Ian_C Posted October 16, 2013 Report Share Posted October 16, 2013 I got a phone call Sunday night after a mate of mine had gone to see a car locally Saturday at a main dealer. She didn't seem to know if she'd bought the car or the dealership were letting her think about it? But she hadn't paid anything. Anyway I got a text Tuesday saying she was collecting it. Met up tonight face to face for the first time in about two months, summary is she's not put a penny down and can only tell me its '195' a month for 48 months and she owns the car at the end of it. So I'm guessing its HP - not a PCP or LP. The dealer have sold her some kind of gap insurance, but she doesn't know how much she has paid, whether its RTI or just to cover negative equity, any claim limits, what duration etc. I think shes been sold all sorts of stuff like alloy and tyre insurance too. All the extras (£400 as the windscreen price was £7000) have been added to the balance which is £7400. Could see from her body language that she's stressed out and knows she's not thought through everything properly and that reality has dawned. She hasn't told her parents or been home yet with the car, she's at her boyfriends round the corner! With car finance is there a 14 day cooling off period? Can she just hand the car back in this period? If not, can she renegotiate the finance arrangement (deposit, duration etc) within the 14 days? The £1500 her boyfriend is paying for her outgoing car would be a start - why this wasn't paid as a deposit up front I have no idea. Apparently this money is available immediately. Sat her down tonight and showed her using an online finance calculator (using a typical 12% as she doesn't know the APR) that putting £1500 down, stripping the £400 extras back to the windscreen price of £7000 and changing to 36 months saves almost £900 quid interest alone compared with the full balance incl extras of £7400 with zero deposit spread over 48 months - both examples with the same £195 monthly payment. My figures are 'guestimates' without the paperwork and the APR, but I think they got the message across judging by the look of horror on her face seeing £1900 interest payable..... I've never bought using finance but have offered to try and help her, any comments welcome, even if they are stating the bleeding obvious! And yes I have already told my friend she's an idiot, I've been brutally honest with her and told her 'straight as it is', and that she has a finite length of time to sort it ASAP before its too late. Her seven day drive away insurance expires Monday night (she'd need to transfer the new car onto her present policy, and boyfriend to commence policy in his name on her old car) so I guess that is her deadline. I've tried to explain the negative equity thing and that she will effectively be stuck with the car until shes made the 48th payment. Had a very quick look online, Click 4 Gap was suggesting approx £100 for 36 months and £150 for 48 months RTI. Does this seem about right, any recommendations for gap companies on a used car? She doesn't know what she's paid for Gap, I've offered to look through all the paperwork with her tomorrow Link to comment Share on other sites More sharing options...
CarMad Posted October 16, 2013 Report Share Posted October 16, 2013 Booster will be able to help on the legalities bit but I know Mac had a terrible time with Click 4 Gap despite some recommendations. It certainly doesn't seem right does it, but she should have been read and signed a million times to say she has been told about things and what she has and hasn't signed up for, where is all the paperwork? Link to comment Share on other sites More sharing options...
Tipex Posted October 16, 2013 Report Share Posted October 16, 2013 (edited) Why on earth would you purchase GAP insurance on a used car? I appreciate your wanting to help a friend, but sometimes I can't help thinking people deserve the mess they find themselves in, all of the info you mention would have been shown to her already, including the total amount payable. Edited October 16, 2013 by Tipex Link to comment Share on other sites More sharing options...
Booster Posted October 17, 2013 Report Share Posted October 17, 2013 She has a 14 day cooling off period in which she can settle the finance with no charge and a further 14 days in which she can settle for a nominal charge (on that amount it will be about £2per day interest in this window). She can't change her mind and hand the car back though. She should look at getting a loan from someone like Sainsburys who have excellent rates and using the £1500 to reduce the amount she needs to borrow. Gap insurance is useful on a used car, especially where there is no deposit. Click4gap have gone downhill and it seems ala.co.uk are much better (for now). The fact that the dealership managed to get her finance for £400 over the retail cost of the car with no deposit means that her credit rating must be goodso she shouldn't have an issue getting the funds elsewhere. The rate isn't actually that bad though. I'm assuming that there will be a front end and back end fee of about £150 each so knocking them off, from your figures, the flat rate will be just under 6% per annum. She hasn't been fleeced as you often come across dealers charging 10 or 12% on that amount to maximise their commision! 1 Link to comment Share on other sites More sharing options...
Booster Posted October 17, 2013 Report Share Posted October 17, 2013 Why doesn't she know if she has bought the car it not?? How odd! If she hasn't actually driven it away, she can tell them she doesn't want it or the finance or both. Link to comment Share on other sites More sharing options...
Daz Posted October 17, 2013 Report Share Posted October 17, 2013 the flat rate will be just under 6% per annum. She hasn't been fleeced as you often come across dealers charging 10 or 12% on that amount to maximise their commision! I've just been offered a deal at 0.9% flat rate - is that quite good then? Link to comment Share on other sites More sharing options...
Booster Posted October 17, 2013 Report Share Posted October 17, 2013 I've just been offered a deal at 0.9% flat rate - is that quite good then? Er, yep! Must be the manufacturers own finance company to be that cheap. Link to comment Share on other sites More sharing options...
Daz Posted October 17, 2013 Report Share Posted October 17, 2013 Yeah it is. I was going to ask you but I guess you can't do better. Link to comment Share on other sites More sharing options...
Booster Posted October 17, 2013 Report Share Posted October 17, 2013 No one can touch manufacturer promotions! Snap their hand off!! Link to comment Share on other sites More sharing options...
Ian_C Posted October 17, 2013 Author Report Share Posted October 17, 2013 She should look at getting a loan from someone like Sainsburys who have excellent rates and using the £1500 to reduce the amount she needs to borrow. Booster thank you for your feedback. Ahhh okay, finance through Sainsbury and pay off the dealer? There's definitely going to be a problem with negative equity - hence the need for Gap Tipex. The problem is the £7000 windscreen price was already inflated - she seemed to suggest Saturday she could get the car discounted to £6500. How she's ended up paying £7400 I'm not sure. I'd previously emailed her other same spec mileage age cars for £5500-6000, cheapest was £5500 in Coventry at an independent dealer, car looked clean. Usual story I think of going to the closest dealer planning to just see a car in the flesh, going for a test drive and ending up buying the first one she saw. £5500 for the car with £1500 down, £4000 financed, thats approaching half what she's signed up for! It's going to cost her dearly. (just to clarify, it was Saturday when she got home that she wasn't sure if she'd agreed to buy the car or not. But now the deed is done, she collected the car Tuesday) Link to comment Share on other sites More sharing options...
Ian_C Posted October 17, 2013 Author Report Share Posted October 17, 2013 She should look at getting a loan from someone like Sainsburys who have excellent rates and using the £1500 to reduce the amount she needs to borrow. Wow, those are unbelievable rates! And not secured against the car either. Car £7400 Deposit £1500 Loan £5900 Duration 30 months Monthly repayment £213.87 Total repayable £6,416.10 Interest repayable £516.10 APR - 6.8% And if she could strip back the extras back to the £7000 windscreen price...... Car £7000 Deposit £1500 Loan £5500 Duration 30 months Monthly repayment £199.37 Total repayable £5,981.10 Interest repayable £481.10 APR - 6.8% £481 interest over 30 months vs circa £1900 interest using the dealers 48 month finance with the same £199 monthly payment Link to comment Share on other sites More sharing options...
cruiser647 Posted October 17, 2013 Report Share Posted October 17, 2013 Why on earth would you purchase GAP insurance on a used car? I appreciate your wanting to help a friend, but sometimes I can't help thinking people deserve the mess they find themselves in, all of the info you mention would have been shown to her already, including the total amount payable. This is when those who don't know too much, really need to take someone who does, with them. Protect them from both the dealer and themselves! Link to comment Share on other sites More sharing options...
Ian_C Posted October 17, 2013 Author Report Share Posted October 17, 2013 This is when those who don't know too much, really need to take someone who does, with them. Protect them from both the dealer and themselves! Indeed. £7400 is way too much for that car, but whats done is done, its damage limitation now. She said she fancied the salesman which probably didn't help! Its quite an achievement to pay £400 over the windscreen price, great negotiation skills there! I've forwarded her Andys comments and advised the two priorities are stripping out all the extra crap she's been sold by the garage (tyre and alloy insurance, overpriced Gap insurance) and more importantly shuffling the finance so she doesn't end up paying £9500+. Swapping the finance should easy in theory - £5500 loan paid straight into current account, she instructs garage to remove extras to reduce balance from £7400 to £7000, she then pays garage £5500 loan + £1500 deposit using her debit card Link to comment Share on other sites More sharing options...
cruiser647 Posted October 17, 2013 Report Share Posted October 17, 2013 She might be better off keeping the alloy insurance............ what with her being a girl an all. 1 Link to comment Share on other sites More sharing options...
Ian_C Posted October 17, 2013 Author Report Share Posted October 17, 2013 Not if its added to the finance agreement, that is madness! Link to comment Share on other sites More sharing options...
Mac Posted October 18, 2013 Report Share Posted October 18, 2013 (edited) Why on earth would you purchase GAP insurance on a used car? What? Why wouldn't you purchase GAP on a user car? Mine paid out on return to invoice, and was very cheap at a hundred quid or so??? Although as Booster mentioned, I wouldn't touch Click4Gap anymore, they were an utter ballache to work with. Edited October 18, 2013 by Mac Link to comment Share on other sites More sharing options...
Tipex Posted October 18, 2013 Report Share Posted October 18, 2013 (edited) I guess it depends how much you are spending, but on a 7k car I wouldn't go near it, the insurance will cover it's full replacement value if necessary, used cars are worth whatever they are worth, they don't depreciate the minute you drive off a forecourt like a new car. Edited October 18, 2013 by Tipex Link to comment Share on other sites More sharing options...
Mac Posted October 18, 2013 Report Share Posted October 18, 2013 I think it's a no brainer myself really. A 7k car to somebody could be 'worth' to them what my car is to me. Of course personally I wouldn't bother with GAP if I had bought a 7k car - I'd take the risk on myself. Link to comment Share on other sites More sharing options...
Ian_C Posted October 18, 2013 Author Report Share Posted October 18, 2013 I guess it depends how much you are spending, but on a 7k car I wouldn't go near it, the insurance will cover it's full replacement value if necessary, used cars are worth whatever they are worth, they don't depreciate the minute you drive off a forecourt like a new car. Yes, during the first year from new an insurer would normally pay invoice price. However on a second hand car they won't pay 'invoice'. Insurance definitely would not pay out enough to cover the balance here Tipex because she's paid £7400 from a main dealer for a car that is worth £5500-6000. Immediate negative equity situation! Found out she'd paid about £200 for Gap, thats a bit much, even for 48 months which is generally a lot more than 36 months. This car *could* have been paid off in 30 months on the right finance with a £1500 deposit - hence could have saved on the shorted Gap too. The dealership has shafted her putting the whole balance on 48 months! But thats absolutely her own stupid fault as much as theirs..... Link to comment Share on other sites More sharing options...
Tipex Posted October 18, 2013 Report Share Posted October 18, 2013 So has she done anything about it, or is she just taking it on the chin? Link to comment Share on other sites More sharing options...
Ian_C Posted October 18, 2013 Author Report Share Posted October 18, 2013 Emailed her Andys words closely followed by the Sainsbury figures I posted above, got a text simply saying "I see your point", but text and emailed her since with no reply. I've tried to stress the finite length of time she has to make the swap. She knows the car was overpriced, but with a bit of juggling she can pay only about a QUARTER of the interest the main dealer has her set up to pay! When I saw her and the car Weds night I offered to go through all the paperwork with her in detail the next evening (she didn't have anything with her) but she changed her mind about meeting up. I've told her not to be embarrassed about anything and that I'm happy to help - damage limitation as already mentioned..... Link to comment Share on other sites More sharing options...
Tipex Posted October 18, 2013 Report Share Posted October 18, 2013 Sounds like you're wasting your time. You can lead a horse to water.... Link to comment Share on other sites More sharing options...
NewNiceMrMe Posted October 18, 2013 Report Share Posted October 18, 2013 (edited) Sounds to me like she doesn't want you involved. Leave her to it. You've tried. To be honest, and I mean no offence, she sounds like a bloody idiot and it may be the best way for her to learn a lesson. Edited October 18, 2013 by NewNiceMrMe Link to comment Share on other sites More sharing options...
Ian_C Posted October 18, 2013 Author Report Share Posted October 18, 2013 Unfortunately I think you are probably right. She's finding it difficult to visualise the overall picture. Maybe I need to draw out £1500 and put it in front of her nose to hold - ie. this is how much you save in the long run! Link to comment Share on other sites More sharing options...
bazza_g Posted October 18, 2013 Report Share Posted October 18, 2013 is she just taking it on the chin? ...bit personal?!?! Link to comment Share on other sites More sharing options...
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