To cancel car finance

[ItsTheSmallThings]

Went to view a car last week and loved it, went to see it again today and test drive, decided I wanted it, paid deposited and signed the paperwork for finance through the dealership, will collect car next weekend. Got home and saw a well known bank advertising loans on social media, checked eligibility and it says I'm 95% chance of getting accepted. Loan will be £25 a month cheaper over 5 years.
AIBU to call dealership tomorrow and ask them to cancel finance? Can I even do that now I've signed the paper work and of I can will the garage be really annoyed at me, I hate awkward conversations and annoying people.

I'm in the UK, yet this extends to global markets because many manufacturers are not selling anywhere near as many cars. In the US, they've reduced most brands to selling trucks and SUVs, something that is now impacting the UK because the profitability of those units is better than on the company and sub-compacts that Europe typically buys. A lot of this is down to the bigger car fashion trend after petrol got cheaper post-2008, and some is down to brands moving away from having models they can only sell in certain markets. The Fiesta, of which I recently got my third, will now have no replacement. The Puma is the next closest Ford offers.

As fewer young people learn to drive or can even afford to start, this will only worsen. Electric cars are also notoriously expensive compared to the already high prices for many cars, even used. So while, yes, you're right that they make plenty of cash selling cars still, the trend as with everything has been towards financialisation. Everything is a service now where you can nickel and dime people, as the yanks say, and constantly. Whereas I paid out of my savings to get a used car of two years old, I was suggested I get a new vehicle on PCP or other finance scheme because dealers love upselling. And the cost of £200/month looks so much less than a lump sum 60 times that, or so they want you to focus on.

All the same, something like 15% of auto-loans in the US now are at $1000/month, so even if you get kicked out of your house as you miss mortgage payments, you may barely be able to pay to sleep in your car at this rate. Fun times.

I have to say you're spot in with your second paragraph. I purchased my last car a year ago and a lot of pages don't even mention a cash price, it's price per month and I see adverts on social media "is your car in negative equity?" It's just assumed you will pay monthly.

I did get a partial loan for mine from a bank but the place I got mine were visibly disappointed that their commission from me was then limited. I only went there because it was cheap and reasonably close to my house. I would never go to the such a place by choice.

I've seen videos of American dealers and what they pay per month for their car.

Looks like it’s happening.

People who buy expensive cars with cash are stupid. Only a moron would plow capital into a depreciating asset. Leasing is generally cheaper than buying a new car.

I can afford to buy a car outright, but I don't, safe in the knowledge that the capital amount I would use to buy it is returning a nice sum in an investment account. The earnings cover the monthly rental payments with a little extra in addition.

'i scrimped and saved to buy it out right blah blah blah' you don't sound high and mighty, you sound idiotic...

As PP has stated, new cars will be rental only sooner rather than later anyway.

I'd rather be stupid than up rude and superior.

I am sure my DH would loved your character assassination of him. He bought me an expensive car, outright with cash because he was dying at the time and couldn't get a lease when he had less than six months to live. He wanted to leave me with a vehicle that would allow me to continue to foster especially as the child we had at the time was too young to get the mobility past of DLA so I couldn't get him a WAV.

Love to pay over market value for my car, it makes me feel so much better to not understand the finance model and depreciation rates.

This is also why I only buy non-special edition, fully outfitted premium models that basically become worthless. If you look at the market rates for most base model or mid-range model cars from the likes of Toyota and Honda, they can sell for 90% of their MSRP even a decade and 200k miles after. My old Fiesta went part-ex'd for 25% this January of what I paid for it in 2011.

But sure, leasing is cheaper or something.

"I'd rather be stupid than up rude and superior"

And wrong. Lease companies make a profit because it is cheaper to buy the car outright. And you pay their profit by paying the lease. They don't do it out of the goodness of their heart.

I also used to work for a lease co and was part of a program to persuade people to lease by saying it was cheaper in the long run. The cost is not too different and there is an asset to sell at the end. It's only better for companies and even then it's doesn't cost less, just affects the books differently.

@Beneficialchampion2 I’m really intrigued by this as I have a friend who says the same yet he pays £400 per month for his car and gets a new one every 3 years so £14400 over that period. (plus a deposit of some sorts). Over 9 years he’ll spend £43200 on car payments. Over 9 years ago we paid £9000 for a 3 year old car that’s still going strong. One big fix when the fan went so that was £800. Other than that, just replacing the tyres and annual services.

purchasing a car outright is often cheaper… unless you can explain how it isn’t?

Genuine question as we are considering getting a newer vehicle in the next year so I’ve started looking at leases but for large family cars it doesn’t seem to pay off?

@TeenLifeMum

Leasing/PCP will never be cheaper than buying (or bank loaning) a newish car outright and running it into the ground.

People who tell you it is are those who like to present as someone with a new car but likely feel guilty about the cost. If only they could understand that you can’t tell how rich and important someone is by the car that they drive.

Second hand cars aren’t necessarily a depreciating asset these days, especially if you chose wisely. My 2017 Golf estate is worth the same now as I paid in 2020.

Leasing is only cheaper for people who must have a new car every 3 years. Those people put so much value on the warranty, new technology and image that there is some method behind the statement. It fuels the used market with a steady stream of 3 year old cars which purchasers usually need to finance. It fuels the new market etc etc.

Does it remind you of another kind of selling? Mobile Phones?

There is nothing wrong with leasing just as there is nothing wrong with cash. Calling someone a moron for paying cash is plain nasty. I purchased a car 11 yrs ago on PCP. The interest rate was 0.3% and there was a dealer contribution so the finance cost me about £30 in total. I would have been a moron to pay cash for that one. This time i went in and paid almost double in cash for my next car. There was no incentives for finance and the interest rates being charge were expensive.

So looking into it, the bank loan will charge me for any overpayment, but the finance will let me pay off any amount without a charge.

"Only a moron would plow capital into a depreciating asset.' we are talking about buying a personal car, not a fucking office block. Leasing just means you pay the depreciation costs monthly to the lease company - it's not a magical way to dodge the depreciation.

I love how people think this subject turns them into Warren Buffet when it's just about a car.

But you don't have the bank loan. There are several reasons upthread as to why you might not get it, or would get a worse rate. Not a risk worth taking at this stage.

Finance also offers you a protection that a bank loan doesn't. The finance is against the car itself and if there is an issue, they help you fix it as it's their asset. I don't know the specifics but learnt this when I used a bank loan and there was a problem.

This.

I don’t think the dealership will care how you finance it, but I’d wait to make sure you get the loan as 95% is just an indicator, not a guarantee.

I've just bought (as in, yesterday) a new second hand car after scouring all the sites and didn't see this at all? Are you sure this isn't just algorithms?

Every search site I used, you had the option to filter by max/min price, then a separate option for estimated monthly payment.

@ChiefWiggumsBoy I can't remember where I looked to be honest but it was definitely monthly price first and you had to amend the searches or hunt a little to get cash price. I want to say arnold clark and a kia dealer I can't remember the name of had this for definite.

I wouldn't say algorithms as I was always looking for cash price.

It's good if they have changed it.

You might not get the loan.