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Old 19 Feb 2002, 20:44 (Ref:219104)   #1
Carrie
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Carrie should be qualifying in the top 5 on the gridCarrie should be qualifying in the top 5 on the grid
Car Finance

Hopefully sometime pretty soon I'm looking to change my car. I'm aiming on getting something that's about 12 months old rather than a brand new car, but just out of interest have been looking at new cars. This led me to look at the small print on the figures quoted as example car finance. I think it was Renault where the car finance was over 3 years based on an annual mileage of 10,000 with excess mileage being charged at 6 pence per mile. I thought that was bad enough, but then spotted in the small print for one of the car supermarkets that their finance was based upon an annual mileage of 6,000 and excess mileage would be charged at a specified mileage rate. Now, lets just take the Renault example and my average annual mileage which is around 22,000 that would mean I'd be paying an annual excess of 720!!! Okay, so I do quite a high mileage, but insurance companies put the average for annual mileage at 12,000 so in both these cases the finance only accounts for a mileage that is below average. Looks like someone's found a pretty good way of making some money here.
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Old 19 Feb 2002, 20:56 (Ref:219118)   #2
av8rirl
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And its not like they're not making money anyway.
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Old 19 Feb 2002, 21:01 (Ref:219123)   #3
Carrie
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Exactly, anyone who takes out car finance is being taken to the cleaners anyway. I was quite astounded when I read the mileage limitations that are imposed. I wonder when they started introducing that clause and how many people have been caught out with it.
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Old 20 Feb 2002, 00:05 (Ref:219223)   #4
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I've had to endure some major rows over the phone with customers who've been caught by this.

(I work in vehicle leasing, you understand.)

Sadly, these three-year plans are almost universally saddled with mileage restrictions, although most can be tailored to a driver's individual needs at the point of sale. But there will be higher monthly instalments to pay instead.

The sneaky thing is what happens if you need to get out of a finance agreement early. They will look at how much of the agreed mileage you have done. If you want out after - say - 60% of the agreed term, then you'd better not have done more than 60% of the agreed mileage, or they will STILL sting you for the excess mileage charge.

These are not new clauses. I've seen agreement documents dating back to 1995 that have these sorts of terms tucked away in the deepest recesses of the small print.
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Old 20 Feb 2002, 01:08 (Ref:219245)   #5
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In my experience its far better to get a personal loan instead of finance. Then theres no rubbish about who actually owns the car etc.
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Old 20 Feb 2002, 04:26 (Ref:219299)   #6
Ray Bell
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Or better still to pay cash... this is leasing we're discussing here, not regular car finance. It's certainly a huge ripoff.
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Old 20 Feb 2002, 14:41 (Ref:219476)   #7
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It has to be said that the distinction between leasing and finance has been mightily blurred over the last decade. After Ford's Options scheme about eight years ago, most manufacturers, certainly in the UK, will offer a package much as Carrie has described. The low initial payment on the car is set against a lump sum later in the car's life - usually three years. This is where mileage and condition enter into the equation.

Very few people are in the exalted position of being able to put down 10,000 plus in cash on a new car - I wish I was! So finance in one form or another has to be the option for the vast majority of private purchasers.

Leasing is no more a rip-off than any other financial service, be it a bank loan, a credit card or a mortgage. For some individuals, it is the best option, but it is only one option of many. It is down to personal circumstances and requirements which is best suited to the customer.

If I was in the pleasant position of choosing a new or nearly-new car at the moment, I think my chosen options would be to look at the dealerships offering my selected model, and look for either a 0% interest package on a showroom new car - they are out there - dealers are desparate to shift metal, or to look at a bank loan and a hearty discount on a pre-registered dealer car, perhaps an ex-demonstrator. It is very unlikely that a favourable dealer finance package will be available on an ex-demo, as they've already borne the cost of the early depreciation on it.

I would steer clear of packages which are based on an agreed valuation at the end of the finance term, simply because the depreciation rates on the British market are so unpredictable. What was a perfectly reasonable resale calculation three years ago doesn't look like much of a bargain after the used-car market freefall of the last 15 months.

A new car is going to cost a lot whatever happens. The sums that minimise that cost are complex and affected by an individual's personal requirements.
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Old 20 Feb 2002, 16:44 (Ref:219531)   #8
Neil C
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I've always opted for purchase over lease, but leasing does offer some options for those to whom it is suited. In the US, it is best suited for those that like to drive a spanking new car every 24 or 36 months, without any pride (or pain) of ownership.

If you plan to supercharge your car or race it on weekends at Billy Bob's Speedway...don't lease.
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Old 21 Feb 2002, 22:07 (Ref:220332)   #9
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Oh and be sure to take out the insurance option, being made redundant next month, it will be the insurance company that pays

Whilst posting I have just heard that John Thaw has died of cancer aged 60. Sh*t I'm shatterd. No more Sweeny. Such a nice copper, sometimes.... RIP

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Old 21 Mar 2002, 02:18 (Ref:240505)   #10
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We just ordered a Ford Winstar LX in Matador red. The financing is by Ford at 0% interest for 48 months. That is as good as it gets.We should have it end of april.
I never did think that I would ever drive a mini van. I wanted a VW Passat station wagon but the finance minister insisted on a van. To keep peace in the family we will be driving a van specially ordered so we can have bucket seats in the front and a bench seat directly behind for our dog Heidi. She does not like bucket seats.
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Old 22 Mar 2002, 08:07 (Ref:241387)   #11
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car finance is just f***ed ne way, did i hear someone say rip off merchants
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Old 22 Mar 2002, 08:49 (Ref:241406)   #12
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Tim

Thanks for logic in your post. The idea of cash when talking on the car lot usually works wonders. Your rationale on the demonstrators makes sense. Almost makes me want a new car. Almost.
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Old 22 Mar 2002, 12:35 (Ref:241549)   #13
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I just leased a new car. It is our 3rd lease and we have gone up in style and options for each new car. I get tax concessions through my business and it allows me to get into a better car than what I would normally be able to afford. The money I have saved on servicing and repairs to second hand cars helps offset any extra costs also.

The first car I leased was with the Ford plan and I would of had to pay a lot extra for excess milage but I had them factor in an extra 20,000 km so I could spread it out over the two years.

The bottom line is I wouldn't have a nice new car coming next week if I didn't let the bank put their money up front first. The mileage thing just protects their investment because they don't want a completely flogged heap of rubbish back but if that's what they get at least they will be compensated.
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