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Aplogies for my conspicuous absense from such questions. Work has been rather busy.
Other that to re-iterate alot of what has already been said about personal loans v car finance there are a few other factors to consider.
When you take out a personal loan, you walk into the show-room as a cash buyer, a typical retail customer if you like. What this means is that you will most likely be sold the car at close to full price or with some discount but not too much.
When it comes to car finance things change in the background somewhat.
For our company the following applies:
We as a company have negotiated deals with dealer groups which mean we get a substantial discount against retail price due to the quantities of vehicles we supply to our customers.
We as a company have also negotiated strong rates with our funders for the same reason as above.
Our funders also do deals directly with manufacturers for even better deals which they then pass on to us
All this combined means we can cherry pick our funder offering the best deal and rates, cherry pick our dealer offering the best further discount and then wrap this up nicely for our customer who gets provided with the car they want and the financial product they want (not what that dealer can push).
Is the cost of borrowing less on a personal loan than car finance, on the face of it almost always yes. However, when you look at the deals brokers like us can do this quickly changes.
Here is an example:
VW Passat 2.0TDI GT Saloon - Manual
Retail Cost Price: £26,025
3 Year Personal Loan (Tesco): £796.90/month (total paid = £28688)
Approx Value of car after 3 years (Autotrader): £11,000 (total 30,000 miles)
Offset residual value against loan = £17,688 over 3 years
Total monthly cost = £17,688/36 = £491
Then add cost of maintenance/servicing/Tyres/Road Fund License
A PCH deal we have on at the moment for the same car:
3+35 x £246 (inc VAT) which includes servicing, maintenance, tyres and road fund license
Total payable over 3 years: £9,348 or equivalent monthly cost of £259.66
Plus no hassle of selling the car etc
Contract Hire or PCP, or even HP are not for everyone, and some will never finance a car on principle, which is fine but I would always reccomend a customer consider all the options before proceeding as there can be considerable savings involved in going against what you would normally do.
For those who would not want to use an independent broker but go to local dealer for finance, you can ask what commission they receive from the funder for doing the deal with you. Often it will be around £500 of which the saleman may get £250.
Now I'm not the biggest fan of dealer retail sales as they are not the best, but I do feel occasionally sorry for them when they arrange a deal, give test drives, spend time on it, all on a wage of around £12k basic (the rest is commission from finance and sales) to then think yay Ive done a deal that will earn me £250, only to find out the buyer settled immediately which means the salesman gets nothing for that deal in the end so may as well not have bothered.
Just something to think about... I would recommend being up front with the salesman concerned so they know that they will not recieve any benefit from spending time with you, giving you a test drive, getting the best rate they can, finding the car, ordering it, checking it over when it arrives, doing the handover with you etc.
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