Car Finance V Lump Sum

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Lavanda
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Car Finance V Lump Sum

Postby Lavanda » Fri Apr 09, 2021 6:28 pm

Does anyone understand car finance? I am looking at a car costing €15,500 and am thinking of paying for the car in a lump sum. However, the dealer tells me that the car will be €14,500 if I chose the finance option which is a monthly payment over x years. Does that really mean that the end sum I pay will be €14,500 and why is that cheaper than paying for the thing in one go? I don't understand it.

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Re: Car Finance V Lump Sum

Postby biribiri » Fri Apr 09, 2021 7:57 pm

It's easy enough to work out. How much a month x How many years?
I'll guarantee the final amount will be more than €15,500. The dealer will always push for the finance option as he will receive a nice bung in commission from the finance company.

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Re: Car Finance V Lump Sum

Postby Lavanda » Fri Apr 09, 2021 8:07 pm

That's a conversation I will have on Monday but it must work out more expensive. So why did he give the impression that the car is €1,000 cheaper?

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Re: Car Finance V Lump Sum

Postby El Cid » Fri Apr 09, 2021 9:24 pm

Because it is. They basically give a real discount if you take the finance option. The dealers are controlled by the manufacturers finance companies and that is the way they do it in Spain. I have bought two new cars in the past 7 years and the finance deals were much better than paying in full. Why? I don’t know but that’s the way it is.

Sid

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Re: Car Finance V Lump Sum

Postby Lavanda » Fri Apr 09, 2021 9:27 pm

Thanks for that. I shall have a real talk on Monday and get some figures down and do some adding up. If the finance route is cheaper then that's the way I will go. It also means the capital can stay in the bank.

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Re: Car Finance V Lump Sum

Postby El Cid » Fri Apr 09, 2021 9:35 pm

Make sure you push for the hidden discounts such as free 4 year servicing and extended warranty which often apply to finance deals. You might even get free insurance! They are desperate to sell new cars at the moment.

Unlike in the UK the dealers get low margins and have little room to offer discounts. They rely on the manufactures to offer the discounts which can change on a monthly basis. This month it might be a free sunroof, next month it could change to a free electric boot lift.

Sid

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Re: Car Finance V Lump Sum

Postby markwilding » Fri Apr 09, 2021 9:49 pm

Try to get some more discount. Tell them you are also looking at another car and they might drop it another 200-400 Euros. then when they give you it, tell them you are on a budget and try for another 200 Euros. They have always dropped a little from the original offer because I think they have a little wriggling room.

As far as finance is concerned you will to work out the final payment against the cash sell to see the real discount. I have benefited from taking out finance but I got much more than a thousand Euros discount for taking out finance. I might not be worth the discount if the price after interest is more than a thousand Euros

As Sid says the car we bought last July, apart from the discount also included free servicing for 5 years and a couple of other benefits, which all compensated for the interest so for us it worked out cheaper.

One odd thing was before we had to buy a new car for my son because his old one finally died on him, I was thinking of buying a new one for myself and because my cars trade in value took it above the minimum borrowing amount to get the discount, I would have had to take out the minimum finance and i would have to be given the difference back in cash

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Re: Car Finance V Lump Sum

Postby Lavanda » Sat Apr 10, 2021 7:37 am

All interesting and very informative responses, thanks.

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Re: Car Finance V Lump Sum

Postby Wicksey » Sat Apr 10, 2021 11:42 am

We bought a new car 2 years ago but paid cash and did not get any offers. Is it just when you take their finance they do that? In the UK many years back we bought a car on 0% finance but here at Suzuki, they did not push the finance + reduced price offer at all. We had looked at Peugeot and Seat and they seemed to have the monthly payments alternative, but as we didn't want to pay interest we weren't interested. I'm sure in those cases the overall total worked out more than paying in cash. Too late now, and I doubt we'll be buying a new car again for many years as we plan to keep this one 10 years.

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Re: Car Finance V Lump Sum

Postby Pamela1 » Sat Apr 10, 2021 2:08 pm

We looked into buying a new car 2 yrs ago in Spain and went to several dealers and they all pushed the finance option, i too couldn't get my head around finance being the cheaper way to go but other forum members say it's how things are done in Spain so i guess that is how it is.. It's true that you can keep the capital in the bank and just make monthly payments over x yrs until it has been paid, if nothing changes in your life then all well and good. I'm glad now that we didn't get carried away and buy a new car, i realised that i couldn't justify buying a new car in a country i didn't live in. Having said that we haven't yet bought a used car and i'm glad that we stalled on that idea because of the covid circumstances over the past year. For now i think it's enough paying bills for a house we can't get to without paying insurance and road tax just for the sake of it.

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Re: Car Finance V Lump Sum

Postby Lavanda » Sat Apr 10, 2021 2:44 pm

That makes sense, Pamela. We live here all the time, and in the countryside, so a car is reasonably important.

Had I known, even five years ago, that I would be visiting my parents in Devon so much and for so long, I would have encouraged them to keep their car in the garage rather than sell it when they gave up driving. Over the last few years I must have spent enough on car hires to actually buy a car and pay for the upkeep. Hindsight.

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Re: Car Finance V Lump Sum

Postby Pamela1 » Sat Apr 10, 2021 3:15 pm

Yes i can fully understand that you definitely need a car living in the Countryside Lavanda, I also know exactly what you mean about car hires..If our property wasn't in the countryside and perhaps by the coast or even in a village not far from the airport i doubt we would bother looking for a car...At first car hire was the easy and obvious option and it's only until a few yrs have gone by that the total cost of car hires starts to add up..Looking back we could probably have bought one with what we have spent but it is what it is and i guess it's no different to renting property when the money could have been used towards buying it.
I hope you enjoy your new vehicle when you get it. :thumbup:

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Re: Car Finance V Lump Sum

Postby jhonie99 » Mon Apr 12, 2021 9:42 am

Lavanda wrote: Fri Apr 09, 2021 6:28 pm Does anyone understand car finance? I am looking at a car costing €15,500 and am thinking of paying for the car in a lump sum. However, the dealer tells me that the car will be €14,500 if I chose the finance option which is a monthly payment over x years. Does that really mean that the end sum I pay will be €14,500 and why is that cheaper than paying for the thing in one go? I don't understand it.
Paying lump sum is by far the best way forward. What you've been told so far is very misleading.

With finance, they deliberately hide the real price you're paying for the vehicle and more or less just tell you the monthly payments.
Also, they'll have added on a whole load of extras (both car and finance) that you didn't ask for and don't want.

We even prefer to get a loan from bank rather than take their finance. Gives us flexibility on how quickly we want to pay off the loan. With their finance, you're locked in. Things like free insurance are all rubbish - they counter it with high franquicia. Extened warranties - again, costs extra and doesn't cover anything. Have you read the exclusions, lol!

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Re: Car Finance V Lump Sum

Postby Wicksey » Mon Apr 12, 2021 10:39 am

A friend bought the same car as us a couple of years previously and they took the finance option as they said it was a better deal. They seemed to get a discount for being pensioners too. You would have to take all the figures and repayment plans home to study to see exactly what you would end up paying. As I say, we weren't even offered any sort of finance scheme when we went to look at the car.

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Re: Car Finance V Lump Sum

Postby markwilding » Mon Apr 12, 2021 11:30 am

jhonie99 wrote: Mon Apr 12, 2021 9:42 am


With finance, they deliberately hide the real price you're paying for the vehicle and more or less just tell you the monthly payments.
Also, they'll have added on a whole load of extras (both car and finance) that you didn't ask for and don't want.

We even prefer to get a loan from bank rather than take their finance. Gives us flexibility on how quickly we want to pay off the loan. With their finance, you're locked in. Things like free insurance are all rubbish - they counter it with high franquicia. Extened warranties - again, costs extra and doesn't cover anything. Have you read the exclusions, lol!
It's not very difficult to check figures against taking out a bank loan or paying cash. Have you ever bought a car in Spain? If you haven't, you will be surprised how it works? Why do you think the OP is questioning this system? Obviously, it's because the way of buying a car can appear a little odd here in Spain.

Your same argument was put forward in another thread a couple of years ago by a member who had no experince of buying a car in Spain.

Unlike the UK where a discount might be given for paying cash. here in Spain a rather large discount is given if finance is taken out.
The lowest price advertised is with finance. Not taking it out means paying more. The purchaser then needs to do some sums to see if the overall discount with the extras(Also dependant on the finance) will benefit them financially or not.

This is completely different from a company that offer interest free, then gives discount for an upfront payment so in fact, interest is being paid on the loan.
Last edited by markwilding on Mon Apr 12, 2021 11:39 am, edited 1 time in total.

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Re: Car Finance V Lump Sum

Postby Devils Advocate » Mon Apr 12, 2021 11:39 am

The dealer in no matter what country will steer the punter in to the deal that's best for the dealer. If there are pennies to be had the dealer wants them in his pocket.

Again in all countries finance is the preferred route to push. I was dealer principal for a big UK franchise in a former life and talking people out of paying "cash" was a daily chore. The aim is to to get the win/win feeling for the customer whilst taking his trousers down.
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Re: Car Finance V Lump Sum

Postby markwilding » Mon Apr 12, 2021 11:47 am

I'm sorry you are wrong in this case. I have negotiated other discounts but it is impossible to get the quite high discount for paying on finance by paying cash. Since our last debate, I have bought another car and played hard ball but the high discount and free five year servicing were totally dependant on the finance and it would have meant paying more. I compared prices with a bank loan and cash and the best bet was with finance.

I wrote this in an earlier post

One odd thing was before we had to buy a new car for my son because his old one finally died on him, I was thinking of buying a new one for myself and because my cars trade in value took it above the minimum borrowing amount to get the discount, I would have had to take out the minimum finance and i would have to be given the difference back in cash

I would have been given back more than 3,000 Euros
Last edited by markwilding on Mon Apr 12, 2021 11:50 am, edited 1 time in total.

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Re: Car Finance V Lump Sum

Postby Devils Advocate » Mon Apr 12, 2021 11:50 am

Why am I wrong? I stated the dealer wants to make the biggest profit possible.......never questioned your car buying experiences whatsoever.
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Re: Car Finance V Lump Sum

Postby markwilding » Mon Apr 12, 2021 11:52 am

Because I am talking about buying in Spain. It's clear by OP's original post that she has come up against the same problem.

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Re: Car Finance V Lump Sum

Postby Devils Advocate » Mon Apr 12, 2021 11:59 am

And yet forgive me for saying so but I personally know people in Spain who've bought new cars too and battled and won to get a proper deal at large Franchises in Andalucia, without taking finance. There is only so much money in a deal no matter what country you are in and the dealer wants to keep as much in the deal as he can. Furthermore your sales invoice and breakdown will read totally different to what's on the books of the dealers when the sale is completed. I'd be interested to see a true dealer breakdown of how this phenomena works, it's the only way I'd be able so suss it.
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