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Finance.....like a scene from lock stock & two smoking barrels

To a car dealer finance is a great source of revenue with some dealerships seeing the cars themselves as merely a convenient commodity on which to attach the real prize, the finance commission cheque. Not surprisingly then the dealer isn`t always the best person to speak to when you want to arrange funds.

We have always referred customers to independent finance companies and don`t really see any commissions that might arise as particularly important, in the same way when we recommend someone to service your car we don`t expect a "bung" from the garage. We`d rather create a family of suppliers who work well with each other and who reflect each other`s values and quality expectations.

With specific regard to vehicle finance there have historically been 2 main stumbling blocks:

For some reason best known to themselves the main finance companies have always preferred to lend on rapidly depreciating newer cars with a high risk of negative equity. Older, more stable value cars are penalised with higher rates of interest, limited repayment options or outright refusal to lend.

The second stumbling block has been the instance of finance companies to lend on fixed rate schemes. The reason for that is simple, it`s very profitable when someone wants to change their car and settle the finance before the end of the agreement. With a fixed rate loan your total interest charge is taken and then very much front end loaded. This can result in potentially high settlement figures even though considerable money has been paid into the account. Your mortgage on the other hand calculates interest on a daily basis and so can allow repayment without the "penalty" of paying interest on money you haven't borrowed yet. How would you feel if you sold a house after 5 years only to be told that the mortgage company in effect wanted a contribution towards the unused 20 year portion of your 25 year mortgage even if you were financing your next house through them and you have to settle one car finance completely before you can finance your new purchase.  That's what happens on a standard car finance agreement.

We have teamed up with Classic and Sports finance, a company who specialise in financing older or more "niche market" vehicles, offering an array of different schemes including balloon payment options. The key difference with their products is that they are variable rate schemes meaning early or lump sum repayments are possible without incurring financial disadvantage. Whilst the interest rate is variable the amount you pay each month is fixed, (unless you want to pay a lump sum into the account), what changes is the length of the agreement shortening or lengthening. In reality these changes tend to be in the order of days rather than months. The big benefit is that if you arrange finance over, say 3 or 4 years to match your monthly budget but then sell the car after 18 months or 2 years you are not disadvantaged. Similarly if you want to pay off a lump sum from a bonus, inheritance, house or vehicle sale you can do so and benefit in full from the payment, no interest is charged on that portion of the loan from that point onwards.

We genuinely think this is the way forward in car finance. Your local dealer might not think so because the downside is that commission cheques are non-existent or at best very small but from the customer's point of view it's good news. Click on the Classic & Sports logo to contact them. The company also offer a "pre approval" scheme whereby you can arrange finance in principal before you go off hunting for cars safe in the knowledge that when you do find the car you want the money is already sorted, in much the same way you would if property hunting.

Click on any of the Classic & Sports Finance logos to contact them directly

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