FOR the last 10 years dealers have been unable to sell finance because everyone could get cheaper finance on credit cards and from supermarket banks.
But more and more traders tell me that customers are asking for, and once again taking up, their finance offers.
Finance & Leasing association figures from August back this up, reporting a 21 per cent increase. The reason for this is that the credit crunch has left a void where there was once stacks of cheap credit offers.
The money advice websites used to struggle for space to fit all the cheap loan offers in, now they struggle to fill even a small page.
So people are again asking their dealers what they can do to help. Which is fine, but you should know the dealer often sets their own commission on top of the the interest rate agreed with the finance house who ultimately lend the money.
So if they are paying five per cent to the finance company, they may choose to charge you seven per cent, and that's their extra profit on top of the £1,000 they’ll make on the car. So make sure you haggle on the interest rate as much as the price of the car.
It's all the same techniques. Shop around before seeing the dealer, then tell him or her that you would do the deal "but I can get it for 2 per cent less elsewhere..."
It won’t be easy because once the dealer knows you want the car, they will stone wall over discounts on finance, especially as they know you have few alternatives in the current market. But if you are looking to borrow £5,000 for a car worth £5,500, at seven per cent (which is good) you will pay back £6,764.29 over five years. But if you get the loan for four per cent you only pay back £6,188.43 – saving nearly £600.
And those are reasonable targets if you have a good to excellent credit rating. If you have an average rating you will be offered more like nine per cent and if you can get that down to seven per cent you save yourself a massive £1,250.