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Mini select finance deal seems expensive

I had a quote yesterday for a mini cooper. the cost of the car was £14,000 and the deposit was £3000. So financing £11k over 36 months with a £6,300 balloon at the end and £228 per month. I am sure I am right in thinking the total payable is 3000 + 35*228 + 6300 = 17280 which gives a cost for credit of 3280. This seems like a lot. They said they were unable to tell me the APR until I had been accepted and I went to sign the finance agreement which would be on the day of collection. I did a quote on the Alliance and leicester car purchase scheme and the deal was 3000 + 35*227 + 4400 = 15345 at 6.5% APR. Anyway the MINI dealer said their APR would be about 11%. It sounds to me like it is more.

Reply to
alfi
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get a straight forward loan Pay 333 a month with Northern Rock at 5.9% for 36 months total credit payment 1001

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or

257 a month for 4 years total for credit 1338
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Both are better option. AND I certainly would not use a finance company that won't tell you the apr before you sign up
Reply to
Pet Lover

It does to me too. There again, you're borrowing 6300 for the whole three years and 4700 for on average just under 1.5 years. That's almost 26 kilopoundyears, which roughly works out at 12.64% flat.

I've never understood the attraction of balloon payments. Quite apart from the fact that in the case of a car, it seems like you're paying £6300 for a car which by the end of 3 years is likely not to be worth that much any longer. And if you expect to be able to afford £6300 then, shouldn't you be able to afford it now? Well, perhaps not, but then you'll have to save up for it *while* making the finance payments. It would make much more sense to

"Been accepted"? Who do they think they are? It's up to *you* to accept *their* terms. Surely they are required by law to give you quotation with APR before you even consider applying. Basically you should get them to fill in an application form and in due course you will let them know whether you've decided to give them the opportunity to sell you this car.

Walk away. This sounds well dodgy.

You're right, it is more. I make 13.6% for the figures you gave. I make it 6.1% for the other deal, assuming the price is the same at 14000. For it to be 6.5%, the price would need to be some £80 less, i.e. £13920.

Reply to
Ronald Raygun

Oops, forgot to finish before posting.

It would make much more sense to make those savings contributions into the loan fund, where they "earn" interest at the loan APR instead of at net-of-tax cash deposit rates.

Specifically, if in addition to paying the £228 each month you also had to save up towards £6300 over 36 months, at 3.6% (taking ING's 4.5% less 20% tax), you'd have to save £166 a month, so you need actually to commit £394 a month. But were you simply to pay off the whole £11000 over 36 months at 13.6%, it would only cost you £370 a month.

This would reduce your total outgoings by £864. They sure have ways of luring the pounds out of your pockets into theirs.

Reply to
Ronald Raygun

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