Thursday 30 March 2017

Distributors bypass banks with sweet credit discounts

Martin Brennan

Motor distributors are giving big discounts to motorists through their own finance houses, bypassing the banks, credit unions and other lending institutions.

VW Bank and and Opel Credit are offering zero per cent credit on some models and FordCredit is offering 2.9 per cent on Fiesta and Focus models next year.

The Volkwagen Bank zero per cent deal is on Skoda Fabia and Roomster models, with a deposit as low as 10 per cent of the price and Opel Credit covers all models over a 2-4 year period, depending on the deposit, which is a 30 per cent minimum, with a four-year warranty thrown in.

These are just some of the moves by the motor industry to combat an expected drop in sales from 90,000 this year to a 75,000-80,000 forecast for next year. It is also a bid to sidestep high-interest loans from Credit Unions -- eg 8.67 per cent at the Indo Credit Union and 12.9 per cent at AIB on car loans.

Customers have complained of high rejection rates by the mainstream banks to their applications. Ford says that compared with their 2.9 per cent rate, the AIB figure would represent an extra €1,525 on a €10,000 loan over three years.

Both Ford and VW say that there are high acceptance figures for their credit facilities -- 75 per cent in the case of VW. Ford says there is no need to make a trip to a bank when cheaper finance is available at the dealer. VW says its bank is open for business for VW, Seat, Skoda and Audi cars and commercial models. It has given out €100m in finance this year and intends to increase its funding substantially next year.

The zero per cent finance offer on Fabia and Roomster models is over a three-year loan period, with a deposit as low as 10 per cent for models registered in 2012. Other Skoda models can be bought at a finance credit rate of 5.9 per cent.

Seat has a Personal Contract Plan on Ibiza and Leon models. Customers who sign up before the end of the year can drive for €4.24 and €5.54 a day with deposit arrangements and buy or change model options after three years. This scheme will continue in January for the Leon model while the rate for other Seat models will be 4.9 per cent next year.

VW has a 3.95 rate on Polo and Golf and 4.9 per cent on other models and Audi is offering a 5.9 per cent finance deal with incentive rates for personal contracts with guarantees of residual value at the end of the contract. There are also incentives on fleet offerings.

Ford also has rewards for purchasers of Mondeo models with a four-year warranty which incorporates four years servicing and roadside assistance package. This comes on stream as Ford drops the price of the entry-level Mondeo by €750. The company also has plans to roll out a service-activated warranty for the first quarter of 2012 on all models up to seven years old. For a fee in the region of €50, an extra year's warranty can be added on if the car is serviced at a recognised Ford service centre.

Renault has been a leader in low pricing for a number of years and now offers a 4.9 per cent interest deal which can run over four years. On top of this there is a minimum €2,000 Bounce Back bonus (it rises to €3,500 on certain models) to those who trade in a car for a new Renault or who buy without a trade-in. Deposits range from 30 per cent to 50 per cent of the purchase price.

The top marque for sales this year, Toyota, is not getting involved in the ultra low credit war. The company already gives a three-year warranty and is adding to this a three- year servicing package on passenger models bought before the end of January.

Nissan is wooing punters with a "Twice is Nice" deal on mainstream models such as Micra, Qashqai, Qashqai+2, Note and Juke which sees your 2012 model replaced with a new model the following year. This offer will run to the end of January but Nissan says it may be extended. There are conditions attached such as mileage and the deal is based on the full retail price of the model chosen. There is also a sliding scale of interest rates on credit from 4.9 per cent to 7.9 per cent depending on the length of the loan and the amount of the deposit.

BMW is offering finance arrangements of 8.39 per cent on MINI and BMW models on a two, three, four, and five- year plan and has lease and personal contract plans.

Hyundai has a five-year unlimited mileage warranty, roadside assistance and vehicle health check in place and is arranging special finance plans to be announced later.

These are the deals from the top 10 distributors. Nearly all other manufacturers have put, or will put, in place their own offers to stimulate sales next year.

Sunday Independent Supplement

Promoted articles

Editors Choice

Also in Life