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My Brother (Older!) recently traded in his Caravan and purchased a Brand Spanking ACE Motorhome.
DESPITE all the advice and information I have given him from my experience of buying Company and private vehilces this is what he got caught up in the sales deal and monthly figure trap. Signed on the dotted line on the day without shopping around.
A Not what he really wanted
B Massive Lending Charges
C Discrepencies on Vehicle deposit/Trade in resulting in losing a further £900
With regard to A, the dealer is a Large Caravan dealer who has a small plot and dealership for new Motorhomes. He shopped local as he had dealt with the company with his caravan (alebeit with past problems). As a result due to the limited stock and models offered, settled for what they had. Furthermore when he initially picked the Motorhome up it developed a fault with the ECU on the way home. It sat on his drive all easter awaiting collection and it had to be taken to Fiat for repairs. The van was eventually delivered back to him 2 WEEKS LATER.
Onto B After being offered a trade-in that would after settlement of his Caravan loan give him a deposit of £2,900 pounds. He was quoted a monthly figure of £420 to finance the balance of £30450. He asked the salesman for the APR and was quoted a base rate of just over 5% and that meant the apr would be about 8%
This leads to C
On receiving the confirmation paperwork from the Finance company it transpires that he has only been allowed a deposit of £2,000 from the dealer. Worse than this is that the Total charges for Finance are a whopping £18,000.00! He then after the event telephones me for my advice.
Well our kid I says you have been well and truly stuffed. Firslty, YOU NEVER LISTEN you should have at least calculated 240 months @ £420 to give you some idea of what you will end up paying. This should have made you think a little, ask for written confirmation of the actual APR as base rate means jack S**t. Along with written quotation for your part ex. Even if they were unwilling to supply this at the time then you should have had it with your order confirmation. Then you should have walked away. maybe contacted your local bank or gone online for a decent finance quote as you have an excellent lending record. Then maybe rang or vsisted a few other dealers.
On finace alone he would have been paying with a good deal
£340 a month rather than £420
£10,400 in charges as opposed to £18,000
He says he does have a blurred photocopy of the order/part ex and original finance document from the dealer on the day, but it is totally illegible. When I asked if he had read the original he said well would you have. Damn bloody right I would!
I am a CAB adviser and am frequently amazed by the deals that people sign up to, particularly on cars.
Typically they will pay a high price for the car, on top of that will be sold expensive insurance (mechanical breakdown insurance, which is pretty useless on an old car as it excludes wear and tear, also payment protection insurance, which again is frequently useless as it has so many loopholes). These are usually for 4 years but capitalised up front and added to the cars purchase price. They then finance the lot adding interest at anything from 20% to 30% apr.
When the buyer cannot afford the extortionate repayments the car gets re-possessed, and the buyer can get sued for the difference. They cannot cancel the insurances as it was a 4 year policy not paid monthly, with no refund options. I had a case a while ago where a car costing £3200 (but only worth £2200) finished up with a finance agreement for over £7000, the buyer could not afford the repayments so the car was repossed, and the buyer finished up with no car and an outstanding bill from the finance company for £5000.
Be vary wary of dealer sold finance and insurances - they make a fortune on them!
______________________________________________________________ Still sat here in front of the computer - it may be in the office, or on the laptop if I manage to get away from the office.
As far as I know, the only motorhoming Oxford United supporter in Bognor.
If it makes your bother feel better based on the theory that house prices double over ten years if instead of lending money the finance company bought houses they would make more profit. Maybe the interest rate is not that bad.
My advice would be to save the money and pay cash, that way you gain interest on your money and don't pay to support finance companys. Its surprising how quickly the money can build up if you save what you would pay in finance.
Lots of people have learnt that in Ireland when 5 yrs ago the Finance Minister introduce a 5 yr saving plan SSIA save €1 and he would add 25 cent based on a fixed monthly savings plan. On top of which we got normal bank interest.
It is my understanding that credit agreements have a 14 day cooling of period, are you saying that it took longer than that to receive the paper work, or that he did not read it properly, sounds like the credit company has its own way on implementing this 14 day cooling of period by making sure it was of the road for fourteen days
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France
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