Hey everyone. This forum has been a valuable resource for me in making my decisions for the 500. I was just wondering if I could ask for some advice regarding Fiat Finance offered by the dealers, and your experiences with it.

I know exactly which 500 I want, and im ready to buy, however, I will be needing to finance the car somehow. I was planning on taking a HP deal with the dealer. Ive never had a car on HP before, ive always bought used cars outright, or used a small personal loan. HP seems the more sensible solution for me for a brand new car though.

I took a 500 for a test drive yesterday, and then sat down with the dealer for a finance quote. I wasnt expecting to get a 0% deal like the ones being offered on the Punto, as im aware of why they exist. I was not, however, expecting an APR of 12% for the 500. The dealer refused to budge on this, saying that he would need to subsidise the car in order to lower the APR.

Has anyone else been getting better deals? If so, which dealerships are you using?

I'd really appreciate some advice on this, as ive not bought a car on dealer finance before. Many thanks in advance!

Rob, as you are aware, there are plenty of deals on all the other Fiats, from 0% interest, Discounts, extra warranty etc. but because of the newness of the 500 you will be lucky to get anything from a Fiat dealer. I believe you will be better off getting a personal loan from the cheapest lender (try www.moneysupermarket.com as a guide) than from any HP deal from the dealer.

Thanks grimwau. I suspected as much. I dont mind getting a personal loan, I just liked the benefits of HP over a personal loan for buying a car.

I was just totally shocked that the APR could be so high. When ive previously looked at buying a new car, the APR has generally been quite competitive.

RobTuck said:

Thanks grimwau. I suspected as much. I dont mind getting a personal loan, I just liked the benefits of HP over a personal loan for buying a car.

I was just totally shocked that the APR could be so high. When ive previously looked at buying a new car, the APR has generally been quite competitive.

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i dont know why your so shocked this is how any dealership make thier money, they do depend of the lazy buyer just to say yes to thier hp deals...
its up to you if you cannot do a cash deal to find a better deal simple as that

the 50:500 deal isnt actually that bad. Whilst the interest is higher than some loans u can get as you dont pay anything for 2 years and can therefore offset some of this interest by saving in a ISA account over the next two years.

Eventually 500's will be sold with 0% or 5yr warranty but only when sales begin to slump.

I got 2% on my Grande Sporting, and I know we werent quoted anything like that on our 500 either, although nowhere close to 12% thats a joke, just say ok if theres nothing you can do walk out, either he will do something for you, or just try another dealer, always shop around anyway though.

Unfortunately the world of financing was supposed to be simplified when the APR was introduced in the early 70s.

Back then interest rates were 15% plus per annum, and the arrangement fees and option to purchase fees were the matter of a few pounds each.

Now, interest rates are low, but the fees are over £100 each.

As APR is calculated as the total amount to be paid back, these fees make a marked difference to the APR.

This isn't to say that the dealer isn't trying to get his leg over, but if the balance financed isn't large and the rate is low then the APR can look out of proportion.

There are a number of direct lenders currently offering good terms, but beware the small print.

While the headline rate might be an APR of 4.9%, you need to be borrowing £100K that you don't need to get that rate.

Again, the lower the balance, the higher the rate, and thats before they 'score' you for credit. If you 'score' badly then the rate goes up again.

Don't be tempted to ask every supplier to propose you for finance, as all the searches are recorded, and finance houses don't like to see a number of searches around the same time at the same address.

There are people out there who take out loads of loans, and then jump the country.

I am sure you could do better, my Company is currently offering Autoloans, which are personal loans with no arrangement fee or option fee, for an APR of 8.5% if the balance is over £8K.

Cheers

GC

Its a bit annoying that the thing we should seriously be shopping around for which is finance results in less chance of actually getting a good deal because they flag u.
Can u imagine the fuss if tesco band u from shopping because u bought too many 2 for 1's !!
But as rallycinq says the APR on small loans can look very high due to the fixed fees signing up and ending.
I looked at borrowing more to get a lower APR then repaying back most of it instantly but they have cottened on to this !! Alot of the low apr's are tied to finnishing the loan. Im sure this will in time be made illegal though.

Best u can do is "Neither a borrower, nor a lender be".

I got 7.4% from the Alliance and Leicester which was pretty good I thought, and no fees at all

Jake_in_notts said:

I looked at borrowing more to get a lower APR then repaying back most of it instantly but they have cottened on to this !! Alot of the low apr's are tied to finnishing the loan. Im sure this will in time be made illegal though.

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Its not illegal, and won't ever become so. The regulations lay down a formula that the finance companies must use to calculate an early settlement.

What you have to remember is that when you borrow the money, the largest months interest will be the first month, because thats when you have borrowed the most. After the first months interest has been paid, a little bit is taken off the amount borrowed.

Then the next month's interest is added, and a very slightly smaller amount of your payment goes to paty the interest, and a very slightly larger amount comes off your amount due.

and so on.

Cheers

GC

rallycinq said:

Its not illegal, and won't ever become so. The regulations lay down a formula that the finance companies must use to calculate an early settlement.

What you have to remember is that when you borrow the money, the largest months interest will be the first month, because thats when you have borrowed the most. After the first months interest has been paid, a little bit is taken off the amount borrowed.

Then the next month's interest is added, and a very slightly smaller amount of your payment goes to paty the interest, and a very slightly larger amount comes off your amount due.

and so on.

Cheers

GC

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You miss understand what my beef is, not the compounded interest added to the loan. What the problem is and what should be sorted is the bonus interest rates that some current lenders are offering if you stick to the full term eg 6% vs 9% if u end early. Repaying borrowed money should never be discouraged and any business that tries to do this will ultimately come a cropper.

nuovapanda said:

I got 7.4% from the Alliance and Leicester which was pretty good I thought, and no fees at all

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Thats probably what im going to end up having to do if I cant get a decent rate from the dealer.

Its not that I cant afford the monthly repayments. In fact, theyre exactly what I was expecting to pay. Its purely the fact that I think over £1700 in interest alone over the course of the agreement is just far too much 'wasted' money.

This is the first dealer ive tried, which is why I was wondering what others had been quoted. There is another dealer in my area which im going to try tomorrow, and then I'll have to push further afield if necessary.

I thought that fiat uk were suggesting the finance be 9.9APR?
Sell your car for cash and you should get 9.9 from a fiat dealer; the extra couple of percent over personal loan will make little difference on the monthly and you have got the protection of HP legislation - voluntary termination if you need it (hopefully 500 residuals will be good and you will never need to VT)
FIAT dealer in wigan was certainly offering 9.9APR, but the deal offered to me at another dealer ended up at 16APR, when the salesman said it was "about 10"!

Jake_in_notts said:

You miss understand what my beef is, not the compounded interest added to the loan. What the problem is and what should be sorted is the bonus interest rates that some current lenders are offering if you stick to the full term eg 6% vs 9% if u end early. Repaying borrowed money should never be discouraged and any business that tries to do this will ultimately come a cropper.

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I see what you are on about, but think about it from the company's point of view. Arranging to lend the money, the checks that are made, the staff that actually send you the money all need to be paid for. They will look at the costs and add their margin, as in any business, and then sell at that price.

If you decide to change the terms of the transaction, by finishing early, they may not have covered their costs, so they are being up front about the charges they are going to make.

Seems fair to me. If I came into a lump sum and had an agreement running I would lock the sum away in a tax free savings account and earn more than I am paying in interest for the term of the agreement.

Cheers
GC

paulmc said:

I thought that fiat uk were suggesting the finance be 9.9APR?
Sell your car for cash and you should get 9.9 from a fiat dealer; the extra couple of percent over personal loan will make little difference on the monthly and you have got the protection of HP legislation - voluntary termination if you need it (hopefully 500 residuals will be good and you will never need to VT)
FIAT dealer in wigan was certainly offering 9.9APR, but the deal offered to me at another dealer ended up at 16APR, when the salesman said it was "about 10"!

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This particular dealer caved a little when I refused to budge, and got it down to 10.4%, and then when I still refused, said he might be able to get it down to 9.5% but couldnt make any guarantees. At 9.5%, the total interest came to over £1500, which im still not overly happy about, but that is almost the same as the total amount of interest on a 7.3% personal loan. As you pointed out, the HP deal provides better protection, which is why id rather go that route.

He actually tried to compare this to a 5% bank loan by saying that borrowing £9000 from a bank at 5% would be £450 a year in interest - £450 x 4 years = £1800 making it more expensive than the HP deal. Hmm. Yeah. Right.

RobTuck said:

He actually tried to compare this to a 5% bank loan by saying that borrowing £9000 from a bank at 5% would be £450 a year in interest - £450 x 4 years = £1800 making it more expensive than the HP deal. Hmm. Yeah. Right.

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That is right, if 5% is the FLAT RATE!

Stu DemonD said:

That is right, if 5% is the FLAT RATE!

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Absolutely! He was comparing an extremely unattainable apple with an orange.

The hunt for a better dealer finance rate continues....

Has anyone here actually taken dealer finance on a 500?

what are these extra benifits of HP?

I already had a loan with Alliance and Leicester at 7.5% so I asked how much to borrow some more to pay that off and buy a 500. Despite 2 years unblemished payment record, they offered me 14%! So I went to the AA and got 6.9%. This morning I had a phone call from Alliance and Leicester asking why I hadnt retruned the agreement. When I told them why, they offered to match the AA's rate. I told them where to go.

Simmo1 said:

what are these extra benifits of HP?

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HP, is Hire Purchase. You are hiring the car for the period of the agreement with an option to purchase fee payable at the end for you to own the vehicle.

If you have made more than one third of the total amount due, including deposit, then they cannot come after the car without a court order.

If you have paid more than 50% of the total amount due, then you can return the car with nothing more to pay, and they can do nothing about it.

This may not be much of an issue with the 500, hopefully, but on some cars with a very low residual value it can be worth handing the car back and starting another agreement on a new car.

Cheers

GC