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Hire purchase

  • 21-02-2024 8:10pm
    #1
    mjp
    Registered Users, Registered Users 2 Posts: 1,011 ✭✭✭


    Buying car off garage and they giving me additional €1500 for my own car if I take finance with them. Finance rate is 10.9% which cancels out the savings I can make on 6.5%rate with my credit union. My plan was to take the trade in price with finance and to take finance option and to repay the full loan back after 1 months with a credit union loan. Will be paying an additional €2100 cost of credit by taking their finance option. They tell me that there is no penalty with their finance which is with BOI if I repay the loan in full after 1 month. Does anyone have experience of clearing off a car loan/HP early with finance providers here.



Comments

  • #2
    Buddy Bubs
    Registered Users, Registered Users 2 Posts: 4,486 ✭✭✭Buddy Bubs


    Sounds ropey. There is commission clawback on nearly every financial sale, I've worked in it and there's loads of tricks to generate commission but plenty of safeguards against doing the likes of what you're doing.

    If they're offering you 1500 to take finance, they're making at least that. When you pay it off with no interest paid, you can be pretty sure the bank won't be happy. And if the dealer gets commission clawed back they won't be happy after giving you 1500 extra.

    Who is the ultimate burden of this 1500 falling on? It's either you, the bank or the dealer, I'd put my money on it being you.



  • #3
    mjp
    Registered Users, Registered Users 2 Posts: 1,011 ✭✭✭mjp


    Theyve been open and told me they can offer more for my own car as they get kickback from finance. After raising query of lump sum payment as I expecting to come into inheritance she tells me that there are no penalties for early repayment and if I wanted to clear it next week that i could without incurring any charges



  • #4
    Miscreant
    Registered Users, Registered Users 2 Posts: 2,319 ✭✭✭Miscreant


    You need to be careful that the finance company don't front load the interest into the loan at the beginning. I have seen this done several times and there was a thread on here about it in the past week or so. That practice would negate any saving you make by paying the finance off early.



  • #5
    Del2005
    Registered Users, Registered Users 2 Posts: 19,102 ✭✭✭✭Del2005


    https://www.boards.ie/discussion/comment/121801084#Comment_121801084

    You need to read the credit agreement you sign when buying the car and not listening to a sales person working for a different company. Or call BoI car finance and ask them.



  • #6
    colm_mcm
    Registered Users, Registered Users 2 Posts: 73,520 ✭✭✭✭colm_mcm


    https://www.boards.ie/discussion/comment/121801084#Comment_121801084

    It’s been a while since I sold HP but that doesn’t sound right.



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  • #7
    mjp
    Registered Users, Registered Users 2 Posts: 1,011 ✭✭✭mjp


    https://www.boards.ie/discussion/comment/121801162#Comment_121801162

    You're correct regarding front loading of interest. Won't be going down this route as be paying the full interest for first 16 months and not making any inroads into principle. Also have to pay 6 months interest penalty if exit agreement in first 12 months so they nail you in all directions.



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