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Buying a car for cash

When buying a car for cash, both my friend and I have been told it is an FSA requirement to explain about gap insurance and other such things that might be relevant to buying a car on finance.

This culminated at the weekend in my friend being tried to be convinced that taking out a 7.1% loan was much better financially than paying cash.

Is there any such FSA rule that demands that a waiver is signed saying that things have been explained and gap insurance declined, or is it just a usual scam to get you in front of a bloke who then tries to frighten you into buying something.

Cheers

John

Reply to
JohnW
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JohnW gurgled happily, sounding much like they were saying:

It isn't. Ever.

The important word there is "commission".

What you think?

Reply to
Adrian

Despite being reasonably numerate, it took me some time to spot the flaw...

Salesman: "The cost of the car is £7 000"

"but it is cheaper to buy it on Finance"

"We will only charge £6 000"

"After 5 years, with interest, the cost to you will be £8 500"

"However, if you put the £7 000 into a Building society for 5 years, it will be worth £9 000 in five years".

" so it is £500 cheaper on finance".

Don't worry too much about the detail [relative interest rates etc]. At the time, the figures were plausible.

.

An interesting scam.

Caveat.

Flop

Reply to
Flop

The finance wanted no payments for 5 years? ;-)

But sometimes it *is* actually cheaper getting the finance - I bought my last car through a broker and there was an extra 1000 off if I took out finance. With the max deposit and shortest term the total interet cost would only have been about 800, so it was a no-brainer. But even better, there was nothing to stop me paying the finance off early - I paid it off after about a month and so paid less than 100 interest :-)

Reply to
Andy Pandy

Correct.

That was the catch. Mention of monthly payments did not arise until I saw the Agreement Form.

Flop

Reply to
Flop

I've heard quite a few stories like this recently. If it isn't an FSA requirement is the salesman breaking any laws claiming that it is?

Indeed. I has a salesman trying to get me to take out a loan I didn't want - I said that perhaps we could split the commission from the finance company and he shut up.

I eventually bought a car from somewhere else using the 9 months interest free for new purchases on my new credit card.

Reply to
Gareth

[snip]

Even with no monthly payments, if you pay 6000 upfront you're getting 1000 'free' for 5 years, not 7000. And you need to generate 2500 from that to 'win'. Not so easy.

Though I did see, at the beginning of the credit crunch when interest rates were 6%ish, "buy this sofa on 0% finance and pay nothing for 4 years". Which is equivalent to a 26% discount on the sofa. But then sofa pricing is entirely illusory anyway :)

Theo

Reply to
Theo Markettos

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