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Nurse Juju
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Discussion Starter · #1 ·
Hi,

I was offered an interest rate of 4.49% yesterday if I pre-ordered with a particular dealership. Funny thing is I actually spoke to a man from their head office who happened to be around and he tempted me into another pre-order.

I confirmed with him if the rate was definitely going to be 4.49% as some places say it could be 5% but then when you sign up you end up with a rate of 12%. Head office guy confirmed that 'the rate would definitely be 4.49%' if I pre-ordered today with a deposit. I was extremely tempted as this would mean not using our savings to pay for the car in full.

I paid the deposit, I was sent the paperwork online, which seemed to be accurate, I did not question anything. When my husband checked the finance side of things, he found that the actual rate I was offered in the documentation is over 7%.

He wasn't very happy and we have since sent them an email for an explanation for the inaccuracies.

I do not know where I stand now with getting the 4.49% rate . I feel duped :(, am I that gullible?

I thought we could trust dealerships to carry through with what they say. And what is really niggling me is that if my husband hadn't noticed this, the dealership would have not said a word and would have been quite happy for me to sign a contract with incorrect rates. That for me is just DISHONEST.

Any advice on where to go from here would be gratefully received.

Thanks, Juju
 

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I was offered a low rate finance, if, when the time comes to collect the car it has changed ,then I'll just cancel it all and walk away.

Take care looking at finance rates and APR rates.
 

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Nurse Juju
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Discussion Starter · #3 ·
Did they give you a document with some figures for your records when they offered you finance Unicoder?
 

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I've got a loan at 5.1% Apr. When you check the paperwork the actual interest rate is under 3%. The APR is the full cost of the loan. It you check money supermarket. Com there are several 5.1% loans available if you borrow enough.
 

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Did they give you a document with some figures for your records when they offered you finance Unicoder?
No paper work, just word of mouth from dealer that a better rate than dacia offer ?

I think the dacia offer is very high at somewhere around 13% APR
 

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Nurse Juju
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Discussion Starter · #7 ·
I received this email explanation just now and I do not get it.

"Looking at the finance, we will never quote an APR, this is a term used to calculate interest with penalties and administartion fees, which isnt a true indication of interest. The 4.49% is a flat rate of interest which will put in the simplest term the amount of interest you will be paying. The APR will be calculated and then printed on the finance documentation in due course for collection".

So are they now trying to say the finance can be anything they want? I'm seriously confused.
 

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I think by law they must quote flat rate and the APR annual % rate.

If they don't they are in breach of the law, a complaint to the FSA would see them in hot water.
 

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Always ask for the APR... They try to sell the flat rate as it sounds good.... but I am sure that practice is against FSA regulations an they must quote the APR.. the APR the one you're interested in (and don't believe the sales people when they tell you the basic is the one you should be interested in) is usually but not exactly double the APR you can use that as a guide...

So 4.9% flat as a guide could be somewhere between 8-10% APR doesn't sound quite as nice as 4.9% does it.. Or they will say well how much can you afford to pay per month.. You say what's the APR?

They will say let's not worry too much about that just yet, what can you afford,, if they try and avoid telling you ask them out straight.. You want to know the APR or walk away... as that is just sharp practice and that goes on in some establishments they just want to get the sale... as they say 'buyer beware'
 

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The whole financing business, as someone said, is a minefield. I ended up with a loan from Santander that I'm happy with, especially given the v. poor Dacia finance option that the dealers offer ... but, to be fair, I don't think the dealers have much, if any, room for manoeuvre on Dacia Duster financing rates. In fact my dealer recommended that I go elsewhere for financing my Duster. I searched extensively before settling on applying for the Santander loan -- but I was acutely aware of not making an actual loan application until I'd made a decision about my preferred provider. The reason for hanging fire was I didn't want my credit-rating to be zapped which can happen if you make one loan application after another and get turned down. The other trap that lies in wait for the unwary applicant is the difference between the headline rate that a lender may advertise and the actual loan proposal that they offer after conducting a credit search on you. The headline rate is meant to draw people in, but it's usually only a small percentage of people that actually get offered those terms.
In making my decision I looked at the APR and the interest rate, but I found the most useful figure was the one which states the 'Total Cost of Loan' ... in other words it gives you the bottom line on what the loan will cost you. I find that having that figure is the best way of comparing deals. I always look for or ask for that bottom line total-cost-of-loan figure, because I had my fingers burnt a good few years ago when I was mis-sold a loan by a bank that I had trusted for 30 years. I stupidly didn't ask enough questions or look at the small print and ended up with a punitive total cost of loan figure that was massively greater than the sum I actually borrowed. I complained eventually and received appropriate compensation, but I have become very wary about the whole loan process.
 

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Nurse Juju
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Apologies in advance guys for the long winded message, i've just sent this off to the saleman.

As per your email and telephone conservation, the flat rate is 4.49% and the payments are £247.96. According to our calculations this should be roughly the same as Money Advice Service website calculator (shown below). Although this does not include the credit admin fee of £298 included in the hire purchase agreement, it amounts to £232.00.

On the other hand a personal loan from Nationwide with current market rate of 5.9% on a loan amount of £9000 over the same term of 42 months and the monthly repayments are £237.07. This interest rate is 1.5% higher than your flat rate. Even with this high rate their monthly repayments is £10 less. You can confirm this for yourself by using Nationwide's online loan calculator on: http://www.nationwide.co.uk/loans/default.htm.

Based on the Money Advice Service online calculator and over the phone advice, for flat rate of 4.49% the monthly repayment of £247.96 is inaccurate. There is a difference of £670.32 charged extra over the term of the loan.

When I discussed this hire purchase agreement with the Money Advice Service, they also advised that I should have received a clear breakdown of the financial quote and financial summary as per FSA regulations but the document I currently hold is just a Hire Purchase agreement with terms and conditions.

Could you please provide a clear breakdown of the finance agreement, including charges, fees (admin, penalties, interest, cost of the agreement or otherwise) and financial summary with your response for us to consider and review as soon as you can.

I would like to state that my excitement about buying a new car and confidence of buying it from Arnold Clark is dwindling due the stress of getting this finance agreement clarified. I hope you appreciate that this is a very crucial step for us as a new family with a little baby.

I look forward to hearing from you.

Kindest regards,
Juju

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Thank you for using the Loan calculator on the Money Advice Service. Here are your results.

Loan Details Loan amount £ 9,000 Annual interest rate (%) 4.49% How long for? 3 Years 6 Months Results Monthly repayment £ 232 Total interest paid £ 728 Total amount paid £ 9,728

Remember, when it comes to money, the Money Advice Service has other impartial information and tools to help you work out what's right for you. So come back again soon.

Hopefully this gets me a straight forward answer as i think its around the 7% APR mark, I think you're right Bandit, the guy was trying to brush me off :angry: earlier as he stated "APR's can vary so much between loan to loan depending on what penalties and administration fees are in place, including terms of the loan and can be used to easily hide the true value of the interest."
 

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Just to complicate this a bit more ... I was of the opinion the APR is the one you should be looking at.

APR is the annual recentage rate. So this details the rate you pay over a full year. I.e. how much interest you pay over the year.

Where as the actual rate, even though may be much lower, it really depends on how it is calculated. The big difference comes into play if they charge their interest daily, weekly or monthly etc. the shorter the time scale they use to charge the interest the more expensive it will be. Therefore a daily calculated rate will be much more expensive than a monthly calculated one. I don't want to get into the Maths but the flat rate as you call it is not going to shed much light on your payments unless you know the interest calculating time frame. Therefore the APR is the real guide ... I.e. how much interest you pay per year.

Therefore I would be of the opinion if financing you should be looking at the APR.

Now it seems that loans are done quite differently in the UK as over here you get all the info before you sign. Rate, APR, total cost of the finance etc.

But yes, they do their best to confuse you, so don't be too hard on yourself.
 
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Nurse Juju
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My lawyer friend has looked through my contract and confirmed that Yes the flat rate is 4.49% however the APR is around 7% for the term I am after :huh: :eek: :angry: and this flat rate is for £9000 for every single year I want the loan as they do not take into consideration any of my repayments. Which is why the figures don't make sense.

Now I am really pissed :angry: :angry: :angry:

As I agreed to this new contract on the 11th Apri I am calling the dealership tomorrow to cancel. I feel they have been dishonest or (put politely) not entirely open and transparent and I don't trust them anymore, not one bit.

I'll let you know how I get on, good thing I didn't cancel my first order :lol:

Juju
 

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Hi juju,

Arnold Clark you mention , is the dealer in your area ,Nottingham ?

I've ordered my duster from Arnold Clark in Huddersfield , I suppose as a company they have company wide policy on finance , so I'll be looking into what they quote me for my finance .

Thanks for the heads up!
 

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Car dealers like to talk flat rate loans where the interest is on the full amount for the full term, they then skip to monthly payment to try and get you to think monthly cost rather than total cost of vehicle ownership.

There is no point going for a cheap Dacia and expensive finance, it defeats the object totally.

I use http://moneyfacts.co.uk to compare rates and deals and they have some good calculators on there as well.

Remember the dealer is selling you two items the car and the finance. He makes more money on the finance than he does on the car....

Sent from my Nexus 7 using Tapatalk HD
 

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Nurse Juju
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1,342 Posts
Morning Unico,

No the dealer is not, when i called the Nottingham branch to ask questions about finance I was put through to the Preston branch as they stated they hadn't fully changed things over for the Nottingham branch and with the hard sell, of if I drove to Preston to sign documents, they would pay for my travel and they would deliver my new car to me at home/Nottingham branch etc etc, I was sold.

Please make sure you ask what the APR is as I think this is probably a nationwide tactic.

Hi juju,

Arnold Clark you mention , is the dealer in your area ,Nottingham ?

I've ordered my duster from Arnold Clark in Huddersfield , I suppose as a company they have company wide policy on finance , so I'll be looking into what they quote me for my finance .

Thanks for the heads up!
Morning Nobbi,

After some thought, you are spot on, I now realise all I was being told is the flat rate, they did not even tell me what the APR is which is what I was mistaking the flat rate for.

Any time previous i took any sort of loan they said interest rate and that is APR but it seems this is not the case with Arnold Clark. :angry:

I am now concerned about get my deposit back, as my friend said I agreed to the contract, but we will see. I only ordered 2 days ago so hopefully not too much hassle as last night i didn't sleep a wink stressing about the whole thing. :(

Car dealers like to talk flat rate loans where the interest is on the full amount for the full term, they then skip to monthly payment to try and get you to think monthly cost rather than total cost of vehicle ownership.

There is no point going for a cheap Dacia and expensive finance, it defeats the object totally.

I use http://moneyfacts.co.uk to compare rates and deals and they have some good calculators on there as well.

Remember the dealer is selling you two items the car and the finance. He makes more money on the finance than he does on the car....

Sent from my Nexus 7 using Tapatalk HD
 

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Any financial deal has a cooling off period. Have a quick Google but I think it is 7 days face to face or 14 days over the phone or internet.

Car sales is still to heavily reliant on pressuring the customer to sign on the day rather than offering the correct product and expecting to them to come back.

My local dealer tried to use the grief of finding out my Scenic needed over a grand to get it through the MOT to push me in to signing for a new car that day. And that was 5% "flats rate"

Flat rate is very quick and easy to work out and car sales men are not often the brightest sparks, just the best dressed. Real financial advice needs to come from an approved broker (also often slimy crooks) or your bank ( government owned crooks)

Is in summary if you are going to borrow money you are a small fish swimming with sharks. ( for information I used to work in finance and marketing and also have worked in a car dealership)

Sent from my Nexus 7 using Tapatalk HD
 
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