Here's what to do next ZeniX;

Go to the dealership and tell your dealer 'friend' that you are not buying a car from them anymore.

Tell them, in writing, that you expect your deposit refunded within 7 days as a result. You are entitled to the return of your deposit because you have entered into a three party agreement (You, them, finance co). In these circustances, any of the three parties can withdraw from the agreement without penalty. If they do not refund your deposit within the alloted time frame you will be seeking further legal advice and take them to court for the return of the cash.

They know their rights (none) and are trying it on by saying they aren't going to refund your deposit.

Forget their finance rates and what they may or may not end up doing. Get your money back and go find a reputable dealer who conducts his business with transparency rather than the Arthur Daly style Smoke and Mirrors approach.

As an aside, this isnt accurate to the decimal place but you will need their 5.25 'flat rate' reducing to about 4.25 to compete with your 9.2apr from the bank.

Avoid these cowboys - friend or no friend.

JJ

Update: They are not prepared to refund the deposit but they have said they would drop the interest to their staff rate of 5.2% but are unable to tell me what APR that is working out as. He said its normally slightly over double the rate - is there anyway I can find out what the APR will be? surely its not as simple as saying the APR was 12.3% at the rate of 5.75 leaving 6.55% difference so the new APR will be 11.75% APR? All that has done is bring my monthly payments down a few pound a month over 60 months although it has dropped the interest I will be repaying slightly.

I'm confused as what to do now =/

Hi,

As far as i understand it, you have not entered into an agreement with them (i.e. signed any contract either written or verbal). Therefore, you are entitled to your deposit back in full. As you have a receipt for this then you shouldn't have a problem.

As the salesman is your schoolfriend you shouldn't have a problem anyway, after all, if he doesn't give you it back he's not much of a friend is he?

I decided to buy a new car and the sales man asked how I was going to pay for this would it be through finance? I told him I had an existing personal loan and had applied for it to be extended and had been accepted in principle. I told him I wanted to keep it as 1 payment a month instead of 2 (the existing loan and a HP agreement on the new car). He asked about my personal loan, how much was outstanding and what rate it was at. I told him there was slightly under £3,500 outstanding and the rate for the new loan was at 9.2% APR. He then told me that their finanace would be a cheaper option to take out as its only "5.75" - because I am trading in my current car as part exchange and putting £1,000 deposit down towards the new car that they would be able to write off my existing personal loan. Basically they would write me a cheque for £3,500 and I'd pay off the personal loan and the £3,500 is added into the HP agreement at 5.75. Happy days I think, obviously the less interest I'm paying the better! So that was fine, I signed to do a great check to make sure I would be approved for finanace. The sales man contacted me later in the day to say the finance was approved. Great - I said I would drop in £1,000 cash deposit later.

When I went in later the sales man I was dealing with wasn't in so I left the £1,000 cash deposit with another member of staff and got a receipt for it. The next day I went back to speak to the sales man I had been dealing with and I wanted to check was there anything else I had to sign or what happens next? So he tells me i've got the HP agreement to sign and he goes to get it. As I start reading it through I notice immediately it says 12.3% APR and I asked where this came from - he said their rate of "5.75" is +base rate or something like that I dont completely understand how its brought up to 12.3% APR. I told them that I was not signing that because as I stated at the start I could get my personal loan for 9.2% APR. He said thats fine go away and check the personal loan stuff and if you can get it cheaper with the bank albeit do that. The sales man is an old school friend and I expect him to keep my right but I feel that I have been midlead or wrongly advised about the rate of 5.75. He had even circled it in some of the quotes stating this is your rate.

Forgetting about the £3,500 to pay off the existing loan the problem is that after my part exchange and deposit is taken off the cost outstanding on the car is £10,100. When I had applied for the loan to be extended in principle it was for £9,000 for an Astra I seen before - but this is now a Leon I am buying. So basically my £9,000 isn't enough and I dont have other money available to boost that up. The other problem is they also have £1,000 cash deposit of mine. Can I walk away for this deal? If I do will I loose my deposit? As far as I am concerned we have been mislead about the rate of the finance. Yes the finance was approved but not at the rate we were made to believe and the deposit was put down based on the finance agreement which is yet to be signed.

As far as the finance is concerned the payments are the same as we were being told which is around £295/month for 5 years however the loan amount would be £303/month for 4 years, albeit for £9,000 not £10,100.

Although this is the car I wanted - I will be asking for my deposit back but I'm not sure what exactly I'm going to be told so I would like to be prepared. I think I would still happily buy the car using the personal loan if they agreed to sell for the £9,000 outstanding but I'm sure its very unlikely that they would drop £1,100 on the price based on the incorrect information we received.

Any advice on where I stand would be appreciated. I am in N. Ireland incase the law differs. Sorry for the long post!