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BMW 3-Series (E90 E92) Forum > BMW E90/E92/E93 3-series General Forums > Regional Forums > UK > UK Off-Topic Discussions > Help on finance deal



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      01-06-2013, 02:38 PM   #1
briers
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Help on finance deal

Tried to do a deal on a car last week but dealer not willing to discount at all. I'm paying cash so no dealer commissions etc.

Someone suggested on another forum taking out finance, dealer gets their commission and I get a better deal which I'm keen to get on a 30k car that is probably hard to shift in the future.

The idea was to use the 14 day cooling off period to pay off the finance with my own cash. Does this idea stack up? What about front loaded interest, deposits, dealer commission if 14 day cooling off is used and any charges or come backs from the dealer if I pay it off etc...

Anyone know?
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      01-07-2013, 06:58 AM   #2
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If you use the 14 day cool off period to pay the finance, I'm pretty sure you will have to pay a percentage of the interest owed. The only way would be to cancel the finance then pay the dealer cash. That may open a can of worms up though.

I'm surprised the dealer wouldn't budge on price? I bought a new car the weekend and stayed poker faced and they moved loads to sell it to me.
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      01-07-2013, 07:08 AM   #3
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A friend of mine has recently been in exactly the same situation. He was replacing his wife's car and had plumped for a bells and whistles Polo. He always pays cash (ie trade in of the old car plus actual cash) and never uses finance. However, he just couldn't get a decent discount on the new car. He was encouraged to get the remaining balance on finance to get a better discount and then just advised to cancel the finance after the first payment and pay off the remainder. This he did. I believe there was a small 'penalty' (how the interest is calculated?) but the discount more than outweighed this.
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      01-07-2013, 07:48 AM   #4
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It's usually a months interest as penalty for early repayment. There might also be a final payment fee as well couple hundred quid.

For example if a 1000 payment is at 8%, pay 80 extra. Plus a final value fee. Total cost maybe 300.

As a very loose example!

So you're actually better to take a very long finance term in this case where a months interest will be less money due to the lower monthy cost.

Someone correct me if they know better.
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      01-07-2013, 08:20 AM   #5
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Be very careful with this, who is the finance with??

Different companied have different terms, there may be a set up fee and a settlement fee along with part interest to pay, you may end up far worse.

Can you not call round other dealers and see if someone else will discount one?
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      01-07-2013, 08:51 AM   #6
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...or just play along with the game saying you'll do the finance but when you go to collect just refuse to sign the finance forms and insist on paying cash there and then??

Surely they'll be looked after in the profit on the car but they're after the 'bonus' of finance too.

They must allow for this sort of thing to happen surely. Also, they can't force finance down your throat it you don't want/need it, think they're just playing hard ball.
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      01-07-2013, 12:09 PM   #7
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I paid cash for a new car at the weekend too (well the deposit with remainder in 4 months when it's built) and the finance wasn't a factor. Well it was but i made sure it wasn't

If the dealer isn't interested in moving and you're not happy. Walk away.
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      01-07-2013, 12:17 PM   #8
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I work at a dealership. Some dealers wont move regardless of payment type. The words Im paying cash is worse for us not better. In fact saying that instantly makes us want to raise the price not lower as we will get paid no backend money.

My dealership is a 1 price store like carmax. You can work us till your blue in the face and pennies will not have changed sides. We do price ours "apples to apples" to be the lowest price. Some will still try the old I saw it lower somewhere else, if thats true show me the ad and Ill beat it if its apples to apples. It never is.

As for paying off, in Florida you can pay off anytime you want you only pay interest on the time you held the loan. So if its 15 days then you pay 15 days which is dollars if anything. Again here in Florida there are also no prepayment penalities. Some places will have a penalty if you pay off early.

If you finance with the dealer you wouldnt return to the dealer to pay if off, you would be paying the finance company not the dealership.
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      01-07-2013, 12:20 PM   #9
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Dealers are there to sell finance. That is the name of the game in the modern world, everywhere you go people want to sell you finance. Use finance as a bartering tool. If you are paying a huge sum in the first place the arrangement fees will be fairly small in comparison to the borrowing amount and the discount you can probably haggle by taking finance. When BMW wants to flog vehicles that don't reduce the list price, they reduce the finance rate.

The penalty you will pay will a months interest or similar (providing you don't take PCP iirc) and whatever the finance arrangement fees are. A months interest is peanuts in comparison to arrangement fees.

All together if you take finance and pay it all off after a month it will probably cost you 300, but you might be able to get a better price and all that matters is that you get the best overall price. When you arrange the finance the loan company think they are going to make 2/3/4/5k over the period of the loan and the dealer is obviously compensated accordingly for that and will take that into account. The loan company is probably BMW finance anyway
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      01-07-2013, 12:30 PM   #10
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Also beware, car finance is a minefield and they always sell it to you in the most complicated incomprehensible way possible. Ask them to give you any details in mortgage style figures. This takes them a while because they use annoying flat rate interest for calculations instead of APR. Also you don't want front loaded (PCP is this I think) as basically they get your loan, calculate the interest and then you start with that figure and repay it. So if you had a 10k loan for 1 year @ 20% your opening balance is 12k and early repayment has no benefit as interest is not recalculated over the period of the loan.

And then you have rule of 78s style loans which basically mean your first payments are paying mostly interest. So after about a year all that is left is principal and it also becomes pointless to pay off the loan as you have already paid all the interest.
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      01-07-2013, 12:35 PM   #11
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Thanks all

Guy the finance will be with Jaguar, i will find out the terms and see what i can do. I did try just 1 other dealer but the bloody idiots had advertised the car which they didn't have, presumably sold but hadn't remove the advertising and promptly tried to stick me on their email and phone list.... c**ts
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      01-08-2013, 02:54 AM   #12
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Cash vs. finance

The biggest difference between cash and finance is the number of negotiables.

In cash you have the list price, trade-in value and discount. Lean pickings for anyone who likes to negotiate.

In finance you have list price, trade-in value, customer deposit, discount, dealer deposit contribution, manufacturer contribution, residual value, interest rate, monthly payment amount, contract type, service packages, dealer commissions etc.

Let's say a manufacturer wants to move a particular type of car.....if customers pay cash, their only option is to give a big across the board discount, which they will resist because it massively increases depeciation, undermining residual values and all used car values.

If customers finance, they can hide the discount and juggle the numbers anyway they like, offering dealer and manufacturer 'contributions', attractively low APRs, unrealistic guaranteed residuals etc. without affecting list price or depreciation.

This is why its often cheaper to buy a new car on finance than one a couple of years old for cash.

If you look at some of the finance deals around today, you'll find that the sum of the deposit and monthly payments is considerably less than the depreciation, making finance actually a lot cheaper than cash.

These days, the only place for cash is in the private used market, where there are some phenomenally good deals for cars with large thirst engines and high tax brackets.

Finance these days is highly regulated. Early settlement and interest charge calculations are all laid down by law and are all fairly consumer friendly so as long as you're buying from a reputable manufacturer you should be ok.

The 2 things you've got to figure into your finance is good gap insurance (usually between 100 - 200) and great maintenance including all minor damage to wheels, paintwork and windscreens. With manufacturer SMART repair, this is usually under 100 for minor scapes, bumps and kerbings.

Its anyway advisable to keep a good car in tip-top condition because what you save on repairs you'll lose on trade-in
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