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      10-15-2019, 04:36 AM   #1
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Car Finance Crackdown Incoming

Car financing crackdown 'to save drivers £165m' https://www.bbc.co.uk/news/business-50052375

Welcome to 12.9% APR for everyone
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      10-15-2019, 04:42 AM   #2
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If that were to be the case then finance from an alternative source if you need to and then purchase as a cash buyer.

Welcome move by the FSA though.
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      10-15-2019, 04:51 AM   #3
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Quote:
Originally Posted by CraigUK View Post
If that were to be the case then finance from an alternative source if you need to and then purchase as a cash buyer.

Welcome move by the FSA though.
I can understand the motives

But I fear all it does is remove flexibility from dealers and all they'll offer is one rate, take it or leave it
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      10-15-2019, 05:04 AM   #4
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One thing's for certain - dealers and the financial industry will always find new and creative ways to screw you.
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      10-15-2019, 05:38 AM   #5
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Quote:
Originally Posted by DB118D View Post
Welcome to 12.9% APR for everyone
I see nothing in that article to suggest the above, I can see the discounts/contributions offered on financed cars dropping though if there is no commission payable on the finance.

But it's as broad as it is long, profit isn't a dirty word and we need business to make a profit to employ people so that people have money in their pockets that the government can then tax when they buy things...and so the world turns.

A friend who has a garage will often factor the commission in on a deal, if he has 4k across a car and the purchaser wants to finance and he'll get 2k commission then he has more room to move on the price etc....if they remove the commission he won't have the room so the price will stay firm and the punter will still be paying the interest on a larger amount. Well done FCA! Clowns....
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      10-15-2019, 06:45 AM   #6
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Standard is about 6.9% now.

To be honest its not the dealers so much as the finance brokers.

I work at a small independent dealership of mixed marques and whenever we call for a finance quote the brokers always come back with a rate at 9.9% or higher.... which is rubbish as we know they can always get it down to 6.9%.

When we question the rate they always say the higher rate is to give us a bigger bonus.

We didn't ask for the higher rate!! All our email for quotes now state in big letters PLEASE QUOTE AT THE LOWEST RATE.
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      10-15-2019, 06:50 AM   #7
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People's circumstances also affect the rate offered, generally dealers have a panel of lenders start at the prime end 5.9-6.9 and it then goes from there depending.
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      10-15-2019, 06:07 PM   #8
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Interest rates on cars have been criminal in the UK since forever. When I moved to the states I bought a used car at 11% when in the UK I'd have been lucky to get it under 20%.
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      10-16-2019, 02:33 AM   #9
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Quote:
Originally Posted by agentorange View Post
Interest rates on cars have been criminal in the UK since forever. When I moved to the states I bought a used car at 11% when in the UK I'd have been lucky to get it under 20%.
You can pick up 6-7% on a used car easily and 3-5% on a new car are the norm.

Anyone paying near 20% these days has credit history issues.
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      10-16-2019, 05:51 AM   #10
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Quote:
Originally Posted by DB118D View Post
Car financing crackdown 'to save drivers 165m' https://www.bbc.co.uk/news/business-50052375

Welcome to 12.9% APR for everyone
The bit they should be looking at is a clear warning that you may have no equity in the car at the end of the deal (how many people who do PCP think they will) and then closing the VT loophole - if you VT you cant have car finance again for a car of anything more than x% of the value VTd (where x is no more than 50%)

Its supposed to be a get out clause for people who cant afford it so this would force them down a cheaper route next time and stop sales guys using it as a way to make a sale....
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      10-16-2019, 05:58 AM   #11
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Quote:
Originally Posted by isleaiw1 View Post
closing the VT loophole - if you VT you cant have car finance again for a car of anything more than x% of the value VTd (where x is no more than 50%)
Never heard of that. I've VT'd the last four cars I've had on a PCP and never come across that.

Sorry, having re-read your post I think you were proposing that as an idea rather than what happens now. Fair point although I personally disagree - in order to offer finance the sales person should do a proper affordability assessment - that's all that's needed.
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      10-16-2019, 06:42 AM   #12
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Originally Posted by xenon View Post
Never heard of that. I've VT'd the last four cars I've had on a PCP and never come across that.

Sorry, having re-read your post I think you were proposing that as an idea rather than what happens now. Fair point although I personally disagree - in order to offer finance the sales person should do a proper affordability assessment - that's all that's needed.
It was a proposal - and whilst you can afford it at the point of signing, life changes in ways you can never predict and so its right there is a get out clause - but its not right that the legal escape route put in for people to be able to get out when the burden is too much is abused by people as they fancy a new motor....

But that's just my view, I know I am in the minority on here!
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      10-16-2019, 07:06 AM   #13
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Quote:
Originally Posted by isleaiw1 View Post
It was a proposal - and whilst you can afford it at the point of signing, life changes in ways you can never predict and so its right there is a get out clause - but its not right that the legal escape route put in for people to be able to get out when the burden is too much is abused by people as they fancy a new motor....

But that's just my view, I know I am in the minority on here!
I agree that VT should only be used for its intended purpose. It's an abuse of a consumer protection rule to use it to upgrade.
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      10-16-2019, 07:10 AM   #14
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Never thought of it that way.
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      10-16-2019, 08:52 AM   #15
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Quote:
Originally Posted by isleaiw1 View Post
It was a proposal - and whilst you can afford it at the point of signing, life changes in ways you can never predict and so its right there is a get out clause - but its not right that the legal escape route put in for people to be able to get out when the burden is too much is abused by people as they fancy a new motor....

But that's just my view, I know I am in the minority on here!
Who cares? The car companies and finance companies make a packet elsewhere. You can still see by the low Apr, the big discounts and the good gfv's being offered that the relatively small amount of people that VT aren't hitting you in the pocket.

Far more important things in this world to take the high ground on than the VT rules for car finance. I think they can look after themselves.
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      10-16-2019, 09:04 AM   #16
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If VT was an issue for BMWFS they wouldn't let you take another one out after doing it...clearly they have no issue.
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      10-16-2019, 09:11 AM   #17
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Quote:
Originally Posted by Wills2 View Post
If VT was an issue for BMWFS they wouldn't let you take another one out after doing it...clearly they have no issue.
Clearly. Last week I left my VT'd car at Stratstones for BMW finances representatives to collect from there. No one batted an eyelid when I made my calls to arrange this.
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      10-16-2019, 09:23 AM   #18
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Quote:
Originally Posted by Goneinsixtyseconds View Post
Clearly. Last week I left my VT'd car at Stratstones for BMW finances representatives to collect from there. No one batted an eyelid when I made my calls to arrange this.
Just because BMW encourage it doesnt make it moral.

As for making lots of money, well BMW might be, BMW FS might be (for now) but the dealers arent.

The banks made money out of PPI by the way, and look how that ended up....

I know lots on here dont agree but that's fine, its a personal thing. I personally believe that a specific clause brought in to give a get out for people who have fallen on hard times shouldnt be abused to make more money...

And ultimately I fear those that abuse it will spoil it for those that need it!
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      10-16-2019, 09:39 AM   #19
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Quote:
Originally Posted by isleaiw1 View Post
Just because BMW encourage it doesnt make it moral.

As for making lots of money, well BMW might be, BMW FS might be (for now) but the dealers arent.

The banks made money out of PPI by the way, and look how that ended up....

I know lots on here dont agree but that's fine, its a personal thing. I personally believe that a specific clause brought in to give a get out for people who have fallen on hard times shouldnt be abused to make more money...

And ultimately I fear those that abuse it will spoil it for those that need it!
I think you're barking at the wrong end of this stick, morality doesn't even come into it, it's a statutory right there is no moral question whatsoever.

VT has nothing to do with whether dealers make money or not it certainly has no detrimental effect as they generally get to sell another car when someone VTs, but again it's just not relevant at all. (They get paid the day you drive the car away)

This is the reverse of PPI, VT is statutory consumer right, it isn't a separate product pushed onto the unsuspecting consumer, they couldn't be further apart.
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      10-16-2019, 09:40 AM   #20
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Quote:
Originally Posted by isleaiw1 View Post
Just because BMW encourage it doesnt make it moral.

As for making lots of money, well BMW might be, BMW FS might be (for now) but the dealers arent.

The banks made money out of PPI by the way, and look how that ended up....

I know lots on here dont agree but that's fine, its a personal thing. I personally believe that a specific clause brought in to give a get out for people who have fallen on hard times shouldnt be abused to make more money...

And ultimately I fear those that abuse it will spoil it for those that need it!
Unfortunately those that need it very rarely know about it.

And if dealers are losing money then closing this loophole will make them even less profitable as they sell even less cars, not better off. It's a good thing that BMW Finance are helping support their dealers by not closing this area of new sales for them.
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      10-16-2019, 10:02 AM   #21
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Yes agreed. I've done it several times, the dealer even encouraged me to do so as he had an inbound F10 that was a cancelled factory order and was pleased I agreed to take it.

I always saw it as a statutory right whatever your personal circumstances, not just an escape route for those who had fallen on hard times.
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      10-16-2019, 10:27 AM   #22
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Quote:
Originally Posted by Goneinsixtyseconds View Post
Unfortunately those that need it very rarely know about it.

And if dealers are losing money then closing this loophole will make them even less profitable as they sell even less cars, not better off. It's a good thing that BMW Finance are helping support their dealers by not closing this area of new sales for them.
But morally the dealers are making money by exploiting a law designed to protect individuals. And BMW (the manufacturer are effectively subsidising it). So the solution is to set lower targets, give the dealer the incentive for hitting that lower target and not abuse a law that was not designed to make dealers money

BMW are by far the worst at it in my experience, to the extent that they seem to positively encourage it.....
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