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Personal Loans Discuss personal loans, secured and unsecured, and general borrowing.

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  #1  
Old 08-29-2006, 07:29 PM
jim bent jim bent is offline
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Default Loans vs HP

In recent years, car dealerships have seen their margins eroded. Gone are the days when 65% of all their sales were written on their own Hire Purchase product and with average commissions for selling finance at around £1000, it was a good income stream for them. Recently, this finance penetration has dropped to only 25%.

WHY?

The reason is what they called the Personal Loan nightmare! Increasingly, customers are landing on their forecourts with the cash in their bank having obtained a loan. One thing that British people love is being a cash buyer! Striking a deal and handing over the reddies is a time-honoured tradition in pursuit of a bargain.

But, this may not be the best way. A car dealership has a certain amount of money they 'need' to make out of a deal, and so when they can't make a penny on the finance, they either can't move on the price, or look to make up the money elsewhere by selling ancillary aftercare products such as GAP insurance and SupaGuard polish.

However, there are some great Car Loan products out there with some very attractive rates. Some even give away freebies such as MOT cover, car checks, warranties etc.

But be careful when you want to compare the two products. Personal Loan companies use APRs but Dealerships use FLAT RATES! As a rule of thumb, you can normally double a flat rate to give you the equivalent APR - you have been warned!

Also, a standard HP agreement is 'secured' on the car, so if you default, in most cases, the finance company has the right to repossess the vehicle. This cannot happen with a loan, as the finance is not linked to the asset. Instead, the loan company will pursue you through the normal collections/court procedure to get their money back.

Has anybody got any views on this? Anybody been to a dealership, negotiated the price based on the dealership finance, but then switched and tried to pay with a loan? Did they try and change the price of the vehicle?

Has anybody received one of these freebies with their loan and found its not worth the paper its printed on?

Speak up and help other potential Car Finance/Loan customers avoid the pitfalls!
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  #2  
Old 09-02-2006, 12:42 PM
brian brian is offline
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Default Re: Loans vs HP

Exactly the reasons why I bought my car on a loan, not HP - the salesman quoted the base rate of interest, and then tried to hide the APR in the forms - turned out to be around 20%.

Also - it's not just that HP allows repossession, but also they put limits on what you can do - for example, you can't drive over a certain number of miles without incurring extra charges.

Overall, I won't touch HP - you know much better as to where you stand with a loan, in my opinion.
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  #3  
Old 10-23-2006, 01:22 PM
bangfor bangfor is offline
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Default Re: Loans vs HP

The best way out is to compare and to do that, before approaching a dealer it helps to line up a car or personal loan and compare the advantages, because for one, the manufactures could allow 0% incentive, which could go a long way. Other than that even if dealers donít come forward with them there are incentives that they get from the manufacturers that they should pass on to the buyers and knowing those in advance and asking for them could make borrowing through the dealer cheaper.
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Old 10-23-2006, 01:24 PM
bangfor bangfor is offline
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Default Re: Loans vs HP

The best way out is to compare and to do that, before approaching a dealer it helps to line up a car or personal loan and compare the advantages, because for one, the manufactures could allow 0% incentive, which could go a long way. Other than that even if dealers donít come forward with them there are incentives that they get from the manufacturers that they should pass on to the buyers and knowing those in advance and asking for them could make borrowing through the dealer cheaper.
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  #5  
Old 11-29-2006, 05:46 AM
burfi burfi is offline
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Default Re: Loans vs HP

I would always want to go for a Loan, no matter what. I am a disciplined person when it comes to loans and I won't take a loss for anything.
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