Dealer HP or personal loan?

phoenix49

This is probably a question which was asked a gazillion times, but here we go:
I might end up buying a new car from a dealership and have been quoted for a car in PCP and HP, but then I discovered that I can actually get a loan from my own bank with a lower rate than that offered by a dealer. I know that finance & sales people are probably getting some kind of kick-bank from their deals with financing in fees or bonuses and the question is it a common/normal thing to do - to tell them that I have a better deal and might end up not using their finance deals and buy the car straight away?

Any quirks or things I should be aware of? Thanks!

MarkN

phoenix49 wrote: »

This is probably a question which was asked a gazillion times, but here we go:
I might end up buying a new car from a dealership and have been quoted for a car in PCP and HP, but then I discovered that I can actually get a loan from my own bank with a lower rate than that offered by a dealer. I know that finance & sales people are probably getting some kind of kick-bank from their deals with financing in fees or bonuses and the question is it a common/normal thing to do - to tell them that I have a better deal and might end up not using their finance deals and buy the car straight away?

Any quirks or things I should be aware of? Thanks!

Give them a chance to match the rate on the HP I suppose but if you’re happy to buy without PCP then go with the cheapest of the loans using the traditional method. Is your bank one an unsecured personal loan or also HP? Obviously with the latter you won’t own the car until the last payment is made.

colm_mcm

Loan gives you more freedom than HP.

phoenix49

Yes, I meant an unsecured personal loan, basically a lump sum I can use against anything. I hope the dealer will keep the discounts on a car they were offering once I tell them I don't need their loan options (unless they can at least match it) and extra things they are trying to sell (supagard, cover against minor paint damage, etc).

Thanks for the replies!

MarkN

Shouldn't make a difference to the dealer how you pay for it in terms of what the deal is. They may try and match or better the rate from your bank but obviously it won't be a personal loan if they do.

jimmycrackcorm

colm_mcm wrote: »

Loan gives you more freedom than HP.

Actually HP gives you more freedom via the ability to walk away once half the payments are made if you become financially stretched.

In theory you don't own the car until the final payment but in practice you can agree a sale provided an arrangement is made from the sale price to pay the outstanding finance owed which is how PCP ( a form of HP) works.

phoenix49

jimmycrackcorm wrote: »

Actually HP gives you more freedom via the ability to walk away once half the payments are made if you become financially stretched.

In theory you don't own the car until the final payment but in practice you can agree a sale provided an arrangement is made from the sale price to pay the outstanding finance owed which is how PCP ( a form of HP) works.

Can you sell the car while it's in HP or PCP? I guess that depends on dealers and they could differ?

MarkN

You can always sell the car when you like with a standard loan, once you can pay back what you owe. Interest isn't front loaded on your bank loan either which many HP dealers are. So you can in theory walk away sooner than any halfway rule.

Idbatterim

I hope its not a new bmw you are looking at!

phoenix49

Idbatterim wrote: »

I hope its not a new bmw you are looking at!

Nope, it's a Nissan Leaf 2018

Lantus

This should be a simple numbers game. The total cost of each financial package over the full term? Unless there is a restriction I don't want the cheapest overall loan would be the best surely?

phoenix49

Lantus wrote: »

This should be a simple numbers game. The total cost of each financial package over the full term? Unless there is a restriction I don't want the cheapest overall loan would be the best surely?

Yes and you'd also need to consider monthly payments. I wouldn't mind overpaying couple of ks in 4 years time if it gives me reasonable monthly payments. It's all about the sweet spot.

colm_mcm

Are you going keeping the car a long time?

phoenix49

colm_mcm wrote: »

Are you going keeping the car a long time?

Yep, I plan on keeping it for at least 4-5 years, but I might also need to change it earlier (though I doubt it).

Side question: What is the usual process if you decide to buy by taking a loan and paying in cash, would you pay the full price upfront given that you'd need to wait for the car to arrive? Which could take up to three months.

colm_mcm

Nah just pay a deposit of around a grand.

Check how much the GMFV would be on PCP.