you to buy payment protection, GAP etc.

PPI is largely a waste IMO, unless you have an unstable job, they always look for excuses to not pay up. Gap insurance - you can get this independently, and a lot cheaper than the dealer would offer I suspect.

If they give a better price for the car on finance than cash, check for any early settlement penalties, if small/none, take the finance then pay it off straight away.

[Deva Link]

sidicks said:

Why would you turn down a rate that is lower than the (after tax) rate you can get on savings??

Sidicks

I think that's what confounded them!

Generally, I would just rather pay for stuff and then I can forget about it. I think it's about not being beholden to anyone.

The other specific issue with the Merc purchase is that I knew I could lose my job over the following few mths, and that did happen. We had a plan B which worked fine, but I didn't want a chunky debt hanging over me.